TIDMZAM
RNS Number : 1644Q
Zambeef Products PLC
17 June 2020
17 June 2020
Zambeef Products plc
("Zambeef" or the "Group")
Interim res ults for the Half Year Ended 31 March 2020
Zambeef (AIM: ZAM), the integrated cold chain foods and retail
business with operations in Zambia, Nigeria and Ghana, today
announces its unaudited interim results for the six months ended 31
March 2020.
Financial Highlights
31-Mar-20 31-Mar-19 % 31-Mar-20 31-Mar-19 %
ZMW'000s ZMW'000s USD'000s USD'000s
------------ ---------- ---------- ----------
Revenue 1,797,633 1,416,490 26.91% 129,233 118,833 8.75%
Cost of sales (1,168,504) (945,920) 24.82% (83,472) (78,036) 6.97%
Gross profit 626,129 470,570 33.06% 45,013 39,477 14.02%
Administrative expenses (500,630) (459,193) 8.97% (36,029) (38,582) 6.62%
Operating profit 125,499 11,377 1003% 9,022 954 845.70%
Share of loss equity
accounted investment (1,898) (1,819) 4.3% (136) (153) -11.1%
Exchange losses (62,870) (3,347) 1778% (4,520) (281) 1509%
Finance costs (48,241) (36,367) 32.65% (3,468) (3,051) 13.67%
Profit before taxation 12,490 (30,156) 141.42% 898 (2,531) 135.48%
Taxation charge (927) (1,633) -43.23% (67) (137) 51.09%
Group income/(loss)
for the year from
continuing operations 11,563 (31,789) 136.37% 831 (2,668) 131.15%
(Loss)/profit from
discontinued operations (9,423) - (677) -
Group income for
the year 2,140 (31,789) 106.73% 154 (2,668) 105.77%
EBITDA 192,088 70,104 174% 13,809 5,881 134.81%
------------ ---------- -------- ---------- ---------- --------
Gross Profit Margin 34.83% 33.22% 34.83% 33.22%
EBITDA Margin 10.67% 4.95% 10.67% 4.95%
Debt/Equity (Gearing) 27.24% 28.04% 27.24% 28.04%
Debt-To-EBITDA 5.22 12.36 4.02 12.08
------------ ---------- -------- ---------- ---------- --------
PERFORMANCE OVERVIEW
The half-year period ended 31st March 2020 (HY 2020) saw Zambeef
post encouraging results in the context of a very challenging
macroeconomic environment. During this period, the Zambian Kwacha
weakened by 37%, resulting in short- to medium-term record
inflation. The high inflation, coupled with a tight monetary
policy, eroded the purchasing power of our customers. The
challenges stemming from reduced electricity generation, on the
back of a regional record drought, significantly increased
operational costs which, in turn, impacted on margins as some
divisions were unable to pass through the increases.
Despite the challenging economic environment and the uncertainty
caused by the onset of the COVID-19 pandemic, consumer demand for
Zambeef's products remained robust, and the trading performance in
the period has been satisfactory.
Zambeef's chain of 237 retail outlets - both own-brand and
within Shoprite supermarkets - remain at the heart of the business,
with demand from customers driving supply. During the half-year
period under review, the Group continued to invest in the roll-out
of two macro stores and two retail outlets in strategic
locations.
KEY FINANCIAL HIGHLIGHTS
Revenue and gross profit for the period was ZMW 1,798 million
(USD 129.2 million) and ZMW 626 million (USD 45.0 million), which
was up in Kwacha terms by 27% and 33% respectively, and in dollar
terms by 9% and 14% respectively, from the previous half-year
period.
Management's continued focus on cost control ensured
administration expenses increased by only 9% (7% in US$ terms) from
ZMW 459 million (US$38.6 million) in the previous period to ZMW 501
million (US$36 million) in the current period, in the context of
14% inflation during the period.
The Group achieved an operating profit of ZMW 125 million versus
ZMW 11 million recorded in the previous half year period (USD 9
million vs USD 0.954 million), which represents a 1,003% increase
in ZMW and an 846% increase in USD. This increase in profitability
was driven by increased sales volumes in the Cropping and Stockfeed
divisions and pricing and cost optimisation initiatives undertaken
by management across our divisions.
Finance costs increased by 33% in ZMW and 14% in USD as a result
of higher utilisation of working capital, rising ZMW interest rates
and the depreciation of the Zambian Kwacha against the US Dollar,
resulting in increasing interest on US Dollar facilities in Kwacha
terms.
As a result, the Group managed to generate a profit of ZMW 2
million (USD 0.154 million) compared to a loss of ZMW 32 million
(USD 2.7 million) in the previous half-year period.
Zambeef's management remains committed to focusing on its core
divisions to generate cash flow that will be channelled towards
deleveraging the Group.
Zambeef's management will continue to focus resources on the
Group's profitable business divisions, whilst improving those
divisions that need additional attention to ensure that all areas
of the business contribute fully to Group profitability. In
response to the current uncertainty of the COVID-19 situation, the
Group is moving quickly to take appropriate actions to further
manage costs and preserve balance sheet flexibility during this
period. The conclusion of the sale of Sinazongwe farm in April 2020
was a key milestone whose proceeds will go towards reducing
debt.
OUTLOOK
As previously announced, despite the uncertainty caused by the
COVID-19 pandemic, the trading performance is expected to remain
satisifactory for H2 2020 and, accordingly, for the year ending 30
September 2020, dollar revenue, EBITDA, EBIT and adjusted Profit
Before Tax* are anticipated to be in line with market
expectations.
* Adjusted Profit Before Tax is defined as excluding any
realised or unrealised foreign exchange gains or losses and any
losses or gains made from asset disposals.
Commenting on these results, Chairman Mr. Michael Mundashi
said:
"The Zambian economy was under significant fiscal pressure
during the period, which, combined with the shock of the COVID-19
pandemic on the global economy, led to reduced demand for copper
and a sharp depreciation in the Kwacha. The subsequent inflationary
impact resulted in a significant drop in our customers' disposable
income.
"Despite the challenging economic environment and the
uncertainty caused by the COVID-19 pandemic, consumer demand for
Zambeef's products remained robust and the trading performance in
the period was satisfactory.
"The Group continued with its long term strategy to invest in
the roll-out of macro stores and retail outlets in strategic
locations. The Group's strategic partnership with Shoprite has been
essential as we continue to observe growth through the Shoprite
butcheries.
"Looking ahead, the macro-economic climate is expected to remain
challenging for the rest of the financial year, characterised by a
volatile Kwacha, continued electricity supply constraints and a
potentially crippling COVID-19 pandemic. Despite this, the Group
still expects to report Full Year results for the year ending 30
September 2020 in line with current market expectations."
For further information, please visit www.zambeefplc.com or
contact:
Zambeef Products plc Tel: +260 (0) 211
369003
Walter Roodt, Chief Executive Officer
Faith Mukutu, Chief Financial Officer
Strand Hanson Limited (Nominated & Financial Tel: +44 (0) 20 7409
Adviser) 3494
James Spinney
Ritchie Balmer
Rob Patrick
FinnCap (Broker) Tel: +44 (0) 20 7220
0500
Chris Raggett
Powerscourt (Financial PR) Tel: +44 (0)20 7250
1446
Nick Dibden
Bethany Johannsen
About Zambeef Products PLC
Zambeef Products PLC is the largest integrated cold chain food
products and agribusiness in Zambia and one of the largest in the
region, involved in the production, processing, distribution and
retailing of beef, chicken, pork, dairy, eggs, fish, flour and
stockfeed throughout Zambia and the surrounding regions, as well as
Nigeria and Ghana. The Group also has large cereal row cropping
operations (principally maize, soya beans and wheat), with
approximately 7,973 hectares of row crops under irrigation, which
are planted twice a year and a further 8,776 hectares of rain-fed
crops available for planting each year.
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. Upon the
publication of this announcement via Regulatory Information
Service, this inside information is now considered to be in the
public domain.
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CHAIRMAN'S REPORT
It is my pleasure to present to you the Chairman's Report for
the six months ended 31 March, 2020.
Despite the challenging economic environment and the uncertainty
caused by the COVID-19 pandemic, consumer demand for Zambeef's
products in-country stood up well, and trading performance in the
period has been satisfactory.,The Group generated a profit after
tax of ZMW 2 million (USD 0.1 million), compared to a loss of ZMW
32 million (USD 2.7 million) in the previous period. This
achievement, in the face of economic and market difficulties,
illustrates the Group's fundamental strengths as a diversified and
vertically integrated business.
The Board remains committed to achieving the Group's strategic
priorities, despite fundamental changes in the operating
environment. The Group will continue to focus on organically
growing the core business that generates sustainable and strong
cashflows, particularly our Retail and Cold Chain Food Products
(CCFP) and Stockfeed divisions.
I am pleased to report that the successful divestment of
Sinazongwe Farm to Chenguang Biotech (Zambia) Agri-Dev Limited for
a total consideration of USD 10 million was finalised in April
2020. The net sale proceeds will largely be used to pay down the
Group's debt and reduce interest costs. The disposal demonstrates
the Group's strategy to focus on its core business of producing and
retailing CCFP and stockfeed.
The Economic Environment
The Zambian economy has been under significant fiscal pressure
during the period, which, combined with the shock of the COVID-19
pandemic on the global economy, has led to reduced demand for
copper and a sharp depreciation in the Kwacha. The subsequent
inflationary impact has resulted in a significant drop in our
customers' disposable income and has continued to put pressure on
the share of wallet going towards food spend.
Zambia is currently battling an electricity generation crisis,
with load shedding hours having worsened in the period from October
2019 to January 2020. The Kwacha to Dollar exchange rate
depreciation has resulted in significant price increases,
especially on imported goods, which in turn saw inflation leap to
14% in March 2020 from 11% at the beginning of October 2019.
Trading Results
In the face of these macroeconomic challenges, management took
proactive mitigation steps for both the short and longer-term,
underpinned by continued focus on key strategic initiatives.
Therefore, the Group's results are very encouraging as the Group
posted a profit after tax (from continued operations) of ZMW 11.6
million (USD 0.8 million) compared to a loss of ZMW 32 million (USD
2.7 million) over the same period last year. The increased
profitability was mainly driven by cropping, following improved
yields in the summer crop, and increased volumes and margins in the
Stockfeed division.
During the period, the Group recorded an underlying EBITDA
growth of 173%, supported by top-line growth and cost
optimisation.
Net debt at the end of the period was ZMW 1,002 million (USD
55.5million), compared with ZMW 886 million (USD 67.1 million) for
the same period last year. This was before any repayment of debt
from the proceeds of the sale of Sinazongwe farm. Despite making
strides towards the repayment of USD debt, the devaluation of the
local currency resulted in a translational increase in the Kwacha
debt. Our focus continues to be on reducing the Group's
indebtedness, with dollar debt being the priority.
Retail and Cold Chain Food Products
Zambeef's chain of 237 retail outlets - both own-brand (166) and
within Shoprite supermarkets (71) - remain at the heart of the
business, with demand from customers driving supply. During the
half-year period under review, the Group continued to invest in the
roll-out of two macro stores and two retail outlets in strategic
locations. The Group's strategic partnership with Shoprite has been
essential as we continue to observe growth through the Shoprite
butcheries. Revenue in Retail and Cold Chain Food Products grew 15%
against the prior half-year period. Cost pressures, mainly from
increased depreciation and dollar-denominated fleet maintenance
costs, resulted in operating profit performance being largely in
line with the prior half-year period.
Cropping
Cropping revenue increased by 71% due to improved maize and
wheat volumes, coupled with better pricing obtained on maize sales.
Difficulties arising from the constrained electricity supply and
Kwacha depreciation-related inflation put pressure on costs while
having the opposite effect on revenue.
Stockfeed
The Stockfeed operations posted strong volume growth of 19% in
the half-year period. This, coupled with strong revenue
realisation, ensured healthy top-line growth. Despite the
challenges around load shedding and the drought impacting margins,
gross profit grew 58% compared to the prior half-year due to
improved manufacturing capacity utilisation and cost
management.
Outlook
The macro-economic climate is expected to remain challenging for
the rest of Zambeef's financial year, characterised by a volatile
Kwacha, continued electricity supply constraints and a potentially
crippling COVID-19 pandemic. Despite this, the Group still expects
to report Full Year results for the year ending 30 September 2020
in line with current market expectations.
The pandemic has changed the way we work and the way we interact
with our customers in the marketplace. Exports into some of our key
markets have slowed as many countries impose strict movement
lockdowns. The pandemic presents an unprecedented challenge for all
of us, yet the fundamental strengths of our company remain
unchanged. The health and safety of our employees is our priority
and we are doing our part to help the communities we operate
in.
In response to the current uncertainty of the COVID-19 pandemic,
the Group is moving quickly to take appropriate actions to manage
costs further and preserve balance sheet flexibility.
I would like to express my utmost appreciation to our management
and staff for their dedicated efforts to feed the nation during
this challenging period.
Michael Mundashi
Chairman
16 June 2020
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
The half-year period ended 31st March 2020 (HY 2020) saw Zambeef
post encouraging results in the context of a very challenging
macroeconomic environment. During this period, the Zambian Kwacha
weakened by 37%, resulting in short to medium term record
inflation. The high inflation coupled with a tight monetary policy
eroded the purchasing power of our customers. The challenges
stemming from reduced electricity generation, on the back of a
regional record drought, significantly increased operational costs
that eroded margins and some of our divisions were unable to pass
on the increases to our customers.
Our revenue for the period was ZMW 1,798 million (USD 129.2
million), and we achieved a gross profit of ZMW 626 million (USD
45.0 million), which was up in Kwacha terms by 27% and 33%, and in
dollar terms by 9% and 14% respectively from the previous half-year
period. The growth in both metrics was driven by the performance of
the Stockfeed and Cropping divisions.
Despite the challenges in the operating environment, Zambeef
recorded an operating profit from continuing operations of ZMW 125
million (USD 9.0 million) and a profit after tax of ZMW 11.6
million (USD 0.8 million) compared to a ZMW 11.4 million (USD 0.95
million) and a ZMW 31.8 million (USD 2.7 million) loss respectively
in the previous half-year period.
The performance achieved was encouraging, considering the
adverse trading conditions, and is attributable to the strong
Zambeef brands, a wide-ranging retail footprint, market penetration
and a vertical and diversified product offering. In addition, swift
actions from the management team resulted in mitigating some of the
aforementioned challenges. Management will continue driving
efficiencies to enable sustained top-line growth while looking for
opportunities to optimise costs. Our consistent commitment to
achieving our long-term strategic objectives through the years has
allowed the Group to maintain market share and grow, despite a
volatile economic environment.
Strategic focus
Zambeef's strategic focus on the roll-out of macro and retail
stores across Zambia has continued to contribute to revenue growth.
The proceeds from the sale of the Sinazongwe Farm will enable us to
accelerate the pay down on our debt as we continue with the
deleveraging strategy and focusing on our core businesses.
Retail and Cold Chain Food Products (CCFP)
The disposable income of our customers was constrained during
the period, driven by high inflation which resulted in a subdued
performance in some of our product lines. Despite this, the Group
continued to grow revenue and volumes in its Retailing and Cold
Chain Food Production division from the prior half-year period.
However, margins have come under pressure because of higher
production input costs that we were unable to fully pass on to our
customers.
Stockfeed
The Stockfeed division performed exceptionally well during the
period. Stockfeed sales volumes grew by 19% to 117,313 tonnes (HY
2019: 98,847 tonnes). Revenue growth of 56% was recorded on the
back of volume growth and pricing. Management focus on cost control
ensured operating profit growth of 160% above HY 2019 in Kwacha
terms, despite the period being characterized by higher fuel and
electricity costs.
Cropping
Cropping revenue increased 71% on the back of increased sales
volumes of maize and wheat following the carryover stocks from the
previous season. The drop in the average price of soya beans by 9%
in Dollar terms was offset by the translational effect of the
depreciation of the Kwacha. Increased load shedding and the cost of
inputs was shielded by the dollar-denominated revenue increase.
