TIDMZAM
RNS Number : 5067W
Zambeef Products PLC
15 November 2017
15 November 2017
Zambeef Products plc
("Zambeef" or the "Group")
Audited Results for the Year Ended 30 September 2017
Zambeef (AIM: ZAM), the fully integrated cold chain foods and
agri-business with operations in Zambia, Nigeria and Ghana, today
announces its final audited results for the year ended 30 September
2017.
Financial Performance Summary
(Figures in 000's) 2017 2016 % 2017 2016 %
USD USD Change ZMW ZMW Change
------------------------- --------- --------- -------- ---------- ---------- --------
Turnover 255,796 219,404 16.6% 2,435,182 2,376,148 2.5%
Gross Profit 83,890 80,881 3.72% 798,631 875,946 (8.8%)
Admin Expenses (75,078) (63,716) (17.8%) (714,746) (690,047) (3.6%)
Operating Profit 9,102 17,321 (47.5%) 86,653 187,593 (53.8%)
Finance Costs (9,234) (10,281) 10.2% (87,904) (111,346) 21.1%
Exchange Gains/(Losses) 704 5,387 (86.9%) 6,701 58,345 (88.5%)
Profit/(Loss)
Before Tax 572 12,427 (95.4%) 5,450 134,592 (95.9%)
Tax (110) (997) 88.9% (1,049) (10,798) 90.3%
Profit/(Loss)
from Discontinued
Operations (119) 3,101 N/A (1,133) 33,592 N/A
Profit After
Tax 343 14,531 (97.6%) 3,268 157,386 (97.9%)
Adjusted Profit
Before Tax (*) 476 8,560 (94.4%) 4,531 92,709 (95.1%)
EBITDA 18,239 29,228 (37.6%) 173,629 316,555 (45.2%)
Gross Profit
Margin 32.8% 36.9% 32.8% 36.9%
EBITDA Margin 7.1% 13.3% 7.1% 13.3%
Debt/Equity (Gearing) 21.4% 25.7% 21.4% 25.7%
Debt-To-EBITDA 3.5 1.6 3.6 1.5
-------------------------- --------- --------- -------- ---------- ---------- --------
(*) adjusted to exclude unrealised foreign exchange differences
and losses arising from price adjustments in fair value of
biological assets
Performance Overview:
-- Strong performance from our Retailing, Cold Chain Food
Products (CCFP) and Stock Feed divisions;
Ø Retail sales revenue increased by 27.3 per cent. in ZMW from
ZMW1,132 million to ZMW1,441 million (44.9 per cent. increase in
USD from USD104.5 million to USD151.3 million). Like for like sales
growth from the Zambeef Macro and Outlets stores was 18.2 per cent.
in ZMW and 34.4 per cent. in USD (2016: 31.5 per cent. in ZMW and
(-12.5 per cent.) in USD)
Ø CCFP volumes increased by 15.8 per cent. and EBITDA increased
by 4.0 . per cent. in ZMW from ZMW124.5 million to ZMW129.5 million
(18.3 per cent. increase in USD from USD11.5 million to USD13.6
million).
Ø Stock Feed division had a record year with EBITDA increasing
by 19.2 per cent. in ZMW, from ZMW97 million to ZMW116 million
(36.6 per cent. in USD, from USD9.0 million to USD12.2 million);
volumes also increased by 3.6 per cent. from 150,280 M.T. to
155,752 M.T.
-- However, a challenging macroeconomic environment during
H1/2017, which pressurised CCFP margins, and a major drop in soft
commodity prices significantly impacted the Group's financial
performance.
Ø Global and local commodity prices for soya and maize fell
sharply to seven year lows, and lower than expected wheat yields
due to the fungal disease Septoria have adversely impacted gross
profits in our Cropping division by USD9.1 million.
Ø During H2, the improved liquidity in the Zambian economy
resulted in consolidated retail and CCFP margins improving from
23.3 per cent. (H1) to 26.8 per cent. (H2).
Strategic Progress Summary:
-- Successful completion of a number of capacity expansion and
efficiency improvement capex projects, including:
Ø Ten new Macro stores opened, adding circa 4,950 sq. m of
retail space, to bring Zambeef's own retail footprint at the
year-end to circa 22,740 sq. m from 130 outlets across Zambia.
Ø Eight new Shoprite/Zambeef butchery counter concessions
opened; four in Zambia (bringing total to 31), three in Nigeria
(bringing total to 23) and one in Ghana (bringing total to
six).
Ø Zambeef's total retail network increased from 171 outlets to
196 outlets.
Ø Day-old chick production capacity increased from 210,000 per
week to 340,000 per week during the second half of the year.
Ø Broiler slaughter and processing capacity increased by 30,000
birds per week, to a total of 160,000 per week from June 2017.
Ø Installation of a 70 unit (365 cows/hour capacity) rotary
milking parlour at Kalundu dairy farm in February 2017.
Ø The opening in August 2017 of a new 120,000 M.T. annual
capacity stock feed mill at Mpongwe, which will service the
Copperbelt and DRC markets.
-- The Group entered into an agreement on 6 September 2017 to
sell 90 per cent. of the Group's equity in Zampalm Limited to the
Industrial Development Corporation of Zambia ("IDC"). This disposal
is expected to complete by February 2018 for a cash consideration
of USD16 million, with a further performance amount of up to USD2
million being payable by IDC, dependent on the achievement of
certain performance milestones over the three years 2018 to 2020.
Proceeds from the disposal will be used to reduce debt and further
strengthen the Zambeef balance sheet.
Key Financial Points:
-- Turnover increased by 2.5 per cent. in ZMW from ZMW2,376 to
ZMW2,435 million (16.6 per cent. in USD from USD219.4 to USD255.8
million), while gross profit margins reduced from 36.9 per cent. to
32.8 per cent., resulting in gross profit reducing by 8.8 per cent.
in ZMW from ZMW876 million to ZMW799 million (increasing by 3.7 per
cent. in USD from USD80.9 million to USD83.9 million).
-- Operating profit decreased by 53.7 per cent. in ZMW from
ZMW188 million to ZMW87 million (47.4 per cent. in USD from USD17.3
million to USD9.1 million).
-- Adjusted Profit Before Tax from continuing operations (after
adjusting for unrealised exchange gains and losses, and losses
arising from price adjustments in fair value of biological assets)
of ZMW4.5 million (USD0.5 million) compared with an Adjusted Profit
Before Tax of ZMW92.7 million (USD8.6 million) in the previous
year.
-- Profit After Tax of ZMW3.3 million (USD0.3 million), compared
with Profit After Tax of ZMW157.4 million (USD14.5 million) for the
same period last year.
-- EBITDA decreased to ZMW173.6 million (USD18.2 million),
versus a prior year comparative of ZMW316.6 million (USD29.2
million). EBITDA margin reduced from 13.3 per cent. to 7.1 per
cent.
-- Group net debt at year end was ZMW620 million (USD64.1
million), versus a prior year comparative of ZMW483 million
(USD48.3 million).
-- The Group had undrawn headroom of over USD28 million in its
working capital limits at year-end.
-- Gearing reduced from 25.7 per cent. (2016) to 21.4 per cent. (2017).
-- Debt-to-EBITDA deteriorated from 1.6 (2016) to 3.5 (2017).
Leadership Succession
-- Carl Irwin, Joint Chief Executive Officer to retire on 31 March 2018 for personal reasons.
Tim Pollock, representative for CDC on the Board, to leave CDC
and join Zambeef as Group Managing Director on 1 January 2018, and
subsequently as Joint Chief Executive Officer, with Francis Grogan
from 31 March 2018.
Commenting on the results, Zambeef Chairman Dr. Jacob Mwanza,
said:
"Despite a record contribution from our Stock Feed business and
strong performance from our Retail and CCFP division, a sharp fall
in soft commodity prices and lower than expected wheat yields
severely impacted our Group performance in FY2017.
As we set out in the 2016 Annual Report, Zambeef's vision is to
become a leading provider of Cold Chain Food Products in Zambia,
and the Southern Africa region, where there is a growing and
rapidly urbanising population of circa 450 million people. The
consequence of this is that the demand for food is growing rapidly,
and the immediate priority for Zambeef is to meet this growing
demand whilst driving operational efficiencies and margin
improvements across our core business units.
In pursuit of this vision, the Group committed to a number of
strategic priorities and objectives, including the expansion of our
retail network and footprint across Zambia, the expansion of
production capacity across our CCFP facilities, the construction of
a second Stock Feed plant and the disposal of non-core businesses.
It is pleasing to be able to report significant progress has been
achieved during the year in delivering all these objectives.
The Board is conscious of the significant level of investment
that has been made in the Zambeef business over the past two years,
and of the need to improve shareholder returns. Whilst the
financial performance in FY2017 has been disappointing for reasons
largely outside of Management's control, the strength of Zambeef's
balance sheet provides a solid platform from which to continue to
deliver sustainable long-term growth and added shareholder
value.
Management's focus in FY2018 will be largely upon improving
operating margins and the return on capital employed from our
existing assets."
I would like to take this opportunity to thank on behalf of
shareholders, employees and the Board, Carl Irwin for his
outstanding contribution to Zambeef over the past 23 years. He,
along with Francis Grogan, co-founded the business and it has been
through their vision, entrepreneurial drive and leadership that
Zambeef has grown to become a market-leading and respected Zambian
and Southern African business.
For further information, please contact:
Zambeef Products plc Tel: +260 (0) 211 369003
Carl Irwin, Joint Chief Executive Officer
Francis Grogan, Joint Chief Executive Officer
Strand Hanson Limited (Nominated Adviser) Tel: +44 (0) 20 7409 3494
James Spinney
Ritchie Balmer
Frederick Twist
Finncap (Broker) Tel: +44 (0) 20 7220 0500
Emily Morris
Camille Gochez
Chris Raggett
Powerscourt Tel: +44 (0)20 7250 1446
Nick Dibden
Isabelle Saber
Pangaea Securities
Peter Zulu Tel: +260 (0) 211 220707
Wendy Tembo Tel: +260 (0) 211 238709
Notes to Editors
The Zambeef Group is one of the largest fully integrated cold
chain food producers and agri-business's in Zambia, involved in the
production, processing, distribution and retailing of beef,
chicken, pork, milk, eggs, dairy products, fish, flour and stock
feed. The Group also has large cereal row cropping operations
(principally maize, soya beans and wheat), with approximately 7,787
hectares of row crops under irrigation, which are planted twice a
year and a further 8,694 hectares of rain-fed/dry-land crops
available for planting each year. The Group is also expanding its
West Africa operations in Nigeria and Ghana. The Group employed an
average of over 7,000 employees in the period.
Further information can be found on www.zambeefplc.com
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CHAIRMAN'S REPORT
Operating environment
The financial year ended 30 September 2017 has been particularly
challenging for Zambeef Products PLC. Despite a record contribution
from our Stock Feed division and strong growth in our Retail and
Cold Chain Food Products ("CCFP") divisions, our results have been
impacted by external factors largely outside of Management's
control. Global and local commodity prices for soya and maize fell
sharply to seven year lows, and lower than expected wheat yields
due to the fungal disease Septoria have adversely impacted gross
profits in our Cropping division by USD9.1 million. The Cropping
division has historically generated circa 30 per cent. of the
Group's overall gross profit (five year average fiscal years
2012-2016) and this will be the first year in which this division
will have reported an operating loss. Many farming businesses and
small-scale growers in Zambia are also suffering from the fall in
soya and maize prices, which for many are now below the cost of
production.
It is pleasing to see the recent initiative by the Zambia
Agricultural Commodities Exchange (ZAMACE) and the Johannesburg
Stock Exchange to launch futures contracts for Zambian maize, soya
and wheat, which will give the Group and other Zambian growers the
opportunity to more easily manage commodity price risk.
Following the Zambian General Election in October 2016, the Bank
of Zambia put in strict measures to stabilise the currency and
reduce inflation. These measures, which included high interest
rates and tight control of the money supply, impacted consumer
spending in the first half of the year. Consequently, gross margins
in our Retail and CCFP divisions declined by 6.1 per cent. in the
first half, to 23.3 per cent. (H12016: 29.4 per cent.). It is
pleasing to see that these tough short-term measures have achieved
their goals, with Zambia now back to single digit inflation, a
relatively stable currency and reduced interest rates. This has
resulted in margins starting to normalise and increasing to 26.8
per cent. for H2.
Overview of financial performance
The Group has achieved an Adjusted Profit Before Tax from
continuing operations (after adjusting for unrealised exchange
gains and losses, and losses arising from price adjustments in fair
value of biological assets) of ZMW4.5 million (USD0.5 million)
compared with an Adjusted Profit Before Tax of ZMW92.7 million
(USD8.6 million) in the previous year.
The Group's Profit After Tax for the year from continuing
operations was ZMW4.4 million (USD0.5 million) versus a Profit
After Tax from continuing operations of ZMW123.8 million (USD11.4
million) in the prior year.
