REG - Zambeef Products PLC - Half-year Report
Zambeef Products plc
("Zambeef" or the "Group")
Interim results for the Half Year Ended 31 March 2021
Zambeef (AIM: ZAM), the fully integrated cold chain foods and retail business with operations in Zambia, Nigeria and Ghana, today announces its results for the half-year ended 31 March 2021.
Financial Highlights
Figures in 000's
2021
2020
%
2021
2020
%
ZMW
ZMW
USD
USD
Revenue
2,150,473
1,797,633
20%
102,501
129,233
-21%
Cost of sales
(1,411,049)
(1,171,504)
20%
(67,257)
(84,220)
-20%
Gross profit
739,424
626,129
18%
35,244
45,013
-22%
Administrative expenses
(584,654)
(500,630)
17%
(27,867)
(35,991)
-23%
Operating profit
154,770
125,499
23%
7,377
9,022
-18%
Share of loss equity accounted investment
(915)
(1,898)
-52%
(44)
(136)
-68%
Exchange losses
(42,558)
(62,870)
-32%
(2,029)
(4,520)
-55%
Finance costs
(56,360)
(48,241)
17%
(2,686)
(3,468)
-23%
Profit before taxation
54,937
12,490
340%
2,618
898
192%
Taxation charge
(21,846)
(927)
2257%
(1,041)
(67)
1454%
Group (loss)/profit for the period from continued operations
33,091
11,563
186%
1,577
831
90%
Profit/(Loss) from discontinued operations
20,843
(9,423)
-321%
993
(677)
-247%
Total Profit for the period
53,934
2,140
2420%
2,570
154
1569%
EBITDA
259,888
182,665
42%
12,387
13,141
-6%
Gross Profit Margin
34.38%
34.83%
34.38%
34.83%
EBITDA Margin
12.09%
10.16%
12.09%
10.16%
Debt/Equity (Gearing)
27.6%
28.9%
27.57%
28.93%
Debt-To-EBITDA
3.88
5.48
3.88
5.48
PERFORMANCE OVERVIEW
The Group had a strong start to the financial year, delivering results ahead of pre-pandemic levels. Demand for products, particularly poultry products, remained strong allowing the Group to remain in line with revenue expectations. The cost containment embarked on by management also continued to yield significant savings and contributed positively to the results. Improvements in the load shedding situation, following the good regional rains, resulted in reduced generator fuel costs and improved production efficiencies.
Notwithstanding, the half year period continued to present challenges in the operating environment, resulting from the Covid-19 pandemic and the previous 2020 economic uncertainties, despite greater stability compared to the second half of the 2020 financial year. The rising inflation put pressure on consumer disposable income and reduced the share of wallet going towards food spend. Supply constraints on some of Zambeef's product lines further put pressure on cost of inputs.
KEY FINANCIAL HIGHLIGHTS
Revenue was ZMW2.2 billion (USD103 million) and we achieved a gross profit of ZMW739.4 million (USD35.2 million), measuring 20% and 18% above the prior year in kwacha terms, but both down by 21% and 22% in USD terms, respectively. The performance in USD was adversely impacted by the steady depreciation of the local currency.
The Group's strong performance was driven by growth in the poultry, retail and cropping divisions. Management continued optimising top line growth through revenue management while the continued cost control measures helped deliver strong Earnings Before Interest Taxes, Depreciation and Amortisation (EBITDA).
The profitability was mainly driven by cropping, increased volumes and margins in the stock feed division and Retail and Cold Chain Food Products which is in line with our strategic imperative of consistent revenue growth through expansion of our retail network.
Despite being slightly lower than the prior year (measured in USD), exchange losses and financing costs remained high in kwacha terms, eroding bottom-line performance. The depreciation of the kwacha led to increased financing costs and exchange losses on our dollar denominated debt, notwithstanding continued principal repayments during the period.
Zambeef's Total Profit for the period increased from ZMW2.1m to ZMW53.9m (USD0.154m to USD2.57m).
Commenting on these results, the Chairman, Mr Michael Mundashi said:
"Despite the macroeconomic headwinds and Covid-19 related uncertainties continuing into the current year, we saw a relatively more stable environment during the period under review in terms of the rate of depreciation of the kwacha. Despite these challenges, the Group generated an operating profit, including discontinued operations, of ZMW175.6 million (USD8.4 million) compared to ZMW116 million (USD8.3 million) achieved in first half of the previous financial year. This achievement, in the face of such economic and market difficulties, illustrates the Group's fundamental strengths as a diversified and resilient business.
"The Board remains committed to achieving the Group's strategic priorities while navigating the seasonal market and economic challenges. The focus will be on optimising the assets of core businesses to pay down debt and to invest for the future.
"The macro-economic climate is expected to remain challenging for Zambia in 2021, characterised by high national debt levels and continued foreign currency supply constraints which could negatively affect business activity across the economy.
"The Group remains committed to delivering value to shareholders and is positioned to navigate the turmoil while capitalising on opportunities."