Outlook
We anticipate the macro-economic climate to remain challenging
but more stable in the second half of the financial year. The
accelerated depreciation of the Kwacha appears to be behind us for
now and the Kwacha seems to have stabilised. We anticipate that
Zambia will acclimate to living with COVID-19 and resuming life
under a new normal. However, the impacts of the pandemic still pose
a significant risk to the business.
Moderate revenue growth is expected across most of our product
lines due to a slowdown in the economy, supported by anticipated
good yields from the winter crops. However, the full effects of an
inflationary second quarter will be felt in the next half year.
Consequently, we expect to see more pressure on our margins with
minimal passing on of cost increases as consumer spending power
erodes further.
As such, and despite expected satisfactory revenue, EBITDA and
EBIT performance (all of which are currently in line with market
expectations for the full year) and the Group's profit before tax
for the full year (when factoring in foreign exchange effects) is
expected to be negatively impacted.
Our Dollar debt is expected to reduce after applying the
proceeds of the sale of the Sinazongwe Farm. However, we expect to
end the year with a higher Kwacha debt balance due to the effects
of its continued depreciation. This will be due to the increased
interest costs on dollar debt in Kwacha terms, although we expect
to continue paying down the debt.
I am confident that management will respond to these challenges
and continue steering the business towards sustaining this
performance over the second half of the year. We will continue our
concerted efforts to protect our staff, customers and the general
public from the effects of COVID-19. Health protocols have been
rolled out in all of our workplaces and shops, and periodic
compliance audits continue to be performed.
DIVISIONAL PERFORMANCE
Table 1 (ZMW) and Table 2 (USD) below provide a summary of the
consolidated performance of the key business divisions reported at
an operating profit level.
Table 1: Divisional financial summary in ZMW'000
ZMW Revenue Gross Profit Overheads Operating Profit
2020 2019 2020 2019 2020 2019 2020 2019
Division ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Total
Retailing 1,138,678 975,606 120,170 105,971 (166,107) (142,460) (45,937) (36,489)
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
CCFP 745,736 681,798 196,628 176,308 (104,790) (93,495) 91,837 82,813
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Less Interco (721,059) (648,538)
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Combined
Retail & 1,163,355 1,008,866 316,798 282,279 (270,897) (235,955) 45,900 46,324
CCFP
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Stock Feed 641,656 412,344 122,378 77,544 (60,753) (53,873) 61,625 23,671
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Cropping 256,990 150,529 161,886 93,323 (85,151) (80,593) 76,735 12,730
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Others 109,476 96,129 25,067 17,424 (11,634) (13,305) 13,434 4,119
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Total 2,171,477 1,667,868 626,129 470,570 (428,435) (383,726) 197,694 86,844
============== ========== ========== ========= ========= ========== ========== ========= =========
Less: Intra/
--------- --------- ---------- ---------- --------- ---------
Inter Group (373,844) (251,378)
--------- --------- ---------- ---------- --------- ---------
Sales
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Central
---------- ---------- --------- ---------
Overhead (72,195) (75,467) (72,195) (75,467)
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Group Total 1,797,633 1,416,490 626,129 470,570 (500,630) (459,193) 125,499 11,377
-------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Table 2: Divisional financial summary in USD'000
USD Revenue Gross Profit Overheads Operating Profit
2020 2019 2020 2019 2020 2019 2020 2019
Division USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Retailing 81,861 81,846 8,640 8,890 (11,942) (11,951) (3,302) (3,061)
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
CCFP 53,612 57,198 14,135 14,791 (7,533) (7,844) 6,602 6,947
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Less Interco (51,838) (54,408)
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Combined
Retail & 83,635 84,636 22,775 23,681 (19,475) (19,795) 3,300 3,886
CCFP
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Stock Feed 46,129 34,593 8,798 6,505 (4,368) (4,520) 4,430 1,986
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Cropping 18,475 12,628 11,638 7,829 (6,122) (6,761) 5,516 1,068
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Others 7,870 8,065 1,802 1,462 (836) (1,116) 966 346
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total 156,109 139,922 45,013 39,477 (30,801) (32,192) 14,212 7,285
============== ========= ========= ========= ========= ========= ========= ========= =========
Less: Intra/
--------- --------- --------- --------- --------- ---------
Inter Group (26,876) (21,089)
--------- --------- --------- --------- --------- ---------
Sales
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Central
--------- --------- --------- ---------
Overhead (5,190) (6,331) (5,190) (6,331)
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Group Total 129,233 118,833 45,013 39,477 (35,991) (38,523) 9,022 954
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
DIVISIONAL REVIEW
Taking the performance of each of our key business areas in
turn:
Retail and Cold Chain Food Products
Table 3 (ZMW) and Table 4 (USD) provide the key business area
performances of the combined Retail and Cold Chain Food Products
divisions.
Table 3: Retail and Cold Chain Food Products ZMW'000
HY 2020 Revenue Gross Profit Overheads Operating Profit
Division 2020 2019 2020 2019 2020 2019 2020 2019
ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000
---------- ---------- --------- --------- ---------- ---------- --------- ---------
Retailing
Zambia 1,029,584 882,826 94,721 84,017 (143,720) (124,304) (48,999) (40,287)
----------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Retailing
West Africa 109,094 92,780 25,449 21,954 (22,387) (18,156) 3,062 3,798
----------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Total Retailing 1,138,678 975,606 120,170 105,971 (166,107) (142,460) (45,937) (36,489)
----------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
CCFP 745,736 681,798 196,628 176,308 (104,790) (93,495) 91,837 82,813
----------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Less Interco (721,059) (648,538)
----------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Combined Retail
& CCFP 1,163,355 1,008,866 316,798 282,279 (270,897) (235,955) 45,900 46,324
----------------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Table 3: Retail and Cold Chain Food Products USD'000
HY 2020 Revenue Gross Profit Overheads Operating Profit
Division 2020 2019 2020 2019 2020 2019 2020 USD'000 2019 USD'000
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
--------- --------- --------- --------- --------- --------- ------------- -------------
Retailing
Zambia 74,017 74,063 6,810 7,048 (10,333) (10,428) (3,522) (3,380)
----------------- --------- --------- --------- --------- --------- --------- ------------- -------------
Retailing
West Africa 7,843 7,783 1,830 1,842 (1,609) (1,523) 220 319
----------------- --------- --------- --------- --------- --------- --------- ------------- -------------
Total Retailing 81,860 81,846 8,639 8,890 (11,942) (11,951) (3,302) (3,061)
----------------- --------- --------- --------- --------- --------- --------- ------------- -------------
CCFP 53,612 57,198 14,135 14,791 (7,533) (7,844) 6,602 6,947
----------------- --------- --------- --------- --------- --------- --------- ------------- -------------
Less Interco (51,838) (54,408) - - -
----------------- --------- --------- --------- --------- --------- --------- ------------- -------------
Combined Retail
& CCFP 83,634 84,636 22,775 23,681 (19,475) (19,795) 3,300 3,886
----------------- --------- --------- --------- --------- --------- --------- ------------- -------------
We successfully rolled out two new macro outlets and two new
retail outlets in strategic locations as part of our ongoing drive
to optimise revenue and efficiencies across the Retail
division.
Net sales in the combined Retail and Cold Chain Food Products
(CCFP) divisions increased by 15% to ZMW 1,163 million (2019: ZMW
1,009 million) and decreased by 1% to USD 83.6 million (HY 2019:
USD 84.6 million), the difference owing to the depreciation of the
Kwacha. The gross profit margin decreased slightly by 75 basis
points to 27% in Kwacha terms (HY 2019: 28%), with a 15% increase
in overheads to ZMW 271 million (HY 2019: ZMW 236 million) or a 2%
reduction in dollar terms to USD 19.5 million (HY 2019: USD 19.8
million).
The combined Retail and CCFP divisions generated a satisfactory
4% operating margin despite declining from the 2019 margin of 5%,
owing to cost increases that could not be fully passed on to our
customers through the retail network. The operating profit value in
absolute terms decreased by 1% to ZMW 45.9 million (HY 2019: ZMW
46.3 million) in Kwacha terms and 15% in USD terms to 3.3 million
(HY 2019: USD 3.9 million).
Zambia Retail
Zambia Retail revenue increased by 17% to ZMW 1,029 million (HY
2019: ZMW 883 million), whilst the gross profit increased by 13%.
However, due to the depreciation in the Kwacha relative to the
Dollar, revenue was flat at USD 81.9 million (HY 2019: USD 81.8
million).
West Africa Retail
Sales in West Africa (via the Nigeria and Ghana Shoprite
concessions) increased by 18% to ZMW 109 million (HY 2019: ZMW 93
million). West African retail contribution to revenue increased by
9 basis points to 10.60%, from 10.51% last year. It has turned cash
flow positive and marginally contributed to the operating profit in
the division.
Beef
Beef is the largest contributor to revenue in the CCFP at 23%
(HY 2019: 22%) of total revenue. Despite sales volumes increasing
by a marginal 1%, revenues increased 8% owing to the favourable
price of Beef and by-products. Gross profit increased by 34% on the
back of an 8% revenue increase due to a reduction in input costs,
particularly the buying price of Cattle. The price of maize bran
remained relatively stable, only increasing by 9% against the prior
half-year, especially in the context of Maize price increasing by
72%.
Poultry (ZamChick, ZamHatch and ZamEgg)
Revenue in the poultry business increased by 24% to ZMW 240
million (HY 2019: ZMW 193 million) and is the second-largest
revenue contributor to the CCFP business. Gross profits decreased
by 30% to ZMW 41 million (HY 2019: ZMW 59 million), mainly due to
the higher input costs that could not be fully passed on to
customers. In particular, stockfeed increased by 36%, which
affected input costs. Overheads increased by an inflationary 14%,
mainly impacted by higher energy and repair and maintenance
costs.
Pork (Masterpork )
The Pork division saw a drop in sales volumes by 9%, mainly
impacted by a decline in affordable Hungarian sausage sales.
Revenue increased by 12%, translating to a 26% increase in gross
profit of ZMW 24 million (HY2019: ZMW 19 million) due to pricing to
recoup some lost margin due to cost increases.
Overhead costs increased by 36% compared to the prior year,
mainly impacted by power outages causing increased machinery repair
and maintenance costs and electricity tariffs
Milk (ZamMilk)
Milk revenue increased by 3% on the back of a 6% increase in
average selling prices. The volumes of processed milk products
reduced as the demand for fresh milk products soared, resulting in
a net 3% reduction in sales volumes. Gross profit margin increased
by 1,470 basis points owing to price and a favourable sales mix
skewed towards the higher-margin products. Kalundu dairy saw an
improvement in production efficiencies which also contributed to
the increased margins.
Stockfeed (Novatek)
ZMW
Revenue Gross Profit Overheads Operating Profit
------------------ ------------------ -------------------- -------------------
2020 2019 2020 2019 2020 2019 2020 2019
ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000
641,656 412,344 122,378 77,544 (60,752) (53,873) 61,624 23,671
-------- -------- -------- -------- --------- --------- --------- --------
USD
Revenue Gross Profit Overheads Operating Profit
------------------ ------------------ ------------------ -------------------
2020 2019 2020 2019 2020 2019 2020 2019
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
46,129 34,593 8,798 6,505 (4,368) (4,520) 4,430 1,985
-------- -------- -------- -------- -------- -------- --------- --------
Revenue grew by 56% in Kwacha terms (33% in USD terms) due to
volume and pricing, while the operating profit grew by a
significant 160% to ZMW 62 million (HY 2019: ZMW 24 million) or
123% to USD 4.4 million (HY 2019: USD 2.0 million) in Dollar terms.
The gross margin remained flat at 19.1% from 18.8% in the prior
year. Increased raw material costs, due to a severe drought in the
2019 harvest season as well as running backup diesel generators for
prolonged periods to generate electricity, impacted on the profit
margin.
Overheads and efficiencies were key operational focus areas
during the period and grew only by an inflationary 13% to ZMW 61
million (HY 2019: ZMW 54 million).
Cropping
ZMW
Revenue Gross Profit Overheads Operating Profit
------------------ ------------------ -------------------- -------------------
2020 2019 2020 2019 2020 2019 2020 2019
ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000
256,990 150,529 161,886 93,323 (85,151) (80,593) 76,735 12,730
-------- -------- -------- -------- --------- --------- --------- --------
USD
Revenue Gross Profit Overheads Operating Profit
------------------ ------------------ ------------------ -------------------
2020 2019 2020 2019 2020 2019 2020 2019
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
18,475 12,628 11,638 7,829 (6,122) (6,761) 5,517 1,068
-------- -------- -------- -------- -------- -------- --------- --------
Zambeef's cropping division provides a currency risk hedge
against the depreciation of the Kwacha, due to the crops being
traded and financed in USD terms. The division performed
exceptionally well during the period.
Revenue increased 71% to ZMW 257 million (HY 2019: ZMW 151
million) or 46% to USD 18.5 million (HY 2019: USD 12.6 million),
mainly due to increased maize and wheat sales volumes coupled with
an increase in maize price. Gross profit increased 73% compared to
the prior half-year, with only a 26% increase in the overheads due
to increases in the cost of electricity and fuel.
Other businesses
ZMW
Revenue Gross Profit Overheads Operating Profit
------------------ ------------------ -------------------- -------------------
2020 2019 2020 2019 2020 2019 2020 2019
ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000
109,476 96,129 25,067 17,424 (11,634) (13,305) 13,434 4,119
-------- -------- -------- -------- --------- --------- --------- --------
USD
Revenue Gross Profit Overheads Operating Profit
------------------ ------------------ ------------------ -------------------
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
2020 2019 2020 2019 2020 2019 2020 2019
7,870 8,065 1,802 1,462 (836) (1,116) 966 346
-------- -------- -------- -------- -------- -------- --------- --------
Total revenue from the other business divisions increased by 14%
to ZMW 109 million (HY 2019: ZMW 96 million) and decreased by 2% to
USD 7.9 million (HY 2019: USD 8.1 million). The gross profit
increased by 44% in Kwacha terms (23% in Dollar terms) and the
operating profit increased by 226% in Kwacha terms (179% in Dollar
terms).
Milling
The wheat and maize milling division had an exceptional
performance, recording operating profit growth of 57% in Kwacha
terms (40% in Dollar terms), due to the increases in the flour
price and the volumes of maize milled. Overheads were also well
managed, assisted by a reduction in repair and maintenance
costs.
Zamleather
Zamleather recorded a significant improvement in the period as
the turnaround strategy for the leather and shoe business began
taking shape. Revenue increased by 29% (10% in Dollar terms),
supported by an increase in shoe sales volumes. Gross profit
increased 56% in Kwacha terms (34% in Dollar terms), helped by a
swing in volume to higher-margin shoes and grade improvements
resulting from higher selectivity of the hides processed into wet
blue leather.
Walter Roodt
Chief Executive Officer
16 June 2020
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
REPORT OF THE DIRECTORS
In compliance with Section 275 of the Companies Act, the
Directors submit their report on the activities of the Group for
the six month period ended 31 March 2020.
1. Principal activities
Zambeef Products PLC and its subsidiaries ("Group") is one of
the largest agri-businesses in Zambia. The Group is principally
involved in the production, processing, distribution and retailing
of beef, chicken, pork, milk, dairy products, eggs, edible oils,
stock feed and flour. The Group also has large row cropping
operations (principally maize, soya beans and wheat), with
approximately 7,971 Ha of irrigated row crops and 8,623 Ha of
rain-fed/dry-land crops available for planting each year. The Group
also has operations in West Africa in Nigeria and Ghana.
2. The Company
The Company is incorporated and domiciled in Zambia.
