TIDMZAM
RNS Number : 6562B
Zambeef Products PLC
11 June 2021
Zambeef Products plc
("Zambeef" or the "Group")
Interim results for the Half Year Ended 31 March 2021
Zambeef (AIM: ZAM), the fully integrated cold chain foods and
retail business with operations in Zambia, Nigeria and Ghana, today
announces its results for the half-year ended 31 March 2021.
Financial Highlights
Figures in 000's 2021 2020 % 2021 2020 %
ZMW ZMW USD USD
------------ ------------ --------- ---------
Revenue 2,150,473 1,797,633 20% 102,501 129,233 -21%
Cost of sales (1,411,049) (1,171,504) 20% (67,257) (84,220) -20%
Gross profit 739,424 626,129 18% 35,244 45,013 -22%
Administrative expenses (584,654) (500,630) 17% (27,867) (35,991) -23%
Operating profit 154,770 125,499 23% 7,377 9,022 -18%
Share of loss equity
accounted investment (915) (1,898) -52% (44) (136) -68%
Exchange losses (42,558) (62,870) -32% (2,029) (4,520) -55%
Finance costs (56,360) (48,241) 17% (2,686) (3,468) -23%
Profit before taxation 54,937 12,490 340% 2,618 898 192%
Taxation charge (21,846) (927) 2257% (1,041) (67) 1454%
Group (loss)/profit
for the period from
continued operations 33,091 11,563 186% 1,577 831 90%
Profit/(Loss) from discontinued
operations 20,843 (9,423) -321% 993 (677) -247%
Total Profit for the
period 53,934 2,140 2420% 2,570 154 1569%
EBITDA 259,888 182,665 42% 12,387 13,141 -6%
---------------------------------- --------- --------- ------
Gross Profit Margin 34.38% 34.83% 34.38% 34.83%
EBITDA Margin 12.09% 10.16% 12.09% 10.16%
Debt/Equity (Gearing) 27.6% 28.9% 27.57% 28.93%
Debt-To-EBITDA 3.88 5.48 3.88 5.48
------------ ------------ ------ --------- --------- ------
PERFORMANCE OVERVIEW
The Group had a strong start to the financial year, delivering
results ahead of pre-pandemic levels. Demand for products,
particularly poultry products, remained strong allowing the Group
to remain in line with revenue expectations. The cost containment
embarked on by management also continued to yield significant
savings and contributed positively to the results. Improvements in
the load shedding situation, following the good regional rains,
resulted in reduced generator fuel costs and improved production
efficiencies.
Notwithstanding, the half year period continued to present
challenges in the operating environment, resulting from the
Covid-19 pandemic and the previous 2020 economic uncertainties,
despite greater stability compared to the second half of the 2020
financial year. The rising inflation put pressure on consumer
disposable income and reduced the share of wallet going towards
food spend. Supply constraints on some of Zambeef's product lines
further put pressure on cost of inputs.
KEY FINANCIAL HIGHLIGHTS
Revenue was ZMW2.2 billion (USD103 million) and we achieved a
gross profit of ZMW739.4 million (USD35.2 million), measuring 20%
and 18% above the prior year in kwacha terms, but both down by 21%
and 22% in USD terms, respectively. The performance in USD was
adversely impacted by the steady depreciation of the local
currency.
The Group's strong performance was driven by growth in the
poultry, retail and cropping divisions. Management continued
optimising top line growth through revenue management while the
continued cost control measures helped deliver strong Earnings
Before Interest Taxes, Depreciation and Amortisation (EBITDA).
The profitability was mainly driven by cropping, increased
volumes and margins in the stock feed division and Retail and Cold
Chain Food Products which is in line with our strategic imperative
of consistent revenue growth through expansion of our retail
network.
Despite being slightly lower than the prior year (measured in
USD), exchange losses and financing costs remained high in kwacha
terms, eroding bottom-line performance. The depreciation of the
kwacha led to increased financing costs and exchange losses on our
dollar denominated debt, notwithstanding continued principal
repayments during the period.
Zambeef's Total Profit for the period increased from ZMW2.1m to
ZMW53.9m (USD0.154m to USD2.57m).
Commenting on these results, the Chairman, Mr Michael Mundashi
said:
"Despite the macroeconomic headwinds and Covid-19 related
uncertainties continuing into the current year, we saw a relatively
more stable environment during the period under review in terms of
the rate of depreciation of the kwacha. Despite these challenges,
the Group generated an operating profit, including discontinued
operations, of ZMW175.6 million (USD8.4 million) compared to ZMW116
million (USD8.3 million) achieved in first half of the previous
financial year. This achievement, in the face of such economic and
market difficulties, illustrates the Group's fundamental strengths
as a diversified and resilient business.
"The Board remains committed to achieving the Group's strategic
priorities while navigating the seasonal market and economic
challenges. The focus will be on optimising the assets of core
businesses to pay down debt and to invest for the future.
"The macro-economic climate is expected to remain challenging
for Zambia in 2021, characterised by high national debt levels and
continued foreign currency supply constraints which could
negatively affect business activity across the economy.
"The Group remains committed to delivering value to shareholders
and is positioned to navigate the turmoil while capitalising on
opportunities."
For further information, please visit www.zambeefplc.com or
contact:
Zambeef Products plc Tel: +260 (0) 211 369003
Walter Roodt
Faith Mukutu
finnCap (Nominated Adviser and Broker) Tel: +44 (0) 20 7220
0500
Ed Frisby/Kate Bannatyne/Tim Harper (Corporate Finance)
Tim Redfern/Barney Hayward (ECM)
Autus Securities Limited Tel: +260 (0) 761 002 002
Mataka Nkhoma
About Zambeef Products plc
Zambeef Products plc is the largest integrated cold chain food
products and agribusiness company in Zambia and one of the largest
in the region, involved in the primary production, processing,
distribution and retailing of beef, chicken, pork, milk, eggs,
dairy products, fish, flour and stockfeed, throughout Zambia and
the surrounding region, as well as Nigeria and Ghana it has 236
retail outlets throughout Zambia and West Africa.