For further information, please visit www.zambeefplc.com or contact:
Zambeef Products plc
Tel: +260 (0) 211 369003
Walter Roodt
Faith Mukutu
finnCap (Nominated Adviser and Broker) Tel: +44 (0) 20 7220 0500
Ed Frisby/Kate Bannatyne/Tim Harper (Corporate Finance)
Tim Redfern/Barney Hayward (ECM)
Autus Securities Limited Tel: +260 (0) 761 002 002
Mataka Nkhoma
About Zambeef Products plc
Zambeef Products plc is the largest integrated cold chain food products and agribusiness company in Zambia and one of the largest in the region, involved in the primary production, processing, distribution and retailing of beef, chicken, pork, milk, eggs, dairy products, fish, flour and stockfeed, throughout Zambia and the surrounding region, as well as Nigeria and Ghana it has 236 retail outlets throughout Zambia and West Africa.
The Company is one of the largest suppliers of beef in Zambia. Five beef abattoirs and three feedlots are located throughout Zambia, with a capacity to slaughter 230,000 cattle a year. It is also one of the largest chicken and egg producers in Zambia, with a capacity of 8.8m broilers and 22.4 million day-old chicks a year. It is one of the largest piggeries, pig abattoirs and pork processing plants in Zambia, with a capacity to slaughter 75,000 pigs a year, while its dairy has a capacity of 120,000 litres per day.
The Group is also one of the largest cereal row cropping operations in Zambia, with approximately 7,787 hectares of row crops under irrigation, which are planted twice a year, and a further 8,694 hectares of rainfed/dry-land crops available for planting each year.
CHAIRMAN'S REPORT
Dear Shareholder,
It is my great pleasure to present to you the Chairman's Report with respect to the financial half year period ended March 31, 2021.
Despite the 2020 macroeconomic headwinds and Covid-19 related uncertainties continuing into the current year, we saw a relatively more stable environment during the period under review in terms of the rate of depreciation of the kwacha and the easing of monetary policy. However, the period saw adverse market conditions in respect of securing supply, which saw a sharp rise in food inflation.
The Group generated an operating profit, including discontinued operations, of ZMW175.6 million (USD8.4 million) compared to ZMW116 million (USD8.3 million) achieved in the previous half-year period. The operating profit excluding discontinued operations was ZMW154.8 million (USD7.4 million) compared to ZMW125.5 million (USD9.0 million) achieved in the previous half-year period. The Group's performance had shown resilience in the face of market difficulties, illustrating the strengths of the vertically integrated business model which is key to creating long-term shareholder value.
The Board remains committed to achieving the Group's strategic priorities while navigating the seasonal market and economic challenges. The focus will be on optimising the assets of core businesses, to pay down debt and to invest for the future.
The Economic Environment
The Zambian economy has been under significant pressure stemming from the national debt burden, which was exacerbated by the impact of the coronavirus pandemic. Despite indications of recovery in the global economy from the effects of the coronavirus pandemic, the Zambian economic recovery remains gradual in the face of a high debt burden, high inflation and a volatile currency.
The Zambian kwacha has depreciated by 10% since the end of the 2020 full financial year period. The pace of depreciation of the local currency has slowed down owing to monetary policy interventions and the prospective benefits of a higher copper price on the international exchange markets.
Inflationary pressures, particularly food inflation, have 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. Inflation for the half-year period under review closed at 22.8% compared to 14% for the previous corresponding period. The resultant bumper harvest from the good summer rainfall season is expected to drive down food inflation in the second half of the financial year.
Divisional Performance review
Retail and Cold Chain Food Products
The Group continues to prioritise revenue optimisation, asset utilisation and cost control as pillars to drive profitability in the combined retail and cold chain food products divisions. Revenue grew by 29% and operating profit growth of 61% in kwacha terms was achieved.
The division experienced supply challenges during the period which resulted in inputs price increases. As a result, volumes declined across product categories. However, demand for our products was high as we remained competitively priced.
Management positioned the Poultry division as a focus point for growth this year and continues to implement measures to improve production efficiencies and therefore profitability. Increased demand for broilers and eggs allowed for revenue improvement in the Poultry division despite a volume decline.
Stockfeed
Volumes were flat compared to prior year during the period owing to slow growth and some declines on major product lines. The shortage of day-old chicks on the market limited customers buying of broiler feed while an export ban reduced export sales and the ability to earn foreign currency. The high cost of imported materials negatively impacted costs of sales.
Cropping
Zambia had a good summer rainfall season during the half year period, and as a result, yields for the summer crop are expected to be in line with expectations. The country is expected to deliver a bumper harvest which will result in lower maize prices which will help stabilise food inflation.
Strategy review
The board undertook a review of the medium to long-term strategy to position the business to respond to the challenges and opportunities for the future. I am happy to update shareholders that the process is proceeding according to plan. Part of the strategy review process included a review of our operational business units and also governance structures. The board review which I announced at the annual general meeting included a review of the composition of the board in terms of both compliment and size and I am pleased to announce that this process has since been concluded.
Outlook
Although we expect some level of stability, the macro-economic climate is expected to remain challenging during the second half period. The kwacha is expected to continue depreciating at a steady rate with expected improvements towards the end of the calendar year. The copper price, which is a major foreign exchange earner for the country, is expected to continue holding as production increases. Monetary policy easing is expected to continue and inflation is expected to stabilise following the summer crop bumper harvest. The Covid-19 pandemic and how it will evolve has further potential to impact our operations. There are fears of a potential third wave as the country navigates through the winter season that occurs during the following reporting period.