Business address Postal address
Plot 4970, Manda Road Private Bag 17
Industrial Area Woodlands
Lusaka Lusaka
ZAMBIA ZAMBIA
3. Share capital
Details of the Company's authorised and issued share capital are
as follows:
31 Mar 2020 30 Mar 2019
-------------------- --------------------
ZMW'000s USD'000s ZMW'000s USD'000s
Authorised
700,000,000 ordinary shares
of ZMW0.01 each 7,000 938 7,000 938
========= ========= ========= =========
Issued and fully paid
Ordinary shares
300,579,630 ordinary shares
of ZMW0.01 each 3,006 449 3,006 449
Preference shares - convertible
redeemable
100,057,658 of ZMW0.01 each 1,000 100 1,000 100
========= ========= ========= =========
4. Results
The Group's results are as follows:
Unaudited Audited
6 months 6 months 6 months 6 months
to to to to Year ended Year ended
31 March 31 March 31 March 31 March 30 September 30 September
2020 2020 2019 2019 2019 2019
Group ZMW'000s USD'000s ZMW'000s USD'000s ZMW'000s USD'000s
Revenue 1,797,633 129,233 1,416,490 118,833 3,134,967 254,462
Profit/ (loss)
before taxation 12,490 898 (30,156) (2,531) 38,653 3,138
Taxation charge (927) (67) (1,633) (137) (2,780) (226)
Loss from discontinued
operations (9,423) (677) - - (17,379) (1,411)
---------------- --------- ---------- --------- ------------- -------------
Group profit
/(loss) for
the period 2,140 154 (31,789) (2,668) 18,494 1,501
---------------- --------- ---------- --------- ------------- -------------
Group profit
/(loss) attributable
to:
Equity holders
of the parent 1,650 119 (32,379) (2,717) 18,100 1,469
Non-controlling
interest 490 35 590 49 394 32
---------------- --------- ---------- --------- ------------- -------------
2,140 154 (31,789) (2,668) 18,494 1,501
---------------- --------- ---------- --------- ------------- -------------
5. Dividends
There was no dividend paid or proposed for the six month period
ended 31 March 2020.
6. Management
The Senior Management team comprise the following:
Walter Roodt Chief Executive Officer
Faith Mukutu Chief Financial Officer
---------------------------------------------------
Mike Lovett Chief Operating Officer
---------------------------------------------------
Danny Museteka Company Secretary
---------------------------------------------------
Yusuf Koya Group Head - Banking and Administration
---------------------------------------------------
Pravin Abraham Chief Internal Auditor
---------------------------------------------------
Ebrahim Israel General Manager - International Retailing
---------------------------------------------------
Murray Moore General Manager - Beef and Dairy
---------------------------------------------------
Lewis Potgieter General Manager - Sinazongwe Farm
---------------------------------------------------
Robert Hoskins General Manager - Chiawa Farm
Davies
---------------------------------------------------
Francis Mondomona General Manager - Huntley Farm
---------------------------------------------------
Richard Franklin General Manager - Zamleather Limited
---------------------------------------------------
David Subakanya General Manager - Zampalm Limited
---------------------------------------------------
Matthews Ngosa General Manager - Zamchick Limited, Zamhatch
Limited
---------------------------------------------------
Willem Abraham General Manager - Dairy
Voster
---------------------------------------------------
Alun Maskell General Manager - Masterpork Limited
---------------------------------------------------
Christiaan Engelbrecht General Manager - Stock Feed
---------------------------------------------------
Theo de Lange Group Technical Manager
---------------------------------------------------
Bartholomew Mbao Dairy Processing Manager
---------------------------------------------------
Lenard Mwanamumbula Piggery Manager
---------------------------------------------------
Johan Swanepoel Flour Mill Manager
---------------------------------------------------
Charles Milupi Poultry Manager
---------------------------------------------------
Ivor Chilufya Group Financial Controller
---------------------------------------------------
Justin Rust Commercial Manager
---------------------------------------------------
Basil Webber Commercial Manager
---------------------------------------------------
Phillip Diedericks Commercial Manager
---------------------------------------------------
Niyaas Dalal Finance Manager - Zambeef Products Limited,
Zam Chick Limited, Zamhatch Limited
---------------------------------------------------
Simon Nkhata Finance Manager - Zambeef Retailing Limited,
Masterpork Limited
---------------------------------------------------
Baron Chisola Finance Manager - Zampalm Limited, Group Inventory
---------------------------------------------------
Billy Mudenda Finance Manager - Zamleather Limited
---------------------------------------------------
Shadreck Banda Financial Controller - Group Fixed Assets
---------------------------------------------------
Chizola Daka Financial Controller - Group Creditors
---------------------------------------------------
Gbenga Ibitoye Financial Controller - West Africa
---------------------------------------------------
Caroline Mulaga Group Head - Debtors and Credit Control
---------------------------------------------------
Anthony Seno Head of IT
---------------------------------------------------
Awren Mutaka Head of Human Resources
---------------------------------------------------
Mathews Mbasela Head of Payroll Processing
---------------------------------------------------
Eddie Tembo Chief Security Manager
---------------------------------------------------
Jones Kayawe Head of Environment, Health and Safety
---------------------------------------------------
Field Musongole Maintenance Manager
---------------------------------------------------
Ernest Gondwe Regional Manager - Shoprite & Excellent Meats
---------------------------------------------------
Francis Mulenga Regional Manager - Shoprite
---------------------------------------------------
Noel Chola Regional Manager - Shoprite
---------------------------------------------------
Rodgers Chinkuli Regional Manager - Zambeef Outlets
---------------------------------------------------
Hillary Anderson National Retail Manager - Shoprite
---------------------------------------------------
Lufeyo Nkhoma General Manager - Master Meats Ghana
---------------------------------------------------
Clement Mulenga General Manager - Master Meats Nigeria
---------------------------------------------------
7. Directors and Secretary
The directors in office during the financial period and at the
date of this report were as follows:
Michael Mundashi Chairman
Dr. Jacob Mwanza Chairman (Retired on 31 December 2019)
---------------------------------------
Dr. Lawrence S. Non-executive director
Sikutwa
---------------------------------------
John Rabb Non-executive director
---------------------------------------
Yollard Kachinda Non-executive director
---------------------------------------
Prof. Enala Mwase Non-executive director
---------------------------------------
David Osborne Non-executive director
---------------------------------------
Margaret Mudenda Non-executive director
---------------------------------------
Jonathan Kirby Non-executive director
---------------------------------------
Frank Braeken Non-executive director
---------------------------------------
Francis Grogan Chief Executive Officer (Retired on 31
December 2019)
---------------------------------------
Walter Roodt Chief Executive Officer
---------------------------------------
Faith Mukutu Executive Director
---------------------------------------
Danny Museteka Company Secretary
---------------------------------------
8. Directors' interests
The directors held the following interests in the Company's
ordinary shares at the reporting date:
31 March 2020 30 September 2019
----------------------------- -------------------------
Direct Indirect Direct Indirect
Dr. Jacob Mwanza* - - 1,399,629 -
Francis Grogan* - - 995,000 3,596,631
John Rabb - 14,000,000 - 14,000,000
Frank Braeken 375,000 - 375,000 -
375,000 14,000,000 2,769,629 17,596,631
======== =========== ========== ===========
*Retired on 31 December 2019
9. Directors' fees and remuneration
Housing Air Fares
ZMW'000 Salary Bonus Allowance Car Allowance Allowance Medicals
NON-EXECUTIVE
---------- ------ ----------- -------------- ----------- ---------
Jacob Mwanza 245,977 - - - - -
---------- ------ ----------- -------------- ----------- ---------
Michael Mundashi 400,000 - - - - -
---------- ------ ----------- -------------- ----------- ---------
Lawrence Sikutwa 153,736 - - - - -
---------- ------ ----------- -------------- ----------- ---------
John Rabb 184,483 - - - - -
---------- ------ ----------- -------------- ----------- ---------
Yollard Kachinda 153,736 - - - - -
---------- ------ ----------- -------------- ----------- ---------
Enala Mwasa 153,736 - - - - -
---------- ------ ----------- -------------- ----------- ---------
Margaret Mudenda 184,483 - - - - -
---------- ------ ----------- -------------- ----------- ---------
Jonathan Kirby 184,483 - - - - -
---------- ------ ----------- -------------- ----------- ---------
Frank Braeken 153,736 - - - - -
---------- ------ ----------- -------------- ----------- ---------
EXECUTIVE
---------- ------ ----------- -------------- ----------- ---------
Francis Grogan 1,665,955 - - Company - Yes
Car
---------- ------ ----------- -------------- ----------- ---------
Walter Roodt 1,725,657 - - Company - Yes
Car
---------- ------ ----------- -------------- ----------- ---------
Faith Mukutu 1,951,328 - - Company - Yes
Car
---------- ------ ----------- -------------- ----------- ---------
Mike Lovett 1,647,681 - Yes Company - Yes
Car
---------- ------ ----------- -------------- ----------- ---------
Danny Museteka 1,508,697 - - - - Yes
---------- ------ ----------- -------------- ----------- ---------
In addition to the above, all Executive Directors are also
entitled to a gratuity of 10 per cent. of their gross basic salary
paid over the two-year contract term, less statutory deductions for
tax.
Further, the board co-opted Mr Hastings Mtine into the Audit
Committee as an expert advisor. Mr Mtine's remuneration was
ZMW11,588 in the period under review.
10. Significant Shareholdings
As at 31 March 2020, the Company has been advised of the
following notifiable interests in its ordinary share capital:
Investor Name Current Position % of Shareholding
CDC Group Plc 52,601,435 17.5%
----------------- ------------------
M & G Investment Management 46,304,408 15.4%
----------------- ------------------
Africa Life 42,413,679 14.1%
----------------- ------------------
National Pension Scheme Authority
(Zambia) 24,797,819 8.3%
----------------- ------------------
Sussex Trust 14,000,000 4.7%
----------------- ------------------
Eastspring Investments 11,995,062 4.0%
----------------- ------------------
Artio Global Investors 9,360,000 3.1%
----------------- ------------------
CDC Group Plc are also the holders of 100,057,658 convertible
redeemable preference shares. These shares have four voting rights
for every five preference shares held resulting in CDC having
34.85% of the voting rights.
11. Employees
The Group employed an average number of employees of 7,422 (30
September 2019 - 7,407; 31 March 2019 - 7,215) and total salaries
and wages were ZMW242.4 million (USD17.4 million) for the six month
period to 31 March 2020 (30 September 2019 - ZMW453.7 million
[USD36.8 million], 31 March 2019 - ZMW237.6 million [USD19.9
million]).
The average number of persons employed by the Group in each
month of the 6 month period is as follows:
October 2019 7,380
November 2019 7,581
------
December 2019 7,633
------
January 2020 7,022
------
February 2020 7,417
------
March 2020 7,499
------
12. Safety, Health and Environmental issues
As part of some of the Group's term loans, as well as the recent
CDC Group PLC equity investment, the Group has signed up to an
Environmental and Social Action Plan ("ESAP"), which requires the
Group to meet both local Zambian standards as well as international
standards relating to the environment.
The Group provides education and healthcare services to its
employees. The Group also supports various community activities in
the areas in which it operates.
13. Legal matters
There are no significant or material legal or arbitration
proceedings (including to the knowledge of the Directors, any such
proceedings which are pending or threatened, by or against the
Company or any subsidiary of the Group) which may have or have had
during the 12 months immediately preceding the date of this
document a significant or material effect on the financial position
or profitability of the Company or any member of the Group.
14. Gifts and donations
The Group made donations of ZMW1.2million (USD0.09 million), (30
September 2019 - ZMW2million [USD0.165 million], 31 March 2019 -
ZMW1.2 million [USD0.10 million]) to a number of activities.
15. Export sales
The Group made exports of ZMW43 million (USD3 million) during
the period (30 September 2019 - ZMW46.5 million [USD3.8 million],
31 March 2019 - ZMW24 million [USD2 million]).
16. Property, plant and equipment
Assets totalling ZMW57.9 million (USD4.2 million) were purchased
by the Group during the period (30 September 2019 - ZMW113.8
million [USD9.2 million], 31 March 2019 - ZMW54.6 million [USD4.6
million]).
17. Interim report
The interim report set out below has been approved by the
Directors.
By order of the Board
Danny Museteka
Company Secretary
Date: 16 June 2020
The Directors
Zambeef Products PLC
Plot 4970, Manda Road
Industrial Area
Lusaka
Dear Sirs
INDEPENT REVIEW REPORT OF ZAMBEEF PRODUCTS PLC AND ITS
SUBSIDIARIES
Introduction
We have been instructed by the Directors of the Company to
review the financial information set out on pages 15 to 52 and we
have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of, and has been approved
by the Directors. The Listing Rules of the Lusaka Stock Exchange
and International Accounting Standard 34 require that the
accounting policies and presentation applied to the interim figures
should be consistent with those applied in preparing the preceding
annual financial statements except where changes, and reasons for
them, are disclosed.
Review of work performed
We conducted our review in accordance with guidance contained in
the International Standards on Auditing. A review consists
principally of making enquiry of Group management and applying
analytical procedures to the financial information and underlying
financial data and based thereon, assessing whether the accounting
policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as
test of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing
and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial
information.
Review conclusion
On basis of our review we are not aware of any material
modifications that should be made to the consolidated financial
information as presented for the six month period ended 31 March
2020.
Chartered Accountants
Christopher Mulenga (AUD/ F000178)
Name of Partner signing on behalf of the Firm
Lusaka
Date: 16 June 2020
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Unaudited Audited
31 Mar 2020 31 Mar 2019 30 Sept 2019
----- ------------ ------------ -------------
Group Note ZMW'000s ZMW'000s ZMW'000s
----- ------------ ------------ -------------
Revenue 5(i) 1,797,633 1,416,490 3,134,967
----- ------------ ------------ -------------
Net loss arising from
price changes in fair
value of biological assets 9 (10,408) (15,729) 10,284
----- ------------ ------------ -------------
Cost of sales (1,161,096) (930,191) (2,063,704)
----- ------------ ------------ -------------
Gross profit 5(i) 626,129 470,570 1,081,547
----- ------------ ------------ -------------
Administrative expenses (501,168) (459,899) (920,771)
----- ------------ ------------ -------------
Other income 538 706 433
----- ------------ ------------ -------------
Operating profit 125,499 11,377 161,209
----- ------------ ------------ -------------
Share of loss equity accounted
investment (1,898) (1,819) (3,036)
----- ------------ ------------ -------------
Exchange losses on translating
foreign currency transactions
and balances (62,870) (3,347) (36,730)
----- ------------ ------------ -------------
Finance costs (48,241) (36,367) (82,790)
----- ------------ ------------ -------------
Profit/(loss) before taxation 5(i) 12,490 (30,156) 38,653
----- ------------ ------------ -------------
Taxation charge 6(a) (927) (1,633) (2,780)
----- ------------ ------------ -------------
Group profit/(loss) for
the period from continued
operations 11,563 (31,789) 35,873
----- ------------ ------------ -------------
Loss from discontinued
operations 15 (9,423) - (17,379)
----- ------------ ------------ -------------
Total (loss)/profit for
the period 2,140 (31,789) 18,494
----- ------------ ------------ -------------
Group profit/(loss) attributable
to:
----- ------------ ------------ -------------
Equity holders of the
parent 1,650 (32,379) 18,100
----- ------------ ------------ -------------
Non-controlling interest 490 590 394
----- ------------ ------------ -------------
2,140 (31,789) 18,494
----- ------------ ------------ -------------
Other comprehensive income
----- ------------ ------------ -------------
Exchange gains on translating
presentational currency 434,406 13,536 106,391
----- ------------ ------------ -------------
Remeasurement of net defined
benefit liability - - 8,829
----- ------------ ------------ -------------
Remeasurement of leases (12)
----- ------------ ------------ -------------
Total comprehensive income
for the period 436,534 (18,253) 133,714
----- ------------ ------------ -------------
Total comprehensive income/(loss)
for the period attributable
to:
----- ------------ ------------ -------------
Equity holders of the
parent 433,889 (21,759) 129,935
----- ------------ ------------ -------------
Non-controlling interest 2,645 3,506 3,779
----- ------------ ------------ -------------
436,534 (18,253) 133,714
----- ------------ ------------ -------------
Earnings per share Ngwee Ngwee Ngwee
----- ------------ ------------ -------------
Basic and diluted earnings
per share from continued
operations 7 2.76 (7.78) 8.86
----- ------------ ------------ -------------
Basic and diluted earnings
per share from discontinued
operations 7 (2.35) - (4.34)
----- ------------ ------------ -------------
Total 7 0.41 (7.78) 4.52
----- ------------ ------------ -------------
The accompanying notes form part of the financial
statements.