Group EBITDA after adjusting for fair value adjustments and
unrealised exchange gains has decreased to ZMW173.6 million
(USD18.2 million) versus a prior year comparative of ZMW316.6
million (USD29.2 million).
While the financial results for the year are disappointing, it
is pleasing to report strong growth in our Zambian Retail sales
revenue which has increased by 27.3 per cent. in ZMW from ZMW1,132
million to ZMW1,441 million (44.9 per cent. increase in USD from
USD104.5 million to USD151.3 million). Our CCFP division has also
performed well with volumes handled up 15.8 per cent., although
operational difficulties experienced in our dairy unit in the first
half of the year (now resolved) and higher diesel and electricity
costs adversely impacted cost of sales. In the second half, the
Retail and CCFP gross margins started to recover. Notwithstanding
these challenges, EBITDA in this division significantly increased
in ZMW by 55.7 per cent. from ZMW82 million to ZMW133 million (in
USD by 77.1 per cent. from USD7.9 million to USD13.9 million) .
Our Stock Feed division had a record year with falling raw
material prices contributing to a 20 per cent. increase in EBITDA
in ZMW, from ZMW97 million to ZMW116 million (36.5 per cent. in
USD, from USD9.0 million to USD12.2 million).
Strategic progress
As we set out in the 2016 Annual Report, Zambeef's vision is to
become a leading provider of Cold Chain Food Products in Zambia,
the Southern African Development Community (SADC) and the Common
Market for Eastern and Southern Africa (COMESA) regions, where
there is a growing and rapidly urbanising population of circa 450
million people. In pursuit of this vision, the Group committed to a
number of strategic priorities and objectives. These included:
1. Expansion of our retail network and footprint across Zambia;
2. Expansion of production capacity across our Cold Chain Food Production facilities;
3. The construction of a second stock feed plant;
4. The disposal of non-core businesses.
It is pleasing to be able to report significant progress
achieved during the year in delivering these objectives:
Retail
-- A 28 per cent. increase in Zambeef's retail footprint with
the successful opening of 10 new Macro stores in Zambia (of which
seven opened in the second half), adding circa 4,950 sq. m of
retail space to bring Zambeef's own retail footprint at the
year-end to circa 22,740 sq. m from 130 outlets across Zambia.
-- The opening in partnership with Shoprite of eight new Zambeef
butchery counter concessions. Four new stores in Zambia (bringing
the total to 31, with two stores closed and one store closed
temporarily following a fire), three in Nigeria (bringing the total
to 23) and one in Ghana (bringing the total to six).
Cold Chain Food Products (CCFP)
-- Day-old chick production capacity increased from 210,000 per
week to 340,000 per week during the second half of the year.
-- Broiler slaughter and processing capacity increased by 30,000
birds per week, to a total of 160,000 per week from June 2017.
-- Installation of a 70 unit (365 cows/hour capacity) rotary
milking parlour at Kalundu Dairy Farm in February 2017.
Stock Feed
-- The opening in August 2017 of a new 120,000 M.T. annual
capacity stock feed mill at Mpongwe which will service the
Copperbelt and DRC markets.
The full economic benefits of these capacity improvements are
expected to flow through to the underlying business divisions in
FY2018.
Disposal of non-core assets
The Group entered into an agreement on 6 September 2017 to sell
90 per cent. of the Group's equity in Zampalm Limited to the
Industrial Development Corporation of Zambia ("IDC"). This disposal
is expected to complete by February 2018 for a cash consideration
of USD16 million, with a further performance amount of up to USD2
million being payable by IDC, dependent on the achievement of
certain performance milestones over the three years 2018 to 2020.
Following the Group's disposal of its oilseed crushing business
Zamanita in 2016, the Board concluded that given the long
timescales required to create value from the Zampalm plantation
project, with only 2,911 Ha of the 20,238 Ha concession planted out
to date, it was in the best interests of Zampalm stakeholders to
seek a new majority shareholder. IDC represents the ideal partner
given its mandate of working with the private sector to deliver
long-term economic transformation. We are pleased that Zambeef has
been appointed by IDC to manage the Zampalm plantation on its
behalf for an initial term of three years, during which time we
will be assisting IDC with the launch of a smallholder out-grower
scheme.
Dividend policy
In view of the financial performance of the Group during the
year to 30 September 2017, no dividend will be payable in respect
of this financial year. However, it remains the Board's intention
to keep its dividend policy under review with a view to adopting a
policy of regular progressive dividend payments to shareholders
once operating cash flow permits.
Leadership succession
During the last nine months a special committee of the Board,
including the founders and Joint Chief Executive Officers, Dr Carl
Irwin and Francis Grogan, has undertaken a leadership succession
planning process, with the assistance of an executive recruitment
consultant, ahead of the planned retirement on 31 March 2018 of Dr.
Carl Irwin, Joint Chief Executive Officer. I am pleased to announce
that Tim Pollock, Investment Director for Food and Agriculture for
CDC Group plc, has tendered his resignation from CDC and will join
Zambeef on 1 January 2018, initially as Group Managing Director and
subsequently as Joint Chief Executive Officer effective from 31
March 2018, subject to usual regulatory requirements. Mr. Pollock,
who has been a non-executive Director of Zambeef since September
2016, has over 35 years of experience across the food and
agribusiness sectors in operational, leadership and strategic roles
in businesses operating in both developed and frontier markets. We
look forward to his and Francis Grogan's ongoing contribution to
the Group over the coming years. In light of Mr. Pollock's
candidature, CDC Group recused its nominee directors from the
special committee and from any involvement in subsequent Board
discussions regarding the leadership succession.
I would like to take this opportunity to thank on behalf of
shareholders, employees and the Board, Carl Irwin for his
outstanding contribution to Zambeef over the past 23 years. He,
along with Francis Grogan, co-founded the business and it has been
through their vision, entrepreneurial drive and leadership that
Zambeef has grown to become a market-leading and respected Zambian
and Southern African business.
I am also pleased to announce that Mike Lovett, General Manager
of the Cropping division, has been appointed Chief Operating
Officer and Director of Agriculture, and Walter Roodt, General
Manager of the Stock Feed division, has been appointed Deputy
Managing Director with the additional responsibility for leading
the implementation across the Cold Chain Food Products division of
a food safety management system and certification to ISO
standards.
Board
During the year there have been a number of changes to the
composition of the Zambeef Board. Graham Clark stepped down in
April 2017 as non-executive Director, in order to take up the
full-time role of CEO of Fiji Sugar Corporation Ltd. His extensive
business experience has been greatly appreciated, and I would like
to thank him for his contribution.
Three new non-executive Directors were appointed in April 2017,
to broaden the depth of experience and diversity on the Board.
Yollard Kachinda, a Zambian national who is currently Director
General of the National Pension Scheme Authority (NAPSA) which
holds 8.3 per cent. of the Company's equity; Margaret Kunda
Chalwe-Mudenda, a Zambian lawyer and former Director General of the
Zambia Information and Communications Authority; and Professor
Enala Lyson Tembo-Mwase, a prominent Zambian academic who holds a
Doctorate in Entomology from the University of London, and is
currently Deputy Vice Chancellor of the University of Zambia.
In August 2017, Jonathan Kirby joined the Board as a
non-executive Director. Mr. Kirby is a qualified Chartered
Accountant with over 25 years' experience with SABMiller,
predominantly as Finance Director of SABMiller's African portfolio,
comprising of operations in 18 countries, until his retirement
earlier this year.
CDC Group Plc has advised Zambeef that it will in due course
nominate a non-executive Director to replace Tim Pollock as one of
its two representatives on the Board.
I believe that our new non-executive Directors all bring
relevant experience and skills to the Board which will help support
Management in building the business in the future, and I welcome
their appointments.
Outlook for 2018
The Board is conscious of the significant level of investment
that has been made in the Zambeef business over the past two years,
and of the need to improve shareholder returns. Whilst the
financial performance in FY2017 has been disappointing for reasons
largely outside of Management's direct control, the strength of
Zambeef's balance sheet provides a solid platform from which to
continue to deliver sustainable long-term growth and added
shareholder value.
Management's focus in FY2018 will be largely upon improving the
financial performance, optimising the price volume and product line
mix to improve operating margins and the return on capital employed
from our existing assets. Capital expenditure in FY2018 is expected
to moderate to USD14.5 million (FY2017: USD21.5 million).
We do not expect a significant improvement in global soya or
maize prices in the next fiscal year, given what in historical
terms are relatively high global stocks-to-use ratios, unless there
is a significant weather event regionally or in one of the major
producing countries, and therefore Management's focus is on
ensuring we continue to be a globally competitive low cost
producer. During the year the Directors of Zambeef took the
decision to explore strategic options for our southern Chiawa and
Sinazongwe farms, both of which have amenity value and climates
which could permit alternative crops to be produced. Chiawa also
has a valuable 2,737 Ha game conservation area and corridor.
Options being considered include sale and leaseback, joint venture
share farming and disposal, all with a view to reducing the overall
level of long-term capital employed within our Cropping
division.
It has been encouraging to see the recent strengthening of the
Zambian economy, which translated into improved consumer spending
across our retail network in Q4 FY2017, which if maintained, bodes
well for our FY2018 Retail and CCFP sales. However, over the past
year there has been a significant expansion in the number of new
FMCG retail outlets and malls servicing the Lusaka premium consumer
market and competing with the Shoprite chain, so margins and
volumes in our concessions within Shoprite, which account for circa
17 per cent. (2016: 22 per cent.) of our retail sales, are expected
to remain competitive.
The fall in soya and maize raw material prices in FY2017 should
benefit the Group's in-house livestock production operations, with
feed prices now some 20 per cent. lower than a year ago.
Consequently, we expect continued improved operating margins from
these businesses in FY2018.
We have an experienced and capable Management team and loyal,
committed and motivated staff, whose efforts have been fundamental
in delivering our growth over recent years. I thank them all for
their valued contribution over the past year. Finally, I would like
to thank our shareholders and all my Board colleagues for their
support and commitment during the past year.
Dr. Jacob Mwanza
Chairman
14 November 2017
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
JOINT CHIEF EXECUTIVES' REVIEW
Overview
The financial year ended 30 September 2017 has been particularly
challenging for Zambeef Products PLC. Despite a record contribution
from our Stock Feed business and strong growth in revenues from our
Retail and Cold Chain Food Products (CCFP) divisions, a sharp fall
in commodity prices to seven year lows and lower than expected
wheat yields severely impacted gross profits in our Cropping
division. The Group is reporting an Adjusted Profit Before Tax from
continuing operations (after adjusting for unrealised exchange
gains and losses, and losses arising from price adjustments in fair
value of biological assets) of ZMW4.5 million (USD0.5 million)
compared to an Adjusted Profit Before Tax of ZMW 92.7 million
(USD8.6 million) in the previous year.
The Group's Profit After Tax for the year from continuing
operations was ZMW4.4 million (USD0.5 million) versus a Profit
After Tax of ZMW123.8 million (USD11.4 million) in the prior year.
Group EBITDA, after adjusting for fair value adjustments and
unrealised exchange gains, has decreased to ZMW173.6 million
(USD18.2 million) versus a prior year comparative of ZMW316.6
million (USD29.2 million).
Whilst the financial results for the year are disappointing
(principally because the sharp fall in soya and maize prices and
lower wheat yields have adversely impacted the gross profit in our
Cropping division by USD9.1 million), they mask strong growth in
revenues from our Retail and CCFP divisions.
It is pleasing to report that our Zambian retail sales have
increased by 27.3 per cent. in ZMW from ZMW1,132 million to
ZMW1,441 million (44.9 per cent. in USD from USD104.5 million to
USD151.3 million), and like for like sales in the Zambeef Macro and
retail stores increased by 18.2 per cent. in ZMW (34.4 per cent. in
USD). However, a slowdown in consumer spending in the first half of
the year as the Bank of Zambia tightened money supply and raised
interest rates to stabilise the economy, operational difficulties
in our dairy unit (now resolved) and higher transport and
electricity costs impacted cost of sales, resulting in the Retail
& CCFP margin falling by 6.1 per cent. in the first half, from
29.4 per cent. to 23.3 per cent. The Retail & CCFP margin
improved in the second half to 26.8 per cent., to give an average
margin for the year of 25.0 per cent. (prior year 29.4 per cent.).
Notwithstanding these challenges, EBITDA in this division increased
in ZMW by 55.7 per cent. from ZMW82 million to ZMW133 million (77.1
per cent. in USD from USD7.9 million to USD13.9 million).
Our Stock Feed division had a record year with falling raw
material prices contributing to a 20 per cent increase in EBITDA in
ZMW from ZMW97 million to ZMW117 million (36.5 per cent. in USD
from USD9.0 million to USD12.2 million).