The group remains committed to delivering value to shareholders and is positioned to navigate the turmoil while capitalising on opportunities.
Acknowledgement
On behalf of the Company and the Board of Directors, I would like to express my sincere gratitude to Margaret Mudenda, John Rabb, David Osborne and Professor Enala Mwase who resigned from the board in February and March 2021. Their dedication and contributions to the success of the business over the years will be greatly missed.
Since my last Report, we welcomed Monica Musonda, Pearson Gowero and Roman Frenkel to our Board of Directors. Their industry experience and backgrounds will be key in driving the business into the next phase of the Groups evolution as a regional food provider.
I would also want to thank my fellow board members for steering the Group through this challenging period. To our management and staff, I express my gratitude to them for another solid performance, dedicated efforts and resilience in the face of challenges. I am proud of our achievements to date, and I am excited by the potential opportunities upon which we will build on our progress.
Michael Mundashi
Chairman
11 June 2021
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
The half year period continued to present challenges in the operating environment, resulting from the Covid-19 pandemic and 2020 economic uncertainties, despite greater stability compared to the second half of the 2020 financial year. Inflation continued to rise, although the exchange rate depreciated at a much slower rate. Money supply continued to improve in the economy. High inflation put pressure on disposable incomes as prices of goods and services increased resulting in depressed consumer spending. Due to the low supply of livestock from producers, after the devastating effects on their profitability by the previous drought and depreciation of the currency, the retail and cold chain food products supply was negatively affected. The resultant surge in food product prices to our customers forced them towards more affordable offerings of our products.
The load shedding situation improved towards the end of the calendar year 2020 following good regional rains as a result of the La Nina weather pattern, resulting in reduced generator fuel expenditure and improved production efficiencies.
Despite the challenges noted above, Zambeef has had a strong start to the financial year, delivering results ahead of pre-pandemic levels as revenue increased and costs were contained.
The Group delivered operating profit, including discontinued operations, of ZMW175.6 million (USD8.37 million), equating to a growth of 51.3% in kwacha terms and a flat performance of 0.3% growth in US dollar terms, compared with ZMW116.1 million (USD8.35million) in HY2020. The operating profit excluding discontinued operations was ZMW154.8 million (USD7.4 million) compared to ZMW125.5 million (USD9.0 million) achieved in the previous half-year period.
Our revenue, including discontinued operations, was ZMW2.2 billion (USD106.9 million) and we achieved a gross profit of ZMW782.1 million (USD37.2 million), respectively 23.7% and 24.3% above the prior year in kwacha terms, but both down by 18% and 17.6% in US dollar terms, respectively.
The Group's strong performance was driven by growth in the Poultry, Retail and Cropping divisions. Management continued optimising top line growth through revenue management while the continued cost control measures helped deliver strong Earnings Before Interest Taxes, Depreciation and Amortisation (EBITDA), and ensured resultant operating leverage.
Exchange losses and financing costs remained high in kwacha terms, eroding bottom-line performance. The depreciation of the kwacha led to increased financing costs and exchange losses on our dollar denominated debt, notwithstanding continued principal repayments during the period.
Our diversified and vertically integrated business with strong brands, supportive partners and an experienced management team helped deliver the encouraging results.
Strategic focus
Our strategic focus is to optimise our asset utilisation and maximise returns. We remain committed to our strategy of focussing on our core businesses, in which we strive to be the best in class. The continued deleveraging and divestiture of non-core assets will enable us to free up cash to invest into our core businesses and therefore deliver shareholder value.
Retail and Cold Chain Food Products (CCFP)
The period saw traditionally high volume sales lines come under pressure amidst a high inflationary environment and reduced customer spending. Despite high demand in our key product lines, supply constraints negatively impacted volume growth. Revenue growth was mainly driven by pricing increases on traditional product categories and aided by sales volume growth of traded goods and affordable categories. Shoprite in-store butcheries were a source of revenue growth as they proved relatively more resilient to inflationary pressures.
Sales volumes came under pressure on the back of supply constraints due to constrained livestock producer profitability levels. Significant producer price increases were necessary under the review period to livestock producers to increase output. The large price increases that were necessary to stimulate supply resulted in customers moving towards more affordable protein offerings. The Poultry division was a major contributor of revenue growth due to high demand for it as a relatively affordable protein source, in the form of chicken and eggs.
Despite the challenges, the Retail and CCFP business registered a healthy revenue growth of 29% above HY2020. Management employed a revenue optimisation strategy, responding quickly to the evolving volatile operating environment.
Retail and CCFP delivered an operating profit growth of 61% in kwacha terms. Operational efficiency improvements and overhead spend discipline ensured translation of the top line growth to the bottom-line. Reduced load shedding helped reduce generator set fuel costs, which further contributed to the increased profitability, particularly in the second quarter.
