The Zambeef Group
Robust business model of vertical integration
Zambeef Products PLC (“Zambeef”) is the
largest integrated cold chain food products
and agribusiness company in Zambia and
one of the largest in the Southern Africa
region. Zambeef is quoted on both the
Lusaka Stock Exchange and the Alternative
Investment Market (AIM) of the London
Stock Exchange.
It is involved in the primary production,
processing, distribution and retailing of
beef, dairy, chicken, pork, eggs, dairy,
fish, flour, stockfeed and day-old chicks
throughout Zambia and the surrounding
regions, including Nigeria and Ghana.
Zambeef has one of the largest row
cropping operations in Zambia, growing
maize, soya beans and wheat. It plants
nearly 25,000 ha annually, with most
of the resulting crops being used in the
Zambeef animal feed and flour milling
businesses.
Our Purpose
Zambeef’s vision is to be one of the most accessible, affordable and quality cold chain food
providers in the region, delivered through their extensive retail and distribution network of retail
outlets throughout Zambia and West Africa.
Our
Business
Model
Our vertically integrated
business model provides
strong foundations for
growth and:
• Underpins margin
capture and value add;
• Secures supply chain;
• Reduces risk and
earnings volatility.
2019 Highlights
Contents
Cropping - Operating Profit
h 173% (USD)
h 177% (ZMW)
2019: ZMW101.1m (USD8.2m)
2018: ZMW29.4m (USD3.0m)
Stockfeed - Operating Profit
h 7% (USD)
14% (ZMW)
2019: ZMW73.1m (USD5.9m)
2018: ZMW68.3m (USD6.9m)
Other businesses - Operating Profit
h 80% (USD)
h 123% (ZMW)
2019: ZMW15.4m (USD1.24m)
2018: ZMW6.9m (USD0.69m)
Good performance from Cropping
with record wheat yields attained
during a devastating regional
drought
Agreement reached to sell
Sinazongwe Farm for a
consideration of USD10 million
Stockfeed sales volumes increased
9%. Recorded a 46% increase in
exports to 11 African countries
Turn around of Masterpork, West
African Retail and Flour milling
contributing to operational profits
this year
2019 Challenges
Combined Retail & CCFP - Operating Profit
41% (USD)
26% (ZMW)
2019: ZMW107.7m (USD8.7m)
2018: ZMW146.2m (USD14.7m)
Weakening of the Kwacha
against the USD of 24%
Customers disposable income
under pressure from serious
macro economic headwinds
Reduced electricity availability due
to an El-nino induced regional
drought and a 19% increase in the
cost of Diesel
Regional drought had increased
the cost of maize and its products
as the staples to human and
animal nutrition
Overview
2 Zambeef at a glance
4 History and key milestones
5 Feeding a growing region
Strategic report
6 Chairman’s report
8 Chief Executive Officer’s review
12 Divisional performance
Retail Cold Chain Food Products
Stock Feed
Cropping
Other businesses
20 Sustainability Report
Corporate
governanace
26 Corporate governance
30 Board of directors
32 Report of the directors
37 Statement of directors’ responsibilities
Financial
Statements
42 Report of the independent auditors
47 Consolidated Statement of comprehensive income
48 Consolidated statement of changes in equity
50 Company statement of changes in equity
52 Consolidated statement of financial position
54 Company statement of financial position
55 Consolidated statement of cash flows
56 Company statement of cash flows
57 Notes to the financial statements
118 Notice of AGM and agenda
119 Proxy form
Zambeef at a glance
Robust business model of vertical integration
Retail and distribution
Zambeef’s products are retailed through a total of 226 outlets (2018: 206) directly
to end-consumers, in a value-added form, either through the Zambeef concession
agreement to operate Shoprite’s in-store butcheries (69 in 2019; 65 in 2018) or
through Zambeef’s own retail and wholesale distribution network in Zambia (157 in
2019; 141 in 2018).
•
•
•
•
•
•
•
65 Zambeef retail outlets (2018: 67)
35 Zambeef Macros (2018: 29)
28 Novatek retail outlets (2018: 24)
28 Zamshu outlets (2018: 19)
1 Bakery
38 Shoprite butcheries in Zambia (2018: 34)
31 Shoprite butcheries in West Africa: 25 in Nigeria and 6 in Ghana (2018: 31)
Zambeef also operates one of the largest transport and trucking fleets in Zambia
(230 Trucks), giving them control over its logistics and distribution.
Cold Chain Food Products
•
•
The largest processor of beef in Zambia.
Five beef abattoirs (capacity to slaughter 230,000 head p.a.) and three feedlots
located throughout Zambia (standing capacity 11,000 head).
• Meat processing plant with a capacity to process over 100,000 cattle p.a.
• One of the largest chicken processors producing fresh and frozen products
(capacity 8.8m broilers p.a.) and a table egg producer (285,000 layers). The
Group’s breeding and hatchery operations also supply large quantities of
day-old broiler chicks (capacity 22.4m p.a.) to small and medium scale poultry
producers.
• One of the largest piggeries and pork processing plants in Zambia, producing
bacon, pork sausages and other meat products. (capacity to slaughter 75,000
head p.a.)
• Dairy farm with approximately 2,738 cows and a dairy parlour milking
capacity of 2,000 cows per day.
• Dairy processing plant (capacity 120,000 litres/day) to process milk, allowing
Zambeef to add value by producing yoghurt, drinking yoghurt, cheese, butter
and milk based juice).
2
Zambeef Products PLC Annual Report 2019
Stockfeed
•
•
•
The leading stockfeed producer in Zambia, operating two feed mills, in Lusaka and
Mpongwe, with a capacity of 300,000 tonnes p.a.
Novatek products are certified by the Zambia Bureau of Standards (ZS 017, ZS 018
and ZS 019) and the company is the only stockfeed producer in Zambia with ISO
22,000 Food Safety Management certification.
Novatek supplies 50% of the feed produced to Zambeef livestock farming and retail
operations, and supplies 132 branded shops owned by external agents (2018: 119).
Cropping
•
•
•
•
•
•
One of the largest row cropping operations in Zambia.
7,973 ha of irrigated and 8,776 ha of rainfed, arable land.
Double cropping of irrigated land means Zambeef plants 24,750 ha p.a.
Crop production focuses on soyabeans and maize during summer and wheat during
winter.
170,000 M.T. storage capacity [2018:125,000 M.T.]
Cropping division provides raw materials input (wheat, soya, and maize) for further
value add processing within the Group.
Other
• Wheat mill with a capacity to mill 26,000 MT of wheat p.a.
•
•
The largest tannery in Zambia, with a processing capacity of 130,000 hides p.a.
The largest shoe manufacturing plant in Zambia, with a production capacity of
110,000 pairs p.a. (forecast to increase to 215,000 pairs p.a. in 2020)
One bakery with the capacity to bake 1.2 million loafs of bread p.a.
•
3
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019
History & Key Milestones
1994
Zambeef Products Ltd.
incorporated with 60 staff,
a rented abattoir & 2
butcheries, delivering 180
beef cattle per month in 3
land rovers
1996
Acquired Huntley
Farm (abattoir
and feedlot)
2004
Acquired
Sinazongwe
Farm, Shoprite
expansion into
Nigeria & Ghana
2008
First equity
capital raise
(Acquired
Masterpork,
Chiawa Farm,
Zamanita Soya crushing
and refining plant)
Entered into JV’s
with RCL Foods
on Zamchick &
Zamhatch
2013
CDC Group PLC acquires
38% Zambeef equity for
US$65million. Put option
settled to RCL Foods for
full interests in Zamchick
& Zamhatch
IDC Zambia acquires
90% of Zampalm ltd for
US$16million
2016
2018
2011
Listed on the London Stock
exchange (AIM). Acquired
Mpongwe Farms
2015
Disposal of Zamanita
Ltd to Cargill for
US$26million
2017
Commissioning of
US$30million hatchery
and stockfeed mill at
Mpongwe Farm
1995
Secured
concession to
operate the
butcheries in all
Shoprite stores in
Zambia
2003
Listed on Lusaka
Stock Exchange.
Dr Jacob
Mwanza became
chairman.
2005
Sinazongwe
Abattoir built
2009
Zampalm and
Novatek Animal
Feeds established
4
Zambeef Products PLC Annual Report 2019 Feeding a growing region
Zambia
Zambeef Outlets
Zambeef Macros
Novatek
Bakery
Zamshu Outlets
Total Zambeef Outlets
Shoprites
Total Zambia
Nigeria
Shoprites
Master Meats
Outlets
Total Nigeria
Ghana
Shoprites
Total Ghana
2019
2018
2017
65
35
28
1
28
157
38
195
25
0
25
6
6
67
29
24
1
19
140
34
174
25
1
26
6
6
81
19
17
0
12
129
31
160
23
6
29
6
6
2019
2018
2017
Total
Zambeef
Total
Shoprites
Total Retail
Network
157
69
226
141
65
206
135
60
195
5
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Chairman’s Report
Dear Shareholders,
I am pleased
the
Chairman’s Report with respect to the
financial year ended 30 September, 2019.
to present
to you
electricity generation.
The Kwacha weakened during the period,
with the exchange rate ending the period
at around ZMW13.20/USD, having started
the period under review at ZMW12.24/USD.
As we had anticipated, 2019 proved a
challenging year for the Group, driven by
difficult economic and market conditions
that impacted negatively on the Group’s
in
financial performance, particularly
the first half of the year. Despite these
challenges, the Group still generated a
profit after tax of ZMW18.5 million (USD1.5
to ZMW10.5 million
million) compared
(USD1.1 million) in the prior 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 strategic priorities set out in 2014,
with a key focus on the core divisions that
generate sustainable and strong cashflows,
particularly through our Retail and Cold
Chain
Food Products and Stockfeed
divisions.
Another significant cornerstone of our
strategy is our divestment of non-core
assets, with realised proceeds used to
reduce debt levels. Much progress has been
made on this, with the disposal of Zamanita
Ltd to Cargill Holdings BV in 2015, followed
by the sale of our 90% shareholding in
Zampalm Ltd to the Industrial Development
Corporation in 2018.
During the year we entered into a binding
sale and purchase agreement with
Chenguang Biotech
(Zambia) Agri-Dev
Limited for the disposal of Sinazongwe
Farm.
experienced
The Economic Environment
Zambia
challenging
a
macroeconomic climate during the course
of the Group’s 2019 financial year, which
impacted on consumer spending power.
The Minister of Finance stated when
delivering his National Budget speech, that
economic growth was expected to slow
down to 2% by the end of 2019, compared
with a target of 4% and growth of 3.7% in
2018. The slowdown in economic growth
was primarily attributed to the severe
drought the region was experiencing, and
debt servicing challenges. The previous
poor 2018/2019 rainy season led to poor
agricultural production and constrained
The Board remains
committed to achieving
the strategic priorities that
we set in 2014, with a key
focus on the core divisions
that generate sustainable
and strong cashflows,
particularly through our
Retail and Cold Chain Food
Products and Stockfeed
divisions.
6
this
reassuring, especially
Trading Results
Set against
challenging macro
economic backdrop, the Group’s results
the
were
second half of the year, as management
took proactive steps to deal with these
challenges in both the short and long term,
underpinned by continued focus on key
strategic initiatives.
in
for
(USD2.4 million)
The Group achieved profit after tax (from
continuing operations) of ZMW35.9 million
(USD2.9 million), compared with ZMW23.8
million
the same
period in the previous year. The increase
in profitability was mainly driven by
cropping, increased volumes and margins
in the Stockfeed division and Retail and
Cold Chain Food Products, in line with our
strategic imperative of consistent revenue
growth through expansion of our retail
network. Net debt at the end of the period
was ZMW 886.3 million (USD67.1 million)
compared with ZMW684.9 million (USD55.9
million).
Stockfeed
The stockfeed operations continued
to
grow during the year, against the backdrop
of the drought, and the division remains
a significant contributor to the Group. The
division produced 218,762 tonnes of feed in
2019, compared to 200,846 tonnes in 2018,
with Mpongwe producing 24.5% more than
the previous year.
Retail and Cold Chain Food Products
Zambeef’s chain of 226 retail outlets
- both own-brand and within Shoprite
supermarkets - remain at the heart of the
business, with demand from consumers
driving supply. The Group’s focus continued
with the successful roll out of seven new
Macro outlets in strategic locations across
Zambia and the closure of seven small
retail stores as part of its ongoing drive to
optimise revenue and efficiencies across the
division.
Cropping
Cropping
performed
The
division
exceptionally well, despite
the severe
drought in summer, constrained electricity
supply, and water shortages in the winter.
Zambeef Products PLC Annual Report 2019
Yields for all crops were above management expectations, and
thus the division contributed positively to profitability.
Disposal of non-core assets
The Group has entered into a binding sale and purchase agreement
with Chenguang Biotech (Zambia) Agri-Dev Limited for the sale of
Sinazongwe Farm, subject to the fulfilment of certain conditions
precedent. This disposal is expected to complete by March 2020 for
a cash consideration of USD10 million.
DIVIDEND
While we are steadfast in our dedication to enhance shareholder
value, in view of the financial performance and debt levels of the
Group, no dividend will be paid in respect of this financial year. We
will continue to monitor and review our dividend policy.
OUTLOOK
The macro-economic climate is expected to remain challenging
for Zambia in 2020, characterised by high national debt levels,
a volatile Kwacha and continued electricity supply constraints,
negatively affecting business activity across the economy and in all
sectors. This will impact growth of the Zambian economy and have
a significant knock-on effect on our customers’ disposable incomes.
Despite these continued problems, the Group is committed to
strengthening its earnings potential and unlocking value through
reducing debt levels in the medium term, which will mitigate foreign
exchange and interest rate risk exposures.
ACKNOWLEDGEMENT
I express my sincere thanks to my fellow Board members for leading
the Group through this challenging year. To our management and
staff, I express our utmost appreciation for your dedicated efforts.
As a Board we would like to express our deepest gratitude to
the Chief Executive Officer, Mr Francis Grogan, who will be retiring
effective 31st December 2019. His leadership and profound business
acumen have enabled the Zambeef Group to grow by leaps and
bounds during his tenure. He has played a significant role in the
Group and we all wish him all the very best.
Mr. Grogan will be succeeded from 1 January 2020 by Mr Walter
Roodt, who was appointed to the Zambeef Board on 5 February
2019. Mr Grogan has been working closely with Mr Roodt and Mr
Mike Lovett, the Group’s Chief Operating Officer, since January 2018
in a well-planned succession to ensure a successful and smooth
transition.
On behalf of the Group, a warm welcome to our newest Board
members, Mr Michael Mundashi, who was appointed as an
Independent Non-Executive Director effective 11 September 2019,
and Ms Faith Mukutu, the Chief Financial Officer, as an Executive
Director of the Board. Their established professional backgrounds
and valuable expertise will be an asset to the Group.
We would also like to thank our shareholders, for their continued
support of the Group. Our appreciation goes as well to our
other stakeholders such as financiers, business associates and
consultants for all their support.
Dr. Jacob Mwanza, Chairman
6 December 2019
7
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Chief Executive Officer’s Review
Overview
The financial year ended 30 September
2019 proved to be a challenging year amidst
a regional drought and macroeconomic
headwinds. The weakening of the Zambian
Kwacha against the USD by approximately
24% over the period, an increase in the cost
of fuel by 19% together with constrained
electricity supply, due to reduced electricity
generation arising from low water levels
in the country’s major water reservoirs,
impacted
Zambeef’s
only
performance but also on our customers’
spending power. The inadequate supply of
electricity has resulted in Zambeef running
diesel powered generators, significantly
increasing operational costs.
not
on
Zambeef’s management
remains committed in
focusing on core divisions
to generate cash flow that
will be channelled towards
de-risking the business.
Despite
the challenges noted above,
Zambeef achieved a Profit After Tax (from
continuing operations) of ZMW35.9 million
(USD2.9 million), compared with ZMW23.8
million (USD2.4 million), for the same period
last year driven by good performance from
the Cropping and Stockfeed divisions. Our
revenue ended at ZMW3.1 billion (USD254.5
million), whilst we achieved a gross profit
of ZMW1.1 billion (USD87.8 million), which
were respectively 12.7% and 12.8% above
prior year in Kwacha terms, but both down
by 9.2% in USD terms.
to be one of
Zambeef continued
the
largest employers in Zambia with our total
headcount averaging 7,407 per month at
an average wage bill of ZMW38 million
(USD3.5 million) per month.
Strategic focus area
Zambeef’s
remains
management
committed in focusing on core divisions to
generate cash flow that will be channelled
towards de-risking the business. Our plans
are underpinned by:
•
Consistent revenue growth through
retail network,
expansion of our
driving our cold chain food products
and stockfeed operations;
Continued capital investment in the
highest performing areas of
the
business;
Cash generation through improved
margins, cost control, working capital
management and prudent capital
expenditure;
Continued divestment of non-core
assets; and
Environmental and
improvement projects.
safety
food
•
•
•
•
8
During the year, Zambeef entered into a
binding sale and purchase agreement
with Chenguang Biotech (Zambia) Agri-Dev
Limited for the sale of Sinazongwe Farm
for a consideration of USD 10 million. This
disposal is expected to be completed by
March 2020 and the funds will be used to
reduce our debt levels.