The year has seen significant progress in the Board's strategy
of disposing of non-core activities with an agreement signed on 6
September 2017 to divest 90 per cent. of the Group's equity in
Zampalm Limited to the Industrial Development Corporation of Zambia
("IDC"). This disposal is expected to complete by February 2018 for
a cash consideration of USD16 million, with a further performance
amount of up to USD2 million being payable by IDC, dependent on the
achievement of certain performance milestones over the three years
2018 to 2020. Proceeds from the disposal will be used to reduce
debt and further strengthen the Zambeef balance sheet.
The Group has continued to invest in the expansion of processing
capacity in its Cold Chain Food Products division, and in the
expansion of its Retailing footprint. Group capital expenditure of
ZMW209 million (USD22 million) has been incurred during the year
(2016: ZMW179 million or USD16.5 million), with Group net debt at
year-end increasing from ZMW483.2 million (USD48.3 million) to
ZMW620 million (USD64.0 million). However, overall gearing for the
Group reduced from 25.7 per cent. (2016) to 21.4 per cent. (2017).
Net debt is expected to fall in FY2018 as the proceeds from the
disposal of Zampalm are received.
Retail: building our network
In line with the strategic priorities set out in our 2016 Annual
Report, a key area of focus for Management during the year has been
the expansion of Zambeef's retailing activities. We are pleased to
report that Zambeef's total retail presence has increased from 171
outlets to 196 outlets during the past year. This growth has been
driven both by the expansion of the Shoprite retail network in
Zambia, Nigeria and Ghana, and the expansion of Zambeef's own
retail network, with the building of new Zambeef Macro outlets
across Zambia.
Shoprite is Africa's leading supermarket chain with whom Zambeef
holds a concession agreement to operate in-store meat butchery
counters in Zambia and West Africa. During the year, Shoprite
opened four new stores in Zambia (bringing the total to 31 after
closing two stores, and closing one temporarily due to fire
damage), three in Nigeria (bringing the total to 23) and one in
Ghana (bringing the total to six), all with Zambeef concessions
within.
Zambeef has opened 10 new Macro stores in Zambia (of which seven
opened in the second half), adding circa 4,950 sq. m of retail
space to bring Zambeef's own retail footprint at the year-end to
circa 22,740 sq. m from 130 outlets across Zambia, and delivering
ZMW58 million (USD6.1 million) in new sales. These new Macro stores
are expected to deliver sales, once fully established, of circa
ZMW20 million (USD2 million) each on an annualised basis. All of
the new Zambeef stores are on premises owned by Zambeef and are
outlets that have been built and fitted to Zambeef's specifications
with the Group's own construction, IT and refrigeration teams
ensuring cost-effective and timely delivery of the rollout
programme. Total capital expenditure in Retail was ZMW46 million
(USD4.7 million), including expenditure securing future sites, and
the new Kitwe distribution centre.
The progressive expansion of our Retail business will drive
Zambeef's growth and ensure the Group plays a leading role in
providing food to a fast growing and urbanising population in
Zambia, West Africa and the wider SADC/COMESA regions.
Cold Chain Food Products: building capacity
In order to meet future growth in consumer demand for affordable
proteins, Zambeef continued to invest in its Cold Chain Food
Products division. During the year, we invested USD3.1 million
in:
-- Additional broiler breeder rearing and laying housing and
additional hatchery setters to increase day-old chick production
from 210,000 per week to 340,000 per week effective May 2017;
-- Increasing the Huntley broiler slaughter and processing
capacity by 30,000 birds per week to a total of 160,000 per week
from June 2017;
-- Construction of a new CCFP depot outside Kitwe, in order to
improve distribution efficiency to our expanding retail network in
the Copperbelt region, which is expected to be completed in
December 2017;
-- Installed a new rotary milking parlour at the Kalundu dairy unit in February 2017.
The full benefits of these capacity improvements are expected to
flow through into the CCFP business in FY2018.
Stock Feed: new Mpongwe plant
Zambeef's Stock Feed operation, which trades under the brand
name Novatek, had an excellent year, helped by the expansion of the
retail network and growth in demand from monogastric and ruminant
customers in both the formal and informal sectors. Demand remains
high and our existing plant in Lusaka has been operating at full
capacity for the past two years in order to meet this demand. It is
therefore pleasing to be able to report that our new Mpongwe feed
mill was commissioned in August 2017. This will add 120,000 M.T. of
annual capacity to our existing annual capacity of 140,000 M.T. at
our Lusaka mill. The new Mpongwe mill is ideally placed to supply
the Copperbelt market, the northern half of Zambia and the northern
export markets. This will save upon finished feed transport costs
and further improve the efficiencies of Novatek.
Cropping
This has been one of the most difficult years for our Cropping
division, with sharp falls in the international and local prices of
soya and maize to seven year lows on the back of large global and
regional harvests and an increase in carryover stocks. Soya prices
in Zambia fell from USD530/M.T. to USD360/M.T. and maize prices
fell from an average of USD225/M.T. to USD125/M.T. The Cropping
result has been further impacted by lower than expected biological
realisation from the FY2016 year-end valuation, wheat yields which
were 10.2 per cent. below budget at 41,750 M.T. due to a fungal
disease, Septoria, which appears to have been more virulent this
year despite implementation of our usual fungicide control
programme, and diesel fuel and electricity cost of sales increasing
by USD1.8 million. Consequently, gross profit in the Cropping
division fell by ZMW86 million (USD9.1 million) from ZMW252 million
to ZMW135 million (USD23.2 million to USD14.1 million), and the
business has, for the first time, posted a small operating loss of
ZMW14 million (USD1.5 million) versus an operating profit of ZMW107
million (USD9.9 million) in the prior year.
Other activities
During the last quarter of the year, we refurbished our flour
mill at Huntley and commenced trials of an in-store bakery at our
Mtendere Macro store, to ensure we maximise value from our wheat
production.
Zamleather has had a difficult year, with poor export demand for
wet blue hides.
As reported above, the Group has signed an agreement to sell 90
per cent. of the equity it holds in Zampalm Limited to the
Industrial Development Corporation of Zambia ("IDC"). This disposal
is expected to complete by February 2018. Following the Group's
disposal of its oilseed crushing business Zamanita in 2016, the
Board concluded that given the long timescales required to create
value from the Zampalm plantation project, with only 2,911 Ha of
the 20,238 Ha concession planted out, it was in the best interests
of Zampalm stakeholders to seek a new majority shareholder. IDC
represents the ideal partner given its mandate of working with the
private sector to deliver long-term economic transformation. We are
pleased that Zambeef has been appointed by IDC to manage the
Zampalm plantation on its behalf for an initial term of three
years, during which time we will be assisting IDC with the launch
of a smallholder out-grower scheme.
Outlook for FY2018
The Board is conscious of the significant level of investment
that has been made in the Zambeef business over the past two years,
and of the need to improve shareholder returns. Our focus in FY2018
will be largely upon optimising operating margins and the return on
capital employed from our existing assets.
The strengthening of the Zambian economy seen in Q4 FY2017
translated into improved consumer spending across the Zambeef
retail network, which bodes well for our FY2018 Retail and CCFP
sales. However, there has been a significant expansion in the
number of FMCG retail outlets and malls servicing the Lusaka
premium consumer market and competing with the Shoprite chain, so
margins and volumes in our concessions within Shoprite are expected
to remain competitive.
We do not expect a significant improvement in global soya or
maize prices in the next fiscal year given what in historical terms
are relatively high global stocks-to-use ratios, unless there is a
significant weather event regionally or in one of the major
producing countries, and therefore Management's focus is on
ensuring we continue to be a globally competitive low cost
producer. We may idle and fallow some of our poorer yielding
land.
The recent fall in soya and maize raw material prices should
benefit our own broiler, egg, dairy and beef feedlot livestock
operations, with feed prices now some 20 per cent. lower than a
year ago, thus we expect improved operating margins from these
businesses in FY2018.
The pace of capital investment will slow from USD22.0m in FY2017
to circa USD14.5m in FY2018. Budgeted projects including amounts
originally planned for FY2017 but carried forward include:
-- USD2.5 million on the construction of a further ten Macro
stores and investment in refrigerated distribution capacity;
-- USD2.9 million completing the Mpongwe stock feed mill;
-- USD1.8 million of improvements across Cold Chain Food Product
operations in beef, dairy and pork;
-- USD1.2 million increasing our IQF gyro freezer capacity to
meet rising fast food outlet demand for portions;
-- USD1.3 million expansion of broiler breeder laying farms
capacity to complete the increase in day-old chick production from
210,000 to 340,000 per week;
-- USD1.0 million on the delivery of environmental and social
improvements under the Environmental and Social Action Plan;
and
-- USD3.8 million in replacement and contingency capex.
In line with our previously announced strategy, we will divest
non-core operations and assets with a view to enabling Management
to focus on those areas of the business where we can maximise
shareholder returns, as well as reducing gearing and net debt.
Following the usual four yearly revaluation of fixed assets which
was undertaken during the past year, Group gearing stood at 21.4
per cent. at the year-end (2016: 25.7 per cent.). Gearing and net
debt are expected to fall in FY2018 once the proceeds from the
disposal of Zampalm to IDC are received.
Zambeef is fortunate to be operating in areas with some of the
fastest growing urbanising populations in the world. The
consequence of this is that the demand for food is growing rapidly,
and the immediate challenge for Zambeef will be to meet this
growing demand whilst driving operational efficiencies and margin
improvements across our beef, chicken, pork, eggs and dairy
products lines to reflect the significant capital investment made
over the past two years in increasing our retail footprint and
production capacities in our CCFP division.
It has been an extremely busy year at Zambeef and we feel
incredibly proud of our 7,000 employees and what they have achieved
over this period despite what has been a challenging trading
environment, and we would like to take this opportunity to thank
all of our employees for the contribution they have made to the
Company. In addition, we would like to thank our Chairman, Dr.
Jacob Mwanza, as well as our entire Board of Directors for their
valuable guidance and support.
Carl Irwin & Francis Grogan
Joint CEOs
14 November 2017
OPERATIONAL AND FINANCIAL REVIEW
SUMMARY
Turnover for the Group increased by 2.5 per cent. in ZMW to
ZMW2,435 million (16.6 per cent. in USD to USD255.8 million), while
gross profit margins reduced from 36.9 per cent. to 32.8 per cent.,
resulting in gross profit reducing by 8.8 per cent. in ZMW from
ZMW876 million to ZMW799 million (increasing by 3.7 per cent. in
USD from USD80.9 million to USD83.9 million). The Group has tightly
controlled its overheads despite the average inflation rate at the
start of the year being 18.9 per cent., dropping to finish the year
at 6.6 per cent., with overheads increasing by 3.0 per cent. in ZMW
(17.3 per cent. in USD). EBITDA margin (after adjusting for fair
value adjustments and unrealised exchange gains) reduced from 13.3
per cent. to 7.1 per cent. Operating profit decreased by 53.8 per
cent. in ZMW from ZMW188 million to ZMW87 million (47.5 per cent.
in USD from USD17.3 million to USD9.1 million).
The ZMW101 million (in USD8.2 million) fall in operating profit
was largely driven by a drop in Cropping division gross profit of
USD9.1 million from USD23.3 million to USD14.1 million arising
from:
-- A sharp fall in global and local soft commodity prices, with
Zambian soya prices dropping from USD530/M.T. at the end of March
2016 to USD360/M.T. by September 2017, and regional maize prices
falling from USD225/M.T. in April 2016 to USD125/M.T. by September
2017. It should be noted that the Zambian forward market is
generally illiquid, making forward hedge sales very difficult.
-- Cost of sales and distribution costs were impacted by circa
USD1.8 million as a result of a 30 per cent. increase in fuel
prices during the first half of the year, and a 50 per cent.
increase in electricity costs in May 2017 as Zambia moves towards a
market-based electricity pricing policy.
-- A shortfall in budgeted wheat yields of 10.2 per cent. and in
the realisations from the 2016 year-end biological valuation.
The poor result from Cropping was partially offset by:
-- Novatek, our Stock Feed business, which had a record year
with falling raw material prices contributing to a 20.4 per cent.
(in ZMW) increase in operating profit from ZMW94 million to ZMW113
million (36.9 per cent. in USD from USD8.7 million to USD11.9
million).
-- The Retail and Cold Chain Food Products (CCFP) divisions,
which contributed to a 77.1 per cent. (in ZMW) increase in
operating profit from ZMW49 million to ZMW86 million (101.4 per
cent. in USD from USD4.5m to USD9.1m).
Operating profit was also impacted by a rise in central
overheads which increased from ZMW75 million to ZMW107 million
(USD7.0 million to USD11.3 million).
Interest expense has fallen by 21 per cent. in ZMW (10.2 per
cent. in USD) to ZMW88 million (2016: ZMW111 million) as a result
of lower debt levels, although interest rates were higher for the
first half of the year.