The Company is one of the largest suppliers of beef in Zambia.
Five beef abattoirs and three feedlots are located throughout
Zambia, with a capacity to slaughter 230,000 cattle a year. It is
also one of the largest chicken and egg producers in Zambia, with a
capacity of 8.8m broilers and 22.4 million day-old chicks a year.
It is one of the largest piggeries, pig abattoirs and pork
processing plants in Zambia, with a capacity to slaughter 75,000
pigs a year, while its dairy has a capacity of 120,000 litres per
day.
The Group is also one of the largest cereal row cropping
operations in Zambia, with approximately 7,787 hectares of row
crops under irrigation, which are planted twice a year, and a
further 8,694 hectares of rainfed/dry-land crops available for
planting each year.
CHAIRMAN'S REPORT
Dear Shareholder,
It is my great pleasure to present to you the Chairman's Report
with respect to the financial half year period ended March 31,
2021.
Despite the 2020 macroeconomic headwinds and Covid-19 related
uncertainties continuing into the current year, we saw a relatively
more stable environment during the period under review in terms of
the rate of depreciation of the kwacha and the easing of monetary
policy. However, the period saw adverse market conditions in
respect of securing supply, which saw a sharp rise in food
inflation.
The Group generated an operating profit, including discontinued
operations, of ZMW175.6 million (USD8.4 million) compared to ZMW116
million (USD8.3 million) achieved in the previous half-year period.
The operating profit excluding discontinued operations was ZMW154.8
million (USD7.4 million) compared to ZMW125.5 million (USD9.0
million) achieved in the previous half-year period . The Group's
performance had shown resilience in the face of market
difficulties, illustrating the strengths of the vertically
integrated business model which is key to creating long-term
shareholder value.
The Board remains committed to achieving the Group's strategic
priorities while navigating the seasonal market and economic
challenges. The focus will be on optimising the assets of core
businesses, to pay down debt and to invest for the future.
The Economic Environment
The Zambian economy has been under significant pressure stemming
from the national debt burden, which was exacerbated by the impact
of the coronavirus pandemic. Despite indications of recovery in the
global economy from the effects of the coronavirus pandemic, the
Zambian economic recovery remains gradual in the face of a high
debt burden, high inflation and a volatile currency.
The Zambian kwacha has depreciated by 10% since the end of the
2020 full financial year period. The pace of depreciation of the
local currency has slowed down owing to monetary policy
interventions and the prospective benefits of a higher copper price
on the international exchange markets.
Inflationary pressures, particularly food inflation, have
resulted in a significant drop in our customers' disposable income
and has continued to put pressure on the share of wallet going
towards food spend. Inflation for the half-year period under review
closed at 22.8% compared to 14% for the previous corresponding
period. The resultant bumper harvest from the good summer rainfall
season is expected to drive down food inflation in the second half
of the financial year.
Divisional Performance review
Retail and Cold Chain Food Products
The Group continues to prioritise revenue optimisation, asset
utilisation and cost control as pillars to drive profitability in
the combined retail and cold chain food products divisions. Revenue
grew by 29% and operating profit growth of 61% in kwacha terms was
achieved.
The division experienced supply challenges during the period
which resulted in inputs price increases. As a result, volumes
declined across product categories. However, demand for our
products was high as we remained competitively priced.
Management positioned the Poultry division as a focus point for
growth this year and continues to implement measures to improve
production efficiencies and therefore profitability. Increased
demand for broilers and eggs allowed for revenue improvement in the
Poultry division despite a volume decline.
Stockfeed
Volumes were flat compared to prior year during the period owing
to slow growth and some declines on major product lines. The
shortage of day-old chicks on the market limited customers buying
of broiler feed while an export ban reduced export sales and the
ability to earn foreign currency. The high cost of imported
materials negatively impacted costs of sales.
Cropping
Zambia had a good summer rainfall season during the half year
period, and as a result, yields for the summer crop are expected to
be in line with expectations. The country is expected to deliver a
bumper harvest which will result in lower maize prices which will
help stabilise food inflation.
Strategy review
The board undertook a review of the medium to long-term strategy
to position the business to respond to the challenges and
opportunities for the future. I am happy to update shareholders
that the process is proceeding according to plan. Part of the
strategy review process included a review of our operational
business units and also governance structures. The board review
which I announced at the annual general meeting included a review
of the composition of the board in terms of both compliment and
size and I am pleased to announce that this process has since been
concluded.
Outlook
Although we expect some level of stability, the macro-economic
climate is expected to remain challenging during the second half
period. The kwacha is expected to continue depreciating at a steady
rate with expected improvements towards the end of the calendar
year. The copper price, which is a major foreign exchange earner
for the country, is expected to continue holding as production
increases. Monetary policy easing is expected to continue and
inflation is expected to stabilise following the summer crop bumper
harvest. The Covid-19 pandemic and how it will evolve has further
potential to impact our operations. There are fears of a potential
third wave as the country navigates through the winter season that
occurs during the following reporting period.
The group remains committed to delivering value to shareholders
and is positioned to navigate the turmoil while capitalising on
opportunities.
Acknowledgement
On behalf of the Company and the Board of Directors, I would
like to express my sincere gratitude to Margaret Mudenda, John
Rabb, David Osborne and Professor Enala Mwase who resigned from the
board in February and March 2021. Their dedication and
contributions to the success of the business over the years will be
greatly missed.