Whilst Zambeef recorded a loss after tax
in the first half of the year, the second half
was particularly pleasing as management
managed to stabilise operations and the
Group ended the year on a positive note.
The cost to income ratio decreased from
26.4% (2018) to 25.1% (2019). However, due
to the cash flow pressure arising from the
steep increase in input costs, our net debt
increased from ZMW685 million (USD56
million) to ZMW886 million (USD67 million).
Retail and Cold Chain Food Products
The disposable income of our customers
was constrained during the financial year
driven by the tough economic climate
which resulted in a subdued performance.
The constrained ability of the livestock
production divisions to pass on the extra
costs of inputs, such as feed prices and
the cost of production, to the Zambian
consumer was evident in the stagnant
market selling prices of products in Kwacha
terms.
Broiler day old chick prices reduced by 7%
due to the pressure on the poultry value
chain caused by the steep increase in feed
prices. The chicken live market sales prices
increased only 6% and whole frozen chicken
prices increased by 7%. Market retail prices
for a tray of 30 eggs increased by only 8%.
Beef prices remained under pressure due
to the regional drought and escalating
costs of feed forced farmers to sell more
cattle. The prohibitive cost of finishing cattle
for marketing due to shortages of maize
bran, the main feed ingredient, and a 109%
increase in its price impacted negatively
on performance - the sales price for mixed
beef increased by a mere 2%.
Stockfeed
Zambeef’s Stockfeed division trades under
the brand names Novatek and Zamfeed,
with a 300,000 tons annual manufacturing
capacity based in Lusaka and Mpongwe.
Approximately 50% of all sales are
generated through Zambeef macros and
livestock operations.
Zambeef
internal
Zambeef Products PLC Annual Report 2019
The balance is sold through Novatek’s 132
branded external agency outlets (2018: 119)
throughout Zambia and direct accounts
held by livestock farmers.
A major drought in Southern Africa during
the 2018 summer rain season resulted in
maize prices in USD terms increasing by 28%
and solvent extracted cake also increased
by 22%. These materials represent the
highest inclusions in stockfeed which led to
the feed prices in Kwacha terms increasing
on average by 34% for pig and broiler
feeds, and 42% for layer feeds.
The division performed pleasingly in spite of
the very difficult operating environment.
Cropping
The Zambeef cropping division had an
exceptional year despite operating
in
a
challenging business environment
owing to a severe drought in the summer,
inadequate electricity supply and water
shortages in the winter. In spite of this, the
Farms produced exceptionally good yields.
The Farms increased the production of
fodder by 34% (25,490 tons) and grains
by 7% (119,830 tons) this year compared
to 16,736 tons of fodder and 112,027 tons
grains in the prior comparable period.
Zambia had a large soya bean crop which
was in excess of local solvent extracted
soya cake requirements, which resulted in
a 4% reduction in soya bean prices. Wheat
prices on the other hand were 3% higher
than the previous year thus contributing
positively to our profitability.
Capital Expenditure
The capital expenditure for 2019 was at
a record low of ZMW113.8 million (USD
9.2 million) with a focus on completing
expansion projects started
in previous
reporting periods;
Outlook
Zambeef’s management will continue to
focus its efforts on de-risking the business,
cost control, and margin enhancement.
Zambeef’s performance will be under
pressure from escalating costs emanating
from inadequate electricity supply resulting
in higher diesel usage costs, pending
increase in electricity tariffs as well as the
constrained disposable
income of our
customers.
However, despite the negative effects of the
challenges noted above, the likelihood of a
normal summer rain season is considered
high which will result in higher crop yields
of maize and soya beans in the region. This
expected higher harvested yield should
result in a reduction in the commodity prices
which will cascade through the food value
chain, impacting Zambeef positively.
As part of Zambeef’s on-going process
to de-risk the business, CAPEX will be
restricted to high performing areas of the
business.
•
o
o
o
•
•
•
•
completion
USD5.02 million on Retail and Cold
Chain Food Products with the addition
of
Retail: 7 new Macro outlets and the
expansion of the logistics fleet.
Zamhatch:
of
the
the hatchery and
expansion of
breeding farm capacity from 400,000
to 500,000 hatching eggs per week.
Zamchick: completion of 2 ton/hour
gyro freezer to double Individually
Quick Frozen (IQF) chicken production.
USD1.03 million on Stock Feed logistics,
material storage and replacement of
equipment.
USD0.76 million
on
equipment replacement.
USD0.72 million on milling and leather,
doubling
the shoe manufacturing
capacity from 500 to 1,000 pairs per
day.
USD1.67 million on environmental &
safety improvements and contingency
spending.
Cropping
Francis Grogan
Chief Executive Officer
6 December 2019
9
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Key Market Indicators
Reporting period market comparatives
Economy
2019
2018
Change
ROE (ZMW/USD)
Copper ($/Ton)
Breakfast Maize meal (K/25kg)
Annual Inflation rate (%)
Overhead Costs
TBS 364day (Yield %)
Fuel Pump Price - Diesel ZMW/Litre
Commodities
Maize ($/ton)
Wheat ($/ton)
Soya Beans ($/Ton)
Solvent Extracted Soya Cake ($/ton)
Input Prices
Maize Bran (K/ton)
Broiler Grower feed (K/50kg)
Pig Grower feed (K/50kg)
Layer feed (K/50kg)
Day-Old Chick (K/DOC)
Selling prices
Beef Mixed Cut (K/Kg)
Chicken Frozen (K/Kg)
Chicken Live Market (K/Chicken)
Egg Tray (K/Tray of 30 Eggs)
12.32
6102
101.8
8.4
24.7
13.9
207
447
400
442
1434
242
200
175
5.9
35.8
28.9
38.2
28.0
9.92
6726
73.7
7.1
17.4
11.7
161
433
417
363
686
181
149
123
6.4
35.0
26.9
35.9
25.8
-24%
-9%
38%
18%
42%
19%
28%
3%
-4%
22%
109%
34%
34%
42%
-7%
2%
8%
6%
8%
10
Zambeef Products PLC Annual Report 2019 11
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Divisional performance
Table 1: Segmental Financial summary in ZMW’000s
Table 1: Segmental Financial summary in ZMW’000s
Division
Revenue
2019
ZMW'000
Revenue
2018
ZMW'000
Gross
Profit 2019
ZMW'000
Gross
Profit 2018
ZMW'000
Overheads
2019
ZMW'000
Overheads
2018
ZMW'000
Operating
Profit 2019
ZMW'000
Operating
Profit 2018
ZMW’000
Retailing
2 038 675
1 693 234
213 502
199 117
CCFP
1 388 492
1 313 052
367 657
379 870
Less Interco
(1 303 519)
(1 001 575)
Combined
Retail &
CCFP
Stock Feed
Cropping
Others
Total
Less: Intra/
Inter Group
Sales
Central
Overhead
2 123 648
2 004 711
581 159
578 987
(419 417)
(385 484)
107 744
146 215
986 075
474 202
210 348
706 008
515 585
141 452
191 011
270 116
39 261
163 442
189 601
27 129
(103 751)
(82 460)
(126 413)
(118 729)
(21 930)
(18 521)
73 092
101 082
15 361
68 264
29 380
6 885
3 794 273
3 367 756
1 081 547
959 159
(671 511)
(605 194)
297 279
250 744
(659 306)
(587 167)
(136 070)
(129 907)
(136 070)
(132 474)
Group Total
3 134 967
2 780 589
1 081 547
959 159
(807 581)
(735 101)
161 209
118 270
12
Zambeef Products PLC Annual Report 2019 Divisional performance (continued)
Table 2: Segmental financial summary in USD’000s
Revenue
2019
USD’000
165 477
112 702
Revenue
2018
USD’000
Gross
Profit 2019
USD’000
Gross
Profit 2018
USD’000
Overheads
2019
Overheads
2018
USD’000
USD’000
Operating
Profit 2019
USD’000
Operating
Profit 2018
USD’000
170 689
132 364
17 330
29 843
20 071
38 293
(105 805)
(100 965)
172 374
202 088
47 173
58 364
(34 043)
(38 859)
8 745
14 739
80 039
38 490
17 074
71 170
51 974
14 259
307 977
339 491
(53 515)
(59 190)
15 503
21 925
3 187
87 788
16 476
19 113
2 736
(8 421)
(10 262)
(1 780)
(8 313)
(11 969)
(1 867)
5 933
8 205
1 247
6,881
2 962
694
96 689
(54 506)
(61 008)
24 130
25 276
(11 045)
(13 095)
(11 045)
(13 354)
Division
Retailing
CCFP
Less Interco
Combined
Retail &
CCFP
Stock Feed
Cropping
Others
Total
Less: Intra/
Inter Group
Sales
Central
Overhead
Group Total
254 462
280 301
87 788
96 689
(65 551)
(74 103)
13 085
11 922
13
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019
Retail and Cold Chain Food Products
DIVISIONAL REVIEW
Taking each of our key business areas performance in turn as follows:
Table 3 (ZMW) and Table 4 (USD) below provides each key business area performance of the combined Retail and Cold Chain Food
Products divisions.
Table 3: Retail and Cold Chain Food Products ZMW’000
Division
2019
ZMW'000
2018
ZMW'000
2019
ZMW'000
2018
ZMW'000
2019
ZMW'000
2018
ZMW'000
2019
ZMW'000
2018
ZMW'000
Revenue
Gross Profit
Overheads
Operating Profit
Retailing Zambia
1 853 721
1 548 421
Retailing West Africa
184 954
144 813
Total Retailing
2 038 675
1 693 234
CCFP
Less Interco
Combined Retail
& CCFP
1 388 492
1 313 052
(1 303 519)
(1 001 575)
2 123 648
2 004 711
581 159
578 987
(419 417)
(385 484)
107 744
146 215
Table 4: Retail and Cold Chain Food Products USD’000
Division
Retailing Zambia
Retailing West Africa
Total Retailing
CCFP
Less Interco
Combined Retail
& CCFP
Revenue
Gross Profit
Overheads
Operating Profit
2019
USD’000
2018
USD’000
2019
USD’000
2018
USD’000
2019
USD’000
2018
USD’000
2019
USD’000
2018
USD’000
150 464
15 013
165,477
112 703
156 091
14 598
170 689
132 364
(105 806)
(100 965)
172 374
202 088
47 173
58 364
(34 043)
(38 859)
8 745
14 739
We continued with the successful roll out of 7 new Macro outlets across Zambia in strategic locations and the closure of 2 retail outlets as
part of our ongoing drive to optimise revenue and efficiencies across the Retail division. Shoprite also expanded their footprint with another
4 outlets in Zambia.
Net sales in the combined Retail and Cold Chain Food Products (“CCFP”) divisions increased by 6% to ZMW2,124 million (2018: ZMW2,005
million) and decreased by 15% to USD172 million (2018: USD 202 million), the difference owing to the weakening of the Kwacha. The
Gross Profit margin decreased slightly in Kwacha terms to 27.4% (2018: 28.9%), with a 9% increase in overheads to ZMW419 million
14
Zambeef Products PLC Annual Report 2019 (2018: ZMW385 million) or a 12% reduction
to USD34 million (2018: USD39 million).
The combined Retail and CCFP divisions
have still generated a satisfactory 5.1%
Operating Profit margin (2018: 7.3%). The
weak economy and the increase in costs
from the inputs into the livestock divisions
and the fuel costs used in transport and
electricity generation could not be passed
on to our customers through the retail
network. The Operating Profit decreased
by 27% to ZMW107 million (2018: ZMW146
million) in Kwacha terms and 41% to USD8.8
million (2018: USD14.7 million) in USD terms.
Zambia Retail
Zambia Retail revenue increased 20% to
ZMW1,854 million (2018: ZMW1,548 million)
whilst the Gross Profit increased by 4%.
However due to the depreciation in the
Kwacha relative to the USD, the revenue
decreased by 3% to USD165 million (2018:
USD171 million).
Strong revenue growth of 82% in the
stockfeed, flour, cooking oil and other dry
goods increased this segments contribution
to 17% in the retailing sales mix from the
previous two years contributions of 11%.
Difficult trading conditions saw a decline
in revenue growth on CCFP for most of
the year, with a good comeback on CCFP
revenue growth in the last quarter of the
year. CCFP increased its revenue by 12%
from the previous year. This change in the
mix of products had degraded the average
Gross Profit margin by 1.4%.
(via
in West Africa
West Africa Retail
Sales
the Nigeria
and Ghana Shoprite concessions) have
increased 28% from ZMW145 Million to
ZMW185 million. The turnaround of the
Group’s operations in the region started
showing positive results in the latter part of
the previous reporting period and continued
through this year. During the current period
the overhead costs
in Kwacha were
reduced by a further 14%, although this
was negatively impacted by the recent
xenophobic attacks that were directed at
South African businesses in Nigeria towards
the end of the financial year (Shoprite has
its origins in South Africa). Stock losses
and the shutdown of the majority of the
outlets during September detracted from
the positive anticipated results from this
business for the year. West African retail
only contributes 9% to the retail revenue, it
has however 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. Beef sales volumes increased
by 4% compared to the financial year 2018,
with the number of cattle slaughtered
reducing 4% due to foot and mouth disease
outbreaks restricting
the movement of
cattle from affected areas in Zambia to
our slaughter facilities, but the average
slaughter weight increased by 5%. Revenue
increased by 4% whilst the Gross Profit only
marginally increased by 2% from ZMW125
million in 2018 to ZMW128 million in 2019.
Poultry (Zamchick, Zamhatch and
ZamEgg)
Revenue of the poultry business increased
by 3% in 2019. It is the second largest
revenue contributor to the CCFP business.
Gross profits decreased by 12%
from
ZMW143 million in 2018 to ZMW126 million
in 2019, mainly due to the higher input
costs which could not be passed on to the
customers.
in
for
to excel
The Zamhatch Breeder Farm and Hatchery,
based on the Mpongwe Farms in the
north of Zambia, continued its expansion
programme, with a further investment of
USD2 million during the period, ramping up
the production capacity to 430,000 day-old
chicks per week by year end. The day-old
chick sales increased by 13% as a result
of further investments into the logistics
fleet as well as expansion of the Zambeef
retail network which allowed
the
Zamhatch distribution footprint to expand
to all provinces of the country. Zamhatch
continued
its production
efficiency and was the proud recipient of the
Cobb Champion Awards for best Breeder
Performance for 2018 for the EMEA region
(Europe, Middle East and Africa).
Increased stockfeed prices were cushioned
somewhat by a reduction in day-old chick
prices, with the Novatek stockfeeds and
Zamhatch day-old chick basket continuing
to offer an attractive opportunity for growth
in this important sector of the market. The
informal and small scale chicken farming
sector was much more
resilient and
competitive than the formal poultry sector
as the cost and availability of electricity had
a lower impact on this sector. This positively
contributed to the volumes of sales for
Zamhatch and Novatek stockfeeds that are
receiving the bulk of their sales from the
informal sector.
The year under review was a challenging
one for Zamchick with volumes increasing
by 1% compared to the prior year. Multiple
stockfeed price increases had a significant
negative impact on margins. Operational
challenges were also experienced during
the 2018/2019 summer rain season as the
industry faced widespread dysbacteriosis,
which negatively impacted broiler growth
performance. Despite a
challenging
economic climate, Zamchick continued its
investment into production infrastructure,
with commissioning of an additional
spiral freezer which allowed for increased
production of
Individually Quick-Frozen
chicken portions, to meet the increasing
demand for these products.
relatively
Demand
constant during
the year, while egg
production dropped marginally by 3% in
2019 compared to 2018.
for eggs
remained
Pork (Masterpork)
The pork division has seen a number
of improvements during the year with
a
focus on merchandising and brand
building activities undertaken. The Kwacha
overhead costs were held flat (with only a
1.6% increase) together with a 5% increase
in sales volumes being recorded. The
revenue increased 13% and the Gross
Profit increased 12% from ZMW35 million
to ZMW39 million. The division was turned
around from a loss making Operating Profit
in 2018 to a marginal Operating Profit in
2019.
Management focus was on passing on
input costs effectively to
its customers
by ensuring cost reflective prices of its
goods. Improving the carcass quality of
pigs slaughtered
in
the grading and pricing system, resulted
in 3% fewer pigs being slaughtered and
increased the average pig weight by 4%,
with an 8% increase in slaughtered carcass
prices.
through advances
Milk (ZamMilk)
Milk revenue increased 16% with the Gross
Profit remaining flat at ZMW67 million (2018:
ZMW66 million. Sales volumes increased
8% from 19 million litres (2018) to 21 million
litres processed.