The Group has achieved an Adjusted Profit Before Tax from
continuing operations (after adjusting for unrealised exchange
gains and losses arising from price adjustments in fair value of
biological assets) of ZMW4.5 million (USD0.5 million) compared with
an Adjusted Profit Before Tax of ZMW92.7 million (USD8.6 million)
in the previous year.
The Group's Profit After Tax for the year from continuing
operations was ZMW4.4 million (USD0.5 million) versus a Profit
After Tax of ZMW123.8 million (USD11.4 million) in the prior
year.
Group EBITDA, after adjusting for fair value adjustments and
unrealised exchange gains, has decreased to ZMW173.6 million
(USD18.2 million) versus a prior year comparative of ZMW316.6
million (USD29.2 million).
MACRO ECONOMIC ENVIRONMENT AND EXCHANGE RATES
This past year has been a challenging economic environment.
Post-election in October 2016 the Bank of Zambia put in strict
measures to stabilise the currency, restrict money supply and
reduce inflation. The measures implemented by Bank of Zambia, which
included high interest rates and tight control on the money supply,
impacted consumer spending and put Retail operating margins under
significant pressure in H1. It is pleasing to see that these tough
short-term measures have achieved their goals, with Zambia now back
to single digit inflation, a relatively stable currency and reduced
interest rates.
Inflation started the year at 18.9 per cent. and by year-end had
reduced to 6.6 per cent. The 273 day treasury bills started the
period at 24.9 per cent. but with the stabilisation of the currency
and reduction in inflation the 273 day treasury bill rate has
reduced to 8.5 per cent. at 30 September 2017.
During the year, the ZMW has steadily appreciated against the
USD from 10.01 ZMW/USD at 30 September 2016 to 9.67 ZMW/USD at 30
September 2017. The exchange rates for the last two years are
summarised in the table below:
ZMW/USD
ZMW/USD (2016) (2017)
--------------- --------
Average rate for year 10.83 9.52
--------------- --------
Closing rate at 30 September 10.01 9.67
--------------- --------
The appreciation of the ZMW exchange rate during the year has
resulted in both realised and unrealised exchange gains of ZMW6.7
million (USD0.7 million) being recorded (2016: ZMW58.3 million,
USD5.4 million). It is worth noting that the Group has a natural
currency hedge in that most of its Cropping sales income is USD
denominated.
ADMINISTRATION AND OVERHEAD COSTS
Strong control of administrative and overhead costs has
continued to be a key focus of Management, with total
administrative and overhead costs for the year of ZMW631 million
(2016: ZMW612 million), representing an increase of 3.0 per cent.
in ZMW on the prior year (17.3 per cent. in USD from USD56.5
million to USD66.3 million). These costs, excluding depreciation,
as a percentage of turnover marginally increased from 25.8 per
cent. in 2016 to 25.9 per cent. This is an excellent achievement
when one considers that:
-- Fuel prices increased by 30 per cent. during H1;
-- Electricity costs increased by 50 per cent. in May 2017 as
Zambia moves towards a market-based electricity pricing policy.
However, good rains this year have been positive for power
generation, resulting in a reduction in load shedding;
-- Councils increased levy and slaughter fees by up to 500 per cent.;
-- Toll fees introduced on all major arterial routes.
Within our Retail division, distribution costs, which are a cost
of sale rather than an overhead, increased by 78.3 per cent. on the
prior year to ZMW41.2 million, (USD4.3 million), or 2.9 per cent.
of turnover. (2016: 2 per cent.) reflecting higher diesel fuel and
road toll expenses.
Our largest single cost is wages and salaries which increased in
ZMW by 16 per cent. from ZMW307 million (USD28.4 million) to ZMW357
million (USD37.5 million), which accounts for 56.6 per cent. of
total administration and overhead costs (2016: 50.2 per cent.).
BALANCE SHEET
Total capital employed in the Group has increased to ZMW3,246
million (USD336 million) versus a prior year comparative of
ZMW2,422 million (USD242 million), reflecting capital investment
and an increase of ZMW790 million (USD83 million) in revaluation
reserves following the usual four yearly revaluation of the Group's
fixed assets.
A term loan of USD15 million was drawn down from Deutsche
Investitions- und Entwicklungsgesellschaft ("DEG") on 17 May 2017
to fund capex. This loan is repayable over six years with
semi-annual payments of USD1.25 million starting in March 2018. The
interest rate is six month USD LIBOR plus 5.75 per cent.
During the year term debt totaling USD10.5 million (2016: USD9.4
million) was repaid. Debt capital repayment servicing is expected
to be USD8.0 million in 2018.
Net debt at the year-end was ZMW620 million (USD64.1 million)
versus a prior year comparative of ZMW483 million (USD48.3
million), giving a debt-to-equity ratio of 21.4 per cent. (2016:
25.7 per cent.).
FINANCE COSTS
The finance costs for the Group have decreased by 21 per cent.
in ZMW from ZMW111 million to ZMW88 million (10.2 per cent. in USD
from USD10.3 million to USD9.2 million). This decrease was as a
result of a reduction in net debt versus the previous year
following the investment of USD65 million by CDC Group Plc in
September 2016. The lower gearing was partially offset by an
increase in interest rates during the first half of the year. The
table below shows the movement in the average interest rates
incurred by Zambeef over the year:
Average Rate Average Rate USD : ZMW
(USD) (ZMW) Debt Split
(%)
------------ ------------- ------------- ---------------
March 2015 4.0% 15.6% 77.0% : 23.0%
September
2015 4.4% 16.7% 64.5% : 35.5%
March 2016 6.5% 28.1% 59.8% : 40.2%
September
2016 6.6% 27.6% 82.1% : 17.9%
March 2017 7.0% 24.1% 62.3% : 37.7%
September 67.4% : 32.6%
2017 6.3% 17.0%
------------ ------------- ------------- ---------------
Finance expenses are expected to reduce during 2018.
CAPITAL EXPITURE
Total capital expenditure during the year was ZMW209 million or
USD22 million (2016: ZMW179 million or USD16.5 million).
Capital expenditure incurred during the year included:
-- USD4.2 million on the rollout of 10 new Zambeef Macro outlets
plus the acquisition of seven new sites;
-- USD2.3 million on the new Kalundu Dairy rotary milking
parlour and upgrades to milk processing plant;
-- USD1.0 million on the new Mpongwe stock feed plant;
-- USD2.2 million on the expansion of the Zamhatch hatchery and breeder farm;
-- USD0.8 million on the expansion of the Zam Chick processing plant;
-- USD1.0 million on the expansion of added value foods processing plant at Masterpork;
-- USD0.7 million on the new Kitwe Processing Plant;
-- USD1.9 million on the Zampalm palm project;
-- USD3.2 million for Cropping division replacement capex;
-- USD0.4 million in E&S capex;
-- USD4.4 million in other replacement capex.
The capex budget for FY2018 is approximately USD14.5 million,
with the main focus being on investments which are expected to be
cash generative.
DIVISIONAL PERFORMANCE
In order to give more clarity into the performance of the key
activities of Zambeef, the results for the key business divisions
are now being reported to EBIT level. The directors have elected to
consolidate the reporting of the Retail and Cold Chain Food
Products divisions, given that in the year 78 per cent. of the CCFP
division's sales were made on an inter-company basis to the Zambeef
Retail division.
Tables 1 and 2 below provide a summary of the performance of the
key business units:
Table 1: Segmental financial summary in ZMW'000s
Division Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
ZMW'000 ZMW'000 2017 2016 ZMW'000 ZMW'000 ZMW'000 ZMW'000
ZMW'000 ZMW'000
------------------- ---------- ---------- --------- --------- ---------- ---------- ---------- ---------
Total Retailing 1,604,958 1,348,059
CCFP 1,242,477 1,134,693
less interco (964,480) (961,533)
---------- ----------
Combined Retail
& CCFP 1,882,955 1,521,219 470,417 447,779 (337,692) (362,524) 86,831 49,041
Stock Feed 662,068 697,563 166,884 143,916 (50,300) (46,766) 113,613 94,377
Cropping 505,738 413,391 134,556 251,860 (118,152) (112,244) 14,303 106,833
Others 161,387 213,964 26,774 32,391 (15,014) (13,168) 10,958 18,519
Total 3,212,148 2,846,137 798,631 875,946 (521,158) (534,702) 197,099 268,770
Less: Intra/Inter
Group Sales (776,966) (469,989)
Central Overhead (107,520) (75,867) (110,446) (81,177)
Group Total 2,435,182 2,376,148 798,631 875,946 (628,678) (610,569) 86,653 187,593
------------------- ---------- ---------- --------- --------- ---------- ---------- ---------- ---------
Table 2: Segmental financial summary in USD'000s
Division Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
USD'000 USD'000 2017 2016 USD'000 USD'000 USD'000 USD'000
USD'000 USD'000
------------------- ----------- ---------- --------- --------- ---------- ---------- --------- ---------
Total Retailing 168,588 124,475
CCFP 130,512 104,773
less interco (101,311) (88,784)
----------- ----------
Combined Retail
& CCFP 197,789 140,463 49,414 41,346 (35,472) (33,474) 9,121 4,528
Stock Feed 69,545 64,410 17,530 13,289 (5,284) (4,318) 11,934 8,714
Cropping 53,124 38,171 14,134 23,256 (12,411) (10,364) (1,502) 9,865
Others 16,952 19,757 2,812 2,991 (1,577) (1,216) 1,151 1,710
Total 337,411 262,801 83,890 80,881 (54,743) (49,372) 20,704 24,817
Less: Intra/Inter
Group Sales (81,614) (43,397) - - - - - -
Central Overhead - - - - (11,294) (7,005) (11,601) (7,496)
Group Total 255,796 219,404 83,890 80,881 (66,038) (56,378) 9,102 17,322
------------------- ----------- ---------- --------- --------- ---------- ---------- --------- ---------
RETURN ON CAPITAL EMPLOYED:
The directors are presenting for the first time the return on
capital employed for each of the Group's major activities.
(Note: Directors unable to accurately allocate interest expense
to each division as borrowings are centrally managed and held).
CAPITAL OPERATING OPERATING CAPITAL OPERATING OPERATING
EMPLOYED PROFIT PROFIT EMPLOYED PROFIT PROFIT
ZMW'000 ZMW'000 % USD'000 USD'000 %
ZMW'000 USD'000
-------------- ---------- ---------- ---------- ---------- ---------- ----------
RETAIL
& CCFP 1,053,014 86,831 4.61% 108,895 9,121 4.61%
-------------- ---------- ---------- ---------- ---------- ---------- ----------
CROPPING 1,603,704 (14,303) (2.83)% 165,843 (1,502) (2.83)%
-------------- ---------- ---------- ---------- ---------- ---------- ----------
STOCK FEED 264,109 113,613 17.16% 27,312 11,934 17.16%
-------------- ---------- ---------- ---------- ---------- ---------- ----------
OTHER 75,949 10,958 6.79% 7,854 1,151 6.79%
-------------- ---------- ---------- ---------- ---------- ---------- ----------
GROUP 2,996,776 197,099 7.89% 309,904 20,704 7.89%
-------------- ---------- ---------- ---------- ---------- ---------- ----------
DISCONTINUED 220,099 (1,133) (4.76)% 22,761 (119) (4.76)%
-------------- ---------- ---------- ---------- ---------- ---------- ----------
DIVISIONAL REVIEW
Taking each of our key business areas in turn as follows:
RETAIL AND COLD CHAIN FOOD PRODUCTS
Division Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
ZMW'000 ZMW'000 2017 2016 ZMW'000 ZMW'000 ZMW'000 ZMW'000
ZMW'000 ZMW'000
----------- ------------- -------------- ------------- ---------- ------------ ------------ ------------- ------------
Retailing
Zambia 1,440,784 1,131,524
Retailing
West
Africa 164,174 216,535
Total
Retailing 1,604,958 1,348,059
CCFP 1,242,477 1,134,693
less
interco (964,480) (961,533)
------------- --------------
Combined
Retail
& CCFP 1,882,955 1,521,219 470,417 447,779 (337,692) (362,524) 86,831 49,041
----------- ------------- -------------- ------------- ---------- ------------ ------------ ------------- ------------
Division Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
USD'000 USD'000 2017 2016 USD'000 USD'000 USD'000 USD'000
USD'000 USD'000
----------- -------------- ---------------- ----------------- -------------- --------------- -------------- -------------- --------
Retailing
Zambia 151,343 104,481
Retailing
West
Africa 17,245 19,994
Total
Retailing 168,588 124,475
CCFP 130,512 104,773
less
interco (101,311) (88,784) -
-------------- ---------------- ----------------- -------------- --------------- -------------- -------------- --------
Combined
Retail
& CCFP 197,789 140,463 49,414 41,346 (35,472) (33,474) 9,121 4,528
----------- -------------- ---------------- ----------------- -------------- --------------- -------------- -------------- --------
RETAIL AND COLD CHAIN FOOD PRODUCTS - SUMMARY FINANCIAL
PERFORMANCE
Net sales in the combined Retail and Cold Chain Food Products
divisions increased by 23.8 per cent. in ZMW and 40.8 per cent. in
USD. Gross profit grew by 5.1 per cent. in ZMW and 19.5 per cent.
in USD. Growth in gross profit was impacted principally because of
a slowdown in consumer spending in the first half of the year as
the Bank of Zambia tightened money supply and raised interest rates
to stabilise the economy, operational difficulties in our dairy
unit (now resolved) and higher transport and electricity costs
which in turn impacted cost of sales, resulting in the Retail &
CCFP margin falling by 6.1 per cent. in the first half from 29.4
per cent. to 23.3 per cent. The Retail & CCFP margin improved
in the second half to 26.8 per cent., to give an average margin for
the year of 25.0 per cent. (prior year 29.4 per cent.).