Since my last Report, we welcomed Monica Musonda, Pearson Gowero
and Roman Frenkel to our Board of Directors. Their industry
experience and backgrounds will be key in driving the business into
the next phase of the Groups evolution as a regional food
provider.
I would also want to thank my fellow board members for steering
the Group through this challenging period. To our management and
staff, I express my gratitude to them for another solid
performance, dedicated efforts and resilience in the face of
challenges. I am proud of our achievements to date, and I am
excited by the potential
opportunities upon which we will build on our progress.
Michael Mundashi
Chairman
11 June 2021
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
The half year period continued to present challenges in the
operating environment, resulting from the Covid-19 pandemic and
2020 economic uncertainties, despite greater stability compared to
the second half of the 2020 financial year. Inflation continued to
rise, although the exchange rate depreciated at a much slower rate.
Money supply continued to improve in the economy. High inflation
put pressure on disposable incomes as prices of goods and services
increased resulting in depressed consumer spending. Due to the low
supply of livestock from producers, after the devastating effects
on their profitability by the previous drought and depreciation of
the currency, the retail and cold chain food products supply was
negatively affected. The resultant surge in food product prices to
our customers forced them towards more affordable offerings of our
products.
The load shedding situation improved towards the end of the
calendar year 2020 following good regional rains as a result of the
La Nina weather pattern, resulting in reduced generator fuel
expenditure and improved production efficiencies.
Despite the challenges noted above, Zambeef has had a strong
start to the financial year, delivering results ahead of
pre-pandemic levels as revenue increased and costs were
contained.
The Group delivered operating profit, including discontinued
operations, of ZMW175.6 million (USD8.37 million), equating to a
growth of 51.3% in kwacha terms and a flat performance of 0.3%
growth in US dollar terms, compared with ZMW116.1 million
(USD8.35million) in HY2020. The operating profit excluding
discontinued operations was ZMW154.8 million (USD7.4 million)
compared to ZMW125.5 million (USD9.0 million) achieved in the
previous half-year period.
Our revenue, including discontinued operations, was ZMW2.2
billion (USD106.9 million) and we achieved a gross profit of
ZMW782.1 million (USD37.2 million), respectively 23.7% and 24.3%
above the prior year in kwacha terms, but both down by 18% and
17.6% in US dollar terms, respectively.
The Group's strong performance was driven by growth in the
Poultry, Retail and Cropping divisions. Management continued
optimising top line growth through revenue management while the
continued cost control measures helped deliver strong Earnings
Before Interest Taxes, Depreciation and Amortisation (EBITDA), and
ensured resultant operating leverage.
Exchange losses and financing costs remained high in kwacha
terms, eroding bottom-line performance. The depreciation of the
kwacha led to increased financing costs and exchange losses on our
dollar denominated debt, notwithstanding continued principal
repayments during the period.
Our diversified and vertically integrated business with strong
brands, supportive partners and an experienced management team
helped deliver the encouraging results.
Strategic focus
Our strategic focus is to optimise our asset utilisation and
maximise returns. We remain committed to our strategy of focussing
on our core businesses, in which we strive to be the best in class.
The continued deleveraging and divestiture of non-core assets will
enable us to free up cash to invest into our core businesses and
therefore deliver shareholder value.
Retail and Cold Chain Food Products (CCFP)
The period saw traditionally high volume sales lines come under
pressure amidst a high inflationary environment and reduced
customer spending. Despite high demand in our key product lines,
supply constraints negatively impacted volume growth. Revenue
growth was mainly driven by pricing increases on traditional
product categories and aided by sales volume growth of traded goods
and affordable categories. Shoprite in-store butcheries were a
source of revenue growth as they proved relatively more resilient
to inflationary pressures.
Sales volumes came under pressure on the back of supply
constraints due to constrained livestock producer profitability
levels. Significant producer price increases were necessary under
the review period to livestock producers to increase output. The
large price increases that were necessary to stimulate supply
resulted in customers moving towards more affordable protein
offerings. The Poultry division was a major contributor of revenue
growth due to high demand for it as a relatively affordable protein
source, in the form of chicken and eggs.
Despite the challenges, the Retail and CCFP business registered
a healthy revenue growth of 29% above HY2020. Management employed a
revenue optimisation strategy, responding quickly to the evolving
volatile operating environment.
Retail and CCFP delivered an operating profit growth of 61% in
kwacha terms. Operational efficiency improvements and overhead
spend discipline ensured translation of the top line growth to the
bottom-line. Reduced load shedding helped reduce generator set fuel
costs, which further contributed to the increased profitability,
particularly in the second quarter.
Stockfeed (Novatek)
Revenue for the division was 17% above prior year mainly due to
price, as volumes remained flat on prior year. The demand for
poultry feed reduced following a day-old chick supply shortage
across the market. An export ban on animal feed from Zambia
resulted in a further slowdown of production volumes. However, fish
feed continues to register exponential growth following the sector
specific lifting of the export ban and government's efforts to make
Zambia a regional player in the aquaculture sector. The
depreciation of the kwacha to the USD and ZAR negatively impacted
foreign currency denominated costs.
Cropping
The revenue decline registered in the Cropping business is due
to the timing of wheat sales and the impact of the sale of
Sinazongwe farm. However, operating profit increased in kwacha
terms despite the decline in dollar terms. Zambia experienced a
good rainfall season and the yield on the summer crop is expected
to be in line with expectations.
Outlook
Although we expect the macroeconomic situation to remain
volatile, we expect more stability in the medium term than we
experienced in the second half of 2020. Copper prices have rallied
following the global recovery from the economic downturn caused by
the coronavirus pandemic.