The Kalundu dairy herd has had a very
good year in contrast to the previous year’s
challenge with a foot and mouth disease
outbreak. The average milk production
increased by 12% from 23.7 litres/day in
2018, to 26.6 litres/day, with 1,222 cows
daily being milked at the year end. The
feed cost of the milking herd increased
by 48% due to the price increase in maize
ingredients (maize meal, maize bran and
maize silage) included in the dairy feeds.
15
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019
Stockfeed (Novatek)
Revenue
Gross Profit
Overheads
Operating Profit
2019
ZMW'000
986,075
USD’000
80,039
2018
ZMW'000
706,008
USD’000
71,170
2019
ZMW'000
2018
ZMW'000
2019
ZMW'000
2018
ZMW'000
2019
ZMW'000
2018
ZMW'000
191,011
163,442
(103,751)
(82,460)
73,092
68,264
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
15,503
16,476
(8,421)
(8,313)
5,933
6,881
Stockfeed increased sales volumes by 9%, producing 218,762 tons of stock feed compared to 200,846 tons in 2018. The sales volumes
have again grown ahead of expectations at the Mpongwe Mill with an increase of 25% year on year.
Although revenue in Kwacha terms grew by 40% (12% in USD terms), the operating profit was only able to slightly increase by 7% to ZMW73
million (2018: ZMW68 million), or stated in USD terms, a decrease of 14% to USD6 million (2018: USD7 million). The Gross Margin reduced to
19% from 23% in the previous reporting period. Increased production costs due to running backup diesel generators for prolonged periods
to generate electricity and the 19% increase in diesel costs also impacted on the logistics fleet.
The large and growing poultry sector in Zambia consumes 75% of the feed sales generated by Zambeef. The stockfeed division recorded
a 46% increase in export sales with 12,718 tons having been exported to 11 neighbouring and other African countries, generating revenues
in hard currencies. Although a small part of the total sales mix, the aquaculture feed sales segment recorded an impressive increase of
39% in sales volumes.
16
Zambeef Products PLC Annual Report 2019 Cropping
Revenue
Gross Profit
Overheads
Operating Profit
2019
ZMW'000
474,202
USD’000
38,490
2018
ZMW'000
515,585
USD’000
51,974
2019
ZMW'000
2018
ZMW'000
2019
ZMW'000
2018
ZMW'000
2019
ZMW'000
2018
ZMW'000
270,116
189,601
(126,413)
(118,729)
101,082
29,380
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
21,925
19,113
(10,262)
(11,969)
8,205
2,962
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. It is pleasing to report that this division produced company record yields whilst the region experienced a
devastating drought.
The revenue decreased 8% to ZMW474 million (2018: ZMW516 million) with an increase in overheads of 6% to ZMW126 million (2018:
ZMW119 million). Pleasingly the Gross Profit was up 42% to ZMW270 million (2018: ZMW190 million) and the resulting operating profit
increased 248% to ZMW101 million (2018: ZMW29 million) due to the exceptional wheat yield.
Due to the ZMW weakening to the USD the revenue decreased 27% to USD38 million (2018: USD52 million) and the overheads decreased
16% to USD10 million (2018: USD12 million). The Gross Profit was up 16% to USD 22 million (2018: USD 19 million) and the resulting operating
profit increased 166% to USD 8 million (2018: USD3 million).
The summer harvest for soya beans totalled 44,982 tons versus 44,730 tons in 2018. Maize contributed 19,233 tons of grain together with
22,000 tons of silage for the dairy and beef operations. A 14% increase in the wheat winter crop resulted in a harvest of 50,398 tons (2018:
44,300 tons) which had been planted on 7,047 hectares, which represents a yield of 7.15 tons/hectare and a new Zambeef record in both
total tonnage and yield for the crop.
17
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Other businesses
Revenue
Gross Profit
Overheads
Operating Profit
2019
ZMW'000
210,348
USD’000
17,074
2018
ZMW'000
141,452
USD’000
14,259
2019
ZMW'000
2018
ZMW'000
2019
ZMW'000
2018
ZMW'000
2019
ZMW'000
2018
ZMW'000
39,261
27,129
(21,930)
(18,521)
15,361
6,885
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
3,187
2,736
(1,780)
(1,867)
1,247
694
Total revenue from the other business units increased by 49% from ZMW141 million in 2018, to ZMW210 million this financial year. The Gross
Profit increased by 45% and Operating Profit increased by 123% in ZMW terms.
Flour Milling
The milling division performed above expectations, increasing sales volumes by 29% from 13,165 tons in 2018 to 16,966 tons in 2019.
The milling division had absorbed the weaker exchange rate with higher selling prices. Higher volumes were achieved by producing
consistently high quality flour.
Zamleather
2019 has been one of the toughest years in recent times for Zamleather. The global wet blue market, which is the main channel of revenue
for Zamleather, continued on a multi-year downward trend, weakening further during the financial year on the back of already record
low prices. Only 84,657 hides were processed, a reduction of 31% from the prior year, with stricter focus on only sourcing higher quality
grades of hides.
Shoe sales at 79,396 pairs were almost in-line with the prior year. The doubling of the shoe manufacturing factory capacity for Zamshu
is in progress as part of the turnaround strategy for the Zamleather business. The Capacity of the shoe plant is being doubled from 500
pairs per day to 1,000 pairs per day to be able to value-add all the cattle hides being processed into leather at Zamleather, with a view
of attaining higher margin shoe products.
The new shoe factory is expected to be commissioned in the 2020 financial period and will focus on increasing the supply of school shoes
to the market.
18
Zambeef Products PLC Annual Report 2019 19
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Sustainability Report
Zambeef takes a ‘triple bottom line’ approach to its sustainability
Zambeef takes a ‘triple bottom line’ approach to the sustainability of its operations, to help deliver a positive economic, social, and
environmental impact. We believe that economic sustainability is not simply our traditional corporate capital, but is measured by the impact
our business has on its economic environment. We believe that our business’ sustainability is rooted in the economic and social success
of the local economy.
We believe that we can deliver positive financial results whilst concurrently delivering sound social and environmental performance.
Zambeef is committed to providing a safe and healthy workplace for its employees and contractors, protecting the environment and being
a responsible corporate citizen in the communities in which it operates. This commitment is enshrined in our Environmental & Social and
Health, Safety & Welfare Policies.
Zambeef upholds the principles set out in the International Finance Corporation Performance Standards on environmental and social
sustainability.
The Board of Directors provides oversight through the Environmental and Social Committee. Through this committee, the Board provides
strategic advice and guidance regarding systemic and strategic environmental and social issues. The committee ensures that the Company
has adequate and robust systems in place for monitoring the environmental, health and safety and social management and performance,
in accordance with applicable legislation and Good International Industry Practice (“GIIP”). Zambeef has an Environmental and Social Action
Plan (“ESAP”) that has been agreed on with its development finance partners to help ensure continuous performance improvement at an
operational level. The committee also monitors the adequacy of the resources devoted/allocated to the implementation of the ESAP.
Zambeef has a dedicated environmental and social corporate team of ten people, dedicated to the compliance and improvements in
the operational Divisions. Across business activities, there are 25 people who are dedicated to environmental and social activities at the
operational level.
Environmental performance
Zambeef aims to work towards international good practice, by implementing a process of continual improvement in environmental and
social management.
During the year under review, the Company submitted five Environmental Project Briefs (EPB) to the Zambia Environmental Management
Agency (ZEMA), as governed by Statutory Instrument No. 28 of 1997 ‘Environmental Impact Assessments Regulations’ read together with
the Environmental Management Act (EMA) No. 12 of 2011. The underlisted projects were allowed by the ZEMA Board;
20
Zambeef Products PLC Annual Report 2019
1.
Replacement of old
incinerator at
Huntley processing complex with 600
kg/hour animal incinerator unit whose
emissions are compliant with EU
standards.
3.
2. Construction of new shoe/footwear
factory by Zamleather near the Head
Office premises.
Installation of 22,500
ground diesel tank at Masterpork.
Installation of 39,000
litre above
ground diesel tank at Novatek Lusaka
plant.
litre above
4.
Zambeef carried out several other upgrades
in
improving
environmental compliance.
its operations aimed at
Social performance
Zambeef continues
its social
investments to meet the United Nations
Sustainable Development Goals (UN SDGs).
to align
Inclusive business model: Zambeef
believes
it
continues to source the bulk of its raw
inclusivity, consequently,
in
from
rural communities
materials
in
Zambia. 100% of the beef processed by
the business is sourced from local farmers,
85% of the pork handled by Masterpork is
externally supplied from local farmers. Out-
growers supply 70% of the broiler chickens
processed by Zamchick. 85% of the maize
used at Novatek Animal Feeds is externally
supplied, predominantly by small scale
rural farmers.
This strong linkage to rural based suppliers
helps fight poverty
in these otherwise
communities,
excluded’
‘economically
meeting the aspirations of UN SDG 1, of
‘ending poverty in all its forms everywhere’.
Community engagement:
Zambeef
continues engaging with neighbouring
communities in the areas where we operate.
Consultations are held on a regular basis
and every time developmental projects are
initiated at company sites. Zambeef fully
complies with IFC PS 5 in all its land related
engagements.
Support to vulnerable communities/
groups through foodstuff donations: The
Company renders support to the vulnerable
care
(hospices/hospitals, orphanages,
homes) through donations of foodstuffs.
This is done on a weekly or monthly basis,
for those institutions with adequate storage
facilities. There are currently 21 institutions
hosting vulnerable people that the company
supports through the food supply program.
This gesture by the Company aligns strongly
with UN SDG 2, whose main aspiration is
to ‘end hunger, achieve food security and
improve nutrition ….’
Support to educational and health-
care
institutions:
Zambeef continues to fund educational
and healthcare institutions. This includes
institutions like Mpongwe School and the
nearby medical clinic, wholly owned by
the company, where teachers, teaching
aids, healthcare workers, equipment and
facilities are fully funded by the Company.
Zambeef Products PLC Annual Report 2019
21
CorporategovernanceFinancialstatementsOverviewStrategicreport Sustainability report continued
to
The Mpongwe expenses amounted
US$165,000.00 in the year under review.
The company also supports community/
schools and healthcare
government
institutions
the communities
where it operates.
These company activities align with UN SDG
3 and 4, whose aspirations are to ‘ensure
located
in
healthy lives and promote well-being for
all at all ages’ and ‘ensure inclusive and
equitable quality education and promote
lifelong
for all’,
learning opportunities
respectively.
Zambeef also supports a number of
traditional
sporting
ceremonies and
activities.
Economic performance
Zambeef is a significant contributor to
the country’s economic activities, with a
turnover of more than 1% of the national
GDP.
elite Million Dollar Club of leading exporters.
Skills development
•
The Group is fully committed to developing and training its
employees at all levels.
During the year, specific trainings in food safety, occupational
health and safety and, safe handling of hazardous materials
(asbestos, chemicals) were offered to employees.
The Group’s continual reinvestment in human resources has
resulted in many senior positions being held by Zambians.
Food security
•
Zambeef plays a pivotal role in the national food security of
Zambia, ensuring that the country has sufficient capacity to
feed its growing population as well as a surplus for export
to help feed neighbouring countries. The company produced
over 120,280 metric tonnes of grains (50,380 MT of wheat,
44,400 MT of Soya beans and 25,500 MT of maize) in the year
under review.
Employment
•
Zambeef continues to be one of the largest employers in the
country, with an average of 7,407 staff, 14.5 % of whom are
women.
Over 99.5% of employees are Zambian.
The Group’s cropping division provides significant employment
to rural communities, where poverty levels are higher than in
urban areas.
•
•
•
•
• Most of Zambeef’s raw material suppliers are located in, and
provide employment to communities in rural areas.
Taxes
The Group is a significant contributor to government revenues.
Local capital markets
•
A significant percentage of the Group’s shareholding is owned
by local institutional investors and pension funds, including
the National Pension Scheme Authority (NAPSA), which means
every working Zambian has a stake in the Company.
Export Earnings
•
The Group is a member of the Zambia Development Agency’s
22
Zambeef Products PLC Annual Report 2019
Building a nation
23
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 24
Zambeef Products PLC Annual Report 2019 Corporate
Governance
25
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Corporate governance
High ethical standards in the conduct of business, and a
verifiable framework of corporate governance policies and
procedures, underpin all Zambeef’s decision-making and
management.
that
the current Directors,
annual updates on its compliance with the
QCA Code in its Annual Report and website
(www.zambeefplc.com).
Board of Directors
The Board is responsible for the performance
and direction of Zambeef, through the
establishment of strategic objectives and
key policies, as well as approving major
business decisions, in accordance with its
charter.
The Board comprises 13 directors, of whom
ten are Non Executive Directors, and three
are Executive Directors. Seven Non-Executive
Directors are considered to be independent
by the Board in terms of the guidelines
prescribed in the QCA Code. They are Dr
Jacob Mwanza, Dr Lawrence Sikutwa, John
Rabb, Margaret Kunda Chalwe Mudenda,
Prof. Enala Lyson Tembo-Mwase,Michael
Mundashi, and Jonathan Andrew Kirby.
Details of
their
roles and background are set out in the
Company’s website at zambeefplc.com
its overall
The Board believes
is appropriate, with no
composition
individual or group dominating
the
decision-making process, and with a good
balance between knowledge, experience
and independence. The role of Chairman
is a separate role and position from that of
the Chief Executive Officer. The Chairman is
considered to be independent.
The role of the Chairman is to provide
leadership to the Board and ensure its
effectiveness on all aspects of its remit,
in addition
in
to providing
corporate governance implementation and
practice.
The role of the Chief Executive Officer
is
the
the strategic development of
Group and its clear communication to
the Board, and once approved by the
Board, its implementation. In addition, the
Chief Executive Officer is responsible for
overseeing the management of the Group
and its executive management.
Interaction with Stakeholders un-
der QCA Application
Zambeef
shareholder
meetings, formally through annual AGMs
(and EGMs where required) and informally
leadership
several
has
the principles
Zambeef Products PLC (“Zambeef” or the
“Company”) values excellence in corporate
governance, and
that
enhance openness, integrity, transparency
and accountability. High ethical standards
in the conduct of business, and a verifiable
framework of corporate governance policies
and procedures, underpin all Zambeef’s
decision-making and management.
The Board of Directors believes
that
good corporate governance must be
demonstrated and verifiable. This fosters
trust and confidence in the management of
our business, among all our stakeholders.
that complies with
Exchange
Corporate Governance codes
The Board has a Corporate Governance
Code
the Lusaka
Securities
(LuSE) Corporate
Governance Code. Further to this, it has
formally adopted the Quoted Companies
Alliance QCA Corporate Governance Code
(“QCA Code”) on a ‘comply or explain’
basis, as required by the AIM Rules for
Companies.
The Chairman of the Board acknowledges
his leadership role and responsibility in
promoting good corporate governance for
Zambeef. The Board is confident that it is
applying the QCA Code across the main
areas of delivering growth, maintaining
a dynamic management framework and
building trust. The Company will provide
26
for
through biennial, quarterly or monthly
institutional shareholders.
meetings
Shareholders’ views are shared
in an
open and
frank manner, with senior
management taking due note of their
concerns. The Board believes that this has
proved successful as their views have fed
into the current corporate strategy. The CFO,
CEO, and Deputy Managing Director meet
and conduct formal result presentations
with shareholders on a biannual basis in
Zambia, South Africa and the UK.
The Group publishes the outcome of all
shareholder resolutions immediately after
each AGM/EGM. As required under the
AIM Rules, Zambeef maintains all market
announcements and Annual Reports on its
website for the last 10 years.
The Zambeef business model has identified
and understands
importance of
maintaining strong working relationships
with:
•
key small-scale suppliers across
grains and livestock;
larger commercial raw material/input
suppliers and livestock suppliers;
• wide customer base across stockfeed,
cold chain food products, and other
products;
regulators such as
the Zambia
Environmental Management Agency
(ZEMA), Patents and Companies
(PACRA),
Registration
Water
Resources Management
Agency (WARMA), Lusaka Securities
Exchange
Securities and
Exchange Commission (SEC), and AIM
Nominated Advisor;
financiers; and
social
communities.
responsibility partners
Agency
(LuSE),
•
•
the
in
•
•
Their feedback is received through face-
to-face meetings, customer care hotlines,
technical advisor meetings and written
communication. In the case of customer
feedback, products have been developed
in
to
the stockfeed division according
customer
for example.
Product improvement programmes have
been adopted in production of certain cold
requirements,
Zambeef Products PLC Annual Report 2019 of
standards
chain food products based on customer
feedback.
Corporate Governance in Action
Being listed on exchanges in both Lusaka
and London, the Company is required to
comply with LuSE code and the QCA code.
The UK Corporate Governance Code does
not apply to companies floated on AIM,
the market on which Zambeef is listed.
For the purposes of being listed on AIM,
the Company has agreed to maintain
appropriate
corporate
governance. In this regard, and bearing in
mind the size and scale of the operations of
the Company, the Company has used the
QCA Code and the earlier QCA guidelines
as the base of its corporate governance
standards. Further and where appropriate,
the Company has introduced features from
the UK Corporate Governance Code.