Stockfeed (Novatek)
Revenue for the division was 17% above prior year mainly due to price, as volumes remained flat on prior year. The demand for poultry feed reduced following a day-old chick supply shortage across the market. An export ban on animal feed from Zambia resulted in a further slowdown of production volumes. However, fish feed continues to register exponential growth following the sector specific lifting of the export ban and government's efforts to make Zambia a regional player in the aquaculture sector. The depreciation of the kwacha to the USD and ZAR negatively impacted foreign currency denominated costs.
Cropping
The revenue decline registered in the Cropping business is due to the timing of wheat sales and the impact of the sale of Sinazongwe farm. However, operating profit increased in kwacha terms despite the decline in dollar terms. Zambia experienced a good rainfall season and the yield on the summer crop is expected to be in line with expectations.
Outlook
Although we expect the macroeconomic situation to remain volatile, we expect more stability in the medium term than we experienced in the second half of 2020. Copper prices have rallied following the global recovery from the economic downturn caused by the coronavirus pandemic.
The Covid-19 pandemic and how it evolves will continue to be an important factor in how we perform for the remainder of the year. We believe that a healthy, sustainable and profitable growth trend can only be achieved when we work together with our partners, communities and customers. We remain committed to implementing and enforcing Covid-19 protocols in our outlets.
Despite the macro-economic headwinds and uncertainty caused by the Covid-19 pandemic, Zambeef's underlying performance is expected to remain resilient.
Rehabilitating our balance sheet remains a priority. We have focused on deleveraging and thereby demonstrating to our shareholders that we have a clear path to take care of pending debt maturities. Our current strategy will help relieve exchange losses and financing cost pressures to the bottom line, which will increase free cash flow to enable us to invest for the future.
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
Division
2021
ZMW'0002020
ZMW'0002021
ZMW'0002020
ZMW'0002021
ZMW'0002020
ZMW'0002021
ZMW'0002020
ZMW'000Total
Retailing
1,392,447
1,138,678
138,614
120,170
(166,941)
(166,107)
(28,327)
(45,937)
CCFP
950,587
745,736
235,600
196,628
(133,156)
(104,790)
102,444
91,837
Less Interco
(841,687)
(721,059)
Combined
Retail &
1,501,347
1,163,355
374,214
316,798
(300,097)
(270,897)
74,117
45,900
CCFP
Stock Feed
748,062
641,656
144,290
122,378
(76,981)
(60,753)
67,309
61,625
Cropping
163,313
256,990
191,473
161,886
(102,673)
(85,151)
88,800
76,735
Others
145,964
109,476
29,447
25,067
(14,174)
(11,634)
15,273
13,434
Total
2,558,686
2,171,477
739,424
626,129
(493,925)
(428,435)
245,499
197,694
Less: Intra/
Inter Group
(408,213)
(373,844)
Sales
Central
Overhead
(90,729)
(72,195)
(90,729)
(72,195)
Group Total
2,150,473
1,797,633
739,424
626,129
(584,654)
(500,630)
154,770
125,499
Table 2: Divisional financial summary in USD'000
USD
Revenue
Gross Profit
Overheads
Operating Profit
Division
2021
USD'0002020
USD'0002021
USD'0002020
USD'0002021
USD'0002020
USD'0002021
USD'0002020
USD'000Total
Retailing
66,370
81,861
6,608
8,640
(7,957)
(11,942)
(1,350)
(3,302)
CCFP
45,309
53,612
11,228
14,135
(6,347)
(7,533)
4,883
6,602
Less Interco
(40,119)
(51,838)
Combined
Retail &
71,560
83,635
17,836
22,775
(14,304)
(19,475)
3,533
3,300
CCFP
Stock Feed
35,656
46,129
6,877
8,798
(3,669)
(4,368)
3,208
4,430
Cropping
7,784
18,475
9,127
11,638
(4,894)
(6,122)
4,233
5,516
Others
6,957
7,870
1,404
1,802
(675)
(836)
728
966
Total
121,957
156,109
35,244
45,013
(23,542)
(30,801)
11,702
14,212
Less: Intra/
Inter Group
(19,456)
(26,876)
Sales
Central
Overhead
(4,325)
(5,190)
(4,325)
(5,190)
Group Total
102,501
129,233
35,244
45,013
(27,867)
(35,991)
7,377
9,022
Taking the performance of each of our key business areas in turn:
Retail and CCFP
The combined Retail and CCFP divisions generated an EBIT margin of 5% which increased by 99 basis points from the previous financial year generating an absolute value increase of 61% to ZMW 74.1 million (HY2020: ZMW 45.9 million) in kwacha terms and 7.1% increase to USD 3.5 million (HY2020: USD 3.3 million) in dollar terms.
The strong performance was underpinned by revenue optimisation in Poultry products mainly due to favourable price and high demand given the relative affordability of Chicken and Egg as a source of protein. Cost pressure arising from supply constraints negatively impacted on the profitability in Pork, Beef and Milk.
West Africa Retail
Our Nigerian business was impacted by the sporadic protests related to the Shoprite announcement of the intention to pull out of the Nigeria market and the EndSARS protests. In addition, the business experienced supply challenges across its major product lines. Despite all these challenges, revenue increased by 43% to ZMW 155.7 million (HY2020: ZMW 109 million) mainly due to pricing and exchange translational effects with dollar revenue declining by 5%. However, operating profit declined by 89% in dollar terms due to rising costs.