The Covid-19 pandemic and how it evolves will continue to be an
important factor in how we perform for the remainder of the year.
We believe that a healthy, sustainable and profitable growth trend
can only be achieved when we work together with our partners,
communities and customers. We remain committed to implementing and
enforcing Covid-19 protocols in our outlets.
Despite the macro-economic headwinds and uncertainty caused by
the Covid-19 pandemic, Zambeef's underlying performance is expected
to remain resilient.
Rehabilitating our balance sheet remains a priority. We have
focused on deleveraging and thereby demonstrating to our
shareholders that we have a clear path to take care of pending debt
maturities. Our current strategy will help relieve exchange losses
and financing cost pressures to the bottom line, which will
increase free cash flow to enable us to invest for the future.
DIVISIONAL PERFORMANCE
Table 1 (ZMW) and Table 2 (USD) below provide a summary of the
consolidated performance of the key business divisions reported at
an operating profit level.
Table 1: Divisional financial summary in ZMW'000
ZMW Revenue Gross Profit Overheads Operating Profit
2021 2020 2021 2020 2021 2020 2021 2020
Division ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Total
Retailing 1,392,447 1,138,678 138,614 120,170 (166,941) (166,107) (28,327) (45,937)
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
CCFP 950,587 745,736 235,600 196,628 (133,156) (104,790) 102,444 91,837
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Less
Interco (841,687) (721,059)
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Combined
Retail
& 1,501,347 1,163,355 374,214 316,798 (300,097) (270,897) 74,117 45,900
CCFP
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Stock
Feed 748,062 641,656 144,290 122,378 (76,981) (60,753) 67,309 61,625
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Cropping 163,313 256,990 191,473 161,886 (102,673) (85,151) 88,800 76,735
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Others 145,964 109,476 29,447 25,067 (14,174) (11,634) 15,273 13,434
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Total 2,558,686 2,171,477 739,424 626,129 (493,925) (428,435) 245,499 197,694
=========== ========== ========== ========= ========= ========== ========== ========= =========
Less:
Intra/
--------- --------- ---------- ---------- --------- ---------
Inter
Group (408,213) (373,844)
--------- --------- ---------- ---------- --------- ---------
Sales
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Central
---------- ---------- --------- ---------
Overhead (90,729) (72,195) (90,729) (72,195)
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Group
Total 2,150,473 1,797,633 739,424 626,129 (584,654) (500,630) 154,770 125,499
----------- ---------- ---------- --------- --------- ---------- ---------- --------- ---------
Table 2: Divisional financial summary in USD'000
USD Revenue Gross Profit Overheads Operating Profit
2021 2020 2021 2020 2021 2020 2021 2020
Division USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Retailing 66,370 81,861 6,608 8,640 (7,957) (11,942) (1,350) (3,302)
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
CCFP 45,309 53,612 11,228 14,135 (6,347) (7,533) 4,883 6,602
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Less Interco (40,119) (51,838)
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Combined
Retail
& 71,560 83,635 17,836 22,775 (14,304) (19,475) 3,533 3,300
CCFP
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Stock Feed 35,656 46,129 6,877 8,798 (3,669) (4,368) 3,208 4,430
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Cropping 7,784 18,475 9,127 11,638 (4,894) (6,122) 4,233 5,516
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Others 6,957 7,870 1,404 1,802 (675) (836) 728 966
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total 121,957 156,109 35,244 45,013 (23,542) (30,801) 11,702 14,212
============== ========= ========= ========= ========= ========= ========= ========= =========
Less: Intra/
--------- --------- --------- --------- --------- ---------
Inter Group (19,456) (26,876)
--------- --------- --------- --------- --------- ---------
Sales
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Central
--------- --------- --------- ---------
Overhead (4,325) (5,190) (4,325) (5,190)
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Group Total 102,501 129,233 35,244 45,013 (27,867) (35,991) 7,377 9,022
-------------- --------- --------- --------- --------- --------- --------- --------- ---------
Taking the performance of each of our key business areas in
turn:
Retail and CCFP
The combined Retail and CCFP divisions generated an EBIT margin
of 5% which increased by 99 basis points from the previous
financial year generating an absolute value increase of 61% to ZMW
74.1 million (HY2020: ZMW 45.9 million) in kwacha terms and 7.1%
increase to USD 3.5 million (HY2020: USD 3.3 million) in dollar
terms.
The strong performance was underpinned by revenue optimisation
in Poultry products mainly due to favourable price and high demand
given the relative affordability of Chicken and Egg as a source of
protein. Cost pressure arising from supply constraints negatively
impacted on the profitability in Pork, Beef and Milk.
West Africa Retail
Our Nigerian business was impacted by the sporadic protests
related to the Shoprite announcement of the intention to pull out
of the Nigeria market and the EndSARS protests. In addition, the
business experienced supply challenges across its major product
lines. Despite all these challenges, revenue increased by 43% to
ZMW 155.7 million (HY2020: ZMW 109 million) mainly due to pricing
and exchange translational effects with dollar revenue declining by
5%. However, operating profit declined by 89% in dollar terms due
to rising costs.
Stockfeed (Novatek)
Sales volumes were flat on prior year mainly due to declines on
key volume categories. Shortage of day-old chicks slowed the growth
of broiler feed while an export ban impacted export sales.
Revenue grew by 17% in kwacha terms (23% decline in USD terms),
while the operating profit only grew by 9.2% to ZMW 67 million
(HY2020: ZMW 62 million) or declined by 28% to USD 3.2 million
(HY2020: USD 4.4 million) in dollar terms. The gross margin
increased to 19.3% from 19.1% in the prior year owing to favourable
pricing despite rising costs of inputs.