Notwithstanding these challenges, operating profit in this division
increased in ZMW by 77.1 per cent. (101.4 per cent. in USD from
USD4.5 million to USD9.1 million).
EBITDA in ZMW increased 56 per cent., from ZMW85 million to
ZMW133 million, whilst in USD, it increased by 77.1 per cent., from
USD7.9 million to USD13.9 million. The business has generated a
satisfactory EBITDA margin of 7.0 per cent. (2016: 5.6 per cent.),
which is broadly in line with EBITDA margins seen across the
unbranded cold chain foods sector.
Further details of the Cold Chain Food Products business are set
out in the analysis of the performance of each product line.
RETAIL AND DISTRIBUTION
ZAMBIA:
The Retail business has grown strongly during the period, with
revenue up 27.3 per cent. in ZMW (44.9 per cent. in USD). Like for
like sales in Zambeef Macro and retail stores increased by 18.2 per
cent. in ZMW (34.4 per cent. in USD), but this was partially offset
by a 5.7 per cent. fall in ZMW in like for like sales (but an
increase in USD of 7.3 per cent.) through the Shoprite concessions,
reflecting increased competition in the premium retail sector from
new retail chains and the opening of a number of new retail malls
in Lusaka. Gross profit increased in ZMW by 23.8 per cent. from
ZMW133 million to ZMW164 million.
Zambeef has opened 10 new Macro stores in Zambia (of which seven
opened in H2), adding circa 4,950 sq. m of retail space to bring
Zambeef's own retail footprint at year-end to circa 22,740 sq. m
from 130 outlets across Zambia, and adding ZMW58 million (USD6.1
million) in new sales.
Shoprite is Africa's leading supermarket chain with whom Zambeef
holds a concession agreement to operate in-store meat butchery
counters in Zambia and West Africa. During the year, Shoprite
opened four new stores in Zambia (to total 31 after closing two
stores and closing one temporarily following a fire), all with
Zambeef concessions within.
WEST AFRICA:
Sales in West Africa fell by 13.7 per cent. in USD, reflecting
challenging economic conditions in Nigeria and the temporary
closure for refurbishment of the Accra Mall store in Ghana.
Although the Nigerian operations' turnover increased in Naira by
21.3 per cent., the average Naira/USD exchange rate depreciated by
41.6 per cent., from 225.0 Naira/USD to 318.7 Naira/USD. Gross
profit in USD fell 24.1 per cent., from USD4.5 million to USD3.4
million. Margins remain unsatisfactory and we are exploring a
number of options to improve performance.
During the year, Shoprite opened three new stores in Nigeria (to
total 23) and one in Ghana (to total six), all with Zambeef
concessions within.
COLD CHAIN FOOD PRODUCTS (CCFP)
The CCFP operations include beef, chicken, pork, fish, dairy and
egg production and processing activities which primarily supply the
Zambeef and Shoprite retail chains. Whilst sales across all product
lines have grown strongly during the period, with turnover
increasing by 9.5 per cent. in ZMW (24.6 per cent. in USD), a
slowdown in consumer spending and operational difficulties in our
dairy unit in H1 with low fertility (now resolved) resulted in CCFP
gross margins falling from 23.4 per cent. to 22.0 per cent.
The Cold Chain Food Products performance is analysed in more
detail below.
a) Beef (Zambeef)
Volumes in the beef category increased by 2.2 per cent. from
16.4 million kg to 16.8 million kg, and cattle slaughtered
increased from 69,848 to 78,223 head. Revenue decreased by 2.5 per
cent., reflecting the general fall in cattle prices. Beef margins
improved with gross margin increasing from 22.8 per cent. to 24.9
per cent., principally because of a decline in cattle value. Gross
profit increased by 6.8 per cent. in ZMW, from ZMW97 million to
ZMW104 million. Beef remains the largest product line within the
Cold Chain Food Product operations, accounting for 33.5 per cent.
of turnover (2016: 37.6 per cent.).
b) Chicken (Zam Chick and Zamhatch)
Turnover of our poultry business increased by a satisfactory 4.3
per cent. in ZMW over the prior year. The Zam Chick and Zamhatch
operations account for 23.9 per cent. of turnover of the Cold Chain
Food Products division, making it the second biggest part of the
CCFP operations. Overall gross margins were stable at 22.1 per
cent. (2016: 22.1 per cent.) as we maintained domestic and export
volumes despite the strengthening of the ZMW. Gross profit
increased in ZMW by 4.2 per cent., from ZMW63 million to ZMW66
million.
Zam Chick processed volumes increased by 9.2 per cent., from
10.7 million kg of chicken to 11.7 million kg. Zamhatch increased
day-old chick volumes by 26.8 per cent., from 9.9 million day-old
chicks to 12.6 million during the year.
During the year, we invested USD3.1 million in:
-- Additional broiler breeder rearing and laying housing and
additional hatchery setters to increase day old chick production
from 210,000 per week to 340,000 per week during the second half of
the year;
-- Increasing the Huntley broiler slaughter and processing
capacity by 30,000 birds per week, totalling 170,000 birds per week
from June 2017.
The full benefits of these capacity improvements are expected to
flow through into the CCFP business in FY2018.
c) Pork (Masterpork)
Masterpork has shown strong growth with volumes increasing by
8.2 per cent., from 10.0 million kg to 10.8 million kg. Turnover
increased by 14.0 per cent. in ZMW while gross profit increased by
58.8 per cent., from ZMW23 million to ZMW37 million. It was
pleasing see gross margins in Masterpork improve from 10.9 per
cent. to 15.2 per cent., although still below the divisional
average margin. We will continue to seek to introduce added value
products within the pork category.
Masterpork accounts for 19.6 per cent. of the Cold Chain Food
Products turnover, making it the third largest product line within
the Cold Chain Food Products division.
d) Milk and dairy (Zammilk)
The milk products business has also shown strong growth, with
turnover in ZMW up 37.4 per cent. and sales volumes up 35.5 per
cent., from 14.8 million litres to 20.0 million litres. Despite
this strong volume growth, poor fertility in our Kalundu Dairy unit
led to a drop in milk output in H1, and a rise in the cost of goods
as cows were culled and liquid milk was acquired from third parties
to replace the shortfall in our own volumes. This has resulted in
gross profits in ZMW falling by 11.2 per cent., from ZMW56 million
to ZMW49 million. Gross margin in the first half declined from 45.1
per cent. to 18.4 per cent. Following a change of management in
February 2017, milk output and culling rates at Kalundu Dairy have
normalised, and gross margin in the second half of the year
recovered to 38.9 per cent. versus 43.5 per cent. in the prior
year. Zammilk accounts for 13.9 per cent. (2016: 11.1 per cent.) of
the Cold Chain Food Products turnover.
Capital expenditure of USD2.1 million during the past year
includes the building of a new rotary milking parlor at Kalundu
Dairy as part of the continued growth of the milk production from
Zambeef's own dairy herd, and investment in extra processing
capacity at the Huntley facilities, enabling us to widen the range
of branded value-added yoghurt and drinking yoghurt lines
produced.
e) Fish
Fish is gaining popularity as a cheap source of protein. Volumes
grew by 57.5 per cent. from 1.8 million kg to 2.9 million kg.
Changes in product mix resulted in a 15.1 per cent. increase in ZMW
turnover, but a 24.7 per cent. decline in gross profit
contribution, from ZMW14 million to ZMW11 million. Fish accounts
for only 4.5 per cent. of turnover within the Cold Chain Food
Products division. It is pleasing to see increasing supplies of
locally produced tilapia becoming available.
f) Eggs (Zamegg)
The egg operations, trading under the brand name Zamegg,
increased volumes by 73.4 per cent. to 70 million eggs. Gross
profit in ZMW decreased by 45.9 per cent., from ZMW13 million to
ZMW7 million with egg prices coming down sharply in H1 due to the
difficulties in Katanga Province of DRC. This resulted in large
volumes of eggs, which are normally exported into DRC, being dumped
in Zambia. Eggs account for only 4.6 per cent. of turnover within
the Cold Chain Food Products division.
STOCK FEED (NOVATEK)
Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
ZMW'000 ZMW'000 2017 2016 ZMW'000 ZMW'000 ZMW'000 ZMW'000
ZMW'000 ZMW'000
--------- --------- --------- --------- ---------- ---------- --------- ---------
662,068 697,563 166,884 143,916 (50,300) (46,766) 113,613 94,377
--------- --------- --------- --------- ---------- ---------- --------- ---------
Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
USD'000 USD'000 2017 2016 USD'000 USD'000 USD'000 USD'000
USD'000 USD'000
--------- --------- --------- --------- ---------- ---------- --------- ---------
69,545 64,410 17,530 13,289 (5,284) (4,318) 11,934 8,714
--------- --------- --------- --------- ---------- ---------- --------- ---------
Novatek has had a record year, maintaining its market share and
market leadership, with volumes increasing by 3.6 per cent. from
150,280 M.T. to 155,752 M.T. Our existing Lusaka mill has been
operating at full capacity throughout the year. Unfortunately, the
new Mpongwe mill only commenced operations in August 2017, some
four months later than budgeted due to delays in sub-contract
installation works, and therefore has only produced circa 1,600
M.T. in FY2017. Whilst margins in H1 were adversely impacted by the
fall in feed prices as competitors sought to liquidate high priced
2016 old crop stocks of raw materials ahead of the new crop harvest
in April/May 2017, margins recovered strongly in H2 as cheaper soya
and maize raw material became available. Gross margin improved from
20.6 per cent. to 25.2 per cent. Operating profit has increased by
20.4 per cent. in ZMW from ZMW94 million to ZMW113 million (36.9
per cent. in USD from USD8.7 million to USD11.9 million).
The new Mpongwe mill will provide an additional 120,000 M.T. of
annual production capacity and is well placed to supply the
Copperbelt Province, the North Western Province and the DRC
markets, enabling Novatek and its customers to benefit from savings
in transport costs. Novatek continues to explore new markets in the
region and is now exporting to Zimbabwe, Angola, DRC, Rwanda,
Kenya, Malawi and Mozambique.
Capital investment of USD2.9 million will be incurred at Mpongwe
mill in FY2018 to increase bagged storage capacity and employee
housing facilities and to improve road access.
CROPPING
Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
ZMW'000 ZMW'000 2017 2016 ZMW'000 ZMW'000 ZMW'000 ZMW'000
ZMW'000 ZMW'000
-------- -------- -------- -------- --------- --------- -------- --------
505,738 413,391 134,556 251,860 (118,152) (112,244) (14,303) 106,833
-------- -------- -------- -------- --------- --------- -------- --------
Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
USD'000 USD'000 2017 2016 USD'000 USD'000 USD'000 USD'000
USD'000 USD'000
-------- -------- -------- -------- --------- --------- -------- --------
53,124 38,171 14,134 23,256 (12,411) (10,364) (1,502) 9,865
-------- -------- -------- -------- --------- --------- -------- --------
The Cropping division planted a summer crop of 12,005 Ha of
soya, 2,416 Ha of maize and 500 Ha of silage, and a winter crop of
6,263 Ha of wheat, 997 Ha of winter maize, 78 Ha of seed maize and
193 Ha of Lucerne. The summer farming operations performed well
with a record yield of soya crop averaging 3.57 M.T./Ha. The
division has harvested 42,833 M.T. of soya, (2016: 39,942 M.T.)
22,172 M.T. of summer maize (2016:15,532 M.T.), and 24,073 M.T. of
maize silage (2016: 27,334 M.T.). Winter wheat yields were 10.2 per
cent. below budget at 6.8 M.T./Ha due to a fungal disease known as
Septoria, which appears to have been more virulent this year
despite implementation of our usual fungicide control programme.
Wheat production was 41,750 M.T., winter maize production was 8,455
M.T., seed maize production was 306 M.T. and Lucerne production was
640 M.T.
This has been a tough year for our Cropping division, with gross
profit declining by ZMW117 million (USD9.1 million) from ZMW252
million to ZMW135 million (USD23.2 million to USD14.1 million) from
factors largely outside of Management's control. Firstly, global
and local commodity prices declined sharply following a significant
build-up of stocks in most major production areas, with
international soya and maize prices touching seven year lows.