Stockfeed (Novatek)
Sales volumes were flat on prior year mainly due to declines on key volume categories. Shortage of day-old chicks slowed the growth of broiler feed while an export ban impacted export sales.
Revenue grew by 17% in kwacha terms (23% decline in USD terms), while the operating profit only grew by 9.2% to ZMW 67 million (HY2020: ZMW 62 million) or declined by 28% to USD 3.2 million (HY2020: USD 4.4 million) in dollar terms. The gross margin increased to 19.3% from 19.1% in the prior year owing to favourable pricing despite rising costs of inputs.
Overheads increased by 27% to ZMW 77 million (HY2020: ZMW 61 million) owing to high repairs and maintenance costs and labour costs.
Cropping
The Cropping business is key to Zambeef, providing raw material inputs for value added processing within the Group and serving as a currency hedge by being able to generate USD cash flow.
Revenue decreased 37% to ZMW 163 million (HY2020: ZMW 257 million) or 58% to USD 7.8 million (HY2020: USD 18.5 million) in dollar terms, mainly due to timing of wheat sales during this year's cycle and the impact of the previous years sale of Sinazongwe farm and currently the assets held for sale at Chiawa farm. Gross profit increased 18% compared to the prior half-year, with only a 21% increase in the overheads even in the context of the depreciation of the kwacha.
Zambia experienced a good rainfall season and the summer harvest is expected to be in line with expectations. However, the price of maize is expected to be lower than the prior year following the expected bumper harvest predicted for Zambia.
Other businesses
Total revenue from the Group's other business units increased by 33% to ZMW 146 million (HY2020: ZMW 109 million) mainly due to growth in both the milling and leather to shoe businesses. This translated to gross profit growth of 17% in kwacha terms due to cost pressures in Milling arising from the increase in price of wheat in kwacha terms following the depreciation of the currency.
The leather to shoe business turnaround strategy is beginning to pay off as the division saw an increase in demand for its products, particularly school shoes, following the opening of schools after Covid-19 related closures. Management focus has been to optimise production efficiencies, control overhead costs, innovation and look for new market opportunities for its products.
Walter Roodt
Chief Executive Officer
11 June 2021
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIOD ENDED 31 MARCH 2021
Unaudited
Audited
31 Mar 2021
31 Mar 2020
30 Sept 2020
Group
Note
ZMW'000s
ZMW'000s
ZMW'000s
Revenue
5(i)
2,150,473
1,797,633
3,875,104
Net profit/(loss) arising from price changes in fair value of biological assets
9
17,242
10,408
(14,381)
Cost of sales
(1,428,291)
(1,181,912)
(2,645,101)
Gross profit
5(i)
739,424
626,129
1,215,622
Administrative expenses
(587,575)
(501,168)
(1,011,968)
Other income
2,921
538
6,877
Operating profit
154,770
125,499
210,531
Share of loss equity accounted investment
(915)
(1,898)
(3,177)
Exchange losses on translating foreign currency transactions and balances
(42,558)
(62,870)
(137,705)
Finance costs
(56,360)
(48,241)
(92,322)
Profit/(loss) before taxation
5(i)
54,937
12,490
(22,673)
Taxation charge
6(a)
(21,846)
(927)
(112,957)
Group profit/(loss) for the period from continued operations
33,091
11,563
(135,630)
(Loss)/profit from discontinued operations
15
20,843
(9,423)
33,435
Total (loss)/profit for the period
53,934
2,140
(102,195)
Group profit/(loss) attributable to:
Equity holders of the parent
54,056
1,650
(103,419)
Non-controlling interest
(122)
490
1,224
53,934
2,140
(102,195)
Other comprehensive income
Exchange gains on translating presentational currency
117,226
434,406
625,042
Remeasurement of net defined benefit liability
-
-
6,229
Remeasurement of leases
-
(12)
315
Total comprehensive income for the period
171,160
436,534
529,391
Total comprehensive income/(loss) for the period attributable to:
Equity holders of the parent
173,523
433,889
525,030
Non-controlling interest
(2,363)
2,645
4,361
171,160
436,534
529,391
Earnings per share
Ngwee
Ngwee
Ngwee
Basic and diluted earnings per share from continued operations
7
8.29
2.76
(45.53)
Basic and diluted earnings per share from discontinued operations
7
5.20
(2.35)
11.12
Total
7
13.49
0.41
(34.41)
The accompanying notes form part of the financial statements.