Overheads increased by 27% to ZMW 77 million (HY2020: ZMW 61
million) owing to high repairs and maintenance costs and labour
costs.
Cropping
The Cropping business is key to Zambeef, providing raw material
inputs for value added processing within the Group and serving as a
currency hedge by being able to generate USD cash flow.
Revenue decreased 37% to ZMW 163 million (HY2020: ZMW 257
million) or 58% to USD 7.8 million (HY2020: USD 18.5 million) in
dollar terms, mainly due to timing of wheat sales during this
year's cycle and the impact of the previous years sale of
Sinazongwe farm and currently the assets held for sale at Chiawa
farm. Gross profit increased 18% compared to the prior half-year,
with only a 21% increase in the overheads even in the context of
the depreciation of the kwacha.
Zambia experienced a good rainfall season and the summer harvest
is expected to be in line with expectations. However, the price of
maize is expected to be lower than the prior year following the
expected bumper harvest predicted for Zambia.
Other businesses
Total revenue from the Group's other business units increased by
33% to ZMW 146 million (HY2020: ZMW 109 million) mainly due to
growth in both the milling and leather to shoe businesses. This
translated to gross profit growth of 17% in kwacha terms due to
cost pressures in Milling arising from the increase in price of
wheat in kwacha terms following the depreciation of the
currency.
The leather to shoe business turnaround strategy is beginning to
pay off as the division saw an increase in demand for its products,
particularly school shoes, following the opening of schools after
Covid-19 related closures. Management focus has been to optimise
production efficiencies, control overhead costs, innovation and
look for new market opportunities for its products.
Walter Roodt
Chief Executive Officer
11 June 2021
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Unaudited Audited
31 Mar 2021 31 Mar 2020 30 Sept 2020
----- ------------ ------------ --------------------------
Group Note ZMW'000s ZMW'000s ZMW'000s
----- ------------ ------------ --------------------------
Revenue 5(i) 2,150,473 1,797,633 3,875,104
----- ------------ ------------ --------------------------
Net profit/(loss) arising
from price changes in
fair value of biological
assets 9 17,242 10,408 (14,381)
----- ------------ ------------ --------------------------
Cost of sales (1,428,291) (1,181,912) (2,645,101)
----- ------------ ------------ --------------------------
Gross profit 5(i) 739,424 626,129 1,215,622
----- ------------ ------------ --------------------------
Administrative expenses (587,575) (501,168) (1,011,968)
----- ------------ ------------ --------------------------
Other income 2,921 538 6,877
----- ------------ ------------ --------------------------
Operating profit 154,770 125,499 210,531
----- ------------ ------------ --------------------------
Share of loss equity accounted
investment (915) (1,898) (3,177)
----- ------------ ------------ --------------------------
Exchange losses on translating
foreign currency transactions
and balances (42,558) (62,870) (137,705)
----- ------------ ------------ --------------------------
Finance costs (56,360) (48,241) (92,322)
----- ------------ ------------ --------------------------
Profit/(loss) before taxation 5(i) 54,937 12,490 (22,673)
----- ------------ ------------ --------------------------
Taxation charge 6(a) (21,846) (927) (112,957)
----- ------------ ------------ --------------------------
Group profit/(loss) for
the period from continued
operations 33,091 11,563 (135,630)
----- ------------ ------------ --------------------------
(Loss)/profit from discontinued
operations 15 20,843 (9,423) 33,435
----- ------------ ------------ --------------------------
Total (loss)/profit for
the period 53,934 2,140 (102,195)
----- ------------ ------------ --------------------------
Group profit/(loss) attributable
to:
----- ------------ ------------ --------------------------
Equity holders of the
parent 54,056 1,650 (103,419)
----- ------------ ------------ --------------------------
Non-controlling interest (122) 490 1,224
----- ------------ ------------ --------------------------
53,934 2,140 (102,195)
----- ------------ ------------ --------------------------
Other comprehensive income
----- ------------ ------------ --------------------------
Exchange gains on translating
presentational currency 117,226 434,406 625,042
----- ------------ ------------ --------------------------
Remeasurement of net defined
benefit liability - - 6,229
----- ------------ ------------ --------------------------
Remeasurement of leases - (12) 315
----- ------------ ------------ --------------------------
Total comprehensive income
for the period 171,160 436,534 529,391
----- ------------ ------------ --------------------------
Total comprehensive income/(loss)
for the period attributable
to:
----- ------------ ------------ --------------------------
Equity holders of the
parent 173,523 433,889 525,030
----- ------------ ------------ --------------------------
Non-controlling interest (2,363) 2,645 4,361
----- ------------ ------------ --------------------------
171,160 436,534 529,391
----- ------------ ------------ --------------------------
Earnings per share Ngwee Ngwee Ngwee
----- ------------ ------------ --------------------------
Basic and diluted earnings
per share from continued
operations 7 8.29 2.76 (45.53)
----- ------------ ------------ --------------------------
Basic and diluted earnings
per share from discontinued
operations 7 5.20 (2.35) 11.12
----- ------------ ------------ --------------------------
Total 7 13.49 0.41 (34.41)
----- ------------ ------------ --------------------------
The accompanying notes form part of the financial
statements.