Zambian soya prices dropped from USD530/M.T. at the end of March
2016 to USD360/M.T. by September 2017, and regional maize prices
fell from USD225/M.T. in April 2016 to USD125/M.T. by September
2017. It should be noted that the Zambian forward market is
generally illiquid, making forward hedge sales very difficult.
Secondly, costs of sales and distribution costs were impacted by
circa USD1.8 million from a 30 per cent. increase in diesel fuel
prices during the first half of the year, and a 50 per cent.
increase in electricity costs in May 2017. Thirdly, the division
experienced a shortfall in budgeted wheat yields which were 10.2
per cent. below budget due to a fungal disease, Septoria, which
appears to have been more virulent this year despite implementation
of our usual fungicide control programme. Fourthly, the business
experienced a shortfall in the realisations from the 2016 year-end
biological valuation.
Overhead expenses increased by 5.7 per cent. in ZMW, from ZMW112
million to ZMW118 million (19.7 per cent. in USD, from USD10.4
million to USD12.4 million), principally because of the
strengthening of the ZMW. Replacement capital expenditure of USD3.1
million was incurred during the year.
Zambeef's Mpongwe farming and irrigation assets are of the
highest quality, enabling relatively consistent high yields to be
achieved. During the year the directors of Zambeef took the
decision to explore strategic options for the Chiawa and Sinazongwe
farms, both of which have amenity value and climates which could
permit alternative crops to be produced. Chiawa also has a valuable
2,289 Ha game conservation area and corridor. Options being
considered include sale and leaseback, joint venture share farming
and disposal, all with a view to reducing the overall level of long
term capital employed within our Cropping Division.
OTHER BUSINESSES
Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
ZMW'000 ZMW'000 2017 2016 ZMW'000 ZMW'000 ZMW'000 ZMW'000
ZMW'000 ZMW'000
--------- --------- --------- --------- ---------- ---------- --------- ---------
161,387 213,964 26,774 32,391 (15,014) (13,168) 10,958 18,519
--------- --------- --------- --------- ---------- ---------- --------- ---------
Revenue Revenue Gross Gross Overheads Overheads EBIT EBIT
2017 2016 Profit Profit 2017 2016 2017 2016
USD'000 USD'000 2017 2016 USD'000 USD'000 USD'000 USD'000
USD'000 USD'000
--------- --------- --------- --------- ---------- ---------- --------- ---------
16,952 19,757 2,812 2,991 (1,577) (1,216) 1,151 1,710
--------- --------- --------- --------- ---------- ---------- --------- ---------
Flour milling: The milling operations have performed well, with
flour sale volumes increasing by 22.2 per cent. as we made the
decision to increase throughput in our milling operations by
selling more flour through our retail network. This strategy has
worked well, with retail sales in Zambeef's own retail network
increasing by 189 per cent., and representing 43 per cent. of
overall flour sales (2016: 18 per cent.). Operating profit improved
from ZMW15 million to ZMW18 million. Following refurbishment of one
of the flour lines in FY2017, the aim is to increase flour sales
further in 2018 by continuing to drive sales through Zambeef's
expanding retail network.
Zamleather: This division has had a difficult year, with world
hide prices dropping and the market for lower grade hides being
very sluggish. The number of hides processed increased by 4.3 per
cent. to 101,706 hides from 97,533 last year. In addition, shoe
sales increased by 10.8 per cent. from 67,746 pairs to 75,076
pairs. Gross profit in ZMW fell by 21.2 per cent. and operating
profit fell from ZMW1 million to an operating loss of ZMW6
million.
Edible oil: Following the sale of Zambeef's edible oil operation
Zamanita Ltd to Cargill in 2015, Zambeef has continued to retail
edible oil through its retail network. These sales have increased
during the year. However, the majority of the oil is now delivered
directly into the Retail network by Cargill, hence is reflected in
the Retail division,
DISCONTINUED ACTIVITIES
Zampalm: In line with Group strategy of disposing of non-core
activities, an agreement was signed on 6 September 2017 to sell 90
per cent. of the Group's equity in Zampalm Limited to the
Industrial Development Corporation of Zambia ("IDC"). This disposal
is expected to complete by February 2018 for a cash consideration
of USD16 million, with a further performance amount of up to
USD2million being payable by IDC, dependent on the achievement of
certain performance milestones over the three years 2018 to 2020.
Proceeds from the disposal will be used to reduce debt and further
strengthen the Zambeef balance sheet.
Discontinued trading losses of ZMW1.1 million (USD0.1 million)
arose during the year as 2012 planted palm started to come into
production. Any gain or loss, if any, against the carrying value
will be recognised in fiscal 2018 once the transaction has
completed.
Going forward Zambeef's 10per cent. equity interest in Zampalm,
will be treated as an investment in an associate. Zambeef will not
be required under its shareholder agreement with IDC to provide any
further funding for Zampalm. We are pleased that Zambeef has been
appointed by IDC to manage the Zampalm plantation on its behalf for
an initial term of three years, during which time we will be
assisting IDC with the launch of a smallholder out-grower
scheme.
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 SEPTEMBER 2017
Group Notes 2017 2017 2016 2016
ZMW'000s USD'000s ZMW'000s USD'000s
------------------------------ ------ ------------ ---------- ------------ ----------
Revenue 5 2,435,182 255,796 2,376,148 219,404
------------------------------ ------ ------------ ---------- ------------ ----------
Net gain/(loss) arising
from price changes
in fair value of biological
assets 16 (3,491) (367) 13,257 1,224
------------------------------ ------ ------------ ---------- ------------ ----------
Cost of sales (1,633,060) (171,540) (1,513,459) (139,747)
------------------------------ ------ ------------ ---------- ------------ ----------
Gross profit 798,631 83,889 875,946 80,881
------------------------------ ------ ------------ ---------- ------------ ----------
Administrative expenses (714,746) (75,078) (690,047) (63,716)
------------------------------ ------ ------------ ---------- ------------ ----------
Other income 6 2,768 291 1,694 156
------------------------------ ------ ------------ ---------- ------------ ----------
Operating profit 7 86,653 9,102 187,593 17,321
------------------------------ ------ ------------ ---------- ------------ ----------
Exchange gains/(losses)
on translating foreign
currency transactions
and balances 6,701 704 58,345 5,387
------------------------------ ------ ------------ ---------- ------------ ----------
Finance costs 9 (87,904) (9,234) (111,346) (10,281)
------------------------------ ------ ------------ ---------- ------------ ----------
Profit before taxation 5,450 572 134,592 12,427
------------------------------ ------ ------------ ---------- ------------ ----------
Taxation charge 10 (1,049) (110) (10,798) (997)
------------------------------ ------ ------------ ---------- ------------ ----------
Group income for the
year from continuing
operations 4,401 462 123,794 11,430
------------------------------ ------ ------------ ---------- ------------ ----------
Profit/(loss) from
discontinued operations 33 (1,133) (119) 33,592 3,101
------------------------------ ------ ------------ ---------- ------------ ----------
Group income/(loss)
for the year 3,268 343 157,386 14,531
------------------------------ ------ ------------ ---------- ------------ ----------
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 SEPTEMBER 2017 (CONTINUED)
Notes 2017 2017 2016 2016
ZMW'000s USD'000s ZMW'000s USD'000s
ZMW'000s USD'000s ZMW'000s USD'000s
-------------------------------- ------ ---------- ---------- ---------- ----------
Group income/(loss)
attributable to:
-------------------------------- ------ ---------- ---------- ---------- ----------
Equity holders of
the parent 4,037 424 137,103 12,659
-------------------------------- ------ ---------- ---------- ---------- ----------
Non-controlling interest (769) (81) 20,283 1,872
-------------------------------- ------ ---------- ---------- ---------- ----------
3,268 343 157,386 14,531
-------------------------------- ------ ---------- ---------- ---------- ----------
Other comprehensive
income:
-------------------------------- ------ ---------- ---------- ---------- ----------
Exchange (losses)/gains
on translating presentational
currency (31,190) 4,243 (86,511) 16,909
-------------------------------- ------ ---------- ---------- ---------- ----------
Total comprehensive
(loss)/ income for
the year (27,922) 4,586 70,875 31,440
-------------------------------- ------ ---------- ---------- ---------- ----------
Total comprehensive
(loss)/ income for
the year attributable
to:
-------------------------------- ------ ---------- ---------- ---------- ----------
Equity holders of
the parent (27,257) 4,681 52,292 29,473
-------------------------------- ------ ---------- ---------- ---------- ----------
Non-controlling interest (665) (95) 18,583 1,967
-------------------------------- ------ ---------- ---------- ---------- ----------
(27,922) 4,586 70,875 31,440
-------------------------------- ------ ---------- ---------- ---------- ----------
Ngwee Cents Ngwee Cents
-------------------------------- ------ ---------- ---------- ---------- ----------
Earnings per share
-------------------------------- ------ ---------- ---------- ---------- ----------
Basic earnings per
share - continued
operations 12 1.72 0.18 41.38 3.82
-------------------------------- ------ ---------- ---------- ---------- ----------
Basic earnings per
share - discontinued
operations 12 (0.38) (0.04) 13.42 1.24
-------------------------------- ------ ---------- ---------- ---------- ----------
Total Basic earnings
per share 12 1.34 0.14 54.80 5.06
-------------------------------- ------ ---------- ---------- ---------- ----------
Diluted earnings per
share - continued
operations 12 1.72 0.18 40.70 3.76
-------------------------------- ------ ---------- ---------- ---------- ----------
Diluted earnings per
share - discontinued
operations 12 (0.38) (0.04) 13.21 1.22
-------------------------------- ------ ---------- ---------- ---------- ----------
Total diluted earnings
per share 12 1.34 0.14 53.91 4.98
-------------------------------- ------ ---------- ---------- ---------- ----------
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2017
(i) In
Zambian Total
Kwacha Foreign attributable Non-
Issued Preference exchange Revaluation Retained to owners controlling
share Share share reserve reserve earnings of the interest Total
capital premium capital ZMW'000s ZMW'000s ZMW'000s parent ZMW'000s equity
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
At 1 October
2015 2,480 506,277 - 188,332 504,671 239,449 1,441,209 34,083 1,475,292
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Profit
for the
year - - - - - 137,103 137,103 20,283 157,386
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Transfer
of surplus
depreciation - - - - (18,906) 18,906 - - -
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Other
comprehensive
income:
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Exchange
losses
on translating
presentational
currency - - - (84,811) (84,811) (1,700) (86,511)
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Total
comprehensive
income - - - (84,811) (18,906) 156,009 52,292 18,583 70,875
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Transactions
with owners
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Non-controlling
interest
shares
acquired - - - - - 22,177 22,177 (60,282) (38,105)
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Shares
issued 526 618,735 1,000 620,261 - 620,261
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Total
Transactions
with owners 526 618,735 1,000 - - 22,177 642,438 (60,282) 582,156
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
At 30 September
2016 3,006 1,125,012 1,000 103,521 485,765 417,635 2,135,939 (7,616) 2,128,323
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Profit
for the
year - - - - - 4,037 4,037 (769) 3,268
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Transfer
of surplus
depreciation - - - - (23,418) 23,418 - - -
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Other
comprehensive
income:
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Exchange
(loss)/gain
on translating
presentational
currency - - - (31,294) - - (31,294) 104 (31,190)
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Revaluation - - - - 789,795 - 789,795 - 789795
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
Total
comprehensive
income - - - (31,294) 766,377 27,455 762,538 (665) 761,873
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
At 30 September
2017 3,006 1,125,012 1,000 72,227 1,252,142 445,090 2,898,477 (8,281) 2,890,196
----------------- ---------- ---------- ----------- ---------- ------------- ---------- ------------- ------------- ----------
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2017 (CONTINUED)
(ii) In US Total
Dollar attributable
Foreign to owners Non-
Issued Preference Share exchange Revaluation Retained of the controlling
share share premium reserve reserve earnings parent interest Total
capital capital USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s equity
USD'000s USD'000s USD'000s
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
At 1 October
2015 396 - 123,283 (161,712) 100,509 57,424 119,900 2,836 122,736
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Profit for
the year 12,659 12,659 1,872 14,531
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Transfer
of surplus
depreciation - - - - (1,746) 1,746 - - -
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Other
comprehensive
income:
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Exchange
gains on
translating
presentational
currency - - - 16,813 16,813 96 16,909
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Total
comprehensive
income - - - 16,813 (1,746) 14,404 29,472 1,968 31,440
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Transactions
with owners
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Non-controlling
interest
shares acquired 2,047 2,047 (5,565) (3,518)
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Shares issued 53 100 61,812 - - - 61,965 - 61,965
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Total
Transactions
with owners 53 100 61,812 - - 2,047 64,012 (5,565) 58,447
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
At 30 September
2016 449 100 185,095 (144,901) 98,763 73,875 213,384 (761) 212,623
