GB : June 23, 20222021 Annual Report

Introduction

The results for the year ended 31 December 2021 are presented to you on the back of challenging operating conditions that persisted from the prior year 2020. Various regulatory measures were instituted to combat the spread of the COVID-19 pandemic and had a profound effect on the demand for the company's products in key markets. The hyperinflationary environment contiued during in the year and it's impact was exacerbated by the delayed funding of successful bids at the auction market. According to the ZimStats report, year on year inflation was recorded at 61% from the 348% recorded in the same period last year while the funding of successful bids was reportedly 3 months behind as at 31 December 2021.

In response to the challenges, the Company consolidated its position in market niches carved out in the prior year while focusing on delivering a commensurate value proposition to its customers through stronger stakeholder relationships in a more intensified competitive market. Nevertheless the company recorded an operating profit albeit lower than prior year as local costs underpinned by the parallel market exchange rates soared while there were limited pricing opportunities. Commentary is on inflation adjusted figures.

Group Performance

Overall volumes increased by 113 % at 1488 metric tonnes when compared with prior year's 699 metric tonnes. Following concerted effort to penetrate and consolidate in new markets, the Chemical division shored up volumes in the last quarter which contributed significantly to the increase. The Rubber division benefited from a consistent order book throughout the year.

Total turnover at ZWL575 million was an increase of 7% when compared with prior year's ZWL537 million attributable to the increased volumes. The company benefited from its technical partnerships as the flow of materials was sustained despite the disruptions in South Africa and the logistical delays further afield in countries of raw materials origin. Unrelenting inflation and the strengthening of the Rand against the

United States Dollar contributed in the increased production costs and put pressure on gross margins. As a result, gross profit at ZWL246 million dropped by 10% from the prior year's ZWL278 million. Similarly operating costs ZWL203 million increased by 35 % from the prior year's ZWL 150 million due the costs that tracked the parallel exchange rates. As a result a net operating profit of ZWL44 million was recorded against the prior year's ZWL140 million.

Divisional performance

General Beltings

Volumes at the rubber division increased by 3 % to 310 metric tonnes compared with the prior year's same period of 301 metric tonnes. The volume increase was driven by a consistent order book and improved throughput. Due to the pricing constraints the Divisional turnover at ZWL290 million dropped by 16% from the prior year's ZWL 347 million.

Cernol Chemicals

Cernol Chemicals total volumes at 1,178 metric tonnes increased by 196% from the prior year's 398 metric tonnes due to consolidation efforts in new market niches with deliveries in the fourth quarter accounting for 514 metric tonnes. As a result turnover at ZWL286 million rose by 51% from the prior year's ZWL 190 million.

COVID-19

Following successful vaccination efforts across the world and locally, the COVID-19 pandemic and its variants has been mitigated although it continues to mutate. Given its recurrent nature and impact on business, government and other stakeholders continue with the efforts that are directed at prioritising employees' and customers' safety. GB Holdings Limited will ensure that employee safety and organisational sustainability are balanced in its approach in the management of the pandemic. The company will assist where appropriate should such cases arise amongst its employees.

Environmental Social Sustainability & Governance

The Chemicals Division has in place a comprehensive waste water treatment which is aimed at ensuring that discharge is not harmful to the downstream eco-system and aquatic life. The Division collaborates and cooperates with the Environmental Management Agency and complies with all regulations in this regard.

Raw materials for both Divisions are sourced from environmentally conscious partners. Formulations strive to eliminate any substances that have been shown to harm the environment.

Dividend

At their meeting on 25 March 2022, the Board considered the need for additional working capital requirements and resolved not to declare a dividend.

Outlook

The optimism that emerged following the mitigation of the COVID-19 pandemic scourge has quickly faded given the Russia Ukraine conflict that threatens to plunge the world into chaos particularly the sources of primary raw materials. General Beltings is expected to increase its market consolidation as the anticipated logistical constraints emanating from the conflict will compel its existing customers to replace imports with locally produced products. Recent price increases in fuels and natural gas signal more severe measures that will inevitably constrain logistical supply chains and thereby dislocate the growth trajectories of the global economy.

The much anticipated bumper harvest will be negatively affected by erratic rain pattern in the latter part of the season. As a result the food import bill will exert pressure on the already scarce foreign currency inflows thereby weakening the Zimbabwe dollar further against the

United States Dollar. Therefore price inflation will inevitably reduce aggregate demand in the economy. However, the mineral commodity prices are expected to improve on the back of increased global demand.

In view of the relaxation of Covid-19 measures and improved mining activity, GB Holdings Limited is expected to benefit from increased mining activity and customer penetration. Cernol Chemicals will strive to reassert its market position as the COVID-19 regulations are relaxed. Given the recent labour mobility trends the company will further invest in key skills retention and development to ensure improved performance in the year 2022.

Appreciation

The past year has been a challenging one requiring resilience from employees, management, the Board and support from all stakeholders. I thank you all for the support given in the past year and look forward to the same in the coming year as the company navigates yet another challenging year.

G. G. NHEMACHENA

Chairman

17 April 2022