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIOD ENDED 31 MARCH 2021
Unaudited
Audited
31 Mar 2021
31 Mar 2020
30 Sept 2020
Group
Note
USD'000s
USD'000s
USD'000s
Revenue
5(ii)
102,501
129,233
239,648
Net proft/(loss) arising from price changes in fair value of biological assets
9
822
748
(889)
Cost of sales
(68,079)
(84,968)
(163,581)
Gross profit
5(ii)
35,244
45,013
75,178
Administrative expenses
(28,006)
(36,029)
(62,583)
Other income
139
38
425
Operating profit
7,377
9,022
13,020
Share of loss equity accounted investment
(44)
(136)
(197)
Exchange losses on translating foreign currency transactions and balances
(2,029)
(4,520)
(8,516)
Finance costs
(2,686)
(3,468)
(5,709)
Profit/(loss) before taxation
5(ii)
2,618
898
(1,402)
Taxation charge
6(f)
(1,041)
(67)
(6,986)
Group profit/(loss) for the period from continued operations
1,577
831
(8,388)
Profit/(loss) from discontinued operations
15
993
(677)
2,068
Total profit/(loss) for the period
2,570
154
(6,320)
Group profit/(loss) attributable to:
Equity holders of the parent
2,577
119
(6,396)
Non-controlling interest
(7)
35
76
2,570
154
(6,320)
Other comprehensive income
Exchange (losses)/gains on translating presentational currency
(11,265)
(42,051)
(52,402)
Remeasurement of net defined benefit liability
-
-
385
Remeasurement of leases
-
(1)
20
Total comprehensive loss for the period
(8,695)
(41,898)
(58,317)
Total comprehensive income/(loss) for the period attributable to:
Equity holders of the parent
(8,581)
(42,144)
(58,661)
Non-controlling interest
(114)
246
344
(8,695)
(41,898)
(58,317)
Earnings per share
Cents
Cents
Cents
Basic and diluted earnings per share from continued operations
7
0.40
0.20
(2.82)
Basic and diluted earnings per share from discontinued operations
7
0.25
(0.17)
0.69
Total
7
0.65
0.03
(2.13)
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 PERIOD ENDED 31 MARCH 2021
Share capital
Share premium
Preference share capital
Revaluation reserve
Foreign exchange
translation reserve
Retained earnings
Total attributable to owners of the parent
Non-controlling interest
Total equity
ZMW'000s
ZMW'000s
ZMW'000s
ZMW'000s
ZMW'000s
ZMW'000s
ZMW'000s
ZMW'000s
ZMW'000s
At 1 October 2019
3,006
1,125,012
1,000
1,199,058
381,929
535,704
3,245,709
(4,881)
3,240,828
Loss 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
Profit for the period
-
-
-
-
-
(105,069)
(105,069)
734
(104,335)
Transfer of surplus depreciation
-
-
-
(16,512)
-
16,512
-
-
-
Other comprehensive income
Remeasurement of net defined benefit liability
-
-
-
-
-
6,229
6,229
-
6,229
Adjustment on transition to IFRS16
-
-
-
-
-
327
327
-
327
Exchange gains on translating presentational currency
-
-
-
-
189,654
-
189,654
982
190,636
Total comprehensive income for the period
-
-
-
(16,512)
189,654
(82,001
91,141
1,716
92,857
At 30 September 2020
3,006
1,125,012
1,000
1,167,713
1,003,834
470,174
3,770,739
(520)
3,770,219
Profit for the period
-
-
-
-
-
54,056
54,056
(122)
53,934
Transfer of surplus depreciation
-
-
-
(23,141)
-
23,141
-
-
-
Other comprehensive income
Remeasurement of leases
-
-
-
-
-
-
-
-
-
Exchange gains on translating presentational currency
-
-
-
-
119,467
-
119,467
(2,241)
117,226
Total comprehensive income for the period
-
-
-
(23,141)
119,467
77,197
173,523
(2,363)
171,160
At 31 March 2021
3,006
1,125,012
1,000
1,144,572
1,123,301
547,371
3,944,262
(2,883)
3,941,379
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY
FOR THE SIX MONTH PERIOD ENDED 31 MARCH 2021
Share capital
Share premium
Preference share capital
Revaluation reserve
Foreign exchange
translation reserve
Retained earnings
Total attributable to owners of the parent
Non-controlling Interest
Total equity
USD'000s
USD'000s
USD'000s
USD'000s
USD'000s
USD'000s
USD'000s
USD'000s
USD'000s
At 1 October 2019
449
185,095
100
173,209
(197,748)
84,782
245,887
(370)
245,517
Transactions with owners
Profit for the period
-
-
-
-
-
119
119
35
154
Transfer of surplus depreciation
-
-
-
(1,066)
-
1,066
-
-
-
Other comprehensive income:
Exchange losses on translating presentational currency
-
-
-
-
(42,262)
-
(42,262)
211
(42,051)
Remeasurement of leases
-
-
-
-
-
(1)
(1)
-
(1)
Total comprehensive income for the period
-
-
-
(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
Loss for the period
-
-
-
-
-
(6,515)
(6,515)
41
(6,474)
Transfer of surplus depreciation
-
-
-
(872)
-
872
-
-
-
Other comprehensive income
Remeasurement of leases
-
-
-
-
-
21
21
-
21
Remeasurement of defined benefit liability
-
-
-
-
-
385
385
385
Exchange gains on translating presentational currency
-