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Unaudited Audited
31 Mar 31 Mar
2021 2020 30 Sept 2020
------ --------- --------- -------------
Group Note USD'000s USD'000s USD'000s
------ --------- --------- -------------
Revenue 5(ii) 102,501 129,233 239,648
------ --------- --------- -------------
Net proft/(loss) arising
from price changes in fair
value of biological assets 9 822 748 (889)
------ --------- --------- -------------
Cost of sales (68,079) (84,968) (163,581)
------ --------- --------- -------------
Gross profit 5(ii) 35,244 45,013 75,178
------ --------- --------- -------------
Administrative expenses (28,006) (36,029) (62,583)
------ --------- --------- -------------
Other income 139 38 425
------ --------- --------- -------------
Operating profit 7,377 9,022 13,020
------ --------- --------- -------------
Share of loss equity accounted
investment (44) (136) (197)
------ --------- --------- -------------
Exchange losses on translating
foreign currency transactions
and balances (2,029) (4,520) (8,516)
------ --------- --------- -------------
Finance costs (2,686) (3,468) (5,709)
------ --------- --------- -------------
Profit/(loss) before taxation 5(ii) 2,618 898 (1,402)
------ --------- --------- -------------
Taxation charge 6(f) (1,041) (67) (6,986)
------ --------- --------- -------------
Group profit/(loss) for
the period from continued
operations 1,577 831 (8,388)
------ --------- --------- -------------
Profit/(loss) from discontinued
operations 15 993 (677) 2,068
------ --------- --------- -------------
Total profit/(loss) for
the period 2,570 154 (6,320)
------ --------- --------- -------------
Group profit/(loss) attributable
to:
------ --------- --------- -------------
Equity holders of the parent 2,577 119 (6,396)
------ --------- --------- -------------
Non-controlling interest (7) 35 76
------ --------- --------- -------------
2,570 154 (6,320)
------ --------- --------- -------------
Other comprehensive income
------ --------- --------- -------------
Exchange (losses)/gains
on translating presentational
currency (11,265) (42,051) (52,402)
------ --------- --------- -------------
Remeasurement of net defined
benefit liability - - 385
------ --------- --------- -------------
Remeasurement of leases - (1) 20
------ --------- --------- -------------
Total comprehensive loss
for the period (8,695) (41,898) (58,317)
------ --------- --------- -------------
Total comprehensive income/(loss)
for the period attributable
to:
------ --------- --------- -------------
Equity holders of the parent (8,581) (42,144) (58,661)
------ --------- --------- -------------
Non-controlling interest (114) 246 344
------ --------- --------- -------------
(8,695) (41,898) (58,317)
------ --------- --------- -------------
Earnings per share Cents Cents Cents
------ --------- --------- -------------
Basic and diluted earnings
per share from continued
operations 7 0.40 0.20 (2.82)
------ --------- --------- -------------
Basic and diluted earnings
per share from discontinued
operations 7 0.25 (0.17) 0.69
------ --------- --------- -------------
Total 7 0.65 0.03 (2.13)
------ --------- --------- -------------
The accompanying notes form part of the financial
statements.
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Total
Foreign attributable
Preference exchange to owners
Share Share share Revaluation translation Retained of the Non-controlling Total
capital premium capital reserve reserve earnings parent interest equity
ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s ZMW'000s
At 1 October
2019 3,006 1,125,012 1,000 1,199,058 381,929 535,704 3,245,709 (4,881) 3,240,828
Loss for the
period - - - - - 1,650 1,650 490 2,140
Transfer of
surplus
depreciation - - - (14,833) - 14,833 - - -
Other
comprehensive
income:
Remeasurement
of Leases - - - - - (12) (12) - (12)
Exchange gains
on translating
presentational
currency - - - - 432,251 - 432,251 2,155 434,406
Total
comprehensive
income
for the period - - - (14,833) 432,251 16,471 433,889 2,645 436,534
At 31 March
2020 3,006 1,125,012 1,000 1,184,225 814,180 552,175 3,679,598 (2,236) 3,677,362
Profit for the
period - - - - - (105,069) (105,069) 734 (104,335)
Transfer of
surplus
depreciation - - - (16,512) - 16,512 - - -
Other
comprehensive
income
Remeasurement
of net defined
benefit
liability - - - - - 6,229 6,229 - 6,229
Adjustment on
transition
to IFRS16 - - - - - 327 327 - 327
Exchange gains
on translating
presentational
currency - - - - 189,654 - 189,654 982 190,636
Total
comprehensive
income
for the period - - - (16,512) 189,654 (82,001 91,141 1,716 92,857
At 30 September
2020 3,006 1,125,012 1,000 1,167,713 1,003,834 470,174 3,770,739 (520) 3,770,219
Profit for the
period - - - - - 54,056 54,056 (122) 53,934
Transfer of
surplus
depreciation - - - (23,141) - 23,141 - - -
Other
comprehensive
income
Remeasurement
of leases - - - - - - - - -
Exchange gains
on translating
presentational
currency - - - - 119,467 - 119,467 (2,241) 117,226
Total
comprehensive
income
for the period - - - (23,141) 119,467 77,197 173,523 (2,363) 171,160
At 31 March
2021 3,006 1,125,012 1,000 1,144,572 1,123,301 547,371 3,944,262 (2,883) 3,941,379
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Foreign Total
Preference exchange attributable