The Company’s corporate governance
practices were put all together in the
Corporate Governance Handbook that was
approved by the board in September 2019.
In doing this, the Company has had regard
to the provisions contained in the Articles
of Association and Investment Agreement.
The Handbook will be updated from time-
to-time as necessary.
The Handbook contains
aspects:
-
-
-
-
-
-
-
-
-
-
Share Dealing Code
Disclosure Policy
AIM Rules Compliance Policy
LuSE Listing Rules Compliance Policy
Anti-Corruption and Bribery Policy
Social Media Policy
Related Party Transactions Policy
Delegation of Authority
Board Charter
Terms
Remuneration
Committee
Terms of Reference for the Audit and
Risk Committee
Terms of Reference for the AIM and
MAR Compliance Committee
Terms
Environmental and Social Committee
the
Succession
Reference
and
Reference
following
-
-
-
the
the
for
for
of
of
- Memorandum on Inside Information
and;
Group Code of Ethics
-
Some of the above mentioned policies are
outlined below:
Risk Management
An effective Group Risk Assessment/Risk
Management tool, based on recommended
best practice and regular inputs from senior
management, is formally reviewed on a
quarterly basis. Formal risk assessments are
carried out at group level, and are carried out
per company and division, in conjunction with
respective Heads of Business Units/ General
Managers, every quarter. This provides the
Audit and Risk Committee and directors with
regular updates and mitigating action plans
for all the major risks facing the Group.
The Group risk assessment is used by the
Board to execute and deliver strategy. For
example, the Group risk assessment has
highlighted foreign exchange and interest
rate risks as high-impact risk areas, and
this has been noted in the Company’s debt
reduction and efficient cash management
strategy, which forms part of the current
business plan and corporate strategy.
Assurance is gained from Internal Audit.
its
framework/
Internal Audit
The dedicated and independent Internal
function, operating under an
Audit
Internal Audit Charter,
reports directly
to the Audit Committee of the Board,
independence and
to maintain
objectivity. It independently reviews and
monitors governance processes, the risk
management
processes,
related mitigating action plans
and
implemented by Management.
It also provides objective assurance of
the operation and validity of the systems
of
its regular
compliance audit programmes, making
recommendations
improvement as
for
required.
The Board requires competitive bidding for
significant purchases and contracts, above
determined thresholds, through a formal
Board-approved Delegations of Authority
policy that covers the Board and senior
management.
internal control
through
Share Dealing Code
The Company has adopted a share-dealing
code for dealings in shares by Directors
and senior employees that is appropriate
for an AIM-listed company. The Directors
ensure that they comply with Rule 21 of
the AIM rules for Companies relating to
Directors’ dealings and take all reasonable
the
to ensure compliance by
steps
Company’s relevant employees, including
obtaining the advice and opinion of its AIM
Nominated Advisor. In compliance with
the Market Abuse Regulation (MAR),the
Directors during the year appointed Non-
Executive Director Margaret Mudenda as
the person responsible for share dealings
by the Directors, assisted by the Company
Secretary as the Compliance Officer.
Incident Reporting, Anti Bribery/
Corruption, and Whistleblowing
policies and procedures
The Company has detailed policies and
(CDC),
reports
procedures covering
Incident Reporting,
Anti Bribery and Corruption (“ABC”), and
Whistleblowing.
The Group’s ABC programme has been
formulated in conjunction with CDC Group
PLC
international
following best
practice. It is well structured, documented
and rigorously monitored.
There is a dedicated internal Whistleblowing
Manager, managing
and
complaints. These complaints can be
made in various forms, and anonymously,
without fear of adverse consequences.
This policy has active senior management
encouragement and has had widespread
communication within
the Group, with
a verifiable and transparent process of
handling complaints. This has resulted in
valuable information being obtained for
further action.
Internal Audit closely monitors, reviews and
reports on all of these policies to the Audit
and Risk Committee of the Board.
to achieve
the organisation
Group Code of Ethics and Conduct
The Company has
implemented, and
widely disseminated to all stakeholders
including suppliers, a Group Code of
Ethics and Conduct, in line with the LuSE
Corporate Governance Code section on
Organizational Integrity. This Code of Ethics
covers the important principles and more
detailed ethical guidelines, with respect to
responsibility, accountability, transparency,
and fairness.
The Board firmly believes that a culture
based on ethical values and behaviour is
cardinal to achieving Zambeef’s objectives.
Without sound ethical behaviour, it would
be difficult for stakeholders to retain trust
in
these
objectives. The expected behaviours are
clearly detailed in the Group Code of Ethics.
The Board monitors, via its Audit and
Risk Committee, that management have
widely disseminated the Group Code of
Ethics among all stakeholders. The Audit
and Risk Committee of the board has
the remit to review any cases of ethical
misconduct against directors or senior
management. Such cases may be reported
through the Group’s Whistleblowing Policy,
incident reporting, or direct reports to the
Audit Committee or Board. Monitoring
of compliance
further
provided by the internal audit department’s
review work on
from
disciplinary proceedings, management
and staff conflict of interest reports, control
procedures and anti-corruption and bribery
matters. In the Board’s opinion there have
been no significant ethical issues noted and
it believes that the corporate culture, as a
incident reports
the Code
to
is
27
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Board engagement
The attendance by the Directors during the year was as follows:
Main Board
Audit and Risk
E&S
Remuneration
Non-Executive
Dr. Jacob Mwanza
Dr. Lawrence Sikutwa
John Rabb
David Osborne
Yollard Kachinda
Margaret Mudenda
Enala Mwase
Frank Braeken
Micheal Mundashi #
Jonathan Kirby
Executive
Francis Grogan
Faith Mukutu #
Walter Roodt #
Danny Museteka
A
5
5
5
5
5
5
5
5
1
5
5
1
2
5
B
5
4
4
5
2
5
3
5
1
5
5
1
2
5
A
-
4
-
4
-
4
-
-
4
-
-
-
4
B
-
4
-
3
-
3
-
-
4
-
-
-
4
A
-
-
4
4
-
-
4
-
-
-
4
-
-
4
B
-
-
4
3
-
-
3
-
-
-
4
-
-
4
A
-
-
3
3
3
3
-
3
-
3
-
-
-
3
B
-
-
3
-
2
3
-
3
-
3
-
-
-
3
Notes
# Director joined during the year
A indicates the number of meetings held during the period in which the Director was a member of the Board and/or Committee.
B indicates the number of meetings attended during the period in which the Director was a member of the Board and /or Committee.
whole, is healthy.
Board evaluation
Every year the Board undertakes a self-
assessment of its performance, based on
its Charter’s objectives, with the Company
Secretary collating and reporting on the
findings from each Board member. Board
evaluation details and updates are provided
in the Annual Report and website.
Areas covered
include:
• Management of Board meetings and
the self-assessment
in
Board
and
internal
discussions;
External
relationships;
Skills of Board members;
Reaction to events;
Chairman;
Chairman and CEO relationships;
contribution
Attendance and
meetings;
Open channels of communication;
Risk and Control frameworks;
Composition;
Terms of reference;
Committees of the Board;
Company Secretary;
Timeliness of information;
Board agenda;
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
AGM;
External stakeholders;
Induction and training and
Succession planning.
Board committees
During the year, the Board reconstituted
the three principal standing committees,
led by a chairman who is a Non-Executive
Director in each instance, and with written
terms of reference. The terms of reference
are in line with recommended best practice
for AIM-quoted companies under the QCA
code, and also per requirements from co-
operating partners.
Remuneration and Succession
Committee
Chairman - David Osborne
Members
Yollard Kachinda, Jonathan Kirby, Margaret
Mudenda and Frank Braeken
in
Responsibilities:
•
To regularly review the structure, size,
knowledge, experience and diversity
of the Board, as well as the sub-
committees of the Board, and make
recommendations to the Board with
regard to changes.
•
•
•
•
for
To be responsible
identifying,
evaluating and nominating for the
approval of the Board, candidates to
fill Board vacancies, as and when they
arise.
To give full consideration to succession
for Directors and other
planning
senior executive management, and
in particular, for the key roles of
Chairman and Chief Executive Officer
of the Company. The appointment
of CEO and directors can only be
made following a formal, rigorous
assessment by this committee and its
formal recommendations being made
to the Board, having also evaluated
the balance of skills, knowledge,
experience and diversity on the Board.
To determine and agree with the Board
the framework or broad policy for the
remuneration of the Chief Executive,
the Chairman of the Board, the
Executive Directors,
the company
secretary, and such other members
the executive management of
of
the Group to whom the Board has
extended the remit of the committee.
In determining the remuneration policy,
take into account all factors which it
deems necessary including relevant
28
Zambeef Products PLC Annual Report 2019
of
ensures
committee
legal and regulatory requirements,
the provisions and recommendations
of the QCA Code and associated
guidance. The objective of this policy
shall be to ensure that executive
management
the Group are
provided with appropriate incentives
to encourage enhanced performance
and are, in a fair and responsible
manner, rewarded for their individual
contributions to the success of the
Group.
clear,
The
the
reporting
transparent
Remuneration Committee’s agreed
fees and
for both
remuneration,
the executive directors and non-
executive directors,
formal
Report of the Directors in the Annual
Report. This requires formal approval
by the shareholders in an AGM. The
Chairman ensures he is available to
answer any questions/comments put
forward by the shareholders in the
AGM regarding directors’ fees and
remuneration.
Perform evaluations of the Board,
their
Board
constituents), and recommend training
where necessary.
Committees
(and
the
of
in
•
•
• Monitor and
the
the
LuSE
of corporate governance matters in
accordance with relevant frameworks
including
Corporate
Governance Code and the QCA Code.
reports
review
and function of the internal audit
department,
its own
charter, which requires systematic
evaluation of the effectiveness of risk
management, control, compliance
and governance processes for the
Group.
line with
in
• Monitor and
the
reports
review
of the external auditors and their
performance.
At least once a year, the members
of the committee should meet the
external auditors without the presence
of any Executive Director.
The committee should also consider
and make recommendations to the
Board, to be put to shareholders
for approval at the Annual General
Meeting, as regards the appointment
and/or
the
reappointment
company’s external auditor.
of
•
•
• Monitor the ethical conduct of the
Company, its executives and senior
officials.
Environmental and Social Committee
•
Audit Committee
Chairman - Lawrence Sikutwa
Members
Margaret Mudenda, David Osborne and
Jonathan Andrew Kirby
Environmental and Social Committee
Chair - Professor Enala Lyson Tembo-
Mwase
Members
John Rabb and David Osborne
and
advisor
co-opted
Independent
member- Hastings Mtine
(QCA Code
principle 6: He has extensive experience
as a Chartered Accountant in the fields of
financial reporting, external audit, internal
audit, corporate governance and
risk
management gained in public practice as
well as on various corporate boards. He is
a former Senior Partner for KPMG Zambia.
He provides a detailed review and advisory
service to the Audit Committee across each
of these areas.)
•
Responsibilities:
•
the
to ensure
integrity of
The primary role of the audit committee
is
the
financial reporting and audit process,
including review of the interim and
annual financial statements before
they are submitted to the board for
final approval.
sound
risk
To ensure
internal control
management and
system
is maintained as well as
reviewing the system for monitoring
compliance with applicable laws and
regulations.
To give due consideration and review
that a
•
•
Responsibilities:
•
(“E&S”)
Provide strategic advice and guidance
to the Board in relation to systemic
and strategic environmental and
issues which affect
social
the Company’s business model and
strategy.
Ensure that the Company has in place
adequate and robust systems, policies
and procedures for monitoring the
E&S management of the Company,
applicable
in
accordance with
legislation and Good
International
Industry Practice (“GIIP”), defined by
IFC Performance Standards.
•
• Monitor the implementation of the
Environmental and Social Action Plan
and any corrective action plans that
may be developed in due course.
Oversee any Company investigations
relating to breaches of E&S laws,
regulations and standards and/or the
Company’s E&S policies, management
systems and plans.
Ensure good corporate citizenship
through
equality,
prevention of unfair discrimination and
reduction of corruption.
promotion
of
•
•
Ensure contribution to development of
the communities in which its activities
are predominantly conducted, or
within which its products or services
are predominantly marketed.
Directors’ interests in other companies
In compliance with Section 110 of the
Companies Act of Zambia, all Directors
are required to declare to the Board their
interests in other companies, and this is
taken into account in the event that any
such company enters into any contract
with any Group company. The Group has
a Related Parties Transactions policy which
aims to ensure transparency in related
party transactions as well as appropriate
management of any approved transactions.
Directors’ shareholdings
In compliance with Sections 30, 110 and
195 of the Companies Act of Zambia, all
Directors are required to disclose their
shareholdings in the Company and any
related companies.
Company Secretary
The Board appoints the Company Secretary,
and all Directors have access to his services.
If deemed necessary, the Board may seek
independent professional advice on some
matters.
•
The Company Secretary ensures the
following:
Sufficient and timeous information is
provided to all the Directors prior to
Board and sub-committee meetings.
Promotion
Corporate
of Good
Governance, and related frameworks
and standards.
Good relations and liaison with the
Security and Exchange Commission
(SEC), the Lusaka Securities Exchange
(LuSE), and Patents and Companies
Registration (PACRA).
•
•
•
• Maintenance of statutory registers.
•
Key liaison for investors and contact
point for shareholders.
Providing updates on relevant statutory
amendments and developments.
•
During the year, the Board constituited a
Search Committee, the mandate of which
was to search, interview and recommend
to the Board a suitable candidate to replace
Dr Jacob Mwanza, who is due to retire on
December 31, 2019. The Committee was
comprised of Dr Jacob Mwanza, Frank
Braeken, John Rabb, Prof. Enala Mwase,
Margaret Mudenda and Yollard Kachinda.
Over a period of six months, the Committee
interviewed various individuals and elected
to nominate Mr Michael Mundashi as a
suitable candidate to replace Dr Mwanza.
29
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Board of Directors
Francis Grogan
(age 58)
CEO
Nationality: Irish
Walter Roodt
(age 43)
Deputy Managing
Director
Nationality:
Namibian
Faith Mukutu
(age 39)
Chief Financial
Officer
Nationality:
Zambian
Qualifications:
BSc Agriculture
(Ireland)
Experience:
Over 22 years’
experience in
agriculture
and meat, both in
Ireland and Zambia.
Co-founder of
Zambeef.
External
appointments
Other directorships
include Chisamba
Ranching and
Cropping Ltd,
Fraca Meat
Company Ltd and
Tractorzam Ltd.
Qualifications:
BSc. (Agric.) Animal
Science (University of
Pretoria, RSA); MSc.
(Agric.) Nutrition
Science (University
of Pretoria, RSA);
Senior Executive
Programme (London
Business School, UK)
Experience:
Over 15 years
of experience
in Agriculture in
Southern Africa.
External
appointments:
Director of City
Dental Ltd.
Qualifications:
A.C.C.A. (Chartered
Certified Accountant)
– Zambia Centre
for Accountancy
Studies, Zambia;
Certified Accounting
Technician –
Zambia Centre for
Accountancy Studies,
Zambia
Experience:
Over 15 years
experience in senior
finance positions of
major corporates,
including Zambia
Sugar Plc and
Zambian Breweries
(part of SABMiller
Group)
External
appointments
Current directorships
include: Bayport
Financial Services
Ltd; National
Breweries Plc.
John Rabb
(age 76)
Non-Executive
Director
Nationality: South
African
Qualifications:
BSc (Agriculture)
MBA (RSA).
Experience:
Over 30 years’
business
management
experience. Formerly
Managing Director
of the Wooltru Group
in South Africa,
which was listed on
the Johannesburg
Stock Exchange.
External
appointments
Has served on, and
is currently serving
on, several boards,
including Wellspring
Ltd.
Margaret
Chalwe-Mudenda
(age 47)
Non-Executive
Director
Nationality:
Zambian
Qualifications:
LLB (University
of Zambia);
postgraduate
diploma in legislative
drafting (Zambia
Institute of Advanced
Legal Education);
LLM in Information
Technology and
Telecommunications
(Southampton
University, UK).
Experience:
Over 10 years’
legal experience
including finance,
banking and labour
law. Over seven
years’ experience
in ICT and
telecommunications.
Former Director
General of Zambia
Information and
Communications
Authority.
External
appointments
Currently serving
on the Boards of
Madison Financial
Services Plc, Medical
Stores Ltd and MCK
Legal Practitioners.
Prof. Enala Tembo-
Mwase
(age 60)
Non-Executive
Director
Nationality:
Zambian
Qualifications:
BSc Biological
Sciences (University
of Zambia)
MSc Medical
Parasitology
(University of
London, UK)
PhD in Zoology
– Entomology
(University of
London, UK)
Experience:
Over 30 years’
research and
teaching experience.
Associate Professor
at University of
Zambia. A founding
member of the
Zambia Association
of Women in Science
and Technology. Has
previously served
on a number of
boards and technical
committees.