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Profit for
the year - - - - - 424 424 (81) 343
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Transfer
of surplus
depreciation - - - - (2,460) 2,460 - - -
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Other
comprehensive
income:
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Exchange
gains/ (losses)
on translating
presentational
currency - - - 4,257 - - 4,257 (14) 4,243
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Revaluation - - - - 81,675 - 81,675 - 81,675
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
Total
comprehensive
income - - - 4,257 79,215 2,884 86,356 (95) 86,261
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
At 30 September
2017 449 100 185,095 (140,644) 177,978 76,759 299,740 (856) 298,884
----------------- ---------- ----------- ---------- ---------- ------------- ---------- ------------- ------------- ----------
ZAMBEEF PRODUCTS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2017
(i) In Zambian Issued Preference Revaluation Retained
Kwacha share share Share reserve earnings
capital capital premium ZMW'000s ZMW'000s Total equity
ZMW'000s ZMW'000s ZMW'000s ZMW'000s
----------------------- ---------- ---------- --------- ------------ ---------- -------------
At 1 October
2015 2,480 - 506,277 297,712 469,967 1,276,436
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Profit for
the year - - - - 91,377 91,377
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Transfer of
surplus depreciation - - - (16,731) 16,731 -
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Other comprehensive
income
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Exchange gains
on translating
presentational
currency - - - - (73,394) (73,394)
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Total comprehensive
income - - - (16,731) 34,714 17,983
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Shares issued 526 1,000 618,735 - - 620,261
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Total transactions
with owners 526 1,000 618,735 - - 620,261
----------------------- ---------- ---------- --------- ------------ ---------- -------------
At 30 September
2016 3,006 1,000 1,125,012 280,981 504,681 1,914,680
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Profit for
the year - - - - 24,003 24,003
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Transfer of
surplus depreciation - - - (14,605) 14,605 -
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Other comprehensive
income:
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Surplus on
revaluation - - - 651,521 - 651,521
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Exchange gains
on translating
presentational
currency - - - - (31,682) (31,682)
----------------------- ---------- ---------- --------- ------------ ---------- -------------
Total comprehensive
income - - - 636,916 6,926 643,842
----------------------- ---------- ---------- --------- ------------ ---------- -------------
At 30 September
2017 3,006 1,000 1,125,012 917,897 511,607 2,558,522
----------------------- ---------- ---------- --------- ------------ ---------- -------------
ZAMBEEF PRODUCTS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2017 (CONTINUED)
(ii) In US Foreign
Dollar Issued Preference Share Revaluation exchange Retained
share share premium reserve reserve earnings Total
capital capital USD'000s USD'000s USD'000s USD'000s equity
USD'000s USD'000s USD'000s
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
At 1 October
2015 396 - 123,283 56,533 (137,414) 63,394 106,192
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Profit for
the year - - - - - 8,439 8,439
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Transfer of
surplus depreciation - - - (2,370) 2,370 -
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Other comprehensive
income:
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Exchange losses
on translating
presentational
currency - - - - 14,708 - 14,708
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Total comprehensive
income - - - (2,370) 14,708 10,809 23,147
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Transactions
with owners
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Shares issued 53 100 61,812 - - - 61,965
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Total transactions
with owners 53 100 61,812 - - - 61,965
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
At 30 September
2016 449 100 185,095 54,163 (122,706) 74,203 191,304
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Profit for
the year - - - - - 2,522 2,522
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Transfer of
surplus depreciation - - - - -
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Other comprehensive
income:
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Surplus on
revaluation - - - 68,437 - - 68,437
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Exchange losses
on translating
presentational
currency - - - - 2,321 - 2,321
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
Total comprehensive
income - - - 68,437 2,321 2,522 73,280
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
At 30 September
2017 449 100 185,095 122,600 (120,385) 76,725 264,584
----------------------- ----------- ------------ ----------- -------------- ---------- ----------- -----------
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION -- 30 SEPTEMBER
2017
ASSETS Note 2017 2017 2016 2016
ZMW'000s USD'000s ZMW'000s USD'000s
------------------------------- ------ ---------- ---------- ---------- ----------
Non-current assets
---------------------------------------------------------------------------------------
Goodwill 13 166,801 17,249 157,922 15,776
------------------------------- ------ ---------- ---------- ---------- ----------
Property, plant and equipment 14 2.610,488 269,958 1,769,966 176,820
------------------------------- ------ ---------- ---------- ---------- ----------
Plantation development
expenditure 14 - - 94,302 9,421
------------------------------- ------ ---------- ---------- ---------- ----------
Assets held for disposal 33 221,087 22,863
------------------------------- ------ ---------- ---------- ---------- ----------
Biological assets 16 - - 48,480 4,843
------------------------------- ------ ---------- ---------- ---------- ----------
Deferred tax asset 10(e) 43,368 4,485 28,366 2,834
------------------------------- ------ ---------- ---------- ---------- ----------
3,041,745 314,555 2,099,036 209,694
------------------------------- ------ ---------- ---------- ---------- ----------
Current assets
------------------------------- ------ ---------- ---------- ---------- ----------
Biological assets 16 167,857 17,359 187,026 18,684
------------------------------- ------ ---------- ---------- ---------- ----------
Inventories 17 516,418 53,404 544,739 54,419
------------------------------- ------ ---------- ---------- ---------- ----------
Trade and other receivables 18 90,792 9,390 113,151 11,304
------------------------------- ------ ---------- ---------- ---------- ----------
Assets held for disposal 33 91 9 - -
------------------------------- ------ ---------- ---------- ---------- ----------
Amounts due from related
companies 19 11,422 1,181 10,543 1,053
------------------------------- ------ ---------- ---------- ---------- ----------
Income tax recoverable 10(c) 1,376 142 1,759 176
------------------------------- ------ ---------- ---------- ---------- ----------
Cash and cash equivalents 20 - - 64,806 6,474
------------------------------- ------ ---------- ---------- ---------- ----------
787,956 81,485 922,024 92,110
------------------------------- ------ ---------- ---------- ---------- ----------
Total assets 3,829,701 396,040 3,021,060 301,804
------------------------------- ------ ---------- ---------- ---------- ----------
EQUITY AND LIABILITIES
---------------------------------------------------------------------------------------
Capital and reserves
---------------------------------------------------------------------------------------
Share capital 21 3,006 449 3,006 449
------------------------------- ------ ---------- ---------- ---------- ----------
Preference share capital 21 1,000 100 1,000 100
------------------------------- ------ ---------- ---------- ---------- ----------
Share premium 22 1,125,012 185,095 1,125,012 185,095
------------------------------- ------ ---------- ---------- ---------- ----------
Other reserves 1,769,459 114,096 1,006,921 27,740
------------------------------- ------ ---------- ---------- ---------- ----------
2,898,477 299,740 2,135,939 213,384
------------------------------- ------ ---------- ---------- ---------- ----------
Non-controlling interest (8,281) (856) (7,616) (761)
------------------------------- ------ ---------- ---------- ---------- ----------
2,890,196 298,884 2,128,323 212,623
------------------------------- ------ ---------- ---------- ---------- ----------
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION -- 30 SEPTEMBER
2017 (CONTINUED)
Note 2017 2017 2016 2016
ZMW'000s USD'000s ZMW'000s USD'000s
------------------------------ ------ ---------- ---------- ---------- ----------
Non-current liabilities
--------------------------------------------------------------------------------------
Interest bearing liabilities 23 328,238 33,944 261,734 26,147
------------------------------ ------ ---------- ---------- ---------- ----------
Obligations under finance
leases 24 27,915 2,887 31,485 3,145
------------------------------ ------ ---------- ---------- ---------- ----------
Deferred liability 25 16,756 1,733 10,442 1,043
------------------------------ ------ ---------- ---------- ---------- ----------
Deferred tax liability 10(e) 7,212 746 4,039 403
------------------------------ ------ ---------- ---------- ---------- ----------
380,121 39,310 307,700 30,738
------------------------------ ------ ---------- ---------- ---------- ----------
Current liabilities
--------------------------------------------------------------------------------------
Interest bearing liabilities 23 78,080 8,074 116,223 11,611
------------------------------ ------ ---------- ---------- ---------- ----------
Collateral management
agreement 23 60,248 6,230 118,849 11,873
------------------------------ ------ ---------- ---------- ---------- ----------
Obligations under finance
leases 24 19,916 2,060 19,697 1,968
------------------------------ ------ ---------- ---------- ---------- ----------
Trade and other payables 26 291,843 30,307 322,133 32,179
------------------------------ ------ ---------- ---------- ---------- ----------
Assets held for disposal 33 1,079 111 - -
------------------------------ ------ ---------- ---------- ---------- ----------
Amounts due to related
companies 27 81 9 313 31
------------------------------ ------ ---------- ---------- ---------- ----------
Taxation payable 10(c) 2,988 309 7,822 781
------------------------------ ------ ---------- ---------- ---------- ----------
Cash and cash equivalents 20 105,148 10,874 - -
------------------------------ ------ ---------- ---------- ---------- ----------
559,384 57,846 585,037 58,443
------------------------------ ------ ---------- ---------- ---------- ----------
Total equity and liabilities 3,829,701 396,040 3,021,060 301,804
------------------------------ ------ ---------- ---------- ---------- ----------
ZAMBEEF PRODUCTS PLC
COMPANY STATEMENT OF FINANCIAL POSITION -- 30 SEPTEMBER 2017
ASSETS Note 2017 2017 2016 2016
ZMW'000s USD'000s ZMW'000s USD'000s
----------------------------- ------ ---------- ---------- ---------- ----------
Non-current assets
----------------------------- ------ ---------- ---------- ---------- ----------
Property, plant and
equipment 14 1,915,760 198,114 1,161,485 116,032
----------------------------- ------ ---------- ---------- ---------- ----------
Investment in subsidiaries 15 245,807 25,420 293,763 29,347
----------------------------- ------ ---------- ---------- ---------- ----------
Deferred tax asset 10(e) 26,566 2,747 28,366 2,834
----------------------------- ------ ---------- ---------- ---------- ----------
2,188,133 226,281 1,483,614 148,213
----------------------------- ------ ---------- ---------- ---------- ----------
Current assets
----------------------------- ------ ---------- ---------- ---------- ----------
Biological assets 16 150,087 15,521 170,511 17,034
----------------------------- ------ ---------- ---------- ---------- ----------
Inventories 17 411,841 42,590 413,670 41,326
----------------------------- ------ ---------- ---------- ---------- ----------
Cash and cash equivalents 20 - - 37,193 3,716
----------------------------- ------ ---------- ---------- ---------- ----------
Asset held for disposal 56,835 5,877 - -
----------------------------- ------ ---------- ---------- ---------- ----------
Trade and other receivables 18 37,169 3,844 45,866 4,582
----------------------------- ------ ---------- ---------- ---------- ----------
Amounts due from related
companies 19 655,060 67,741 463,114 46,265
----------------------------- ------ ---------- ---------- ---------- ----------
Income tax recoverable 10(c) - - - -
----------------------------- ------ ---------- ---------- ---------- ----------
1,310,992 135,573 1,130,354 112,924
----------------------------- ------ ---------- ---------- ---------- ----------
Total assets 3,499,125 361,854 2,613,968 261,137
----------------------------- ------ ---------- ---------- ---------- ----------
EQUITY AND LIABILITIES
----------------------------- ------ ---------- ---------- ---------- ----------
Capital and reserves
----------------------------- ------ ---------- ---------- ---------- ----------
Share capital 21 3,006 449 3,006 449
----------------------------- ------ ---------- ---------- ---------- ----------
Preference share capital 21 1,000 100 1,000 100
----------------------------- ------ ---------- ---------- ---------- ----------
Share premium 22 1,125,012 185,095 1,125,012 185,095
----------------------------- ------ ---------- ---------- ---------- ----------
Other reserves 1,429,504 78,940 785,662 5,660
----------------------------- ------ ---------- ---------- ---------- ----------
2,558,522 264,584 1,914,680 191,304
----------------------------- ------ ---------- ---------- ---------- ----------
ZAMBEEF PRODUCTS PLC
COMPANY STATEMENT OF FINANCIAL POSITION -- 30 SEPTEMBER 2017
(CONTINUED)
Note 2017 2017 2016 2016
ZMW'000s USD'000s ZMW'000s USD'000s
------------------------------ ------ ---------- ---------- ---------- ----------
Non-current liabilities
------------------------------ ------ ---------- ---------- ---------- ----------
Interest bearing liabilities 23 328,238 33,945 261,734 26,147
------------------------------ ------ ---------- ---------- ---------- ----------
Obligations under finance