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Unaudited Audited
31 Mar 31 Mar
2020 2019 30 Sept 2019
------ --------- --------- -------------
Group Note USD'000s USD'000s USD'000s
------ --------- --------- -------------
Revenue 5(ii) 129,233 118,833 254,462
------ --------- --------- -------------
Net loss arising from price
changes in fair value of
biological assets 9 (748) (1,320) 835
------ --------- --------- -------------
Cost of sales (83,472) (78,036) (167,509)
------ --------- --------- -------------
Gross profit 5(ii) 45,013 39,477 87,788
------ --------- --------- -------------
Administrative expenses (36,029) (38,582) (74,738)
------ --------- --------- -------------
Other income 38 59 35
------ --------- --------- -------------
Operating profit 9,022 954 13,085
------ --------- --------- -------------
Share of loss equity accounted
investment (136) (153) (246)
------ --------- --------- -------------
Exchange losses on translating
foreign currency transactions
and balances (4,520) (281) (2,981)
------ --------- --------- -------------
Finance costs (3,468) (3,051) (6,720)
------ --------- --------- -------------
Profit/(loss) before taxation 5(ii) 898 (2,531) 3,138
------ --------- --------- -------------
Taxation charge 6(f) (67) (137) (226)
------ --------- --------- -------------
Group profit/(loss) for
the period from continued
operations 831 (2,668) 2,912
------ --------- --------- -------------
Loss from discontinued operations 15 (677) - (1,411)
------ --------- --------- -------------
Total profit/(loss) for
the period 154 (2,668) 1,501
------ --------- --------- -------------
Group profit/(loss) attributable
to:
------ --------- --------- -------------
Equity holders of the parent 119 (2,717) 1,469
------ --------- --------- -------------
Non-controlling interest 35 49 32
------ --------- --------- -------------
154 (2,668) 1,501
------ --------- --------- -------------
Other comprehensive income
------ --------- --------- -------------
Exchange (losses)/gains
on translating presentational
currency (42,051) 2,208 (10,553)
------ --------- --------- -------------
Remeasurement of net defined
benefit liability - - 717
------ --------- --------- -------------
Remeasurement of leases (1) - -
------ --------- --------- -------------
Total comprehensive loss
for the period (41,898) (460) (8,335)
------ --------- --------- -------------
Total comprehensive income/(loss)
for the period attributable
to:
------ --------- --------- -------------
Equity holders of the parent (42,144) (745) (8,367)
------ --------- --------- -------------
Non-controlling interest 246 285 32
------ --------- --------- -------------
(41,898) (460) (8,335)
------ --------- --------- -------------
Earnings per share Cents Cents Cents
------ --------- --------- -------------
Basic and diluted earnings
per share from continued
operations 7 0.20 (0.65) 0.72
------ --------- --------- -------------
Basic and diluted earnings
per share from discontinued
operations 7 (0.17) - (0.35)
------ --------- --------- -------------
Total 7 0.03 (0.65) 0.37
------ --------- --------- -------------
The accompanying notes form part of the financial statements
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Total
Foreign attributable
Preference exchange to owners
Share Share share Revaluation translation Retained of the Non-controlling Total
capital premium capital reserve reserve earnings parent interest equity
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
------------ -------------- -------------- --------------- ------------ --------------- ------------- ---------------- -------------
At 1 October
2018 3,006 1,125,012 1,000 1,228,724 278,923 479,109 3,115,774 (8,660) 3,107,114
Loss for the
period - - - - - (32,379) (32,379) 590 (31,789)
Transfer of
surplus
depreciation - - - (10,817) 10,817 - - -
Other
comprehensive
income: - -
Exchange gains
on translating
presentational
currency - - - - 10,620 - 10,620 2,916 13,536
Total
comprehensive
income
for the period - - - (10,817) 10,620 (21,562) (21,759) 3,506 (18,253)
At 30 March
2019 3,006 1,125,012 1,000 1,217,907 289,543 457,547 3,094,015 (5,154) 3,088,861
Loss for the
period - - - - - 59,308 59,308 490 59,798
Transfer of
surplus
depreciation - - - (18,849) - 18,849 - - -
Other
comprehensive
income:
Exchange gains
on translating
presentational
currency - - - - 92,386 - 92,386 (217) 92,169
Total
comprehensive
income
for the period - - - (18,849) 92,386 78,157 151,694 273 151,967
At 30 September
2019 3,006 1,125,012 1,000 1,199,058 381,929 535,704 3,245,709 (4,881) 3,240,828
Profit for the
period - - - - - 1,650 1,650 490 2,140
Transfer of
surplus
depreciation - - - (14,833) - 14,833 - - -
Other
comprehensive
income
Remeasurement
of leases - - - - - (12) (12) - (12)
Exchange gains
on translating
presentational
currency - - - - 432,251 - 432,251 2,155 434,406
Total
comprehensive
income
for the period - - - (14,833) 432,251 16,471 433,889 2,645 436,534
At 31 March
2020 3,006 1,125,012 1,000 1,184,225 814,180 552,175 3,679,598 (2,236) 3,677,362
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Total
Foreign attributable
Preference exchange to owners
Share Share share Revaluation translation Retained of the Non-controlling Total
capital premium capital reserve reserve earnings parent Interest equity
USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s
----------------- --------------- ---------------- --------------- ------------ ------------- ------------- ---------------- ------------
At 1 October
2018 449 185,095 100 175,617 (186,889) 80,188 254,560 (708) 253,852
Loss for the
period - - - - - (2,717) (2,717) 49 (2,668)
Transfer of
surplus
depreciation - - - (907) - 907 - - -
Other
comprehensive
income
Exchange gains
on translating
presentational
currency - - - - 1,972 - 1,972 236 2,208
Total
comprehensive
income for
the period - - - (907) 1,972 (1,810) (745) 285 (460)
At 31 March
2019 449 185,095 100 174,710 (184,917) 78,378 253,815 (423) 253,392
Transactions
with owners
Profit for the
period - - - - - 4,903 4,903 40 4,943
Transfer of
surplus
depreciation - - - (1,501) - 1,501 - - -
Revaluation - - - - - - - - -
Other
comprehensive
income:
Exchange losses
on translating
presentational
currency - - - - (12,831) - (12,831) 13 (12,818)
Total
comprehensive
income for
the period - - - (1,501) (12,831) 6,404 (7,928) 53 (7,875)
At 30 September
2019 449 185,095 100 173,209 (197,748) 84,782 245,887 (370) 245,517
Profit for the
period - - - - - 119 119 35 154
Transfer of
surplus
depreciation - - - (1,066) - 1,066 - - -
Other
comprehensive
income
Remeasurement
of leases - - - - - (1) (1) - (1)
Exchange gains
on translating
presentational
currency - - - - (42,262) - (42,262) 211 (42,051)
Total
comprehensive
income - - - (1,066) (42,262) 1,184 (42,144) 246 (41,898)
At 31 March
2020 449 185,095 100 172,143 (240,010) 85,966 203,743 (124) 203,619
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION -- 31 MARCH
2020
Unaudited Audited
----------------------------- --------------
Note 31 Mar 2020 31 Mar 2019 30 Sept 2019
ZMW'000s ZMW'000s ZMW'000s
ASSETS
Non - current assets
Goodwill 166,801 166,801 166,801
Property, plant and equipment 8 3,292,653 2,895,599 2,841,824
Investment in associate 10,478 13,592 12,376
Deferred tax assets 6(e) 80,073 47,619 56,525
3,550,005 3,123,611 3,077,526
Current assets
Biological assets 9 520,437 374,728 170,417
Inventories 682,619 594,640 941,159
Trade and other receivables 87,924 68,560 98,025
Assets held for disposal 15 131,857 - 135,357
Amounts due from related
companies 38,281 37,502 41,554
Income tax recoverable 6(c) 18,329 17,517 2,767
1,479,447 1,092,947 1,389,279
Total assets 5,029,452 4,216,558 4,466,805
EQUITY AND LIABILITIES
Capital and reserves
Share capital 3,006 3,006 3,006
Preference share capital 1,000 1,000 1,000
Share premium 1,125,012 1,125,012 1,125,012
Reserves 2,550,580 1,964,997 2,116,691
3,679,598 3,094,015 3,245,709
Non-controlling interest (2,236) (5,154) (4,881)
3,677,362 3,088,861 3,240,828
Non - current liabilities
Interest bearing liabilities 11 234,846 256,206 228,099
Obligations under finance
leases 12 19,741 19,530 19,297
Deferred liability 15,737 26,644 16,362
Deferred taxation 6(e) 32,154 6,865 9,138
302,478 309,245 272,896
Current liabilities
Interest bearing liabilities 11 163,125 94,913 130,661
Collateral management agreement 11 227,983 176,159 212,381
Obligations under finance
leases 12 24,701 11,111 21,487
Trade and other payables 231,592 173,859 259,585
Provisions 54,310 41,597 52,914
Amounts due to related
companies 1,265 362 251
Taxation payable 6(c) 15,253 12,109 1,377
Bank overdrafts 10 331,383 308,342 274,425
1,049,612 818,452 953,081
Total equity and liabilities 5,029,452 4,216,558 4,466,805
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION -- 31 MARCH
2020
Unaudited Audited
-------------------------- ------------
30 Sept
31 Mar 2020 31 Mar 2019 2019
Note USD '000s USD '000s USD '000s
ASSETS
Non - current assets
Goodwill 9,236 13,683 12,636
Property, plant and equipment 8 182,317 237,539 215,290
Investment in associate 580 1,115 938
Deferred tax asset 6(j) 4,434 3,906 4,282
196,567 256,243 233,146
Current assets
Biological assets 9 28,817 30,741 12,910
Inventories 37,797 48,781 71,300
Trade and other receivables 4,868 5,624 7,426
Assets held for disposal 15 7,301 - 10,254
Amounts due from related
companies 2,120 3,076 3,148
Income tax recoverable 6(h) 1,015 1,437 210
81,918 89,659 105,248
Total assets 278,485 345,902 338,394
EQUITY AND LIABILITIES
Capital and reserves
Share capital 449 449 449
Preference share capital 100 100 100
Share premium 185,095 185,095 185,095
Reserves 18,099 68,171 60,243
203,743 253,815 245,887
Non-controlling interest (124) (423) (370)
203,619 253,392 245,517
Non - current liabilities
Interest bearing liabilities 11 13,004 21,018 17,280
Obligations under finance
leases 12 1,093 1,602 1,462
Deferred liability 872 2,186 1,240
Deferred tax liability 6(j) 1,780 563 692
16,749 25,369 20,674
Current liabilities
Interest bearing liabilities 11 9,032 7,786 9,899
Collateral management agreement 11 12,624 14,451 16,089
Obligations under finance
leases 12 1,368 911 1,628
Trade and other payables 12,823 14,263 19,665
Provisions 3,007 3,412 4,009
Amounts due to related companies 69 30 19
Taxation payable 6(h) 845 993 104
Bank overdrafts 10 18,349 25,295 20,790
58,117 67,141 72,203
Total equity and liabilities 278,485 345,902 338,394
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Unaudited Audited
--------------------------------------------------------------------------- -------------
6 months 6 months
to to Year to
31 Mar 2020 31 Mar 2019 30 Sept 2019
ZMW'000s ZMW'000s ZMW'000s
Cash inflow/(outflow) from/(on)
operating activities
Profit/(loss) before taxation 12,490 (30,156) 38,653
Finance costs 48,241 36,367 82,790
(Loss)/profit on disposal of property,
plant and equipment - 126 (986)
Adjustment on transition to IFRS
16 (1,187) - -
Depreciation on right-of-use assets 304 - -
Depreciation 66,285 58,727 121,921
Share of loss of equity accounted
investment 1,898 1,819 3,036
Loss on discontinued operations (9,423) - (17,379)
Fair value price adjustment 10,408 15,729 (10,284)
Net unrealised foreign exchange
(gains)/losses 31,935 (1,011) 7,153
Earnings before interest, tax, depreciation
and amortisation, fair value adjustments
and net unrealised foreign exchange
losses 160,951 81,601 224,904
(Increase)/decrease in biological
assets (360,428) (193,054) 21,541
Decrease in inventory 258,540 45,171 (301,348)
Decrease in trade and other receivables 10,101 87,754 58,289
Decrease in amounts due from related
companies 3,273 12,770 8,718
Decrease in trade and other payables
and provisions (26,597) (124,071) (27,028)
Increase in amount due to related
companies 1,014 130 19
(Decrease)/increase in deferred
liability (625) (4,334) (6,249)
Cash outflow from assets held for
disposal - - -
Income tax paid (3,145) (5,890) (9,652)
Net cash inflow/(outflow from/(on)
operating activities 43,084 (99,923) (30,806)
Investing activities
Purchase of property, plant and
equipment (57,952) (54,596) (113,825)
Proceeds from sale of assets 342 - 11,776
Net cash (outflow)/ inflow (on)/
from investing activities (57,610) (54,596) (102,049)
Net cash (outflow)/inflow before
financing (14,526) (154,519) (132,855)
Financing
Long term loans repaid (56,612) (49,876) (96,913)
Receipt of short term funding 15,602 67,849 119,456
Leasing liabilities obtained/(repaid) 3,658 (7,704) 707
Finance costs including discontinued
operations (48,241) (36,367) (82,790)
Net cash outflow from financing (85,593) (26,098) (59,540)
Decrease in cash and cash equivalents (100,119) (180,617) (192,395)
Cash and cash equivalents at beginning
of period (274,425) (135,743) (135,743)
Effects of exchange rate changes
on the balance of
cash held in foreign currencies 43,161 8,018 53,713
Cash and cash equivalents at end
of period (331,383) (308,342) (274,425)
Represented by:
Cash in hand and at bank 62,113 50,801 56,753
Bank overdrafts (393,496) (359,143) (331,178)
(331,383) (308,342) (274,425)
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Unaudited Audited
----------------------------- ------------
6 months 6 months
to to Year to
31 Mar 31 Mar 30 Sept
2020 2019 2019
USD'000s USD'000s USD'000s
Cash inflow/(outflow) from/(on) operating
activities
Profit/(loss) before taxation 898 (2,531) 3,138
Finance costs 3,468 3,051 6,720
Profit/(loss) on disposal of property,
plant and equipment - 11 (80)
Adjustment on transition to IFRS 16 (90) - -
Depreciation charge on right-of-use
assets 22 - -
Depreciation 4,765 4,927 9,896
Share of loss of equity accounted
investment 136 153 246
Loss of disposal of investments - - -
Loss on discontinued operations (677) - (1,411)
Fair value price adjustment 748 1,320 (835)
Net unrealised foreign exchange losses/(gains) 2,296 (85) 581
Earnings before interest, tax, depreciation
and amortisation, fair value adjustments
and net unrealised foreign exchange
losses 11,566 6,846 18,255
Increase/(decrease) in biological
assets (25,911) (16,196) 1,748
Decrease in inventory 18,587 3,790 (24,460)
Decrease in trade and other receivables 726 7,362 4,731
Decrease in amounts due from related
companies 235 1,071 708
(Decrease) in trade and other payables (1,912) (10,409) (2,194)
Increase in amount due to related
companies 73 11 2
(Decrease) in deferred liability (45) (364) (507)
Cash outflow from assets held for
disposal - - -
Income tax paid (226) (494) (783)
Net cash inflow/(outflow) from/(on)
operating activities 3,093 (8,383) (2,500)
Investing activities
Purchase of property, plant and equipment (4,166) (4,580) (9,239)
Proceeds from sale of assets 25 - 956
Net cash outflow on investing activities (4,141) (4,580) (8,283)
Net cash outflow before financing (1,048) (12,963) (10,783)
Financing
Long term loans repaid (4,070) (4,184) (7,866)
Receipt of short term funding 1,123 5,692 9,696
Leasing liabilities obtained/(repaid) 263 (646) 57
Finance costs including discontinued
operations (3,468) (3,051) (6,720)
Net cash outflow from financing (6,152) (2,189) (4,833)
Decrease in cash and cash equivalents (7,200) (15,152) (15,616)
Cash and cash equivalents at beginning
of period (20,790) (11,090) (11,090)
Effects of exchange rate changes on
the balance of
cash held in foreign currencies 9,641 947 5,916
Cash and cash equivalents at end
of period (18,349) (25,295) (20,790)
Represented by:
Cash in hand and at bank 3,439 4,167 4,299
Bank overdrafts (21,788) (29,462) (25,089)
(18,349) (25,295) (20,790)
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- 31
MARCH 2020
1. The Group
Zambeef Products PLC and its subsidiaries ("Group") is one of
the largest agri-businesses in Zambia. The Group is principally
involved in the production, processing, distribution and retailing
of beef, chicken, pork, milk, dairy products, eggs, edible oils,
stock feed and flour. The Group also has large row cropping
operations (principally maize, soya beans and wheat), with
approximately 7,971 Ha of irrigated row crops and 8,623 Ha of
rain-fed/dry-land crops available for planting each year. The Group
also has operations in West Africa, Nigeria and Ghana.