External
appointments
Deputy Vice
Chancellor of
University of Zambia
(UNZA)
Dr. Jacob Mwanza
(age 83)
Non-Executive
Chairman
Nationality:
Zambian
Qualifications:
PhD (Cornell
University, (USA)
MA Economics
(W. Germany).
Experience:
Over 30 years’
business
management
experience, both
in the public and
private sectors.
Previously
Governor of the
Bank of Zambia,
currently Chancellor
of the University of
Zambia.
External
appointments
Has served and is
currently serving on
several boards,
including IMF
Advisory Group on
Sub-Sahara African
Economic and Social
Affairs, Pangaea
Securities, David
Shepard Foundation
and Kafue
Sanctuary.
30
Zambeef Products PLC Annual Report 2019 Yollard Kachinda
(age 56)
Non-Executive Director
Nationality: Zambian
Dr. Lawrence Sikutwa
(age 65)
Non-Executive Director
Nationality: Zambian
Qualifications:
BSc (Ed.) Mathematics
and Statistics (University
of Zambia)
MSc Social Protection
Financing (Maastricht
University, Netherlands)
Qualifications:
MBA
FCII
Post Grad Diploma in
Insurance (UK).
Honorary doctorate
(University of Lusaka)
Experience:
Over 25 years’
experience at the
Zambian National
Pension Scheme
Authority (NAPSA),
Zambeef’s biggest local
shareholder.
Experience:
Over 30 years’
experience in business
management.
Previously General
Manager of Zambia
State Insurance
Corporation Limited.
External appointments
Director General of
NAPSA. Currently
serving on the Board
of Trustees of NAPSA
Lusaka Trust Hospital
Staff Pension Scheme.
External appointments
Currently Chairman of
Lawrence Sikutwa
Associates Ltd Group of
Companies.
Jonathan Kirby
(age 57)
Non-Executive Director
Nationality: South
African
Qualifications
Bachelor of Accounting
(University of the
Witwatersrand, RSA)
Higher Diploma in Tax
Law (Rand Afrikaans
University, RSA) CA
(RSA)
Experience:
Over 30 years’ business
management and
banking in London,
Hong Kong, Singapore
and South Africa.
Previously Vice
President (Finance) of
AB Inbev Africa and
CFO of SABMiller Africa.
External appointments
Currently on the board
of Delta Corporation,
Zimbabwe and Consol
Holdings (Pty) Ltd, South
Africa.
David Osborne
(age 55)
Non-Executive Director
Nationality: British
Frank Braeken
(age 59)
Non-Executive Director
Nationality: Belgian
Michael Mundashi
(age 61)
Non-Executive Director
Nationality: Zambian
Qualifications:
Cambridge University;
Trinity College (Natural
Sciences).
Experience:
Over 30 years’
investment experience
in private equity and
infrastructure in UK,
Europe, Africa and Asia.
Previously Managing
Partner and Head of the
Islamic Infrastructure
Fund at CapAsia.
External appointments
Director of Direct Equity
Team and Head of
Portfolio Management
with CDC Group PLC.
Qualifications:
MBA in Finance (Leuven
University, Belgium)
Degree in Law with
major in Corporate Law
(Catholic University
Lueven, Belgium)
Adavanced
Management Program
(Wharton Penn
University, USA)
Experience:
Over 30 years of
experience in the
Fast-Moving Consumer
Goods (@FMCG@)
industry. Previously
head of Unilever Africa
and Chief Investment
officer of Amatheon Agri
Holding
External appointments
Currently serving on the
boards of Feronia Inc.,
Buhler AG, Alliance for
a Green Revolution in
Africa, F.M.B BWC-
LLC, Marie Stopes
International and Seven
Hills Ranch Limited.
Qualifications:
Bachelor of Laws
Degree (University of
Zambia); Post Graduate
qualification as an
Advocate of the High
Court of Zambia
Experience:
Over 30 years post
qualification experience
in both the public
and private sectors.
Served as Chairman
of the Zambian Tax
Appeals Court and as
Independent Non-
Executive Chairman of
Standard Chartered
Bank Zambia Plc.
External appointments
Currently serving as
Chairman of British
American Tobacco
Zambia Plc and Sanlam
Insurance; Director of
Nico General Insurance.
Also, full time Managing
Partner of the law firm
of Mulenga Mundashi
Legal Practitioners.
31
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Report of the Directors
In compliance with Section 275 of the Zambian Companies Act, the Directors submit their report on the activities of the Group for the year
ended 30 September 2019.
1. Principal activities
Zambeef Products PLC and its subsidiaries (“The 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 7,973 Ha of row crops
under irrigation and 8,776 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, Zambeef Products Plc, is a public limited company incorporated and domiciled in Zambia.
Business address
Plot 4970, Manda Road
Industrial Area
Lusaka
ZAMBIA
Postal address
Private Bag 17
Woodlands
Lusaka
ZAMBIA
3. Share capital
Details of the Company’s authorised and issued share capital are as follows:
Authorised
700,000,000 ordinary shares of ZMW0.01 each
7,000
938
7,000
938
30 September 2019
30 September 2018
ZMW'000s USD'000s
ZMW'000s USD'000s
Issued and fully paid
Ordinary shares
300,579,630 of ZMW0.01 each
Preference shares – Convertible Redeemable
100,057,658 of ZMW0.01 each
4. Results
The Group’s results are as follows:
Group
Revenue
Profit before taxation
Taxation charge
Loss from discontinued operation
Group profit for the year
Group profit/(loss) attributable to:
Equity holders of the parent
Non-controlling interest
3,006
1,000
449
100
3,006
1,000
449
100
2019
2019
2018
2018
Note
ZMW’000s
USD’000s
ZMW’000s
USD’000s
5
10
3,134,967
254,462
2,780,589
280,301
38,653
(2,780)
(17,379)
18,494
18,100
394
18,494
3,138
(226)
(1,411)
1,501
1,469
32
1,501
28,011
(4,257)
(13,261)
10,493
10,601
(108)
10,493
2,823
(429)
(1,337)
1,057
1,068
(11)
1,057
32
Zambeef Products PLC Annual Report 2019
5. Dividends
There has been no dividend proposed for the year ended 30 September 2019 (2018: ZMW nil).
6. Management
The senior management currently comprises:
Francis Grogan
Walter Roodt
Faith Mukutu
Mike Lovett
Danny Museteka
Yusuf Koya
Felix Lupindula
Pravin Abraham
Ebrahim Israel
Murray Moore
Lewis Potgieter
Robert Hoskins Davies
Francis Mondomona
Richard Franklin
Harry Hayden-Payne
Mathews Ngosa
Willem Abraham Vorster
Alun Maskell
Christian Engelbrecht
Theo de Lange
Bartholomew Mbao
Lenard Mwanamumbula
Charles Milupi
Ivor Chilufya
Justin Rust
Basil Webber
Phillip Diedericks
Niyaas Dalal
Simon Nkhata
Winston Magutswi
Baron Chisola
Shadreck Banda
Chizola Daka
Gbenga Ibitoye
Caroline Mulaga
Anthony Seno
Mathews Mbasela
Eddie Tembo
Jones Kayawe
Field Musongole
Ernest Gondwe
Francis Mulenga
Noel Chola
Rodgers Chinkuli
Hillary Anderson
Lufeyo Nkhoma
Clement Mulenga
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Chief Executive Officer
Deputy Managing Director
Chief Financial Officer
Chief Operating Officer
Company Secretary
Group Head – Banking & Administration
Corporate Affairs Manager
Chief Internal Auditor
General Manager – International Retailing
General Manager – Beef and Dairy
General Manager – Sinazongwe Farm
General Manager – Chiawa Farm
General Manager – Huntley Farm
General Manager – Zamleather Limited
General Manager – Zampalm Limited
General Manager – Zam Chick Limited, Zamhatch Limited
General Manager – Dairy
General Manager – Masterpork Limited
General Manager – Stock Feed
Group Technical Manager
Dairy Processing Manager
Piggery Manager
Poultry Manager
Group Financial Controller
Commercial Manager
Commercial Manager
Commercial Manager
Finance Manager – Zambeef Products Plc, Zam Chick Limited, Zamhatch Limited
Finance Manager – Zambeef Retailing Limited
Finance Manager – Masterpork Limited
Finance Manager – Zamleather Limited, Zampalm Limited, Group Inventory
Financial Controller – Group Fixed Assets
Financial Controller – Group Suppliers
Financial Controller – West Africa
Group Head – Debtors and Credit Control
Head of IT
Head of Payroll Processing
Chief Security Manager
Head of Environment, Health and Safety
Maintenance Manager
Regional Manager – Shoprite & Excellent Meats
Regional Manager – Shoprite
Regional Manager – Shoprite
Regional Manager – Zambeef Outlets
National Retail Manager - Shoprite
General Manager – Master Meats Ghana
General Manager – Master Meats Nigeria
33
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019
Report of the Directors continued
7. Directors and Secretary
The Directors in office at the financial period and at the date of this report were as follows:
Chairman
Dr. Jacob Mwanza
Dr. Lawrence S. Sikutwa
Non-Executive Director
Non-Executive Director
John Rabb
Yollard Kachinda
Non-Executive Director
Non-Executive Director
Prof. Enala Mwase
Non-Executive Director
David Osborne
Margaret Mudenda
Non-Executive Director
Non-Executive Director
Jonathan Kirby
Frank Braeken
Non-Executive Director
Chief Executive Officer
Francis Grogan
Executive Director (Resigned on 4 February 2019)
Yusuf Koya
Executive Director (Appointed on 5 February 2019)
Walter Roodt
(Appointed on 11 September 2019)
Michael Mundashi
Faith Mukutu
(Appointed on 11 September 2019)
Company Secretary
Danny Museteka
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8. Directors’ Interests
The Directors held the following interests in the Company’s ordinary shares at the reporting date:
30 September 2019
30-September-2018
Direct
Jacob Mwanza (Dr)
1,399,629
Francis Grogan
995,000
John Rabb
Yusuf Koya
Frank Braeken
-
245,482
375,000
3,015,111
Indirect
-
3,596,631
14,000,000
-
-
17,596,631
Direct
1,100,000
995,000
-
245,482
375,000
2,715,482
9. Directors’ fees and remuneration
The Remuneration Committee has agreed the following gross annual packages.
Salary
Bonus
Allowance Car Allowance
Allowance Medicals
Housing
Air Fares
Indirect
-
3,596,631
14,000,000
-
-
17,596,631
Long Term
Incentive
Plan 2
(Shares)
ZMW
NON-EXECUTIVE
Jacob Mwanza
Yollard Kachinda
Margaret Mudenda
Lawrence Sikutwa
Enala Mwase
Jonathan Kirby
John Rabb
Frank Braeken
Michael Mundashi
EXECUTIVE
Francis Grogan
Walter Roodt
Faith Mukutu
946,461
296,774
341,521
325,991
296,774
341,521
356,131
296,774
200,000
-
-
-
-
-
-
-
6,235,869
4,734,496
2,583,413
575,040
301,669
-
Danny Museteka
3,036,977
383,360
34
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Company Car
584,640
Company Car
Company Car
-
-
-
584,640
-
-
-
-
-
-
Yes
Yes
Yes
Yes
-
-
-
-
-
-
-
-
-
-
Zambeef Products PLC Annual Report 2019
9. Directors fees and remuneration (continued)
In October 2016, the Board approved a retirement package for the Chairman, Dr. Jacob Mwanza of USD330,000. An advance of USD110,000
was paid about the same time. The full payment was settled during the current financial year.
In addition to the above, all Executive Directors are entitled to a gratuity of 10 per cent of their gross basic salary paid over the contract term.
Further, the Board co-opted Mr. Hastings Mtine into the Audit Committee as an expert advisor. Mr. Mtine’s remuneration was ZMW168,690
for the year under review.
The Long-Term Incentive Plan 2 (“LTIP 2”) had the following key terms/conditions:
Exercise price: 15 pence;
a) Structure: market value option shares (“Options”);
b)
c) Maximum shares: The annual award base value (number of shares multiplied by the share price on the date of grant plus number
of Options multiplied by the exercise price) may not exceed three times the Executive’s base salary (this term/condition does not apply
to the CEO under the JCEO LTIP Scheme) and
d) Vesting period: three years from 2015 to 2018; exercisable by June 2018.
e)
The Options could only be exercised if Zambeef achieved the following targets:
i)
ii)
iii)
iv)
v)
If the share price reaches 40 pence, then 25 per cent. of the Options become exercisable.
If the share price reaches 48 pence, a further 25 per cent. of the Options become exercisable.
If the share price reaches 56 pence, a further 25 per cent. of the Options become exercisable.
If the share price reaches 65 pence, the final 25 per cent. of the Options become exercisable.
Zambeef achieving a debt-to-equity (gearing) ratio of less than 35 per cent. in the audited accounts immediately prior
to exercising the Options.
vi) Zambeef achieving a current ratio (current assets divided by current liabilities) of 1.5 or higher in the audited annual
accounts immediately prior to the exercising of the options.
vii) Zambeef generating free cash flows.
viii) The Zambeef share price triggers set above were to be considered achieved if in the 14 days immediately prior to
exercising the Options, the shares had traded continuously at not less than these prices for 14 days.
The Options would be exercisable at any time for 2 years after the 3 year period from the issue of the Options have
lapsed.
The Options could only be exercised if the relevant executives were still employed by the Company.
ix)
x)
The options lapsed in June 2018. There were no options granted or exercised during the reporting period.
10. Significant Shareholdings
As at 30 September 2019, the Company has been advised of the following notable interests in its ordinary share capital:
Investor Name
CDC Group Plc
M & G Investment Management
Africa Life
National Pension Scheme Authority (Zambia)
Sussex Trust
Eastspring Investment
Artio Global Investors
Rhodora
Red Fort Partnership
Current
Position
% of
Shareholding
52,601,435
46,304,408
42,413,679
24,797,819
14,000,000
11,995,062
9,360,000
8,639,374
8,175,000
17.5%
15.4%
14.1%
8.2%
4.7%
4.0%
3.1%
2.9%
2.7%
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.
35
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 Report of the Directors continued
11. Employees
The Group employed an average of 7,407 (30 September 2018 – 7,555) employees and total salaries and wages were ZMW453.7 million
(USD36.8 million) for the year ended 30 September 2019 (30 September 2018 – ZMW420.8 million [USD42.4 million]).
The average number of persons employed by the Group in each month of the financial year is as follows:
Oct-18 Nov-18 Dec-18
Jan-19
Feb-19 Mar-19
Apr-19 May-19
Jun-19
Jul-19
Aug-19
Sep-19
Headcount
7,166
7,023
7,132
7,379
7,744
7,488
7,491
7,361
7,511
7,643
7,508
7,434
12. Safety, Health and Environmental issues
As part of some of the Group’s term loans, as well as the 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
that it operates from.
13. Legal matters
There are no significant 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 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 ZMW2 million (USD0.165 million) (30 September 2018: ZMW2.6 million [USD0.259 million]) to a number of activities.
15. Export sales
The Group made exports of ZMW46.5 million (USD3.8 million) during the period (30 September 2018: ZMW48.5 million [USD4.9 million]).
16. Property, plant and equipment
Assets totalling ZMW113.8 million (USD9.2 million) were purchased by the Group during the period (30 September 2018 – ZMW144 million
[USD14.5 million]).
17. Other material facts, circumstances and events
The Directors are not aware of any material fact, circumstance or event which occurred between the accounting date and the date of this
report which might influence an assessment of the Group’s financial position or the results of its operations.
18. Events since the Year-End
There have been no significant events affecting the Group since the year-end.
19. Annual financial statements
The annual financial statements set out on pages 47 to 114 have been approved by the directors.
20. Auditor
In accordance with the provisions of section 257(1) of the Zambian Companies Act, the auditors, Messrs Grant Thornton, will retire as
auditors of the Company at the forthcoming Annual General Meeting, and having expressed their willingness to continue in office a
resolution for their re-appointment will be proposed at the Annual General Meeting.
By order of the Board
Danny Shaba Museteka
Company Secretary
Date: 6 December 2019
36
Zambeef Products PLC Annual Report 2019 Statement Of Directors’ Responsibilities
Section 265 of the Zambian Companies Act 2017 requires the Directors to prepare financial statements for each financial year which give a
true and fair view of the financial position of Zambeef Products PLC and its subsidiaries and of its financial performance and its cash flows
for the year then ended. In preparing such financial statements, the Directors are responsible for:
•
designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that
are free from material misstatement whether due to fraud or error;
selecting appropriate accounting policies and applying them consistently;
•
• making judgements and accounting estimates that are reasonable in the circumstances; and
•
preparing the financial statements in accordance with the applicable financial reporting framework, and on the going concern basis
unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of the Group and enable them to ensure that the financial statements comply with the Zambian Companies Act 2017. They are
also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Board of Directors confirm that in their opinion:
(a)
the financial statements give a true and fair view of the financial position of Zambeef Products PLC and its subsidiaries as at 30
September 2019, and of its financial performance and its cash flows for the year then ended;
(b) at the date of this statement there are reasonable grounds to believe that the Group will be able to pay its debts as and when these
fall due; and
(c)
the financial statements are drawn up in accordance with the provisions of the second schedule to Section 164 of the Companies Act
and International Financial Reporting Standards.