Share Share share Revaluation translation Retained to owners Non-controlling Total
capital premium capital reserve reserve earnings of the parent Interest equity
USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s USD'000s
At 1 October
2019 449 185,095 100 173,209 (197,748) 84,782 245,887 (370) 245,517
Transactions
with owners
Profit for the
period - - - - - 119 119 35 154
Transfer of
surplus
depreciation - - - (1,066) - 1,066 - - -
Other
comprehensive
income:
Exchange losses
on translating
presentational
currency - - - - (42,262) - (42,262) 211 (42,051)
Remeasurement
of leases - - - - - (1) (1) - (1)
Total
comprehensive
income
for the period - - - (1,066) (42,262) 1,184 (42,144) 246 (41,898)
At 31 March
2020 449 185,095 100 172,143 (240,010) 85,966 203,743 (124) 203,619
Loss for the
period - - - - - (6,515) (6,515) 41 (6,474)
Transfer of
surplus
depreciation - - - (872) - 872 - - -
Other
comprehensive
income
Remeasurement
of leases - - - - - 21 21 - 21
Remeasurement
of defined
benefit
liability - - - - - 385 385 385
Exchange gains
on translating
presentational
currency - - - - (10,408) - (10,408) 57 (10,351)
Total
comprehensive
income - - - (872) (10,408) (5,237) (16,517) 98 (16,419)
At 3o September
2020 449 185,095 100 171,271 (250,418) 80,729 187,226 (26) 187,200
Profit for the
period - - - - - 2,577 2,577 (7) 2,570
Transfer of
surplus
depreciation - - - (1,103) - 1,103 - - -
Other
comprehensive
income
Remeasurement
of leases - - - - - - - - -
Exchange gains
on translating
presentational
currency - - - - (11,158) - (11,158) (107) (11,265)
Total
comprehensive
income - - - (1,103) (11,158) 3,680 (8,581) (114) (8,695)
At 31 March
2021 449 185,095 100 170,168 (261,576) 84,409 178,645 (140) 178,505
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION -- 31 MARCH
2021
Unaudited Audited
Note 31 Mar 2021 31 Mar 2020 30 Sept 2020
ZMW'000s ZMW'000s ZMW'000s
ASSETS
Non - current assets
Goodwill 166,801 166,801 166,801
Property, plant and equipment 8 3,419,935 3,292,653 3,264,505
Investment in associate 42,911 10,478 43,826
Deferred tax assets 6(e) 8,680 80,073 9,552
3,638,327 3,550,005 3,484,684
Current assets
Biological assets 9 689,646 520,437 176,305
Inventories 906,914 682,619 1,103,640
Trade and other receivables 149,606 87,924 132,668
Assets held for disposal 15 175,654 131,857 175,654
Amounts due from related
companies 4,949 38,281 9,337
Income tax recoverable 6(c) 19,800 18,329 1,784
Cash and cash equivalents 10 83,678 62,113 111,136
2,030,247 1,541,560 1,710,524
Total assets 5,668,574 5,091,565 5,195,208
EQUITY AND LIABILITIES
Capital and reserves
Share capital 3,006 3,006 3,006
Preference share capital 1,000 1,000 1,000
Share premium 1,125,012 1,125,012 1,125,012
Reserves 2,815,244 2,550,580 2,641,721
3,944,262 3,679,598 3,770,739
Non-controlling interest (2,883) (2,236) (520)
3,941,379 3,677,362 3,770,219
Non - current liabilities
Interest bearing liabilities 11 124,233 234,846 190,218
Leases 12 10,242 19,741 19,750
Deferred liability 10,578 15,737 11,389
Deferred taxation 6(e) 85,041 32,154 69,950
230,094 302,478 291,307
Current liabilities
Interest bearing liabilities 11 359,159 391,108 326,899
Leases 12 16,446 24,701 23,259
Trade and other payables 400,006 231,592 321,648
Provisions 120,857 54,310 113,347
Amounts due to related
companies - 1,265 443
Taxation payable 6(c) 23,940 15,253 41
Bank overdrafts 10 576,693 393,496 348,045
1,497,101 1,111,725 1,133,682
Total equity and liabilities 5,668,574 5,091,565 5,195,208
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION -- 31 MARCH
2021
Unaudited Audited
30 Sept
31 Mar 2021 31 Mar 2020 2020
Note USD '000s USD '000s USD '000s
ASSETS
Non - current assets
Goodwill 7,554 9,236 8,282
Property, plant and equipment 8 154,888 182,317 162,091
Investment in associate 1,943 580 2,176
Deferred tax asset 6(j) 394 4,434 474
164,779 196,567 173,023
Current assets
Biological assets 9 31,234 28,817 8,754
Inventories 41,074 37,797 54,798
Trade and other receivables 6,776 4,868 6,587
Assets held for disposal 15 7,955 7,301 8,722
Amounts due from related
companies 224 2,120 464
Income tax recoverable 6(h) 897 1,015 89
Cash and cash equivalents 10 3,790 3,439 5,518
91,950 85,357 84,932
Total assets 256,729 281,924 257,955
EQUITY AND LIABILITIES
Capital and reserves
Share capital 449 449 449
Preference share capital 100 100 100
Share premium 185,095 185,095 185,095
Reserves (6,999) 18,099 1,582
178,645 203,743 187,226
Non-controlling interest (140) (124) (26)
178,505 203,619 187,200
Non - current liabilities
Interest bearing liabilities 11 5,626 13,004 9,445
Leases 12 464 1,093 981
Deferred liability 479 872 565
Deferred tax liability 6(j) 3,852 1,780 3,473
10,421 16,749 14,464
Current liabilities
Interest bearing liabilities 11 16,266 21,656 16,231
Leases 12 745 1,368 1,155
Trade and other payables 18,116 12,823 15,971
Provisions 5,474 3,007 5,629
Amounts due to related companies - 69 22
Taxation payable 6(h) 1,084 845 2
Bank overdrafts 10 26,118 21,788 17,281
67,803 61,556 56,291
Total equity and liabilities 256,729 281,924 257,955
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Unaudited Audited
6 months 6 months
to to Year to
31 Mar 2021 31 Mar 2020 30 Sept 2020
ZMW'000s ZMW'000s ZMW'000s
Cash inflow/(outflow)
from/(on)