2. Principal accounting policies
The principal accounting policies applied by the Group in the
preparation of these financial statements are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
(a) Basis of consolidation
The consolidated financial statements include the financial
statements of the parent Company and its subsidiary companies made
up to the end of the financial year. The results of subsidiaries
acquired or disposed of during the year are included in the
consolidated statement of comprehensive income from the date of
their acquisition or up to the date of their disposal. Intercompany
transactions and profits are eliminated on consolidation and all
income and profit figures relate to external transactions only.
Non-controlling interests, presented as part of equity,
represent the portion of a subsidiary's profit or loss and net
assets that is not held by the Group. The Group attributes total
comprehensive income or loss of subsidiaries between the owners of
the parent and the non-controlling interests based on their
respective ownership interests. Losses incurred are allocated to
the non-controlling interest in equity until this value is nil, at
which point any subsequent losses are allocated against the
interests of the parent.
(b) Going Concern
At the reporting date the current portion of long term loan
amounts repayable amount to ZMW415.8 million (USD22.9 million) [30
September 2019: ZMW364.5 million (USD27.6 million)]. After
reviewing the available information including the Group's strategic
plans and continuing support from the Group's working capital
funders, the Directors have a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements. All
current liabilities will be settled from the continued liquidation
of stock and expected increase in income from the capital
expenditure carried out.
(c) Basis of presentation
The information for the 6 month periods ended 31 March 2020 and
31 March 2019 do not constitute statutory accounts. The figures for
the year ended 30 September 2019 have been extracted from the 2019
statutory financial statements. The auditors' report on those
financial statements was unqualified.
The financial statements are prepared in accordance with the
provisions of the Companies Act and International Financial
Reporting Standards (IFRS). The financial statements are presented
in accordance with IAS 1 "Preparation of financial statements"
(Revised 2007).
The financial statements have been prepared under the historic
cost convention, as modified by the revaluation of property, plant
and equipment, and financial assets and liabilities at fair value
through profit or loss.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
(d) New Standards adopted as at 1 October 2019
The Group has adopted the new accounting pronouncements which
have become effective in 2019, and are as follows:
IFRS 16 'Leases'
IFRS 16 'Leases' replaces IAS 17 'Leases' along with three
Interpretations (IFRIC 4 'Determining whether an Arrangement
contains a Lease', SIC 15 'Operating Leases-Incentives' and SIC 27
'Evaluating the Substance of Transactions Involving the Legal Form
of a Lease'). The new Standard has been applied using the modified
retrospective approach, with the cumulative effect of adopting IFRS
16 being recognised in equity as an adjustment to the opening
balance of retained earnings for the current period. Prior periods
have not been restated.
For contracts in place at the date of initial application, the
Group has elected to apply the definition of a lease from IAS 17
and IFRIC 4 and has not applied IFRS 16 to arrangements that were
previously not identified as lease under IAS 17 and IFRIC 4.
The Group has elected not to include initial direct costs in the
measurement of the right-of-use asset for operating leases in
existence at the date of initial application of IFRS 16, being 1
October 2019. At this date, the Group has also elected to measure
the right-of-use assets at an amount equal to the lease liability
adjusted for any prepaid or accrued lease payments that existed at
the date of transition.
Instead of performing an impairment review on the right-of-use
assets at the date of initial application, the Group has relied on
its historic assessment as to whether leases were onerous
immediately before the date of initial application of IFRS 16.
On transition, for leases previously accounted for as operating
leases with a remaining lease term of less than 12 months and for
leases of low-value assets the Group has applied the optional
exemptions to not recognise right-of-use assets but to account for
the lease expense on a straightline basis over the remaining lease
term.
For those leases previously classified as finance leases, the
right-of-use asset and lease liability are measured at the date of
initial application at the same amounts as under IAS 17 immediately
before the date of initial application.
On transition to IFRS 16 the weighted average incremental
borrowing rate applied to lease liabilities recognised under IFRS
16 was 17.6%.
The Group has benefited from the use of hindsight for
determining lease terms when considering options to extend and
terminate leases.
The following is a reconciliation of total operating lease
commitments at 30 September 2019 to the lease liabilities
recognised at 1 October 2019:
ZMW'000 USD'000
Total operating lease commitments disclosed
at 30 September 2019 15,881 1,203
--------- --------
Recognition exemptions:
Leases of low value assets
Leases with remaining life less than
12 months (14,438) (1,094)
--------- --------
Variable lease payments not recognised - -
--------- --------
Other minor adjustments relating to
commitment disclosures - -
--------- --------
Operating lease liabilities before discounting 1,443 109
--------- --------
Discounted using incremental borrowing
rate (254) (19)
--------- --------
Operating lease liabilities 1,189 90
--------- --------
Reasonable certain extension options - -
--------- --------
Finance lease obligations 40,784 3,090
--------- --------
Total lease liabilities recognised under
IFRS 16 at 1 October 2019 41,973 3,180
--------- --------
(e) Foreign currencies
(i) Presentational and functional currency
Zambeef Products PLC as a company has ten operating branches, of
which nine have a historical functional currency of Zambian Kwacha
(ZMW) and one (the Mpongwe Farm Branch) has a functional currency
of United States Dollars (USD), being an operational branch set up
during the financial year ended 30 September 2012. Management have
chosen a variant on the functional currency of Mpongwe due to the
following factors:
-- the majority of farm input costs (fertilizer, farming
chemicals, agricultural machinery spares, etc.), which are
primarily sourced from overseas, are driven by USD to ZMW exchange
rate due to original prices being USD;
-- the pricing of Mpongwe's principal outputs (wheat, soya and
maize) are significantly influenced by world USD denominated grain
prices;
-- the capital raised attached to the acquisition of the Mpongwe
assets was denominated in foreign currency;
-- the Mpongwe assets were purchased in USD;
-- upon admission and dual listing on the AIM market of the
London Stock Exchange (LSE), Zambeef was required to report in USD
in addition to reporting in ZMW for the LuSE listing; and
-- majority of financial liabilities associated with working
capital funding and capital expenditure are sourced in USD and
repayable in USD, with a substantial portion of the Company's term
liabilities secured on the assets of Mpongwe.
In light of this, Mpongwe's assets and liabilities are
translated to ZMW and consolidated with other branches of the
Company for reporting and tax purposes in Zambia, with any
differences arising out of translation posted as a capital reserve
item and a non-distributable reserve.
The Group's reporting currency in Zambia is ZMW and the
presentation of financial statements to Non-Zambian shareholders
and for the purposes of being listed on the AIM market of the
London Stock Exchange also necessitate the presentation of the
financial statements in United States Dollars (USD).
(ii) Basis of translating presentational currency to USD for the
purposes of supplementary information
Statement of comprehensive income items have been translated
using the average exchange rate for the period as an approximation
to the actual exchange rate. Assets and liabilities have been
translated using the closing exchange rate. Any differences arising
from this process have been recognised in other comprehensive
income and accumulated in the foreign exchange reserve in
equity.
Equity items have been translated at the closing exchange rate.
Exchange differences arising on retranslating equity items and
opening net assets have also been transferred to the foreign
exchange reserve within equity.
The following exchange rates have been applied:
ZMW:USD Average Closing
exchange rate exchange rate
6 months ended 31 March 2019 11.92 12.19
Year ended 30 September 2019 12.32 13.20
6 months ended 31 March 2020 13.91 18.06
All historical financial information, except where specifically
stated, is presented in Zambian Kwacha rounded to the nearest
ZMW'000s and United States Dollars rounded to the nearest
USD'000s.
(iii) Basis of translating transactions and balances
Foreign currency transactions are translated into the functional
currency using the rates of exchange prevailing at the date of
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognized in the statement of
comprehensive income.
Non-operating foreign exchange gains and losses mainly arise on
fluctuations of the exchange rate between United States Dollars and
Zambian Kwacha. Due to the instability of the exchange rate, which
may result in significant variances of foreign exchange related
assets and liabilities, these gains and losses have been presented
below operating profit in the statement of comprehensive
income.
(iv) Basis of translating foreign operations
In the consolidated financial statements, the financial
statements of the foreign subsidiaries originally presented in
their local currency have been translated into Zambian Kwacha.
Assets and liabilities have been translated into Zambian Kwacha at
the exchange rates ruling at the period end. Statement of
comprehensive income items have been translated at an average
monthly rate for the period. Any differences arising from this
procedure are taken to the foreign exchange reserve.
The following exchange rates have been applied:
Average Closing
ZMW: Nigeria Naira exchange rate exchange rate
6 months ended 31 March 2019 30.30 29.39
Year ended 30 September 2019 29.21 27.25
6 months ended 31 March 2020 26.00 20.26
Average Closing
ZMW: Ghana Cedi exchange rate exchange rate
6 months ended 31 March 2019 0.42 0.44
Year ended 30 September 2019 0.42 0.41
6 months ended 31 March 2020 0.40 0.32
(f) General information and basis of preparation
The condensed interim consolidated financial statements are for
the six months ended 31 March 2019 and are presented in Zambian
Kwacha and United States Dollars. They have been prepared in
accordance with IAS 34 Interim Financial Reporting. They do not
include all of the information required in annual financial
statements in accordance with IFRS and should be read in
conjunction with the consolidated financial statements of the Group
for the year ended 30 September 2019.
(g) Significant accounting policies
The interim financial statements have been prepared in
accordance with the accounting policies adopted in the Group's last
annual financial statements for the year ended 30 September
2019.
3. Critical accounting estimates and judgements
When preparing the Interim Financial Statements, management
undertakes a number of judgements, estimates and assumptions about
recognition and measurement of assets, liabilities, income and
expenses. The actual results may differ from the judgements,
estimates and assumptions made by management, and will seldom equal
the estimated results.
The judgements, estimates and assumptions applied in the Interim
Financial Statements, including the key sources of estimation
uncertainty, were the same as those applied in the Group's last
annual financial statements for the year ended 30 September 2019.
The only exceptions are the estimate of income tax liabilities
which is determined in the Interim Financial Statements using the
estimated average annual effective income tax rate applied to the
pre-tax income of the interim period
4. Significant events and transactions
The Group's management believes that the Group is well
positioned in the economy Factors contributing to the Group's
strong position are:
(a) Increase in the retail foot print of the Group.
(b) Increase in production facilities of the Group leading to
higher volumes available for retail.
(c) Improvements in the management team across various areas of
the Group leading to positive reinforcement of strong operational
synergies.
Overall, the Group is in a strong position and has sufficient
capital and liquidity to service its operating activities and debt.
The Group's objectives and policies for managing capital credit
risk and liquidity risk should be read in conjunction with the
consolidated financial statements of the Group for the year ended
30 September 2019.
5. Segmental reporting
An operating segment is a distinguishable component of the Group
that engages in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed
by the Group's Board of Directors ('BoD') to make decisions about
the allocation of resources and assessment of performance about
which discrete financial information is available. Gross margin
information is sufficient for the BoD to use for such purposes. The
BoD reviews information regarding the operating divisions which
match the main external revenues earned by the Group, and
management information regarding the operating assets and
liabilities of the main business divisions within the Group.
During the six month period to 31 March 2020, there have been no
changes from prior periods in the measurement methods used to
determine operating segments and reported segment profit or
loss.