This statement is made in accordance with a resolution of the Directors.
Signed at Lusaka on 6 December 2019
Dr. Jacob Mwanza
Chairman
Francis Grogan
Chief Executive Officer
37
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019
Approval of annual
Financial Statements
The annual financial statements that appear on pages 47 to 114 were approved by the Board of Directors on 6 December 2019 and
signed on its behalf by:
Dr. Jacob Mwanza
Chairman
Signed in Lusaka on 6 December 2019
Fracis Grogan
Chief Executive Officer
Annual compliance certificate
Pursuant to the requirements of schedule 18 to the rules of the Lusaka Stock Exchange, I the undersigned Danny Museteka being the duly
appointed and registered Secretary certify to the Lusaka Securities Exchange that Zambeef Products Plc has during the twelve months
ended 30 September 2019, complied with every disclosure requirement for continued listing on the Lusaka Stock Exchange imposed by the
Board of the Exchange during that period.
In addition, I hereby confirm that for the year ended 30 September 2019, the Company has lodged with the Registrar of Companies all such
returns as are required by a public company in terms of the Zambian Companies Act 1994 and that all such returns are true and correct.
Danny Museteka
Company Secretary
6 December 2019
38
Zambeef Products PLC Annual Report 2019 39
CorporategovernanceFinancialstatementsOverviewStrategicreportZambeef Products PLC Annual Report 2019 40
40
Zambeef Products PLC Annual Report 2015
Zambeef Products PLC Annual Report 2019 Financial
statements
41
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 Report of the Independent Auditors to the Members
of Zambeef Products PLC and its Subsidiaries
Opinion
We have audited the consolidated financial statements of Zambeef
Products PLC (the ‘Company’) and its subsidiaries (the ‘Group’), which
comprise the consolidated and separate statements of financial position
as at 30 September 2019, and the consolidated statement of profit or loss
and other comprehensive income, consolidated and separate statement
of changes in equity and the consolidated and separate statements of
cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and
fair view of the consolidated and company financial position of Zambeef
Products PLC as at 30 September 2019, and of its consolidated and
company financial performance and its consolidated and company cash
flows for the year then ended in accordance with International Financial
Reporting Standards (IFRSs) and the requirements of the Companies Act
and the Securities Act of Zambia.
Basis for Opinion
We conducted our audit in accordance with International Standards
on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the
Group and Zambeef Products PLC in accordance with the International
Ethics Standards Board for Accountants’ International Code of Ethics for
Professional Accountants (IESBA Code) together with ethical requirements
that are relevant to our audit of the financial statements in Zambia, and
we have fulfilled our other ethical responsibilities in accordance with these
Description of matter
How the matter was addressed in our audit
Valuation of biological assets
The valuation of biological assets is determined through use of
estimates and category of the animals.
Due to the judgements required in arriving at biological assets values,
the valuation of biological assets was considered a key matter.
We counted the livestock at the year-end and engaged an expert to
review the categorization and quality of the animals. We also measured
the crop fields, checked the yields and engaged experts to check the
quality of the crop.
We also checked the valuations of biological assets.
Classification, measurement and impairment of financial
assets
IFRS 9 was implemented during the financial year under review.
The directors are required to review the classifications of assets and
align the classifications to the requirements of the financial reporting
standards. The directors also reviewed the fair valuations and
impairment model.
Due to the complex and subjective judgements required in estimating
the timing and valuation of impairment and in estimating the fair value
of assets, this was considered a key audit matter.
Valuation of goodwill
Goodwill amounting to K167 million (USD 12.6 million) was carried in the
statement of financial position. Under IFRS, the Company is required to
test the amount of goodwill for impairment at least annually. In case of
impairment triggers, goodwill requires impairment testing as well. The
impairment tests were significant to our audit due to the complexity
of the assessment process and
judgements and assumptions
involved which are affected by expected future market and economic
developments.
42
We reviewed the classification of the financial assets for compliance
with the reporting standards.
In considering the reasonableness of the impairment provision, we
tested the aging of the outstanding receivables to determine those that
were overdue.
We further assessed their recoverability through testing of subsequent
receipts.
We challenged the cash flow projections included in the annual goodwill
impairment tests. For our audit we furthermore critically assessed and
tested the assumptions and methodologies used by management.
Zambeef Products PLC Annual Report 2019 Deferred tax assets
The group has a significant amount of deferred tax assets, mainly
resulting from net operation losses. The risk exists that future (fiscal)
profits will not be sufficient to fully recover the deferred tax assets.
The valuation of deferred tax assets is significant to our audit because
the assessment process is complex and is based on estimates of future
taxable income. In this area, our audit procedures included, among
others, using our own tax specialists to assist us in assessing the
appropriateness of the level of deferred tax asset balance recognized
in the statement of financial position and reviewing management
assumptions relating to projections of the deferred tax asset utilization.
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the financial statements of
the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Information Other than the Financial Statements and
Auditor’s Report Thereon
Management is responsible for the other information. The other
information comprises the information included in the Chairman’s report,
Directors’ report, Chief Executive Officer’s review, Sustainability report and
Corporate Governance Statements, but does not include the financial
statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other
information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with
Governance for the Financial Statements
Management is responsible for the preparation and fair presentation
of these financial statements in accordance with International Financial
Reporting Standards and the requirements of the Companies Act and the
Securities Act of Zambia and for such internal control as management
determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for
assessing the Group’s and Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management
either intends to liquidate the Group and/or the Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the
Group’s and Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs will always
detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional
judgment and maintain professional skepticism throughout the audit. We
also:
•
•
•
•
Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Group’s and the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by management.
Conclude on the appropriateness of management’s use of the
going concern basis of accounting and, based on the audit evidence
43
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019
obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s and the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the
Group and/or the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial statements. We
are responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
•
•
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on Other Legal and Regulatory Requirements
In our opinion, the financial statements of Zambeef Products PLC and its subsidiaries as at 30
September 2019 have been properly prepared in accordance with the Zambian Companies Act
2017, and the accounting and other records and registers have been properly kept in accordance
with the Act.
Grant Thornton
Chartered Accountants
Christopher Mulenga (AUD/F000178)
Name of Partner signing on behalf of the firm
Lusaka
Date: 6 December 2019
44
Zambeef Products PLC Annual Report 2019 45
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 46
Zambeef Products PLC Annual Report 2019 Consolidated Statement of Comprehensive Income
For the year ended 30 September 2019
Group
Revenue
Net gain/(loss) arising from price changes in fair value of biological
assets
Cost of sales
Gross profit
Administrative expenses
Other income
Operating profit
Share of loss equity accounted investment
Exchange gains on translating foreign currency transactions and
balances
Finance costs
Profit before taxation
Taxation charge
Group income for the year from continuing operations
Loss from discontinued operations
Group income for the year
Group income attributable to:
Equity holders of the parent
Non-controlling interest
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Exchange (loss)/gains on translating presentational currency
Remeasurement of net defined benefit liability
Total comprehensive (loss)/ income for the year
Total comprehensive (loss)/ income for the year attributable to:
Equity holders of the parent
Non-controlling interest
Earnings per share
Basic earnings per share – continued operations
Basic earnings per share – discontinued operations
Total Basic earnings per share
Diluted earnings per share
Diluted earnings per share – continued operations
Diluted earnings per share – discontinued operations
Total Diluted earnings per share
Note
2019
2019
2018
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
5
3,134,967
254,462
2,780,589
280,301
16(a)
10,284
835
(15,245)
(1,537)
(2,063,704)
(167,509)
(1,806,185)
(182,075)
1,081,547
(920,771)
433
161,209
(3,036)
(36,730)
(82,790)
38,653
(2,780)
35,873
(17,379)
18,494
18,100
394
18,494
106,391
8,829
133,714
129,935
3,779
133,714
Ngwee
11.80
(5.78)
6.02
8.86
(4.34)
4.52
6
7
9
10
34
12
12
12
12
12
12
87,788
(74,738)
35
13,085
(246)
(2,981)
(6,720)
3,138
(226)
2,912
(1,411)
1,501
1,469
32
1,501
959,159
(841,319)
430
118,270
(742)
(19,302)
(70,215)
28,011
(4,257)
23,754
(13,261)
10,493
10,601
(108)
10,493
96,689
(84,810)
43
11,922
(75)
(1,946)
(7,078)
2,823
(429)
2,394
(1,337)
1,057
1,068
(11)
1,057
(10,553)
206,425
(46,089)
717
-
-
(8,335)
216,918
(45,032)
(8,367)
32
217,297
(379)
(45,021)
(11)
(8,335)
216,918
(45,032)
Cents
0.96
(0.47)
0.49
0.72
(0.35)
0.37
Ngwee
7.90
(4.41)
3.49
5.92
(3.31)
2.61
Cents
0.80
(0.44)
0.36
0.60
(0.33)
0.27
47
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 Consolidated Statement of Changes in Equity
For the year ended 30 September 2019
Issued
share
capital
ZMW’000s
Share
premium
ZMW’000s
Preference
share
capital
ZMW’000s
Foreign
exchange
reserve
ZMW’000s
Revaluation
reserve
ZMW’000s
Retained
earnings
ZMW’000s
(i) In Zambian Kwacha
Total
attributable
to owners of
the parent
ZMW’000s
Non-
controlling
interest
ZMW’000s
Total
equity
ZMW’000s
At 1 October 2017
3,006
1,125,012
1,000
72,227
1,252,142
445,090
2,898,477
(8,281)
2,890,196
Profit for the year
Transfer of surplus
depreciation
Other comprehensive
income:
Exchange gain/
(loss) on translating
presentational currency
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,601
10,601
(108)
10,493
(23,418)
23,418
-
-
-
206,696
-
-
206,696
(271)
206,425
206,696
(23,418)
34,019
217,297
(379)
216,918
At 30 September 2018
3,006
1,125,012
1,000
278,923
1,228,724
479,109
3,115,774
(8,660)
3,107,114
Profit for the year
Transfer of surplus
depreciation
Other comprehensive
income:
Exchange gain/
(loss) on translating
presentational currency
Remeasurement of net
defined benefit liability
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,100
18,100
394
18,494
(29,666)
29,666
-
-
-
103,006
-
-
-
-
103,006
3,385
106,391
8,829
8,829
-
8,829
103,006
(29,666)
56,595
129,935
3,779
133,714
At 30 September 2019
3,006
1,125,012
1,000
381,929
1,199,058
535,704
3,245,709
(4,881)
3,240,828
48
Zambeef Products PLC Annual Report 2019 Consolidated Statement of Changes in Equity (continued)
For the year ended 30 September 2019
Issued
share
capital
USD’000s
Preference
Share
capital
USD’000s
Share
premium
USD’000s
Foreign
exchange
reserve
USD’000s
Revaluation
reserve
USD’000s
Retained
earnings
USD’000s
(ii) In US Dollar
Total
attributable
to owners of
the parent
USD’000s
Non-
controlling
interest
USD’000s
Total
equity
USD’000s
At 1 October 2017
449
100
185,095
(140,641)
177,978
76,759
299,740
(856)
298,884
Profit for the year
Transfer of surplus
depreciation
Other
comprehensive
income:
Exchange gains
on translating
presentational
currency
Total
comprehensive
income
At 30 September
2018
Profit for the year
Transfer of surplus
depreciation
Other
comprehensive
income:
Exchange gains
on translating
presentational
currency
Remeasurement of
net defined benefit
liability
Total
comprehensive
income
At 30 September
2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,068
1,068
(2,361)
2,361
-
(11)
-
1,057
-
(46,248)
-
-
(46,248)
159
(46,089)
(46,248)
(2,361)
3,429
(45,180)
148
(45,032)
449
100
185,095
(186,889)
175,617
80,188
254,560
(708)
253,852
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,469
1,469
(2,408)
2,408
-
32
-
1,501
-
(10,859)
-
-
-
-
(10,859)
306
(10,553)
717
717
-
717
(10,859)
(2,408)
4,594
(8,673)
338
(8,335)
449
100
185,095
(197,748)
173,209
84,782
245,887
(370)
245,517
49
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 Company Statement of Changes in Equity
For the year ended 30 September 2019
(i) In Zambian Kwacha
At 1 October 2017
Profit for the year
Transfer of surplus depreciation
Other comprehensive income:
Exchange gains on translating presentational
currency
Total comprehensive income
At 30 September 2018
Profit for the year
Transfer of surplus depreciation
Other comprehensive income:
Exchange gain on translating presentational
currency
Total comprehensive income
At 30 September 2019
Issued share
capital
ZMW’000s
Preference
share
capital
ZMW’000s
Share
premium
ZMW’000s
Revaluation
reserve
ZMW’000s
Retained
earnings
ZMW’000s
Total equity
ZMW’000s
3,006
1,000
1,125,012
917,897
511,607
2,558,522
-
-
-
-
3,006
-
-
-
-
-
-
-
-
-
1,000
-
-
-
-
-
-
-
-
-
1,125,012
-
-
-
-
-
3,006
1,000
1,125,012
(27,562)
14,413
27,562
14,413
-
-
217,367
217,367
(27,562)
890,335
-
(28,183)
-
-
(28,183)
862,152
259,342
231,780
770,949
2,790,302
4,225
28,183
-
92,385
124,793
4,225
-
-
92,385
96,610
895,742
2,886,912
50
Zambeef Products PLC Annual Report 2019
Company Statement of Changes in Equity
For the year ended 30 September 2019
Issued share
capital
USD’000s
Preference
share
capital
USD’000s
Share
premium
USD’000s
Revaluation
reserve
USD’000s
Foreign
exchange
reserve
USD’000s
Retained
earnings
USD’000s
Total equity
USD’000s
449
100
185,095
122,600
(120,385)
76,725
264,584
-
-
-
1,453
3,904
1,453
-
-
(ii) In US Dollars
At 1 October 2017
Profit for the year
Transfer of surplus depreciation
Other comprehensive income:
Exchange gain on translating
presentational currency
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At 30 September 2018
449
100
185,095
Profit for the year
Transfer of surplus depreciation
Other comprehensive income:
Exchange gain on translating
presentational currency
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,904)
-
-
(3,904)
118,696
-
(2,288)
-
-
(2,288)
(38,071)
(38,071)
(158,456)
-
-
-
(9,603)
(9,603)
At 30 September 2019
449
100
185,095
116,408
(168,059)
-
(38,071)
5,357
82,082
342
2,288
-
-
2,630
84,712
(36,618)
227,966
342
-
-
(9,603)
(9,261)
218,705
51
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019
Consolidated Statement of Financial Position
For the year ended 30 September 2019
ASSETS
Non-current assets
Goodwill
Property, plant and equipment
Investment in associate
Deferred tax asset
Current assets
Biological assets
Inventories
Trade and other receivables
Assets held for disposal
Amounts due from related companies
Income tax recoverable
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Preference share capital
Share premium
Other reserves
Non-controlling interest
2019
2019
2018
2018
Note
ZMW’000s
USD’000s
ZMW’000s
USD’000s
13
14
15(e)
10(e)
16
17
18
34
19
10(c)
21
21
22
166,801
2,841,824
12,376
56,525
12,636
215,290
938
4,282
166,801
2,902,221
15,412
47,854
13,628
237,110
1,259
3,910
3,077,526
233,146
3,132,288
255,907
170,417
941,159
98,025
135,357
41,554
2,767
12,910
71,300
7,426
10,254
3,148
210
181,674
639,811
156,314
-
50,272
3,885
1,389,279
105,248
1,031,956
4,466,805
338,394
4,164,244
3,006
1,000
1,125,012
2,116,691
449
100
185,095
60,243
3,245,709
245,887
(4,881)
(370)
3,006
1,000
1,125,012
1,986,756
3,115,774
(8,660)
14,843
52,272
12,771
-
4,107
317
84,310
340,217
449
100
185,095
68,916
254,560
(708)
3,240,828
245,517
3,107,114
253,852
52
Zambeef Products PLC Annual Report 2019 Consolidated Statement of Financial Position (continued)
For the year ended 30 September 2019
Non-current liabilities
Interest bearing liabilities
Obligations under finance leases
Deferred liability
Deferred tax liability
Current liabilities
Interest bearing liabilities
Collateral management agreement
Obligations under finance leases
Trade and other payables
Provisions
Amounts due to related companies
Taxation payable
Bank overdrafts
2019
2019
2018
2018
Note
ZMW’000s
USD’000s
ZMW’000s
USD’000s
23
24
25
10(e)
23
23
24
26
27
28
10(c)
20
228,099
17,280
308,312
25,189
19,297
16,362
9,138
1,462
1,240
692
20,163
22,611
6,909
1,647
1,847
565
272,896
20,674
357,995
29,248
130,661
212,381
21,487
259,585
52,914
251
1,377
274,425
953,081
9,899
16,089
1,628
19,665
