REG - Zambeef Products PLC - Interim Results
17 June 2020
Zambeef Products plc
("Zambeef" or the "Group")
Interim results 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 Adviser)
Tel: +44 (0) 20 7409 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
Division
2020
ZMW'0002019
ZMW'0002020
ZMW'0002019
ZMW'0002020
ZMW'0002019
ZMW'0002020
ZMW'0002019
ZMW'000Total
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
Division
2020
USD'0002019
USD'0002020
USD'0002019
USD'0002020
USD'0002019
USD'0002020
USD'0002019
USD'000Total
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 ZMW'000
2019 ZMW'000
2020 ZMW'000
2019 ZMW'000
2020 ZMW'000
2019 ZMW'000
2020 ZMW'000
2019 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 USD'000
2019 USD'000
2020 USD'000
2019
USD'0002020 USD'000
2019 USD'000
2020 USD'000
2019 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
to
6 months
to
6 months to
6 months to
Year ended
Year ended
31 March
2020
31 March 2020
31 March 2019
31 March
2019
30 September 2019
30 September 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 Davies
General Manager - Chiawa Farm
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 Voster
General Manager - Dairy
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. Sikutwa
Non-executive director
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
ZMW'000
Salary
Bonus
Housing Allowance
Car Allowance
Air Fares 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 Car
-
Yes
Walter Roodt
1,725,657
-
-
Company Car
-
Yes
Faith Mukutu
1,951,328
-
-
Company Car
-
Yes
Mike Lovett
1,647,681
-
Yes
Company Car
-
Yes
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
INDEPENDENT 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 PERIOD ENDED 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 PERIOD ENDED 31 MARCH 2020
Unaudited
Audited
31 Mar 2020
31 Mar 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 PERIOD ENDED 31 MARCH 2020
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 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 PERIOD ENDED 31 MARCH 2020
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 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
31 Mar 2020
31 Mar 2019
30 Sept 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 PERIOD ENDED 31 MARCH 2020
Unaudited
Audited
6 months to
6 months 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 PERIOD ENDED 31 MARCH 2020
Unaudited
Audited
6 months to
6 months to
Year to
31 Mar 2020
31 Mar 2019
30 Sept 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
Central operating costs
(500,630)
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)
Zambeef
Retailing
Master 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
Central operating costs
(35,991)
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)
Zambeef
Retailing
Master 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
Revenues
Non-current assets
Revenues
Non-current assets
Revenues
Non-current 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
Revenues
Non-current assets
Revenues
Non-current assets
Revenues
Non-current 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 2020
31 Mar 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 2020
31 Mar 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 2020
31 Mar 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)
Income tax expense
31 Mar 2020
31 Mar 2019
30 Sept 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 2020
31 Mar 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 land and buildings
ZMW'000s
Aircraft
ZMW'000s
Plant and machinery
ZMW'000s
Motor vehicles
ZMW'000sFurniture and equipment
ZMW'000sCapital work in progress
ZMW'000sTotal
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 land and buildings
USD'000s
Aircraft
USD'000s
Plant and machinery
USD'000sMotor vehicles
USD'000sFurniture and equipment
USD'000sCapital work in progress
USD'000s
Total
USD'000sCost 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
ZMW'000
31 March 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
Gains arising
Gains arising
Decrease due to
Increase
from fair value
from fair value
harvest/
As at
due to
attributable to
attributable to
transferred
As at 31
1 Oct 2019
purchases
physical 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
As at 1
Oct 2018
Foreign
exchange
Increase
due to
purchases
Gains arising
From fair value attributable to physical changes
Gains arising
from fair value attributable to price changes
Decrease due to
to harvest/ transferred to inventory
As at
31 Mar
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
Gains arising
Gains arising
Decrease due to
Increase
from fair value
from fair value
harvest/
As at
due to
attributable to
attributable to
transferred
As at 31
1 Oct 2018
purchases
physical 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
As at 1
Oct 2018
Foreign
exchange
Increase
due to
purchases
Gains arising
From fair value attributable to physical changes
Gains arising
from fair value attributable to price changes
Decrease due to
to harvest/ transferred to inventory
As at
31 Mar
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) arising
Gains arising
Decrease due to
Increase
from fair value
from fair value
harvest/
As at 1
due to
attributable to
attributable 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
As at 1 Oct 2018
Foreign exchange
Increase due to purchases
Gains/ (losses) arising from fair value
attributable to physical changes
Gains arising from fair value attributable to price changes
Decrease due to harvest / transferred to inventory
As at 30 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
ZMW'000
31 March 2019
ZMW'000
30 September 2019
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 1 year
ZMW'000
1-2 years
ZMW'000
2-3 years
ZMW'000
3-4 years
ZMW'000
4-5 years
ZMW'000
After 5 years
ZMW'000
Total
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 1 year
1-2 years
2-3 years
3-4 years
4-5years
After 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
ZMW'000
31 March 2020
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.
31 March 2020
Level 1
ZMW'000
Level 2
ZMW'000
Level 3
ZMW'000
Total
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)
30 September 2019
Level 1
ZMW'000
Level 2
ZMW'000
Level 3
ZMW'000
Total
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
USD'000
Level 2
USD'000
Level 3
USD'000
Total
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)
30 September 2019
Level 1
USD'000
Level 2
USD'000
Level 3
USD'000
Total
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.
31 March 2020
Level 1
ZMW'000
Level 2
ZMW'000
Level 3
ZMW'000
Total
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
30 September 2019
Level 1
ZMW'000
Level 2
ZMW'000
Level 3
ZMW'000
Total
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
31 March 2020
Level 3
USD'000
Total
USD'000
Property, plant and equipment:
Land held for production in Zambia
-
82,025
-
82,025
Office building in Zambia
-
2,740
-
2,740
30 September 2019
Level 1
USD'000
Level 2
USD'000
Level 1
USD'000
Level 2
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 2020 ZMW'000
March 2020 USD'000
March 2019 ZMW'000
March 2019 USD'000
Sept 2019
ZMW'000
Sept 2019
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 2020 ZMW'000
March 2020 USD'000
March 2019 ZMW'000
March 2019 USD'000
Sept 2019
ZMW'000
Sept 2019
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 2020 ZMW'000
March 2020 USD'000
March 2019 ZMW'000
March 2019 USD'000
Sept 2019
ZMW'000
Sept 2019
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.ENDIR FQLLFBQLLBBF
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