The revenues and gross profit generated by each of the Group's
operating segments and segment assets are summarised as
follows:
Period ended 31 March 2020
(i) in Zambian Kwacha
Segment Revenue Gross Profit
ZMW'000s ZMW'000s
Retailing - Zambia 1,029,584 94,721
Master Meats (Nigeria) 83,007 17,677
Master Meats (Ghana) 26,087 7,772
Retailing West Africa 109,094 25,449
Total Retailing 1,138,678 120,170
Beef 262,500 81,504
Chicken 212,538 43,941
Pork 134,612 24,140
Milk and dairy 108,961 49,569
Eggs 27,125 (2,526)
Total Cold Chain Food Production 745,736 196,628
Gross Combined Retail and CCFP 1,884,414 316,798
Less: Intra/ Inter Sales (721,059) -
Combined Retail and CCFP 1,163,355 316,798
Stock Feed 641,656 122,378
Crops - row crops 256,990 161,886
Mill and bakery 92,820 18,218
Leather and shoe 16,656 6,849
Total Other 109,476 25,067
Total 2,171,477 626,129
Less: intra/inter group Sales (373,844) -
Group total 1,797,633 626,129
(500,630
Central operating costs )
Operating profit 125,499
Foreign exchange losses (62,870)
Finance costs (48,241)
Share of loss of equity accounted
investment (1,898)
Profit before tax 12,490
Operating assets/(liabilities)
Master
Zambeef Retailing Pork Other Total
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
Property, plant and equipment 2,491,048 227,715 83,804 490,086 3,292,653
Biological assets and
inventories 966,159 68,838 20,491 147,568 1,203,056
Cash, cash equivalents
and bank overdrafts (295,320) (62,209) 4,444 21,702 (331,383)
Period ended 31 March 2020
(ii) in US Dollars
Segment Revenue Gross Profit
USD '000s USD '000s
Retailing - Zambia 74,018 6,810
Master Meats (Nigeria) 5,967 1,271
Master Meats (Ghana) 1,876 559
Retailing West Africa 7,743 1,830
Total Retailing 81,861 8,640
Beef 18,871 5,859
Chicken 15,280 3,159
Pork 9,677 1,735
Milk and dairy 7,833 3,564
Fish - -
Eggs 1,950 (182)
Total Cold Chain Food Production 53,611 14,135
Gross Combined Retail and CCFP 135,472 22,775
Less: Intra/ Inter Sales (51,837) -
Combined Retail and CCFP 83,635 22,775
Stock Feed 46,129 8,798
Crops - row crops 18,475 11,638
Mill and bakery 6,673 1,310
Leather and shoe 1,197 492
Total Other 7,870 1,802
Total 156,109 45,013
Less: intra/inter group sales (26,876) -
Group total 129,233 45,013
(35,991
Central operating costs )
Operating profit 9,022
Foreign exchange losses (4,520)
Share of loss of equity accounted
investment (136)
Finance costs (3,468)
Profit before tax 898
Operating assets/(liabilities)
Zambeef Retailing Master Pork Other Total
USD'000s USD'000s USD'000s USD'000s USD'000s
Property, plant and equipment 137,932 12,609 4,639 27,137 182,317
Biological assets and
inventories 53,497 3.812 1,135 8,170 66,614
Cash, cash equivalents
and bank overdrafts (16,352) (3,445) 246 1,202 (18,349)
Period ended 31 March 2019
(i) in Zambian Kwacha
Segment Revenue Gross Profit
ZMW'000s ZMW'000s
Retailing - Zambia 882,826 84,017
Master Meats (Nigeria) 70,097 14,496
Master Meats (Ghana) 22,683 7,458
Retailing West Africa 92,780 21,954
Total Retailing 975,606 105,971
Beef 242,892 60,768
Chicken 167,865 53,469
Pork 120,561 19,194
Milk and dairy 106,248 32,714
Fish 18,613 4,361
Eggs 25,619 5,802
Total Cold Chain Food Production 681,798 176,308
Gross Combined Retail and CCFP 1,657,404 282,279
Less: Intra/ Inter Sales (648,538) -
Combined Retail and CCFP 1,008,866 282,279
Stock Feed 412,344 77,544
Crops - row crops 150,529 93,323
Mill and bakery 83,198 13,041
Leather and shoe 12,931 4,383
Total Other 96,129 17,424
Total 1,667,868 470,570
Less: intra/inter group Sales (251,378) -
Group total 1,416,490 470,570
Central operating costs (459,193)
Operating profit 11,377
Foreign exchange losses (3,347)
Finance costs (36,367)
Share of loss of equity accounted
investment (1,819)
Loss before tax (30,156)
Operating assets/(liabilities)
Master
Zambeef Retailing Pork Other Total
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
Property, plant and equipment 2,023,654 204,122 84,283 583,540 2,895,599
Biological assets and
inventories 630,330 61,762 21,886 255,390 969,368
Cash, cash equivalents
and bank overdrafts (242,691) (76,614) 1,378 9,585 (308,342)
Period ended 31 March 2019
(ii) in US Dollars
Segment Revenue Gross Profit
USD '000s USD '000s
Retailing - Zambia 74,063 7,048
Master Meats (Nigeria) 5,881 1,216
Master Meats (Ghana) 1,903 626
Retailing West Africa 7,784 1,842
Total Retailing 81,847 8,890
Beef 20,377 5,098
Chicken 14,083 4,486
Pork 10,114 1,610
Milk and dairy 8,913 2,744
Fish 1,561 366
Eggs 2,149 487
Total Cold Chain Food Production 57,197 14,791
Gross Combined Retail and CCFP 139,044 23,681
Less: Intra/ Inter Sales (54,408) -
Combined Retail and CCFP 84,636 23,681
Stock Feed 34,593 6,505
Crops - row crops 12,628 7,829
Mill and bakery 6,980 1,094
Leather and shoe 1,085 368
Total Other 8,065 1,462
Total 139,922 39,477
Less: intra/inter group sales (21,089) -
Group total 118,833 39,477
Central operating costs (38,523)
Operating profit 954
Foreign exchange losses (281)
Share of loss of equity accounted
investment (153)
Finance costs (3,051)
Loss before tax (2,531)
Operating assets/(liabilities)
Zambeef Retailing Master Pork Other Total
USD'000s USD'000s USD'000s USD'000s USD'000s
Property, plant and equipment 166,009 16,745 6,914 47,871 237,539
Biological assets and
inventories 51,709 5,067 1,795 20,951 79,522
Cash, cash equivalents
and bank overdrafts (19,909) (6,285) 113 786 (25,295)
Period ended 30 September 2019
(i) in Zambian Kwacha
Segment Revenue Gross
Profit
ZMW'000s ZMW'000s
Retailing - Zambia 1,853,721 172,031
Master Meats (Nigeria) 138,732 27,381
Master Meats (Ghana) 46,222 14,090
Retailing West Africa 184,954 41,471
Total Retailing 2,038,675 213,502
Beef 474,941 127,946
Chicken 247,580 52,405
Zamhatch 112,665 60,310
Pork 252,952 38,642
Milk and dairy 206,531 67,409
Fish 36,612 7,180
Eggs 57,211 13,765
Total Cold Chain Food Production 1,388,492 367,657
Gross Combined Retail and CCFP 3,427,167 581,159
Less: Intra/ Inter Sales (1,303,519 -
Combined Retail and CCFP 2,123,648 581,159
Stock Feed 986,075 191,011
Crops - row crops 474,202 270,116
Mill and bakery 183,520 30,517
Leather and shoe 26,828 8,744
Edible oils - -
Total Other 210,348 39,261
Total 3,794,273 1,081,547
Less: intra/inter group Sales (659,306) -
Group total 3,134,967 1,081,547
Central operating costs (920,338)
Operating profit 161,209
Foreign exchange gains (36,730)
Finance costs (82,790)
Share of loss on equity accounted
investment (3,036)
Profit before tax 38,653
Operating assets/(liabilities)
Zambeef Retailing Master Pork Other Total
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
Property, plant and equipment 2,060,110 209,897 84,443 487,374 2,841,824
Biological assets and
inventories 820,815 70,921 19,195 200,645 1,111,576
Cash, cash equivalents
and bank overdrafts (195,772) (96,500) 1,461 16,386 (274,425)
Period ended 30 September 2019
(i) in US Dollars
Segment Revenue Gross Profit
USD'000s USD'000s
Retailing - Zambia 150,464 13,964
Master Meats (Nigeria) 11,261 2,222
Master Meats (Ghana) 3,752 1,144
Retailing West Africa 15,013 3,366
Total Retailing 165,477 17,330
Beef 38,550 10,385
Chicken 20,096 4,254
Zamhatch 9,145 4,895
Pork 20,532 3,137
Milk and dairy 16,764 5,472
Fish 2,972 583
Eggs 4,644 1,117
Total Cold Chain Food Production 112,703 29,843
Gross Combined Retail and CCFP 278,180 -
Less: Intra/ Inter Sales (105,806) -
Combined Retail and CCFP 172,374 47,173
Stock Feed 80,039 15,503
Crops - row crops 38,490 21,925
Mill and bakery 14,896 2,477
Leather and shoe 2,178 710
Edible oils - -
Total Other 17,074 3,187
Total 307,977 87,788
Less: intra/inter group Sales (53,515) -
Group total 254,462 87,788
Central operating costs (74,703)
Operating profit 13,085
Foreign exchange gains (2,981)
Finance costs (6,720)
Share of loss on equity accounted
investment (246)
Profit before tax 3,138
Operating assets/(liabilities)
Zambeef Retailing Master Pork Other Total
USD'000s USD'000s USD'000s USD'000s USD'000s
Property, plant and equipment 156,069 15,901 6,397 36,923 215,290
Biological assets and
inventories 62,183 5,373 1,454 15,200 84,210
Cash, cash equivalents
and bank overdrafts (14,831) (7,311) 111 1,241 (20,790)
The Group's revenue from external customers and its geographic
allocation of non-current assets may be summarised as follows:
31 Mar 2020 31 Mar 2019 30 Sept 2019
------------------------ ------------------------ ------------------------
Non-current Non-current Non-current
Revenues assets Revenues assets Revenues assets
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
Zambia 1,645,395 3,521,231 1,299,747 3,100,818 2,903,553 3,054,396
West Africa 109,094 28,774 92,780 22,793 184,954 23,130
Rest of
world 43,144 - 23,963 - 46,460 -
1,797,633 3,550,005 1,416,490 3,123,611 3,134,967 3,077,526
---------- ------------ ---------- ------------ ---------- ------------
31 Mar 2020 31 Mar 2019 30 Sept 2019
------------------------ ------------------------ -------------------------
Non-current Non-current Non-current
Revenues assets Revenues assets Revenues assets
USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s
Zambia 118,289 194,974 109,039 254,373 235,679 231,394
West Africa 7,843 1,593 7,784 1,870 15,013 1,752
Rest of
world 3,101 - 2,010 - 3,770 -
129,233 196,567 118,833 256,243 254,462 233,146
6. Taxation
31 Mar 31 Mar
2020 2019 30 Sept 2019
Income tax expense ZMW'000s ZMW'000s ZMW'000s
(a) Tax charge
Current tax:
Tax charge 1,459 1,442 9,222
Deferred tax:
Deferred taxation (note
6(e)) (532) 191 (6,442)
Tax charge/(credit) for
the period 927 1,633 2,780
31 Mar 31 Mar
2020 2019 30 Sept 2019
ZMW'000s ZMW'000s ZMW'000s
(b) Reconciliation of tax charge
Profit/(loss) before taxation 12,490 (30,156) 38,653
Adjustment for;
Discontinued operation and
other (7,440) 1,819 (14,343)
Profit from continued operations 5,050 (28,337) 24,310)
Taxation on accounting
profit (8,888) (16,925) (24,681)
Effects of:
Permanent differences:
Disallowable expenses 2,576 2,103 3,774
Timing differences:
Capital allowances and
depreciation 8,309 (2,945) 22,375
Livestock and crop valuations
adjustment 5,525 (1,336) 1,924
Other income (144) - 1,342
Unrealised exchange gains/(losses) 3,003 646 (903)
Unrealised tax loss (9,454) 20,090 (1,051)
Tax charge for the period 927 1,633 2,780
(c) Movement in taxation account
Taxation payable at 1 October (1,390) (960) (960)
Charge for the period 1,459 1,442 9,222
Taxation paid (3,145) (5,890) (9,652)
Taxation payable/(recoverable)
at the end of the period (3,076) (5,408) (1,390)
Taxation payable 15,253 12,109 1,377
Taxation recoverable (18,329) (17,517) (2,767)
Taxation payable as at 30
September (3,076) (5,408) (1,390)
(d) Income tax returns have been filed with the ZRA for the tax
year ended 31 December 2019. Quarterly tax returns for the period
were made on the due dates.
(e) Deferred taxation
31 Mar 31 Mar
2020 2019 30 Sept 2019
ZMW'000s ZMW'000s ZMW'000s
Represented by:
Biological valuation 52,879 17,223 14,162
Accelerated tax allowances 88,560 46,259 58,464
Provisions (7,334) (6,409) (8,736)
Tax loss (182,024) (97,827) (111,277)
(47,919) (40,754) (47,387)
Analysis of movement:
Asset as at 1 October (47,387) (40,945) (40,945)
Charge to profit and loss
account (note 6(a)) (532) 191 (6,442)
(Asset)/liability as at
the end of the period (47,919) (40,754) (47,387)
Deferred tax asset (80,073) (47,619) (56,525)
Deferred tax liability 32,154 6,865 9,138
(47,919) (40,754) (47,387)
31 Mar 31 Mar 30 Sept
Income tax expense 2020 2019 2019
USD'000s USD'000s USD'000s
(f) Tax charge
Current tax:
Tax charge 105 121 749
Deferred tax:
Deferred taxation (note
6(j)) (38) 16 (523)
Tax (credit)/charge for
the period 67 137 226
(g) Reconciliation of tax charge
Profit/(loss) before taxation 898 (2,531) 3,138
Adjustment for:
Discontinued operation
and other (535 ) 153 (1,165)
Profit from continued operations 363 (2,378) 1,973
Taxation on accounting
profit (639) (1,420) (2,003)
Effects of:
Permanent differences:
Disallowable expenses 185 176 306
Timing differences:
Capital allowances and
depreciation 597 (247) 1,816
Livestock and crop valuations
adjustment 397 (112) 156
Other income (10) - 109
Unrealised exchange (gains)/losses 216 54 (73)
Unrealised tax loss (679) 1,686 ( 85)
Tax charge for the period 67 137 226
(h) Movement in taxation account
Taxation payable at 1 October (106) (78) (78)
Charge for the year 105 121 749
Taxation paid (226) (494) (783)
Foreign exchange 57 7 6
Taxation payable as at the
end of the period (170) (444) (106)
Taxation payable 845 993 104
Taxation recoverable (1,015) (1,437) (210)
Taxation payable as at 30
September (170) (444) (106)
(i) Income tax returns have been filed with the ZRA for the year
31 December 2019. Quarterly tax returns for the period were made on
the due dates.
31 Mar 31 Mar
2020 2019 30 Sept 2019
(j) Deferred taxation USD'000s USD'000s USD'000s
Represented by:
Biological valuation 2,928 1,413 1,073
Accelerated tax allowances 4,904 3,795 4,429
Provisions (406) (526) (662)
Tax loss (10,080) (8,025) (8,430)
(2,654) (3,343) (3,590)
Analysis of movement:
Liability as at 1 October (3,590) (3,345) (3,345)
Charge to profit and loss
account (note 6(f)) (38) 16 (523)
Foreign exchange 974 (14) 278
(Asset)/liability as at the
end of period (2,654) (3,343) (3,590)
Deferred tax asset (4,434) (3,906) (4,282)
Deferred tax liability 1,780 563 692
(2,654) (3,343) (3,590)
7. Earnings per share
Basic and diluted earnings per share have been calculated in
accordance with IAS 33 which requires that earnings should be based
on the net profit or loss attributable to ordinary shareholders and
the weighted average number of ordinary shares in issue during the
period.
The calculation of the basic and diluted earnings per share is
based on the earnings attributable to ordinary shareholders divided
by the weighted average number of shares in issue during the
period.