4,009
19
104
20,790
72,203
95,247
107,213
18,248
297,390
42,137
232
2,925
135,743
699,135
7,782
8,759
1,491
24,294
3,443
19
239
11,090
57,117
Total equity and liabilities
4,466,805
338,394
4,164,244
340,217
The financial statements on pages 47 to 114 were approved by the Board of Directors on 6 December 2019 and were signed on its behalf by:
Dr. Jacob Mwanza
Chairman
Francis Grogan
Chief Executive Officer
53
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 Company Statement of Financial Position
For the year ended 30 September 2019
ASSETS
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Investment in associates
Deferred tax asset
Current assets
Biological assets
Inventories
Assets held for disposal
Trade and other receivables
Amounts due from related companies
Income tax recoverable
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Preference share capital
Share premium
Other reserves
Non-current liabilities
Interest bearing liabilities
Obligations under finance leases
Deferred liability
Deferred tax liability
Current liabilities
Interest bearing liabilities
Obligations under finance leases
Trade and other payables
Provisions
Amounts due to related companies
Bank overdrafts
Total equity and liabilities
Note
2019
ZMW’000s
2019
USD’000s
2018
ZMW’000s
2018
USD’000s
14
15(b)
15(e)
10(e)
16
17
34
18
19
10(c)
21
21
22
23
24
25
10(e)
23
24
26
27
28
20
2,060,110
245,807
12,376
-
156,069
18,622
938
-
2,154,822
245,807
15,412
24,792
176,048
20,082
1,259
2,025
2,318,293
175,629
2,440,833
199,414
137,215
683,600
135,357
28,153
1,078,745
1,529
2,064,599
4,382,892
10,395
51,788
10,254
2,133
81,722
115
158,349
481,319
-
91,381
796,506
2,510
12,937
39,324
-
7,466
65,073
205
156,407
1,530,065
332,036
3,970,898
125,005
324,419
3,006
1,000
1,125,012
1,757,894
449
100
3,006
1,000
185,095
1,125,012
33,061
1,661,284
449
100
185,095
42,322
2,886,912
218,705
2,790,302
227,966
228,099
17,280
11,505
3,655
6,630
872
277
502
308,312
12,503
5,059
4,034
25,189
1,022
413
330
249,889
18,931
329,908
26,954
343,042
18,266
158,504
40,462
490,045
195,772
25,988
202,460
1,384
12,008
3,065
37,124
14,831
11,841
204,675
26,108
328,633
76,971
1,246,091
94,400
850,688
4,382,892
332,036
3,970,898
16,541
967
16,722
2,132
26,849
6,288
69,499
324,419
The financial statements on pages 47 to 114 were approved by the Board of Directors on 6 December 2019 and were signed on its behalf by:
Dr. Jacob Mwanza
Chairman
Francis Grogan
Chief Executive Officer
54
Zambeef Products PLC Annual Report 2019
Consolidated Statement of Cash Flows
For the year ended 30 September 2019
Cash inflow from operating activities
Profit before taxation
Finance costs
(Profit)/ loss on disposal of property, plant and equipment
Depreciation
Share of loss on equity accounted investment
Loss on discontinued operations
Loss on disposal of investment
Fair value price adjustment
Net unrealised foreign exchange losses
Earnings before interest, tax, depreciation and amortisation, fair
value adjustments and net unrealised foreign exchange losses
(Increase)/decrease in biological assets
Decrease/ (increase) in inventory
Decrease / (increase) in trade and other receivables
Decrease /(increase) in amounts due from related companies
(Decrease)/ (increase) in trade and other payables
Increase/ (decrease) in amounts due to related companies
Increase/ (decrease) in deferred liability
Income tax paid
Net cash inflow from operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds from the sale of assets
Proceeds from the sale of Zampalm
Net cash (outflow)/ inflow (on)/ from investing activities
Net cash (outflow)/inflow before financing activities
Financing activities
Long term loans repaid
Receipt/(repayment) of short term funding
Lease finance (repayment)/ obtained
Finance costs
Net cash outflow on financing activities
(Decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Note
2019
ZMW’000s
2019
USD’000s
2018
ZMW’000s
2018
USD’000s
9
14
16
10(c)
14
9
38,653
82,790
(986)
121,921
3,036
(17,379)
-
(10,284)
7,153
3,138
6,720
(80)
9,896
246
(1,411)
-
(835)
581
28,011
70,215
(220)
105,789
742
-
52,265
15,245
22,343
2,823
7,078
(22)
10,665
75
-
5,269
1,537
2,252
224,904
18,255
294,390
29,677
21,541
1,748
(301,348)
(24,460)
58,289
8,718
(27,028)
19
(6,249)
(9,652)
4,731
708
(2,194)
2
(507)
(783)
(30,806)
(2,500)
(29,062)
(123,393)
(65,522)
(38,850)
47,684
151
5,855
(11,618)
79,635
(2,930)
(12,439)
(6,605)
(3,916)
4,807
15
590
(1,171)
8,028
(113,825)
11,776
-
(102,049)
(132,855)
(96,913)
119,456
707
(82,790)
(59,540)
(192,395)
(135,743)
(9,239)
(144,022)
(14,518)
956
-
(8,283)
(10,783)
(7,866)
9,696
57
(6,720)
(4,833)
(15,616)
(11,090)
151,680
7,658
87,293
(79,873)
25,088
(12,044)
(70,215)
(137,044)
(49,751)
(105,148)
16,000
1,482
9,510
(8,052)
2,529
(1,214)
(7,078)
(13,815)
(4,305)
(10,874)
Effects of exchange rate changes on the balance of cash held in foreign
currencies
53,713
5,916
19,156
4,089
Cash and cash equivalents at end of the year
20
(274,425)
(20,790)
(135,743)
(11,090)
Represented by:
Cash in hand and at bank
Bank overdrafts
20
20
56,753
4,299
101,123
8,262
(331,178)
(25,089)
(236,866)
(19,352)
(274,425)
(20,790)
(135,743)
(11,090)
55
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 Company Statement of Cash Flows
For the year ended 30 September 2019
Note
2019
ZMW’000s
2019
USD’000s
2018
ZMW’000s
2018
USD’000s
Cash inflow from operating activities
Profit before taxation
Finance costs
Depreciation
Fair value price adjustment
(Profit)/ loss on disposal of property, plant and equipment
Share of loss on equity accounted investment
(Profit)/ loss on disposal of investment
Loss on discontinued operations
Net unrealised foreign exchange differences
Earnings before interest, tax, depreciation and amortisation
Decrease/ (increase) in biological assets
Decrease/ (increase) in inventory
Decrease/( increase) in trade and other receivables
Increase in amounts due from related companies
Increase/ (decrease) in trade and other payables
Increase in amounts due to related companies
Increase/ (decrease) in deferred liability
Income tax paid
Net cash inflow/(outflow) from/ (on) operating activities
Investing activities
Purchase of property, plant and equipment
Movements in investments
Proceeds from disposal of investment
Proceeds from sale of assets
Net cash inflow from investing activities
Net cash inflow before financing activities
Financing activities
Long term loans repaid
Short term funding (repaid)/obtained
Lease finance (repayment)/ obtained
Interest paid
Net cash outflow on financing activities
(Decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on the balance of cash held in
foreign currencies
Cash and cash equivalents at end of the year
Represented by:
Cash in hand and at bank
Bank overdrafts
14
16
10(c)
14
15
55,795
67,371
71,049
(10,162)
1,821
3,036
-
(17,379)
6,223
177,754
31,296
(202,281)
63,228
(282,239)
(31,817)
161,412
(1,404)
(5,822)
4,529
5,469
5,767
(825)
148
246
-
(1,411)
505
14,428
2,541
(16,419)
5,133
(22,910)
(2,583)
13,102
(114)
(473)
(89,873)
(7,295)
(23,743)
(1,927)
-
-
1,120
(22,623)
(112,496)
(96,913)
119,456
3,761
(67,371)
(41,067)
(153,563)
(76,971)
-
-
91
(1,836)
(9,131)
(7,866)
9,696
305
(5,469)
(3,334)
(12,465)
(6,288)
20
20
20
34,762
3,922
(195,772)
(14,831)
11,844
(207,616)
(195,772)
897
(15,728)
(14,831)
22,877
54,900
61,376
15,299
1,457
-
1,431
-
19,255
176,595
(23,561)
(69,478)
(54,212)
(141,446)
65,940
84,757
1,400
(10,182)
29,813
(49,415)
41,423
144,161
345
136,514
166,327
(79,873)
25,559
(10,415)
(54,900)
(119,629)
46,698
(25,435)
(98,234)
(76,971)
54,357
(131,328)
(76,971)
2,307
5,534
6,187
1,542
147
-
144
-
1,941
17,802
(2,375)
(7,004)
(5,465)
(14,259)
6,647
8,544
141
(1,026)
3,005
(4,982)
4,176
14,532
35
13,761
16,766
(8,052)
2,576
(1,050)
(5,534)
(12,060)
4,706
(2,631)
(8,363)
(6,288)
4,441
(10,729)
(6,288)
56
Zambeef Products PLC Annual Report 2019 Notes to the Financial Statements
For the year ended 30 September 2019
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 7,973 Ha of row crops under irrigation and 8,776 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. 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. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are
recognised from the effective date of acquisition or up to the effective date of disposal, as applicable.
(b) Going Concern
At the reporting date loans and other finance amounts repayable within twelve months amount to ZMW364.5 million (USD27.6 million) [2018: ZMW220.7
million (USD18 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 during the financial year.
(c) Basis of presentation
The financial statements are prepared in accordance with the provisions of the Zambian Companies Act 2017 and International Financial Reporting
Standards (IFRS). The financial statements are presented in accordance with IAS 1 “Preparation of financial statements” (Revised 2007). The Group has
elected to present the “Statement of Comprehensive Income” in one statement namely the “Statement of Comprehensive Income”.
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. Biological assets are measured at fair value less costs to sell.
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) Foreign currencies
(i) Presentation and functional currency
The Company has twelve operating branches, of which eleven have a functional currency of Zambian Kwacha (ZMW) and one (the Mpongwe Farms
Branch) has a functional currency of United States Dollars (USD) being an operational branch set up during the 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 origin 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
the 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.
As a result of using a functional currency of USD for Mpongwe, there arose an exchange difference of ZMW92.4 million (2018: ZMW212 million) upon
translating all assets and liabilities, which has been recognised as an unrealised gain in the statement of comprehensive income of the company and
an exchange adjustment under property, plant and equipment.
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OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 2. Principal accounting policies (continued)
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 presentation currency to USD for the purposes of supplementary information
Income statement items have been translated using the average exchange rate for the year 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
been transferred to the foreign exchange reserve within equity.
The following exchange rates have been applied:
ZMW: USD
Year ended 30 September 2018
Year ended 30 September 2019
Average exchange rate Closing exchange rate
9.92
12.32
12.24
13.20
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 unrealised 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 year end.
Statement of comprehensive income items have been translated at an average monthly rate for the year. Any differences arising from this procedure
are taken to the foreign exchange reserve.
Average exchange rate
Closing exchange rate
36.09
29.21
29.44
27.25
Average exchange rate
Closing exchange rate
0.46
0.42
0.39
0.41
ZMW: Nigeria Naira
Year ended 30 September 2018
Year ended 30 September 2019
ZMW: Ghana Cedi
Year ended 30 September 2018
Year ended 30 September 2019
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Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 2. Principal accounting policies (continued)
(e) New Standards adopted as at 1 October 2018
IFRS 15 ‘Revenue from Contracts with Customers’
IFRS 15 ‘Revenue from Contracts with Customers’ and the related ‘Clarifications to IFRS 15 Revenue from Contracts with Customers’ (hereinafter referred
to as ‘IFRS 15’) replace IAS 18 ‘Revenue’, IAS 11 ‘Construction Contracts’, and several revenue-related Interpretations. The new Standard has been applied
retrospectively without restatement. There were no incomplete contracts as at 1 October 2018 that would have required an adjustment to the opening
balance of retained earnings as at that date.
In accordance with the transition guidance, IFRS 15 has only been applied to contracts that are incomplete as at 1 October 2018.
Contracts with multiple performance obligations
The Group has a variety of grain contracts with several customers. Under IFRS 15, the Group must evaluate the separability of the promised goods or
services based on whether they are ‘distinct’. A promised good or service is ‘distinct’ if both:
•
•
the customer benefits from the item either on its own or together with other readily available resources, and
it is ‘separately identifiable’ (i.e. the Group does not provide a significant service integrating, modifying or customising it).
IFRS 9 replaces IAS 39 ‘Financial Instruments:
Recognition and Measurement’. It makes major changes to the previous guidance on the classification and measurement of financial assets and
introduces an ‘expected credit loss’ model for the impairment of financial assets.
When adopting IFRS 9, the Group has applied transitional relief and opted not to restate prior periods. Differences arising from the adoption of IFRS 9 in
relation to classification, measurement, and impairment are recognised in retained earnings.
The adoption of IFRS 9 has impacted the following areas:
•
•
The equity investment in Zampalm Limited classified under IAS 39 is measured at fair value through profit or loss as the cash flows are not solely
payments of principal and interest (SPPI). The Group did not elect to irrevocably designate any of the equity investments at fair value with changes
presented in other comprehensive income.
The impairment of financial assets applying the expected credit loss model. This affects the Group’s trade receivables and investments in debt-
type assets measured at amortised cost. For contract assets arising from IFRS 15 and trade receivables, the Group applies a simplified model of
recognising lifetime expected credit losses as these items do not have a significant financing component.
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OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 2. Principal accounting policies (continued)
On the date of initial application of IFRS 15, 1 October 2018, the impact to retained earnings of the Group is as follows:
Measurement category
Carrying amount
Original IAS 39
category
New IFRS 9 category
Closing balance
30 September
2018 (IAS 39)
Adoption of
IFRS 9
(ZMW’000s)
(ZMW’000s)
Opening
balance 1
October 2018
(IFRS 9)
(ZMW’000s)
Non-current financial assets
Other long term financial assets
Investment in Zampalm Limited
Sub-total
Current financial assets
Trade and other receivables
Amounts due from related companies
Sub-total
Total financial asset balances
FVTPL
FVTPL
Amortised cost
Amortised cost
Amortised cost
Amortised cost
15,412
15,412
156,314
50,272
206,586
221,998
-
-
-
-
-
-
15,412
15,412
156,314
50,272
206,586
221,998
There have been no changes to the classification or measurement of financial liabilities as a result of the application of IFRS 9. Reconciliation of
statement of financial position balances from IAS 39 to IFRS 9 at 1 October 2018:
IAS 39 carrying amount
30 September 2018
(ZMW’000s)
Reclassification
(ZMW’000s)
Remeasurement
(ZMW’000s)
IFRS 9 carrying
amount
1 October 2018
(ZMW’000s)
Retained
earnings effect
(ZMW’000s)
15,412
-
-
206,586
221,998
-
-
-
-
-
-
-
-
-
-
15,412
-
-
206,586
221,998
-
-
-
-
-
Fair value through profit and
loss
FVTPL in IAS 39
From available for sale
Total change to fair value
through profit or loss
Amortised cost (including held to
maturity in IAS 39)
Total financial asset
balances, reclassification and
remeasurement at 1 October
2018
60
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019
2. Principal accounting policies (continued)
(f) Standards, amendments and Interpretations to existing Standards that are not yet effective and have not been adopted early by
the Group:
At the date of authorisation of these financial statements, several new, but not yet effective, Standards, amendments to existing Standards, and
Interpretations have been published by the IASB. None of these Standards, amendments or Interpretations have been adopted early by the Group.
Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the
pronouncement. New Standards, amendments and Interpretations neither adopted nor listed below have not been disclosed as they are not expected
to have a material impact on the Group’s financial statements.
IFRS 16 ‘Leases’
IFRS 16 will replace IAS 17 ‘Leases’ and three related Interpretations. It completes the IASB’s long running project to overhaul lease accounting. Leases
will be recorded in the statement of financial position in the form of a right-of-use asset and a lease liability. There are two important reliefs provided
by IFRS 16 for assets of low value and short-term leases of less than 12 months.
IFRS 16 is effective from periods beginning on or after 1 January 2019. Early adoption is permitted; however, the Group have decided not to early adopt.
Management is in the process of assessing the full impact of the Standard. So far, the Group:
•
has decided to make use of the practical expedient not to perform a full review of existing leases and apply IFRS 16 only to new or modified
contracts. As some leases will be modified or renewed in 2019, the Group has reassessed these leases and concluded they will be recognised on
the statement of financial position as a right-of-use asset.
believes that the most significant impact will be that the Group will need to recognise a right of use asset and a lease liability for the office and
production buildings currently treated as operating leases. At 30 September 2019 the future minimum lease payments amounted to ZMW28.9m
(USD2.4m). This will mean that the nature of the expense of the above cost will change from being an operating lease expense to depreciation
and interest expense.
concludes that there will not be a significant impact to the finance leases currently held on the statement of financial position.
