Proplastics : Q1 2023 Trading Update

TRADING UPDATE - FIRST QUARTER 2023

INTRODUCTION

• The just-ended quarter was marred by serious power cuts which signicantly compromised production throughput and eciencies. Production was largely run on a high-costdiesel-powered generator, thereby impacting on the price of the nal product.
• Electricity supply remains the biggest challenge for the business going forward.
• On the economic front, the local currency continued to weaken against all the major currencies as we began the year.
• The market continued to show inclination to settle transactions in United States Dollars as opposed to the use of the local currency.
• The business continues to participate on the foreign currency auction oor with allocations amounting to USD600K having been received for the quarter with USD400K already disbursed.
• Certain scal and monetary changes had a bearing on the business, among them the reduction in interest rates to 150% from 200%, reduction in local USD transactional tax to 2% from 4% as well as the upward review of USD retention to 85% of locally earned dollars and 75% for export earnings.
• On the downside, the scrapping of the 100% retention of proceeds for corporates who have USD loans means all funds into the domestic nostro accounts are now subject to retention.
• In addition, the incremental exports incentive scheme was annulled eective 1st of February 2023. Before this pronouncement, only export proceeds of up to a certain threshold were liquidated at 40% with any excess qualifying for 100% retention.
• However, the business remains alive to any opportunity that may arise in the environment.

PERFORMANCE

• Sales volumes for the quarter grew by 10% compared to the same period last year.
• Revenue remained at compared to the previous year as our selling price retreated due to reduction in global prices of major raw materials.
• Exports' contribution was 15% to the total sales revenue, representing a 91% growth compared to the same period last year.
• The revenue inow was mainly skewed towards United States Dollars.
• Production volumes grew by 10% compared to the previous period despite production interruptions related to power cuts which also aected the sales product mix.
• The raw material supply was consistent throughout the quarter.

OUTLOOK

• Demand is expected to improve driven by public and private sector-initiated projects.
• Transactions are likely to continue being skewed towards United States Dollars.
• Raw Material availability is likely to remain stable with the opening of world trade after removal of COVID19 restrictions and the Ukrainian conict not having a huge negative impact on supply.
• Despite the drawback of the power challenges, the factory remains capacitated to convert all orders in time as a result of modern investments into the new factory.

1. Sebborn 30 April 2023

adrenalin 16866

5 Spurn Road Ardbennie, Harare, Zimbabwe www.proplastics.co.zw

Directors: G Sebborn (Chairman), K Chigiya (CEO)*, P Changunda*, M Di Nicola (Atl. M. McCulloch), H S Mashanyare, S Roberts, P T Zhanda (Jnr.) (*Executive)