-
-
-
(10,408)
-
(10,408)
57
(10,351)
Total comprehensive income
-
-
-
(872)
(10,408)
(5,237)
(16,517)
98
(16,419)
At 3o September 2020
449
185,095
100
171,271
(250,418)
80,729
187,226
(26)
187,200
Profit for the period
-
-
-
-
-
2,577
2,577
(7)
2,570
Transfer of surplus depreciation
-
-
-
(1,103)
-
1,103
-
-
-
Other comprehensive income
Remeasurement of leases
-
-
-
-
-
-
-
-
-
Exchange gains on translating presentational currency
-
-
-
-
(11,158)
-
(11,158)
(107)
(11,265)
Total comprehensive income
-
-
-
(1,103)
(11,158)
3,680
(8,581)
(114)
(8,695)
At 31 March 2021
449
185,095
100
170,168
(261,576)
84,409
178,645
(140)
178,505
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ‑ 31 MARCH 2021
Unaudited
Audited
Note
31 Mar 2021
31 Mar 2020
30 Sept 2020
ZMW'000s
ZMW'000s
ZMW'000s
ASSETS
Non - current assets
Goodwill
166,801
166,801
166,801
Property, plant and equipment
8
3,419,935
3,292,653
3,264,505
Investment in associate
42,911
10,478
43,826
Deferred tax assets
6(e)
8,680
80,073
9,552
3,638,327
3,550,005
3,484,684
Current assets
Biological assets
9
689,646
520,437
176,305
Inventories
906,914
682,619
1,103,640
Trade and other receivables
149,606
87,924
132,668
Assets held for disposal
15
175,654
131,857
175,654
Amounts due from related companies
4,949
38,281
9,337
Income tax recoverable
6(c)
19,800
18,329
1,784
Cash and cash equivalents
10
83,678
62,113
111,136
2,030,247
1,541,560
1,710,524
Total assets
5,668,574
5,091,565
5,195,208
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
2,815,244
2,550,580
2,641,721
3,944,262
3,679,598
3,770,739
Non-controlling interest
(2,883)
(2,236)
(520)
3,941,379
3,677,362
3,770,219
Non - current liabilities
Interest bearing liabilities
11
124,233
234,846
190,218
Leases
12
10,242
19,741
19,750
Deferred liability
10,578
15,737
11,389
Deferred taxation
6(e)
85,041
32,154
69,950
230,094
302,478
291,307
Current liabilities
Interest bearing liabilities
11
359,159
391,108
326,899
Leases
12
16,446
24,701
23,259
Trade and other payables
400,006
231,592
321,648
Provisions
120,857
54,310
113,347
Amounts due to related companies
-
1,265
443
Taxation payable
6(c)
23,940
15,253
41
Bank overdrafts
10
576,693
393,496
348,045
1,497,101
1,111,725
1,133,682
Total equity and liabilities
5,668,574
5,091,565
5,195,208
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ‑ 31 MARCH 2021
Unaudited
Audited
31 Mar 2021
31 Mar 2020
30 Sept 2020
Note
USD '000s
USD '000s
USD '000s
ASSETS
Non - current assets
Goodwill
7,554
9,236
8,282
Property, plant and equipment
8
154,888
182,317
162,091
Investment in associate
1,943
580
2,176
Deferred tax asset
6(j)
394
4,434
474
164,779
196,567
173,023
Current assets
Biological assets
9
31,234
28,817
8,754
Inventories
41,074
37,797
54,798
Trade and other receivables
6,776
4,868
6,587
Assets held for disposal
15
7,955
7,301
8,722
Amounts due from related companies
224
2,120
464
Income tax recoverable
6(h)
897
1,015
89
Cash and cash equivalents
10
3,790
3,439
5,518
91,950
85,357
84,932
Total assets
256,729
281,924
257,955
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
(6,999)
18,099
1,582
178,645
203,743
187,226
Non-controlling interest
(140)
(124)
(26)
178,505
203,619
187,200
Non - current liabilities
Interest bearing liabilities
11
5,626
13,004
9,445
Leases
12
464
1,093
981
Deferred liability
479
872
565
Deferred tax liability
6(j)
3,852
1,780
3,473
10,421
16,749
14,464
Current liabilities
Interest bearing liabilities
11
16,266
21,656
16,231
Leases
12
745
1,368
1,155
Trade and other payables
18,116
12,823
15,971
Provisions
5,474
3,007
5,629
Amounts due to related companies
-
69
22
Taxation payable
6(h)
1,084
845
2
Bank overdrafts
10
26,118
21,788
17,281
67,803
61,556
56,291
Total equity and liabilities
256,729
281,924
257,955
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED 31 MARCH 2021
Unaudited
Audited
6 months to
6 months to
Year to
31 Mar 2021
31 Mar 2020
30 Sept 2020
ZMW'000s
ZMW'000s
ZMW'000s
Cash inflow/(outflow) from/(on) operating activities
Profit/(loss) before taxation
54,937
12,490
(22,673)
Finance costs
56,360
48,241
92,322
(Profit)/loss on disposal of property, plant and equipment
(1,345)
-
4,796
Adjustment on transition to IFRS 16
-
(1,187)
-
Depreciation on right-of-use assets
-
304
8,362
Depreciation
84,275
66,285
141,408
Share of loss of equity accounted investment
915
1,898
3,177
Profit/(loss) on discontinued operations
20,843
(9,423)
1,529
Fair value price adjustment
(17,242)
(10,408)
14,381
Net unrealised foreign exchange (gains)/losses
(5,345)
31,935
186,272