leases 24 17,195 1,778 19,685 1,967
------------------------------ ------ ---------- ---------- ---------- ----------
Deferred liability 25 3,659 378 2,266 227
------------------------------ ------ ---------- ---------- ---------- ----------
Deferred tax liability 10(e) 4,169 431 3,382 338
------------------------------ ------ ---------- ---------- ---------- ----------
353,261 36,532 287,067 28,679
------------------------------ ------ ---------- ---------- ---------- ----------
Current liabilities
------------------------------ ------ ---------- ---------- ---------- ----------
Interest bearing liabilities 23 138,328 14,305 229,394 22,916
------------------------------ ------ ---------- ---------- ---------- ----------
Obligations under finance
leases 24 13,272 1,373 14,108 1,409
------------------------------ ------ ---------- ---------- ---------- ----------
Trade and other payables 26 164,843 17,046 164,467 16,404
------------------------------ ------ ---------- ---------- ---------- ----------
Amounts due to related
companies 27 243,876 25,220 325 33
------------------------------ ------ ---------- ---------- ---------- ----------
Taxation payable 10(c) 1,588 164 3,927 392
------------------------------ ------ ---------- ---------- ---------- ----------
Cash and cash equivalents 20 25,435 2,630 - -
------------------------------ ------ ---------- ---------- ---------- ----------
587,342 60,738 412,221 41,154
------------------------------ ------ ---------- ---------- ---------- ----------
Total equity and liabilities 3,499,125 361,854 2,613,968 261,137
------------------------------ ------ ---------- ---------- ---------- ----------
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 SEPTEMBER 2017
Note 2017 2017 2016 2016
ZMW'000s USD'000s ZMW'000s USD'000s
-------------------------------------- ------ ---------- ---------- ---------- ----------
Cash inflow from operating activities
----------------------------------------------------------------------------------------------
Profit before taxation 5,450 572 134,592 12,427
-------------------------------------- ------ ---------- ---------- ---------- ----------
Finance costs 9 87,904 9,234 111,346 10,281
-------------------------------------- ------ ---------- ---------- ---------- ----------
(Profit)/ loss on disposal
of property, plant and equipment (974) (102) 1,124 104
-------------------------------------- ------ ---------- ---------- ---------- ----------
Depreciation 14 83,301 8,750 77,784 7,182
-------------------------------------- ------ ---------- ---------- ---------- ----------
(Loss)/ profit on discontinued
operations (1,133) (119) 33,592 3,101
-------------------------------------- ------ ---------- ---------- ---------- ----------
Fair value price adjustment 16 3,491 367 (13,257) (1,224)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Net unrealised foreign exchange
losses (4,410) (463) (28,626) (2,643)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Earnings before interest,
tax, depreciation and amortisation,
fair value adjustments and
net unrealised foreign exchange
losses 173,629 18,239 316,555 29,228
-------------------------------------- ------ ---------- ---------- ---------- ----------
Decrease/ (increase) in
biological assets 19,169 2,014 (46,308) (4,276)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Decrease/ (increase)/ in
inventory 28,321 2,975 (132,500) (12,235)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Decrease in trade and other
receivables 22,503 2,363 97,078 8,949
-------------------------------------- ------ ---------- ---------- ---------- ----------
Increase in amounts due
from related companies (1,158) (122) (1,650) (137)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Decrease in trade and other
payables (33,308) (3,499) (50,200) (4,636)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Increase/ (decrease)/ in
amounts due to related companies 4,113 432 (44,165) (4,078)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Increase in deferred liability 6,314 663 1,188 110
-------------------------------------- ------ ---------- ---------- ---------- ----------
Cash outflow from assets
held for disposal (14,226) (1,494) - -
-------------------------------------- ------ ---------- ---------- ---------- ----------
Income tax paid 10(c) (17,329) (1,820) (8,850) (817)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Net cash inflow from operating
activities 188,028 19,751 131,148 12,109
-------------------------------------- ------ ---------- ---------- ---------- ----------
Investing activities
-------------------------------------- ------ ---------- ---------- ---------- ----------
Purchase of property, plant
and equipment 14 (195,610) (20,547) (166,513) (15,376)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Expenditure on plantation
development 14 (13,805) (1,450) (12,259) (1,132)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Movement in investments (8,879) (933) - -
-------------------------------------- ------ ---------- ---------- ---------- ----------
Proceeds from the issue
of shares - - 620,262 57,273
-------------------------------------- ------ ---------- ---------- ---------- ----------
Purchase of shares - - (175,075) (16,166)
-------------------------------------- ------ ---------- ---------- ---------- ----------
Net cash (outflow)/ inflow
(on)/ from investing activities (218,294) (22,931) 266,415 24,599
-------------------------------------- ------ ---------- ---------- ---------- ----------
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 SEPTEMBER 2017 (CONTINUED)
2017 2017 2016 2016
Note ZMW'000s USD'000s ZMW'000s USD'000s
------------------------------- ----- ---------- ---------- ---------- ----------
Net cash (outflow)/inflow
before financing activities (30,266) (3,179) 397,563 36,708
------------------------------- ----- ---------- ---------- ---------- ----------
Financing activities
------------------------------- ----- ---------- ---------- ---------- ----------
Long term loans repaid (104,768) (11,005) (110,289) (10,184)
------------------------------- ----- ---------- ---------- ---------- ----------
Receipt of long term
loans 140,100 15,000 - -
------------------------------- ----- ---------- ---------- ---------- ----------
Receipt/(repayment) of
short term funding (55,292) (5,808) 26,997 2,493
------------------------------- ----- ---------- ---------- ---------- ----------
Lease finance (repayment)/
obtained (3,551) (373) 16,249 1,500
------------------------------- ----- ---------- ---------- ---------- ----------
Finance costs including
discontinued operations 9 (87,904) (9,234) (111,346) (10,281)
------------------------------- ----- ---------- ---------- ---------- ----------
Net cash outflow on financing
activities (111,415) (11,420) (178,389) (16,472)
------------------------------- ----- ---------- ---------- ---------- ----------
(Decrease)/ increase
in cash and cash equivalents (141,681) (14,599) 219,177 20,236
------------------------------- ----- ---------- ---------- ---------- ----------
Cash and cash equivalents
at beginning of the year 64,806 6,474 (190,648) (15,861)
------------------------------- ----- ---------- ---------- ---------- ----------
Effects of exchange rate
changes on the balance
of cash held in foreign
currencies (28,273) (2,749) 36,280 2,099
------------------------------- ----- ---------- ---------- ---------- ----------
Cash and cash equivalents
at end of the year 20 (105,148) (10,874) 64,806 6,474
------------------------------- ----- ---------- ---------- ---------- ----------
Represented by:
------------------------------- ----- ---------- ---------- ---------- ----------
Cash in hand and at bank 20 62,518 6,465 95,747 9,565
------------------------------- ----- ---------- ---------- ---------- ----------
Bank overdrafts 20 (167,729) (17,339) (30,941) (3,091)
------------------------------- ----- ---------- ---------- ---------- ----------
(105,148 (10,874 64,806 6,474
------------------------------- ----- ---------- ---------- ---------- ----------
ZAMBEEF PRODUCTS PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 30 SEPTEMBER 2017
2017 2017 2016 2016
Notes ZMW'000s USD'000s ZMW'000s USD'000s
------------------------------------- ------ ---------- ----------- ---------- ----------
Cash inflow from operating
activities
------------------------------------- ------ ---------- ----------- ---------- ----------
Profit before taxation 37,735 3,964 101,173 9,342
------------------------------------- ------ ---------- ----------- ---------- ----------
Finance costs 67,744 7,116 87,815 8,109
------------------------------------- ------ ---------- ----------- ---------- ----------
Depreciation 14 41,706 4,381 43,728 4,037
------------------------------------- ------ ---------- ----------- ---------- ----------
Fair value price adjustment 16 3,452 363 (12,587) (1,162)
------------------------------------- ------ ---------- ----------- ---------- ----------
(Profit)/ loss on disposal
of property, plant and
equipment (825) (87) 824 76
------------------------------------- ------ ---------- ----------- ---------- ----------
Net unrealised foreign
exchange differences 3,871 407 (17,010) (1,571)
------------------------------------- ------ ---------- ----------- ---------- ----------
Earnings before interest,
tax, depreciation and amortisation 153,683 16,144 203,943 18,831
------------------------------------- ------ ---------- ----------- ---------- ----------
Decrease/ (increase) in
biological assets 20,424 2,144 (21,601) (1,995)
------------------------------------- ------ ---------- ----------- ---------- ----------
Decrease/ (increase) in
inventory 1,829 192 (102,428) (9,458)
------------------------------------- ------ ---------- ----------- ---------- ----------
Decrease in trade and other
receivables 6,727 707 103,853 9,574
------------------------------------- ------ ---------- ----------- ---------- ----------
Assets held for disposal
movements (56,835) (5,970) - -
------------------------------------- ------ ---------- ----------- ---------- ----------
Increase in amounts due
from related companies (189,976) (19,955) (178,682) (16,484)
------------------------------------- ------ ---------- ----------- ---------- ----------
Increase/ (decrease) in
trade and other payables 376 39 (87,379) (8,068)
------------------------------------- ------ ---------- ----------- ---------- ----------
Increase in amounts due
to related companies 243,551 25,583 289 27
------------------------------------- ------ ---------- ----------- ---------- ----------
Increase in deferred liability 1,393 146 596 55
------------------------------------- ------ ---------- ----------- ---------- ----------
Income tax paid 10(c) (13,484) (1,416) (4,438) (410)
------------------------------------- ------ ---------- ----------- ---------- ----------
Net cash inflow/(outflow)
from/ (on) operating activities 167,688 17,615 (85,847) (7,928)
------------------------------------- ------ ---------- ----------- ---------- ----------
Investing activities
------------------------------------- ------ ---------- ----------- ---------- ----------
Purchase of property, plant
and equipment 14 (154,880) (2016,269) (49,743) (4,593)
------------------------------------- ------ ---------- ----------- ---------- ----------
Proceeds from the issue
of shares - - 620,261 57,273
------------------------------------- ------ ---------- ----------- ---------- ----------
Movements in investments 15 47,956 5,037 (175,075) (16,166)
------------------------------------- ------ ---------- ----------- ---------- ----------
Proceeds from disposal - - - -
of investment
------------------------------------- ------ ---------- ----------- ---------- ----------
Proceeds from sale of assets 1,239 130 65 6
------------------------------------- ------ ---------- ----------- ---------- ----------
Net cash inflow from investing
activities (105,685) (11,102) 395,509 36,520
------------------------------------- ------ ---------- ----------- ---------- ----------
ZAMBEEF PRODUCTS PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2017 (CONTINUED)
2017 2017 2016 2016
Note ZMW'000s USD'000s ZMW'000s USD'000s
------------------------------- ----- ---------- ---------- ---------- ----------
Net cash inflow before
financing activities 62,003 6,513 309,662 28,592
------------------------------- ----- ---------- ---------- ---------- ----------
Financing activities
------------------------------- ----- ---------- ---------- ---------- ----------
Long term loans repaid (99,663) (10,468) (101,811) (9,401)
------------------------------- ----- ---------- ---------- ---------- ----------
Receipt from term loans 140,100 14,716 - -
------------------------------- ----- ---------- ---------- ---------- ----------
Movement in short term
funding (55,292) (5,808) 39,938 3,688
------------------------------- ----- ---------- ---------- ---------- ----------
Lease finance (repayment)/
obtained (3,551) (374) 11,823 1,092
------------------------------- ----- ---------- ---------- ---------- ----------
Interest paid (67,744) (7,116) (87,815) (8,109)
------------------------------- ----- ---------- ---------- ---------- ----------
Net cash outflow on financing
activities (86,150) (9,050) (137,865) (12,730)
------------------------------- ----- ---------- ---------- ---------- ----------
(Decrease)/ increase
in cash and cash equivalents (24,147) (2,537) 171,797 15,862
------------------------------- ----- ---------- ---------- ---------- ----------
Cash and cash equivalents
at beginning of the year 37,193 3,716 (140,855) (11,718)
------------------------------- ----- ---------- ---------- ---------- ----------
Effects of exchange rate
changes on the balance
of cash held in foreign
currencies (38,481) (3,810) 6,251 (428)
------------------------------- ----- ---------- ---------- ---------- ----------
Cash and cash equivalents
at end of the year 20 (25,435) (2,631) 37,193 3,716
------------------------------- ----- ---------- ---------- ---------- ----------
Represented by:
------------------------------- ----- ---------- ---------- ---------- ----------
Cash in hand and at bank 20 16,509 1,707 52,239 5,219
------------------------------- ----- ---------- ---------- ---------- ----------
Bank overdrafts 20 (41,944) (4,338) (15,046) (1,503)
------------------------------- ----- ---------- ---------- ---------- ----------
(25,435) (2,631) 37,193 3,716
------------------------------- ----- ---------- ---------- ---------- ----------
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2017
Notes can be read via the following link to the full Financial
Statements:
http://www.rns-pdf.londonstockexchange.com/rns/5067W_-2017-11-14.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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