operating activities
Profit/(loss) before
taxation 54,937 12,490 (22,673)
Finance costs 56,360 48,241 92,322
(Profit)/loss on
disposal of
property,
plant and equipment (1,345) - 4,796
Adjustment on
transition to IFRS
16 - (1,187) -
Depreciation on
right-of-use assets - 304 8,362
Depreciation 84,275 66,285 141,408
Share of loss of
equity accounted
investment 915 1,898 3,177
Profit/(loss) on
discontinued
operations 20,843 (9,423) 1,529
Fair value price
adjustment (17,242) (10,408) 14,381
Net unrealised
foreign exchange
(gains)/losses (5,345) 31,935 186,272
Earnings before
interest, tax,
depreciation
and amortisation,
fair value
adjustments
and net unrealised
foreign exchange
losses 193,398 140,135 429,574
(Increase)/decrease
in biological
assets (496,099) (339,612) (20,269)
Decrease in inventory 196,726 258,540 (162,481)
Decrease in trade and
other receivables (16,938) 10,101 (34,643)
Decrease in amounts
due from related
companies 4,388 3,273 (2,410)
Decrease in trade and
other payables
and provisions 85,868 (26,597) 122,496
Increase in amount
due to related
companies (443) 1,014 192
(Decrease)/increase
in deferred
liability (811) (625) 1,256
Income tax paid - (3,145) (5,525)
Net cash
inflow/(outflow
from/(on)
operating activities (33,911) 43,084 328,190
Investing activities
Purchase of property,
plant and
equipment (59,829) (57,952) (92,664)
Proceeds from sale of
assets 2,247 342 6,452
Right of use assets - - (15,425)
Proceeds from sale of
assets/investments - - 167,264
Net cash (outflow)/
inflow (on)/
from investing
activities (57,582) (57,610) 65,627
Net cash
(outflow)/inflow
before
financing (91,493) (14,526) 393,817
Financing
Long term loans
repaid (81,925) (56,612) (162,217)
Repayment of short
term funding (228,246) - (623,231)
Receipt of short term
funding 232,646 15,602 487,320
Leases obtained - 3,658 14,329
Leases repaid (16,321) - (35,478)
Finance costs
including
discontinued
operations (56,360) (48,241) (92,322)
Net cash outflow from
financing (150,206) (85,593) (411,599)
Decrease in cash and
cash equivalents (241,699) (100,119) (17,782)
Cash and cash
equivalents at
beginning
of period (236,909) (274,425) (274,425)
Effects of exchange
rate changes
on the balance of
cash held in foreign
currencies (14,407) 43,161 55,298
Cash and cash
equivalents at end
of period (493,015) (331,383) (236,909)
Represented by:
Cash in hand and at
bank 83,678 62,113 111,136
Bank overdrafts (576,693) (393,496) (348,045)
(493,015) (331,383) (236,909)
ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Unaudited Audited
6 months 6 months
to to Year to
31 Mar 31 Mar 30 Sept
2021 2020 2020
USD'000s USD'000s USD'000s
Cash inflow/(outflow) from/(on) operating
activities
Profit/(loss) before taxation 2,618 898 (1,402)
Finance costs 2,686 3,468 5,709
Profit/(loss) on disposal of property,
plant and equipment (64) - 297
Adjustment on transition to IFRS 16 - (90) -
Depreciation charge on right-of-use
assets - 22 517
Depreciation 4,017 4,765 8,745
Share of loss of equity accounted
investment 44 136 196
Profit/(loss) on discontinued operations 993 (677) 95
Fair value price adjustment (822) (748) 889
Net unrealised foreign exchange losses/(gains) (255) 2,296 11,495
Earnings before interest, tax, depreciation
and amortisation, fair value adjustments
and net unrealised foreign exchange
losses 9,217 10,070 26,541
Increase/(decrease) in biological
assets (23,646) (24,415) (1,253)
Decrease in inventory 9,377 18,587 (10,048)
Decrease in trade and other receivables (807) 726 (2,142)
Decrease in amounts due from related
companies 209 235 (149)
Increase/(decrease) in trade and other
payables 4,093 (1,912) 7,575
(Decrease)/increase in amount due
to related companies (21) 73 12
(Decrease) in deferred liability (39) (45) 102
Income tax paid - (226) (342)
Net cash inflow/(outflow) from/(on)
operating activities (1,617) 3,093 20,296
Investing activities
Purchase of property, plant and equipment (2,852) (4,166) (5,731)
Proceeds from sale of assets 107 25 399
Right of use asset - - (954)
Proceeds from sale of assets/investments - - 10,344
Net cash outflow on investing activities (2,745) (4,141) 4,058
Net cash outflow before financing (4,362) (1,048) 24,354
Financing
Long term loans repaid (3,820) (4,070) (10,032)
Repayment of short term funding (10,773) - (38,542)
Receipt of short term funding 10,952 1,123 30,137
Leases obtained - 263 886
Leas repaid (778) - (2,194)
Finance costs including discontinued
operations (2,686) (3,468) (5,709)
Net cash outflow from financing (7,105) (6,152) (25,454)
Decrease in cash and cash equivalents (11,467) (7,200) (1,100)
Cash and cash equivalents at beginning
of period (11,763) (20,790) (20,790)
Effects of exchange rate changes on
the balance of
cash held in foreign currencies 902 9,641 10,127
Cash and cash equivalents at end
of period (22,328) (18,349) 11,763
Represented by:
Cash in hand and at bank 3,790 3,439 5,518
Bank overdrafts (26,118) (21,788) (17,281)
(22,328) (18,349) (11,763)
A copy of the Interim Report will shortly be available to view
on the Company's website at www.zambeefplc.com/aim-rule-26/
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END
IR BGGDLBDBDGBB
(END) Dow Jones Newswires
June 11, 2021 06:30 ET (10:30 GMT)
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