The calculation of the basic and diluted earnings/(loss) per
share is shown below:
31 Mar 2020 31 Mar 2019 30 Sept 2019
ZMW'000s USD'000s ZMW'000s USD'000s ZMW'000s USD '000s
Basic earnings per share
Profit/(loss) for the
period 1,650 119 (31,199) (2,619) 18,100 1,469
Weighted average number
of ordinary shares for
the purposes of basic
earnings per share (in
thousand) 300,580 300,580 300,580 300,580 300,580 300,580
Weighted average number
of ordinary shares for
the purposes of diluted
earnings per share (in
thousand) 400,638 400,638 401,187 401,187 400,638 400,638
Basic earnings per share
(ZMW ngwee and US cents)
- Continued operations 3.68 0.26 (10.38) (0.87) 11.80 0.96
Basic earnings per share
(ZMW ngwee and US cents)
- Discontinued operations (3.13) (0.23) - - (5.78) (0.47)
Total Basic earnings
per share (ZMW ngwee
and US cents) 0.55 0.04 (10.38) (0.87) 6.02 0.49
Diluted earnings per
share
Basic earnings per share
- continued operations 2.76 0.20 (7.78) (0.65) 8.86 0.72
Basic earnings per share
- discontinued operations (2.35) (0.17) - - (4.34) (0.35)
Total Basic earnings
per share 0.41 0.03 (7.78) (0.65) 4.52 0.37
8. Property plant and equipment
(i) In Zambian
Kwacha
(a) Group Leasehold Plant Furniture Capital Total
land and Aircraft and Motor and work in
buildings ZMW'000s machinery vehicles equipment progress ZMW'000s
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Cost or
valuation
----------- --------------------- ------------- ----------- ------------- ---------- ----------
As at 1
October
2018 2,052,628 865 815,646 65,605 23,307 46,102 3,004,153
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Exchange
differences 71,470 - 20,871 (194) 61 110 92,318
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Additions 13,868 - 15,621 7,399 4,948 71,989 113,825
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Disposals (2,030) - (7,108) (2,505) (280) - (11,923)
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Transfer to
held for sale (116,020) - (27,547) (876) (420) (698) (145,561)
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Transfers 23,136 - 57,482 7,099 4,001 (91,718) -
----------- --------------------- ------------- ----------- ------------- ---------- ----------
As at 30
September
2019 2,043,052 865 874,965 76,528 31,617 25,785 3,052,812
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Exchange
differences 370,768 - 82,845 1,473 660 - 455,746
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Additions - - 16,773 8,444 2,560 30,175 57,952
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Adjustment
on transition
to IFRS 16 1,187 - - - - - 1,187
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Disposals - - - (1,100) (1) - (1,101)
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Transfers 6,818 - 4,303 9,374 910 (21,405) -
----------- --------------------- ------------- ----------- ------------- ---------- ----------
As at 31 March
2020 2,421,825 865 978,886 94,719 35,746 34,555 3,566,596
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Depreciation
----------- --------------------- ------------- ----------- ------------- ---------- ----------
As at 1
October
2018 16,972 86 66,820 15,457 2,597 - 101,932
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Exchange
difference 539 - (2,044) 3 (26) - (1,528)
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Charge for
the year 18,232 87 83,340 17,459 2,803 - 121,921
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Disposals (77) - (222) (814) (20) - (1,133)
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Transfer to
held for sale (4,630) - (5,255) (246) (73) - (10,204)
----------- --------------------- ------------- ----------- ------------- ---------- ----------
As at 30
September
2019 31,036 173 142,639 31,859 5,281 - 210,988
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Exchange
difference (1,029) - (1,199) (310) (337) - (2,875)
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Charge for
the year 10,177 130 43,481 10,464 2,033 - 66,285
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Disposals - - - (759) - - (759)
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Charge on
rights-of-use
assets 304 - - - - - 304
----------- --------------------- ------------- ----------- ------------- ---------- ----------
As at 31 March
2020 40,488 303 184,921 41,254 6,977 - 273,943
----------- --------------------- ------------- ----------- ------------- ---------- ----------
Net book value
----------- --------------------- ------------- ----------- ------------- ---------- ----------
As at 31 March
2020 2,381,337 562 793,965 53,465 28,769 34,555 3,292,653
----------- --------------------- ------------- ----------- ------------- ---------- ----------
At 30
September
2019 2,012,016 692 732,326 44,669 26,336 25,785 2,841,824
----------- --------------------- ------------- ----------- ------------- ---------- ----------
(ii) In US Dollars
(a) Group Leasehold Plant Motor Furniture Capital
land and Aircraft and machinery vehicles and equipment work Total
buildings USD'000s USD'000s USD'000s USD'000s in progress USD'000s
USD'000s USD'000s
----------- ---------- --------------- ---------- --------------- ------------- -----------
Cost or valuation
----------- ---------- --------------- ---------- --------------- ------------- -----------
As at 1 October
2018 168,428 71 67,332 5,411 1,934 1,869 245,045
----------- ---------- --------------- ---------- --------------- ------------- -----------
Foreign
translation (7,701) (5) (4,317) (521) (210) 1,739 (11,015)
----------- ---------- --------------- ---------- --------------- ------------- -----------
Additions 1,126 - 1,267 601 402 5,843 9,239
----------- ---------- --------------- ---------- --------------- ------------- -----------
Transfers 1,878 - 4,666 576 325 (7,445) -
----------- ---------- --------------- ---------- --------------- ------------- -----------
Disposals (165) - (577) (203) (23) - (968)
----------- ---------- --------------- ---------- --------------- ------------- -----------
Transfer to held
for
sale (8,789) - (2,087) (66) (32) (53) (11,027)
----------- ---------- --------------- ---------- --------------- ------------- -----------
As at 30 September
2019 154,777 66 66,284 5,798 2,396 1,953 231,274
----------- ---------- --------------- ---------- --------------- ------------- -----------
Foreign
translation (21,258) (18) (13,597) (1,755) (666) (670) (37,964)
----------- ---------- --------------- ---------- --------------- ------------- -----------
Additions - - 1,206 607 184 2,169 4,166
----------- ---------- --------------- ---------- --------------- ------------- -----------
Transfers 490 - 309 674 66 (1,539) -
----------- ---------- --------------- ---------- --------------- ------------- -----------
Disposals - - - (79) - - (79)
----------- ---------- --------------- ---------- --------------- ------------- -----------
Adjustment on
transition
of IFRS 16 90 - - - - - 90
----------- ---------- --------------- ---------- --------------- ------------- -----------
As at 31 March
2020 134,099 48 54,202 5,245 1,980 1,913 197,487
----------- ---------- --------------- ---------- --------------- ------------- -----------
Depreciation
----------- ---------- --------------- ---------- --------------- ------------- -----------
As at 1 October
2018 (4,986) 7 10,895 1,649 370 - 7,935
----------- ---------- --------------- ---------- --------------- ------------- -----------
Charge for the
year 1,480 7 6,764 1,417 228 - 9,896
----------- ---------- --------------- ---------- --------------- ------------- -----------
Disposals (6) - (18) (66) (2) - (92)
----------- ---------- --------------- ---------- --------------- ------------- -----------
Transfer to held
for
sale (351) - (397) (19) (6) - (773)
----------- ---------- --------------- ---------- --------------- ------------- -----------
Foreign
Translation 6,214 (1) (6,437) (568) (190) - (982)
----------- ---------- --------------- ---------- --------------- ------------- -----------
As at 30 September
2019 2,351 13 10,807 2,413 400 - 15,984
----------- ---------- --------------- ---------- --------------- ------------- -----------
Charge for the
year 732 9 3,126 752 146 - 4,765
----------- ---------- --------------- ---------- --------------- ------------- -----------
Disposals - - - (55) - - (55)
----------- ---------- --------------- ---------- --------------- ------------- -----------
Charge on
rights-of-use
assets 22 - - - - - 22
----------- ---------- --------------- ---------- --------------- ------------- -----------
Foreign
Translation (863) (6) (3,691) (826) (160) - (5,546)
----------- ---------- --------------- ---------- --------------- ------------- -----------
As at 31 March
2020 2,242 16 10,242 2,284 386 - 15,170
----------- ---------- --------------- ---------- --------------- ------------- -----------
Net book value
----------- ---------- --------------- ---------- --------------- ------------- -----------
At 31 March 2020 131,857 32 43,960 2,961 1,594 1,913 182,317
----------- ---------- --------------- ---------- --------------- ------------- -----------
At 30 September
2019 152,426 53 55,477 3,385 1,996 1,953 215,290
----------- ---------- --------------- ---------- --------------- ------------- -----------
(b) Included in the net carrying amount of property, plant and
equipment are right-of-use assets as follows:
31 March 2020 31 March
ZMW'000 2020
USD'000
Leasehold land and buildings 1,187 90
-------------- ---------
Total right-of-use 1,187 90
-------------- ---------
9. Biological assets
(a) 31 March 2020
Biological assets comprise standing crops, feedlot cattle, dairy
cattle, pigs and chickens. At 31 March 2020 there were 14,436
cattle (11,346 feedlot cattle and 3,090 dairy cattle), 715,885
chickens (338,611 layers and 377,274 broilers), and 4,012 pigs. A
total of 19,666 feedlot cattle, 571 dairy cattle, 4,834 pigs and
4,349,407 chickens were culled during the period.
(i) in Zambian Kwacha
Decrease
Gains arising Gains arising due to
from fair from fair
Increase value value harvest/
attributable attributable
As at due to to to transferred As at 31
physical
1 Oct 2019 purchases changes price changes to inventory Mar 2020
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
Standing
Crops 27,260 177,208 423,213 - (272,252) 355,429
Feedlot cattle 42,878 182,034 86,496 - (268,129) 43,279
Dairy Cattle 49,767 55,774 51,469 10,088 (106,546) 60,552
Pigs 4,555 6,317 516 320 (7,679) 4,029
Chickens 45,957 188,226 25,715 - (202,750) 57,148
Total 170,417 609,559 587,409 10,408 (857,356) 520,437
=========== ========== ============== ============== ============= =========
(ii) in US Dollars
Gains arising Gains arising
From fair from fair Decrease
value value due to
Increase attributable attributable to harvest/ As at
As at 1 Foreign due to to physical to price transferred 31 Mar
Oct 2018 exchange purchases changes changes to inventory 2019
USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s
Standing Crops 2,066 (5,978) 12,740 30,425 - (19,572) 19,681
Feedlot cattle 3,247 (879) 13,087 6,218 - (19,276) 2,397
Dairy Cattle 3,771 (1,194) 4,010 3,700 725 (7,660) 3,352
Pigs 344 (83) 454 37 23 (552) 223
Chickens 3,482 (1,122) 13,531 1,849 - (14,576) 3,164
Total 12,910 (9,256) 43,822 42,229 748 (61,636) 28,817
========== ========== =========== ================= ================= ============== =========
(b) 31 March 2019
Biological assets comprise standing crops, feedlot cattle, dairy
cattle, pigs and chickens. At 31 March 2019 there were 12,800
cattle (10,057 feedlot cattle and 2,743 dairy cattle), 880,335
chickens (576,988 layers and 303,347 broilers), and 5,026 pigs. A
total of 18,372 feedlot cattle, 64 dairy cattle, 4,256 pigs and
3,627,322 chickens were culled during the period.
(i) in Zambian Kwacha
Decrease
Gains arising Gains arising due to
from fair from fair
Increase value value harvest/
attributable attributable
As at due to to to transferred As at 31
physical
1 Oct 2018 purchases changes price changes to inventory Mar 2019
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
Standing
Crops 42,419 184,328 182,500 (15,824) (150,529) 242,894
Feedlot
cattle 56,750 163,937 64,877 - (239,309) 46,255
Dairy Cattle 48,336 30,741 75,414 - (108,248) 46,243
Pigs 4,431 2,497 1,070 95 (3,712) 4,381
Chickens 29,738 111,069 85,446 - (191,298) 34,955
Total 181,674 492,572 409,307 (15,729) (693,096) 374,728
=========== ========== ============== ============== ============= =========
(ii) in US Dollars
Gains arising Gains arising
From fair from fair Decrease
value value due to
Increase attributable attributable to harvest/ As at
As at 1 Foreign due to to physical to price transferred 31 Mar
Oct 2018 exchange purchases changes changes to inventory 2019
USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s
Standing
Crops 3,466 (359) 15,464 15,310 (1,327) (12,628) 19,926
Feedlot cattle 4,636 39 13,753 5,443 - (20,076) 3,795
Dairy Cattle 3,949 20 2,579 6,327 - (9,081) 3,794
Pigs 362 2 209 90 7 (311) 359
Chickens 2,430 - 9,318 7,168 - (16,049) 2,867
Total 14,843 (298) 41,323 34,338 (1,320) (58,145) 30,741
========== ========== =========== ================= ================= ============== =========
(c) 30 September 2019
Biological assets comprise standing crops, feedlot and standing
cattle, dairy cattle, pigs and chickens. At 30 September 2019 there
were 12,335 cattle (9,229 feedlot cattle and 3,106 dairy cattle)
and 900,349 chickens (587,815 layers and 312,534 broilers), and
5,014 pigs. A total of 43,711 feedlot cattle, 642 dairy cattle,
9,430 pigs and 7,997,076 chickens were culled during the year.
(i) in Zambian Kwacha
Gains/(losses) Decrease
arising Gains arising due to
from fair from fair
Increase value value harvest/
attributable attributable
As at 1 due to to to transferred As at 30
Oct 2018 purchases physical changes price changes to inventory Sept 2019
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
Standing Crops 42,419 384,077 178,652 6,097 (583,985) 27,260
Feedlot Cattle 56,750 312,626 158,018 2,019 (486,535) 42,878
Dairy Cattle 48,336 67,939 140,024 - (206,532) 49,767
Pigs 4,431 10,637 2,237 122 (12,872) 4,555
Chickens 29,738 297,042 134,586 2,046 (417,455) 45,957
Total 181,674 1,072,321 613,517 10,284 (1,707,379) 170,417
========= ========== ================= ============== ============= ==========
(ii) in US Dollars
Gains/ (losses) Gains arising
arising from from fair
fair value value Decrease
As at Increase attributable attributable due to harvest
1 Oct Foreign due to to physical to price / transferred As at 30
2018 exchange purchases changes changes to inventory Sept 2019
USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s
Standing
Crops 3,466 (169) 31,175 14,501 495 (47,402) 2,066
Feedlot
Cattle 4,636 (263) 25,375 12,826 164 (39,491) 3,247
Dairy Cattle 3,949 (295) 5,515 11,366 - (16,764) 3,771
Pigs 362 (27) 863 182 10 (1,046) 344
Chickens 2,430 (265) 24,111 10,924 166 (33,884) 3,482
Total 14,843 (1,019) 87,039 49,799 835 (138,587) 12,910
========= ========== =========== ================ ================= ================ ===========
10. Cash and cash equivalents
31 Mar 2020 31 Mar 2019 30 Sept 2019
--------------------- --------------------- ---------------------
ZMW'000s USD'000s ZMW'000s USD'000s ZMW'000s USD'000s
---------- --------- ---------- --------- ---------- ---------
Cash in hand and
at bank 62,113 3,439 50,801 4,167 56,753 4,299
Bank overdrafts (393,496) (21,788) (359,143) (29,462) (331,178) (25,089)
(331,383) (18,349) (308,342) (25,295) (274,425) (20,790)
========== ========= ========== ========= ========== =========
(a) Banking facilities
The Group has overdraft facilities totalling ZMW153.3 million
(2019: ZMW118.3 million) with Zanaco Bank Plc. The Zanaco Bank
overdraft bears an interest rate of Bank of Zambia Policy rate plus
6 per cent on the Kwacha facility.
The Group has overdraft facilities totalling ZMW74.6 million
(2019: ZMW74.6 million) and USD7.3 million (2019: USD5 million)
with Citibank Zambia Limited. The Citibank overdrafts bear interest
rates of Bank of Zambia Policy rate plus 0.25 per cent plus
Liquidity Premium ( defined as 182 day Treasury Bill rate minus
BPR) for the Kwacha facility and 3-month USD LIBOR rate plus 3.5
per cent for the USD facility.
The Group has overdraft facilities totalling ZMW57.5 million
(2019: ZMW57.5 million) and USD2 million (2019: USD2 million) with
Stanbic Bank Zambia Limited. The Stanbic Bank overdrafts bear
interest rate of Bank of Zambia Policy rate plus 6 per cent on the
Kwacha facility and 3-month USD LIBOR rate plus 4 per cent on the
USD facility.
The Group has overdraft facilities totalling ZMW42 million
(2019: ZMW30 million) and USD3 million (2019: USD2 million) with
Standard Chartered Bank Zambia Plc. The Standard Chartered Bank
overdrafts bear interest rates of Bank of Zambia Policy rate plus 6
per cent on the Kwacha facilities and 1-month USD LIBOR rate plus 4
per cent on the USD facilities.
(b) Bank overdrafts
31 Mar 2020 31 Mar 2019 30 Sept 2019
--------------------- --------------------- ---------------------
ZMW'000s USD'000s ZMW'000s USD'000s ZMW'000s USD'000s
Bank overdrafts represented
by:
Zanaco Bank PLC (111,475) (6,172) (96,826) (7,943) (114,029) (8,638)
Citibank Zambia Limited (133,840) (7,411) (132,800) (10,894) (119,071) (9,021)
Stanbic Bank Zambia Limited (67,162) (3,719) (79,961) (6,560) (69,060) (5,232)
Standard Chartered Bank
Zambia PLC (81,019) (4,486) (49,556) (4,065) (29,018) (2,198)
(393,496) (21,788) (359,143) (29,462) (331,178) (25,089)
========== ========= ========== ========= ========== =========
(i) The Zambeef Products Plc Company bank overdrafts are secured
by a first floating charge/ debenture over all the assets of the
Company. The floating charge/ debenture ranks pari passu between
Standard Chartered Bank Zambia Plc (USD5 million), Citibank Zambia
Limited (USD16.3 million and ZMW8 million), Zanaco Bank Plc (ZMW185
million), and Stanbic Bank Zambia Limited (ZMW132 million).
All overdrafts are annual revolving facilities.
11. Interest bearing liabilities
31 Mar 2020 31 Mar 2019 30 Sept 2019
ZMW'000s USD'000s ZMW'000s USD'000s ZMW'000s USD'000s
---------- ---------- -------------- ------------ ----------- -----------
DEG - Deutsche Investitions
und Entwicklungsgesellschaft
MBH (note (a)) 234,960 13,010 206,376 16,930 197,604 14,970
Zanaco Bank Plc (note (b)) 6,646 368 13,286 1,090 13,286 1,006
International Finance Corporation
(note (d)) 127,365 7,052 131,457 10,784 118,870 9,006
Standard Chartered Bank Zambia
PLC (note ( c) 227,983 12,624 176,159 14,451 212,381 16,089
Stanbic Bank Zambia Limited 29,000 1,606 - - 29,000 2,197
625,954 34,660 527,278 43,255 571,141 43,268
Less: short-term portion
(repayable
within next 12 months) (391,108) (21,656) (271,072) (22,237) (343,042) (25,988)
Long-term portion (repayable
after 12 months) 234,846 13,004 256,206 21,018 228,099 17,280
(a) (i) DEG Term Loan 3
The Group has a loan facility of USD4.26 million (2019: USD:5.68
million and original amount of USD10 million) from DEG. Interest on
the loan is 4.25 per cent. above the 6-month USD LIBOR rate per
annum payable 6 monthly in arrears. The capital is repayable in 14
biannual instalments of USD710,000 commencing May 2016 and expiring
in November 2022.