Earnings before interest, tax, depreciation and amortisation, fair value adjustments and net unrealised foreign exchange losses
193,398
140,135
429,574
(Increase)/decrease in biological assets
(496,099)
(339,612)
(20,269)
Decrease in inventory
196,726
258,540
(162,481)
Decrease in trade and other receivables
(16,938)
10,101
(34,643)
Decrease in amounts due from related companies
4,388
3,273
(2,410)
Decrease in trade and other payables and provisions
85,868
(26,597)
122,496
Increase in amount due to related companies
(443)
1,014
192
(Decrease)/increase in deferred liability
(811)
(625)
1,256
Income tax paid
-
(3,145)
(5,525)
Net cash inflow/(outflow from/(on) operating activities
(33,911)
43,084
328,190
Investing activities
Purchase of property, plant and equipment
(59,829)
(57,952)
(92,664)
Proceeds from sale of assets
2,247
342
6,452
Right of use assets
-
-
(15,425)
Proceeds from sale of assets/investments
-
-
167,264
Net cash (outflow)/ inflow (on)/ from investing activities
(57,582)
(57,610)
65,627
Net cash (outflow)/inflow before financing
(91,493)
(14,526)
393,817
Financing
Long term loans repaid
(81,925)
(56,612)
(162,217)
Repayment of short term funding
(228,246)
-
(623,231)
Receipt of short term funding
232,646
15,602
487,320
Leases obtained
-
3,658
14,329
Leases repaid
(16,321)
-
(35,478)
Finance costs including discontinued operations
(56,360)
(48,241)
(92,322)
Net cash outflow from financing
(150,206)
(85,593)
(411,599)
Decrease in cash and cash equivalents
(241,699)
(100,119)
(17,782)
Cash and cash equivalents at beginning of period
(236,909)
(274,425)
(274,425)
Effects of exchange rate changes on the balance of
cash held in foreign currencies
(14,407)
43,161
55,298
Cash and cash equivalents at end of period
(493,015)
(331,383)
(236,909)
Represented by:
Cash in hand and at bank
83,678
62,113
111,136
Bank overdrafts
(576,693)
(393,496)
(348,045)
(493,015)
(331,383)
(236,909)
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED 31 MARCH 2021
Unaudited
Audited
6 months to
6 months to
Year to
31 Mar 2021
31 Mar 2020
30 Sept 2020
USD'000s
USD'000s
USD'000s
Cash inflow/(outflow) from/(on) operating activities
Profit/(loss) before taxation
2,618
898
(1,402)
Finance costs
2,686
3,468
5,709
Profit/(loss) on disposal of property, plant and equipment
(64)
-
297
Adjustment on transition to IFRS 16
-
(90)
-
Depreciation charge on right-of-use assets
-
22
517
Depreciation
4,017
4,765
8,745
Share of loss of equity accounted investment
44
136
196
Profit/(loss) on discontinued operations
993
(677)
95
Fair value price adjustment
(822)
(748)
889
Net unrealised foreign exchange losses/(gains)
(255)
2,296
11,495
Earnings before interest, tax, depreciation and amortisation, fair value adjustments and net unrealised foreign exchange losses
9,217
10,070
26,541
Increase/(decrease) in biological assets
(23,646)
(24,415)
(1,253)
Decrease in inventory
9,377
18,587
(10,048)
Decrease in trade and other receivables
(807)
726
(2,142)
Decrease in amounts due from related companies
209
235
(149)
Increase/(decrease) in trade and other payables
4,093
(1,912)
7,575
(Decrease)/increase in amount due to related companies
(21)
73
12
(Decrease) in deferred liability
(39)
(45)
102
Income tax paid
-
(226)
(342)
Net cash inflow/(outflow) from/(on) operating activities
(1,617)
3,093
20,296
Investing activities
Purchase of property, plant and equipment
(2,852)
(4,166)
(5,731)
Proceeds from sale of assets
107
25
399
Right of use asset
-
-
(954)
Proceeds from sale of assets/investments
-
-
10,344
Net cash outflow on investing activities
(2,745)
(4,141)
4,058
Net cash outflow before financing
(4,362)
(1,048)
24,354
Financing
Long term loans repaid
(3,820)
(4,070)
(10,032)
Repayment of short term funding
(10,773)
-
(38,542)
Receipt of short term funding
10,952
1,123
30,137
Leases obtained
-
263
886
Leas repaid
(778)
-
(2,194)
Finance costs including discontinued operations
(2,686)
(3,468)
(5,709)
Net cash outflow from financing
(7,105)
(6,152)
(25,454)
Decrease in cash and cash equivalents
(11,467)
(7,200)
(1,100)
Cash and cash equivalents at beginning of period
(11,763)
(20,790)
(20,790)
Effects of exchange rate changes on the balance of
cash held in foreign currencies
902
9,641
10,127
Cash and cash equivalents at end of period
(22,328)
(18,349)
11,763
Represented by:
Cash in hand and at bank
3,790
3,439
5,518
Bank overdrafts
(26,118)
(21,788)
(17,281)
(22,328)
(18,349)
(11,763)
A copy of the Interim Report will shortly be available to view on the Company's website at www.zambeefplc.com/aim-rule-26/
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