The DEG term loan 3 is secured by a legal mortgage over Farm no.
4450, 4451 and 5388 (Mpongwe Farm) ranking pari passu with IFC.
(ii) DEG Term Loan 4
The Group has a loan facility of USD8.75 million (2019:
USD:11.25 million and original amount of USD15 million) from DEG.
Interest on the loan is 5.75 per cent. above the 6-month USD LIBOR
rate per annum payable quarterly in arrears. The capital is
repayable in 12 quarterly instalments of USD1,250,000 commencing
March 2018 and expiring in March 2023.
The DEG term loan 4 is secured by a legal mortgage over Farm no.
4450, 4451 and 5388 (Mpongwe Farm) ranking pari passu with IFC.
(b) Zanaco Bank Plc
The Group has a loan facility of ZMW6.64 million (2019: ZMW13.3
million) with Zanaco Bank Plc. Interest on the loan is 6 per cent
above the Bank of Zambia policy rate per annum payable monthly in
arrears. The principal is repayable in 7 annual instalments of
ZMW6,642,857 commencing December 2014 and expiring in December
2020.
The loan is secured by a first ranking legal mortgage over Stand
No. 4970, Industrial Area, Lusaka (Head Office).
(c) Standard Chartered Bank Zambia Plc
The Group has structured agricultural facilities with an annual
revolving limit totalling USD18 million (2020: USD20 million) with
Standard Chartered Bank Zambia Plc. The purpose of the facility is
the financing of wheat, soya beans, and maize under Collateral
Management Agreements/Facilities Against Warehouse Receipts and is
for 270 days. The balance on the facilities at period end was
USD12.6 million (2019: USD14.5 million). Interest on the facility
is 3-month USD LIBOR rate plus 3.25 per cent per annum, calculated
on the daily overdrawn balances.
(d) International Finance Corporation Loan
(i) International Finance Corporation Loan 2
The company has a loan facility of USD6.2 million and ZMW15.4
million (2019: USD8.96 million and ZMW22.2 million and original
amount of USD20 million and ZMW49.6 million). Interest on the loan
is 4.75 per cent. above the 6-month USD LIBOR rate per annum for
the USD facility and 4.45 per cent above the 91-day Treasury Bill
rate plus a variable swap margin for the Kwacha facility payable
quarterly in arrears. The principal is repayable in 29 equal
quarterly instalments of USD689,655 and ZMW1,710,345 commencing
June 2015 and expiring in June 2022.
The loan is secured by a legal mortgage over Farm no. 4450,4451
and 5388 ( Mpongwe Farm) ranking pari passu wth DEG.
12. Leasing
Lease liabilities are presented in the statement of financial
position within borrowings as follows:
31 March 2020 31 March 2019 30 September 2019
ZMW'000 ZMW'000 ZMW'000
Current 24,701 11,111 21,487
-------------- -------------- ------------------
Non-current 19,741 19,530 19,297
-------------- -------------- ------------------
44,442 30,641 40,784
-------------- -------------- ------------------
The Group has leases for K44,442 thousand. The lease liabilities
are secured by the related underlying assets. Future minimum lease
payments at 31 March 2020 were as follows:
Minimum lease payments due
Within After
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000
--------- ---------- ---------- ---------- ---------- --------- ---------
31 March
2020
--------- ---------- ---------- ---------- ---------- --------- ---------
Lease payments 25,299 10,653 6,072 4,048 - - 46,072
--------- ---------- ---------- ---------- ---------- --------- ---------
Finance charges (598) (535) (298) (199) - - (1,630)
--------- ---------- ---------- ---------- ---------- --------- ---------
Net present
values 24,701 10,118 5,774 3,849 - - 44,442
--------- ---------- ---------- ---------- ---------- --------- ---------
31 March
2019
--------- ---------- ---------- ---------- ---------- --------- ---------
Lease payments 11,386 10,270 6,162 4,108 - - 31,926
--------- ---------- ---------- ---------- ---------- --------- ---------
Finance charges (275) (584) (266) (160) - - (1,285)
--------- ---------- ---------- ---------- ---------- --------- ---------
Net present
values 11,111 9,686 5,896 3,948 - - 30,641
--------- ---------- ---------- ---------- ---------- --------- ---------
30 September
2019
--------- ---------- ---------- ---------- ---------- --------- ---------
Lease payments 22,018 9,148 7,089 4,059 - - 42,313
--------- ---------- ---------- ---------- ---------- --------- ---------
Finance charges (531) (450) (348) (200) - - (1,529)
--------- ---------- ---------- ---------- ---------- --------- ---------
Net present
values 21,487 8,698 6,741 3,859 - - 40,784
--------- ---------- ---------- ---------- ---------- --------- ---------
Leasing 31 March 2020 31 March 2019 30 September 2019
USD'000 USD'000 USD'000
------------------------------ ------------------------ ----------------------
Current 1,368 911 1,628
------------------------------ ------------------------ ----------------------
Non-Current 1,093 1,602 1,462
------------------------------ ------------------------ ----------------------
Total 2,461 2,513 3,090
------------------------------ ------------------------ ----------------------
Minimum lease payments
Within After
1 year 1-2 years 2-3 years 3-4 years 4-5years 5 years Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
----------- --------------------- -------------- ----------------------- -------------
31 March
2020
----------- --------------------- -------------- ----------------------- -------------
Lease
payments 1,401 590 337 224 - - 2,551
----------- --------------------- -------------- ----------------------- -------------
Finance
charges (33) (30) (17) (11) - - (90)
----------- --------------------- -------------- ----------------------- -------------
Net
Present
Values 1,368 560 320 213 - - 2,461
----------- --------------------- -------------- ----------------------- -------------
31 March
2019
----------- --------------------- -------------- ----------------------- -------------
Lease
payments 933 842 505 337 - 2,617
----------- --------------------- -------------- ----------------------- -------------
Finance
charges (22) (48) (22) (12) - - (104)
----------- --------------------- -------------- ----------------------- -------------
Net
Present
Values 911 794 483 325 - - 2,513
----------- --------------------- -------------- ----------------------- -------------
30
September
2019
----------- --------------------- -------------- ----------------------- -------------
Lease
payments 1,668 693 537 308 - - 3,206
----------- --------------------- -------------- ----------------------- -------------
Finance
charges (40) (34) (26) (16) - - (116)
----------- --------------------- -------------- ----------------------- -------------
Net
Present
Values 1,628 659 511 292 - - 3,090
----------- --------------------- -------------- ----------------------- -------------
Lease payments not recognised as a liability
The group has elected not to recognise a lease liability for
short term leases (leases with an expected term of 12 months or
less) or for leases of low value assets. Payments made under such
leases are expensed on a straight-line basis. In addition, certain
variable lease payments are not permitted to be recognised as lease
liabilities and are expensed as incurred.
The expense relating to payments not included in the measurement
of the lease liability is as follows
31 March 2020 31 March 2020
ZMW'000 USD'000
Short-term leases 8,718 627
-------------- --------------
Leases of low value assets - -
-------------- --------------
Variable lease payments - -
-------------- --------------
8,718 627
-------------- --------------
Included in the finance cost of K48,241,000 (US$3,468,000) is
interest expense for leasing arrangements amounting to K86,000
(US$6,000).
13. Contingent liabilities
Certain legal cases are pending against the Company in the
Courts of Law. In the opinion of the Directors, and the Company
lawyers, none of these cases will result in any material loss to
the Company for which a provision is required.
14. Fair value measurement
Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair
value in the statement of financial position are grouped into three
Levels of a fair value hierarchy. The three Levels are defined
based on the observability of significant inputs to the
measurement, as follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly
-- Level 3: unobservable inputs for the asset or liability.
The following table shows the Levels within the hierarchy of
financial assets and liabilities measured at fair value on a
recurring basis at 31 March 2020 and 30 September 2019.
Level 1 Level 2 Level 3 Total
31 March 2020 ZMW'000 ZMW'000 ZMW'000 ZMW'000
Financial Assets
Trade receivables - - 10,083 10,083
Total Assets - - 10,083 10,083
Financial Liabilities
US-dollar loans - (346,933) - (346,933)
Total Liabilities - (346,933) - (346,933)
Net fair value - (346,933) 10,083 (336,850)
Level 1 Level 2 Level 3 Total
30 September 2019 ZMW'000 ZMW'000 ZMW'000 ZMW'000
Financial Assets
Trade receivables - - 88,874 88,874
Total Assets - - 88,874 88,874
Financial Liabilities
US-dollar loans - (297,660) - (297,660)
Total Liabilities - (297,669) - (297,660)
Net fair value - (297,660) 88,874 (208,786)
31 March 2020 Level 1 Level 2 Level 3 Total
USD'000 USD'000 USD'000 USD'000
Financial Assets
Trade receivables - - 558 558
Total Assets - - 558 558
Financial Liabilities
US-dollar loans - (19,210) - (19,210)
Total Liabilities - (19,210) - (19,210)
Net fair value - (19,210) 558 (18,652)
Level 1 Level 2 Level 3 Total
30 September 2019 USD'000 USD'000 USD'000 USD'000
Financial Assets
Trade receivables - - 4,413 4,413
Total Assets - - 4,413 4,413
Financial Liabilities
US-dollar loans - (22,550) - (22,550)
Total Liabilities - (22,550) - (22,550)
Net fair value - (22,550) 4,413 (18,137)
There were no transfers between Level 1 and Level 2 in 2020 or
2019.
Measurement of fair value of financial instruments
The Group's finance team performs valuations of financial items
for financial reporting purposes, including Level 3 fair values, in
consultation with third party valuation specialists for complex
valuations. Valuation techniques are selected based on the
characteristics of each instrument, with the overall objective of
maximising the use of market-based information. The finance team
reports directly to the acting Chief Financial Officer (CFO) and to
the audit committee.
Valuation processes and fair value changes are discussed among
the audit committee and the valuation team at least every year, in
line with the Group's reporting dates. The valuation techniques
used for instruments categorised in Levels 2 and 3 are described
below:
Foreign currency forward contracts (Level 2)
The Group's foreign currency forward contracts are not traded in
active markets. These have been fair valued using observable
forward exchange rates and interest rates corresponding to the
maturity of the contract. The effects of non-observable inputs are
not significant for foreign currency forward contracts.
US-dollar loans (Level 2)
The fair values of the US-dollar loans are estimated using a
discounted cash flow approach, which discounts the contractual cash
flows using discount rates derived from observable market interest
rates of similar loans with similar risk. The interest rate used
for this calculation is 4.81% (2018: 4.81%).
Contingent consideration (Level 3)
The group did not have any contingent consideration during the
year.
Fair value measurement of non-financial assets
The following table shows the Levels within the hierarchy of
non-financial assets measured at fair value on a recurring basis at
31 March 2020 and 30 September 2019.
Level 1 Level 2 Level 3 Total
31 March 2020 ZMW'000 ZMW'000 ZMW'000 ZMW'000
Property, plant and
equipment:
Land held for production
in Zambia - 1,481,369 - 1,481,369
Office building in Zambia - 49,491 - 49,491
Level 1 Level 2 Level 3 Total
30 September 2019 ZMW'000 ZMW'000 ZMW'000 ZMW'000
Property, plant and
equipment:
Land held for production
in Zambia - 1,166,494 - 1,166,494
Office building in Zambia - 48,856 - 48,856
Level 3 Total
31 March 2020 USD'000 USD'000
Property, plant and
equipment:
Land held for production
in Zambia - 82,025 - 82,025
Office building in Zambia - 2,740 - 2,740
Level 1 Level 2 Level 1 Level 2
30 September 2019 USD'000 USD'000 USD'000 USD'000
Property, plant and
equipment:
Land held for production
in Zambia - 88,371 - 88,371
Office building in Zambia - 3,701 - 3,701
Fair value of the Group's main property assets is estimated
based on appraisals performed by independent,
professionally-qualified property valuers, Fairworld Properties
Limited. The significant inputs and assumptions are developed in
close consultation with management. The valuation processes and
fair value changes are reviewed by the Board of Directors and audit
committee at each reporting date.
Further information is set out below.
Land held for production in Zambia (Level 2)
Land has been valued using the direct comparison method. This
method has been adopted as the most appropriate for the purpose of
this valuation as there are enough comparisons available on the
open market for land. The land was revalued on 30 September
2017.
The significant unobservable input is the adjustment for factors
specific to the land in question. The extent and direction of this
adjustment depends on the number and characteristics of the
observable market transactions in similar properties that are used
as the starting point for valuation. Although this input is a
subjective judgement, management considers that the overall
valuation would not be materially affected by reasonably possible
alternative assumptions.
The fair values of the office buildings are estimated by using
the direct comparison method. This method has been adopted as the
most appropriate for the purpose of this valuation as there are
enough comparisons available on the open market for buildings.
Level 3 fair value measurement
The Group did not have any financial instruments classified
within level 3 (30 September 2019: ZMW nil: 31 March 2019: ZMW nil)
therefore no reconciliation of balances is required.
15. Assets held for sale
During the previous period management decided to sell Sinazongwe
Farm. As such the assets and liabilities of Sinazongwe were
disclosed in accordance with IFRS 5. A sale and purchase agreement
was signed during the previous period.
The income generated by assets held for sale was as follows:
March March March March Sept 2019 Sept 2019
2020 ZMW'000 2020 USD'000 2019 2019 ZMW'000 USD'000
ZMW'000 USD'000
Revenue 15,262 1,097 - - 41,003 3,328
Cost of sales (12,411) (892) - - (34,307) (2,785)
Administration
costs (8,811) (633) - - (18,933) (1,537)
Operating loss (5,960) (428) - - (12,237) (994)
Depreciation (3,463) (249) - - (5,142) (417)
Loss from discontinued
operations before
tax (9,423) (677) - - (17,379) (1,411)
Tax (expense)/credit - - - - - -
Loss for the period 9,423 (677) - - (17,379) (1,411)
The assets and liabilities of the unit held for sale are as
follows:
March March March March Sept 2019 Sept 2019
2020 ZMW'000 2020 USD'000 2019 2019 ZMW'000 USD'000
ZMW'000 USD'000
Property, plant
and equipment 131,857 7,301 - - 135,357 10,254
Plantation development - - - - - -
expenditure
Biological assets - - - - - -
Total non-current
assets 131,857 7,301 - - 135,357 10,254
- -
Inventories - - - - - -
Trade and other - - - - - -
receivables
Cash and cash equivalents - - - - - -
Total current assets - - - - - -
Assets classified - - - - - -
as held for sale
Interest bearing - - - -
liabilities - -
Deferred liability - - - - - -
Deferred income - - - -
tax - -
Total non-current - - - -
liabilities - -
Trade and other - - - -
payables - -
Total current liabilities - - - - - -
Liabilities classified - - - - - -
as held for sale
The cash flow effects of the unit held for sale are as
follows:
March March 2020 March March Sept 2019 Sept 2019
2020 ZMW'000 USD'000 2019 2019 ZMW'000 USD'000
ZMW'000 USD'000
Cash inflow from
operating activities (9,423) (677) - - (17,349) (1,411)
16. Events subsequent to reporting date
The divestment of Sinazongwe Farm to Chenguang Biotech (Zambia)
Agri-Dev Limited for a total consideration of USD 10 million was
finalised in April 2020.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FQLLFBQLLBBF
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