•
•
The Group is planning to adopt IFRS 16 on 1 October 2019 using the Standard’s modified retrospective approach. Under this approach the cumulative
effect of initially applying IFRS 16 is recognised as an adjustment to equity at the date of initial application. Comparative information is not restated.
Choosing this transition approach results in further policy decisions the Group need to make as there are several other transitional reliefs that can
be applied. These relate to those leases previously held as operating leases and can be applied on a lease-by-lease basis. The Group are currently
assessing the impact of applying these other transitional reliefs.
IFRS 16 has not made any significant changes to the accounting for lessors, and therefore the Group does not expect any changes for leases where
they are acting as a lessor.
(g) Business combinations
On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess
of the cost of acquisition over the fair values of the identifiable net assets acquired is recognized as goodwill. Any deficiency of the cost of acquisition
below the fair values of the identifiable net asset acquired is credited to the statement of comprehensive income in the period of acquisition. Changes
in the Group’s ownership interest that do not result in a loss of control are accounted for as equity transactions. Purchase of non-controlling interests are
recognized directly within equity being the difference between the fair value of the consideration paid and the relevant share acquired of the carrying
value of the net assets to the subsidiary.
Contingent and deferred consideration arising as a result of acquisitions is stated at fair value. Contingent and deferred consideration is based on
management’s best estimate of the likely outcome and best estimate of fair value, which is usually, but not always, a contracted formula based on a
multiple of net profit after tax. All acquisition expenses are recognised in the statement of comprehensive income.
(h) Discontinued operations
A discontinued operation is a component of the entity that has been disposed of. A component can be distinguished operationally and for financial
reporting purposes if:
•
•
•
its operating assets and liabilities can be directly attributed to it
its income (gross revenue) can be directly attributed to it
at least a majority of its operating expenses can be directly attributed to it.
Profit or loss from discontinued operations, including prior year comparatives, is presented in a single amount in the income statement. This amount
comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss resulting from the disposal of the Group’s share of the
entity’s net assets.
The disclosures for discontinued operations in the prior years relate to all operations that have been discontinued by the reporting date for the latest
period presented.
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OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 2. Principal accounting policies (continued)
(j) Goodwill
Goodwill represents future economic benefits arising from a business combination that is not individually identified and separately recognized. Goodwill
is carried at cost less accumulated impairment losses and is tested annually for impairment. Refer to the note for a description of impairment testing
procedures.
(j) Revenue recognition
Revenue comprises the sale of goods as shown in note 5. Revenue is recognized when the significant risks and rewards of ownership have been
transferred to the buyers and no significant uncertainties remain regarding the derivation of consideration, associated costs or the possible return of
goods
To determine whether to recognise revenue, the Company follows a 5-step process:
Identifying the contract with a customer
Identifying the performance obligations
1.
2.
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5.
Recognising revenue when/as performance obligation(s) are satisfied.
Revenue comprises the fair value of consideration received or receivable for the sale of the Group’s products in the ordinary course of the Group’s
activities. Revenue is shown net of trade allowances, duties and taxes paid and after eliminating sales within the Group.
Revenue from sale of agricultural commodities
Revenue for the agribusiness division includes the invoice value of goods transferred to the customers. There are no discounts or other arrangements
that create uncertainty over the level of revenue recognised.
Revenue from retail sales
Revenue from the sale of products produced and supplied via Zambeef’s retail outlets and to external parties is recognised on delivery to customers
either by way of cash sales or credit sales.
The Group often enters into transactions involving a range of the Group’s products. In all cases, the total transaction price for a contract is allocated
amongst the various performance obligations based on their relative stand-alone selling prices. The transaction price for a contract excludes any
amounts collected on behalf of third parties.
Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised
goods to its customers.
The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as
other liabilities in the statement of financial position. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the
Group recognises either a contract asset or a receivable in its statement of financial position, depending on whether something other than the passage
of time is required before the consideration is due.
(k) Property, plant and equipment
All classes of property, plant and equipment are stated at valuation except for plantation development expenditure and capital work in progress which are
stated at historical cost. Capital work in progress relates to internally constructed building parts and plant and machinery and are categorised as such on
completion. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to profit or loss in the statement of comprehensive income during the financial year in which they are incurred.
The Group has adopted a policy of revaluing all classes of property, plant and equipment, excluding capital work in progress and plantation development
expenditure. Revaluations are conducted with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be
determined using fair value at the end of the reporting period.
Increases in the carrying amount arising on revaluation of property, plant and equipment are recognised in other comprehensive income and accumulated
in the revaluation surplus in shareholders’ equity. Decreases that offset previous increases of the same asset are charged against the revaluation surplus
in shareholders’ equity; all other decreases are charged to the statement of comprehensive income. Each year, the difference between depreciation based
on the revalued carrying amount of the asset charged to the statement of comprehensive income and depreciation based on the asset’s original cost, net
of any related deferred income tax, is transferred from the revaluation surplus to retained earnings.
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Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 2. Principal accounting policies (continued)
(k) Property, plant and equipment (continued)
Depreciation is calculated to write off the cost of property, plant and equipment on a straight line basis over the expected useful lives of the assets
concerned. The principal annual rates used for this purpose are:
Buildings
Motor vehicles
Furniture & equipment
Plant & machinery
Aircraft
2%
20%
10%
10%
10%
Land and capital work in progress is not depreciated.
The assets’ residual values and useful lives are reviewed at each reporting date and adjusted where appropriate.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in the statement of
comprehensive income in other income. When revalued assets are sold, the amounts included in the revaluation surplus relating to these assets are
transferred to retained earnings.
(l) Leased assets
Where property, plant and equipment are financed by leasing agreements which give rights approximating to ownership (finance leases) the assets
are treated as if they had been purchased and the capital element of the leasing commitments is shown as obligations under finance lease. The lease
rentals are treated as consisting of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest
element is charged to the statement of comprehensive income over the period of the lease so as to produce a constant periodic rate of interest in the
remaining balance of the liability under the lease agreement for each accounting period.
Rentals payable under operating leases are charged to profit or loss in the statement of comprehensive income over the term of the relevant lease and
in accordance with the terms of the relevant leases.
(m) Financial assets
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with
IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:
•
•
•
amortised cost
fair value through profit or loss (FVTPL)
fair value through other comprehensive income (FVOCI).
In the periods presented the corporation does not have any financial assets categorised as FVOCI.
The classification is determined by both:
•
•
the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows
•
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount
•
outstanding
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into
this category of financial instruments as well as listed bonds that were previously classified as held-to-maturity under IAS 39.
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OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019
2. Principal accounting policies (continued)
(m) Financial assets (continued)
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value
through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and
interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging
instruments, for which the hedge accounting requirements apply (see below).
The category also contains an equity investment. The Group accounts for the investment at FVTPL and did not make the irrevocable election to account
for the investment in Zampalm Limited at fair value through other comprehensive income (FVOCI). The equity investment in Zampalm Ltd was measured
at cost less any impairment charges in the comparative period under IAS 39, as it was determined that its fair value could not be estimated reliably. In
the current financial year, the fair value was determined in line with the requirements of IFRS 9, which does not allow for measurement at cost.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are
determined by reference to active market transactions or using a valuation technique where no active market exists.
Financial assets classified as available for sale (AFS) under IAS 39 (comparative periods)
AFS financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other
categories of financial assets (FVTPL or held to maturity and loans and receivables). The Group’s AFS financial assets include an equity investment in
Zampalm Limited.
All AFS financial assets except for the investment in Zampalm Limited were measured at fair value. Gains and losses were recognised in other
comprehensive income and reported within the AFS reserve within equity, except for interest and dividend income, impairment losses and foreign
exchange differences on monetary assets, which are recognised in profit or loss. When the asset was disposed of or was determined to be impaired,
the cumulative gain or loss recognised in other comprehensive income was reclassified from the equity reserve to profit or loss. Interest calculated using
the effective interest method and dividends were recognised in profit or loss within finance income.
(n) Impairment of assets
(i) Financial assets carried at amortised cost
Impairment of financial assets
IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’.
This replaces IAS 39’s ‘incurred loss model’. Instruments within the scope of the new requirements included loans and other debt-type financial assets
measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some
financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader range of
information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable
forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
•
•
financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial
instrument.
Previous financial asset impairment under IAS 39
In the prior year, the impairment of trade receivables was based on the incurred loss model. Individually significant receivables were considered for
impairment when they were past due or when other objective evidence was received that a specific counterparty will default. Receivables that were
not considered to be individually impaired were reviewed for impairment in groups, which are determined by reference to the industry and region of
the counterparty and other shared credit risk characteristics. The impairment loss estimate was then based on recent historical counterparty default
rates for each identified group.
(ii) Impairment of goodwill
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash generating
units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those
cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group
at which management monitors goodwill.
64
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 2. Principal accounting policies (continued)
(n) Impairment of assets (continued)
Cash-generating units to which goodwill has been allocated (determined by the Group’s management as equivalent to its operating segments) are
tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount,
which is the higher of fair value less costs to sell and value-in use. To determine the value-in-use, management estimates expected future cash flows
from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used
for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future
reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s
assessment of respective risk profiles, such as market and asset-specific risks factors.
Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining
impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently
reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating
unit’s recoverable amount exceeds its carrying amount.
(o) Financial liabilities
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely the same under IFRS 9 compared to IAS 39, the Group’s financial liabilities were not impacted
by the adoption of IFRS 9. However, for completeness, the accounting policy is disclosed below.
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial
liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities
designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial
instruments that are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs
or finance income.
(p) Biological assets
(i) Current assets
Biological assets are valued at their fair values less estimated point of sale costs as determined by the Directors. The fair value of livestock is determined
based on market prices of animals of similar age, breed and genetic merit. Standing crops are revalued to fair value at each reporting date based on
the estimated market value of fully grown standing crops adjusted for the age and condition of the crops at the reporting date. Feedlot, standing and
dairy cattle, chickens (broilers and layers), and pigs have been classified as current biological assets based on Directors’ expectation of their useful
economic life. Upon maturity of biological assets, they are transferred to inventory through harvest and culling.
Net gains and losses arising from changes in fair value less estimated point of sale costs of biological assets are recognised in profit and loss in the
statement of comprehensive income.
(q) Inventory
Inventory is stated at the lower of cost and net realizable value. Cost is determined on a first in first out basis and includes all expenditure incurred in
the normal course of business in bringing the goods to their present location and condition, including production overheads based on normal level of
activity. Net realizable value takes into account all further costs directly related to marketing, selling and distribution.
Biological assets are transferred to inventory at the point of harvest/slaughter at fair value in accordance with IAS 41.
(r) Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank overdrafts, deposits held at call with banks, structured agricultural finance, other short-term
highly liquid investments and balances held with banks.
Bank overdrafts are defined as facilities which are repayable on demand and classified as current liabilities.
65
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 2. Principal accounting policies (continued)
(s) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a
substantial period of time to be prepared for their intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalisation. All other borrowing costs are recognized within ‘finance costs’ in profit or loss in the statement of
comprehensive income in the period in which they are incurred.
(t) Interest bearing liabilities
Short term interest bearing liabilities include all amounts expected to be repayable within twelve months from the reporting date, including instalments
due on loans of longer duration. Long term interest bearing liabilities represent all amounts payable more than twelve months from the reporting date.
(u) Other income
Other income is income not related to the operation or management of the specific business activities of the Group, but which arises from the function
of operating an agri-business. Other income comprises the fair value of the consideration received or receivable.
(v) Taxation
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting
periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and
their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the
related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in
subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal
will not occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization,
provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full.
Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income.
Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same
taxation authority.
Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to
items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other
comprehensive income or equity, respectively.
(w) Employee benefits
(i) Pension obligations
The Group has a plan with National Pension Scheme Authority (NAPSA) where the Group pays an amount equal to the employee’s contributions.
Employees contribute 5 per cent. of their gross earnings up to the statutory cap.
(ii) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary
redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the
employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of
an offer made to encourage voluntary redundancy.
(x) Dividend distributions
Dividend distributions to the Company’s shareholders are recognised as a liability in the financial statements in the year in which the dividends are
approved by the Company’s shareholders at a general meeting.
(y) Equity and reserves
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted
from share premium, net of any related income tax benefits.
The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant and equipment. This reserve is non-
distributable.
66
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 2. Principal accounting policies (continued)
(y) Equity and reserves (continued)
Foreign currency translation differences arising from translating to presentational currency and translating foreign operations are included in the foreign
exchange reserve. These reserves are non-distributable.
Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income. All transactions with owners of
the parent are recorded separately within equity.
(z) Segmental reporting
IFRS 8 requires segments to be identified on the basis of the internal reports about operating units of the Group that are regularly reviewed by the
Chief Executive Officer of and the Chief Financial Officer who are the Chief Operating Decision Makers (CODMs) to allocate resources and to assess their
performance. The Group operates 14 main reportable divisions which match the main external revenues earned by the Group:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Beef
Chicken
Pork
Crops
Stockfeed
Eggs
Retailing
Fish
Milk and dairy
Edible oils
Mill and bakery
Leather and shoe
Master Meats (Nigeria)
Master Meats (Ghana)
Due to the nature of the Group’s operations, namely that groups of assets and liabilities are each used to generate a number of the revenue streams
above, balance sheet items cannot be discretely allocated to the above components, and the CODM also review management information regarding
the operating assets and liabilities of the main reporting entities within the Group as follows:
•
•
•
•
Zambeef
Retailing
Masterpork
Other
The ‘Other’ segment includes the foreign subsidiaries, Zamleather Limited and Zamhatch Limited. Foreign subsidiaries include the Group’s two majority-
owned subsidiaries in Nigeria and Ghana. Inter and intra-divisional, and inter-company sales are recognised based on an internally set transfer price.
The prices are reviewed periodically and aim to reflect what each Business segment could achieve if it sold its output to external parties at arm’s length.
(aa) Provisions (Restructuring costs and legal claims)
Provisions for restructuring costs and legal claims are recognised when the Group has a present legal or constructive obligation as a result of past
events it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating
losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the
class of obligations as a whole.
(bb) Share-based employee remuneration
The Group operates equity-settled share-based remuneration plans for its employees. None of the Group’s plans are cash-settled.
All goods and services received in exchange for the grant of any share-based payment are measured at their fair values.
Where employees are rewarded using share-based payments, the fair value of employees’ services is determined indirectly by reference to the fair
value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for
example profitability and sales growth targets and performance conditions).
All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to retained earnings. If vesting
periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share
options expected to vest.
Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are
subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any adjustment to
cumulative share-based compensation resulting from a revision is recognised in the current period. The number of vested options ultimately exercised
by holders does not impact the expense recorded in any period.
67
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 2. Principal accounting policies (continued)
(z) Segmental reporting (continued)
Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal
(or par) value of the shares issued with any excess being recorded as share premium.
3. Critical accounting estimates and judgements
The preparation of financial statements in conformity with adopted IFRS requires management to make judgements and estimates that affect the
application of policies and reported amounts of assets, liabilities, income, expenses and contingent liabilities. Estimates are based on historical
experience and other assumptions that are considered reasonable under the circumstances.
Significant management judgements
Recognition of deferred tax assets
Management applies judgement in assessing whether a deferred tax asset is recognised on carried forward trading losses based on anticipated future
profits.
Estimation Uncertainty
Information about estimates and assumptions that may have the most significant effects on recognition and measurement of assets, liabilities, income
and expenses is provided below. Actual results may be substantially different.
(i) Investments in associates
Investments in associates are accounted for using the equity method. The carrying amount of the investment in associates is increased or decreased
to recognise the Group’s share of the profit or loss and other comprehensive income of the associate adjusted, where necessary to ensure consistency
with the accounting policies of the Group. Unrealised gains and losses on transactions with the Group and its associates are eliminated to the extent
of the Group’s interest in those entities where the unrealised losses are eliminated. Management exercises judgement in determining the impairment
of the underlying asset.
(ii) Translating to the presentational currency
Management have applied the average exchange rate as an approximation to the actual exchange rate for the purposes of translating the Group’s
consolidated financial statements into USD. The Directors have conducted an exercise to evaluate the impact of these fluctuations on the presentation
of the Group’s results and has concluded that the application of the average exchange rate is a reasonable approximation to the actual rate. The Group
has long-term borrowings denominated in USD and management has conducted sensitivity analysis on the Group’s reported profits and equity for the
periods reported (see note 29).
(iii) Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the present value of future cash flows generated from the cash generating units to
which the goodwill has been allocated. The present value calculation requires an estimation of the future cash flows expected to arise and a suitable
discount rate in order to calculate present value (see note 13).
(iv) Valuation of biological assets and inventory
Biological assets are measured at fair value less estimated costs to sell. In estimating fair values and costs to sell, management takes into account the
most reliable evidence at the times the estimates are made.
The most significant estimate relates to management’s assessment of anticipated yield per hectare for establishing the fair value of standing crops. This
assessment takes into account historic yields, climate conditions and certain other key factors. Realisation of the carrying amounts of biological assets
of ZMW170.4 million (USD12.9 million); ZMW10.3 million (USD0.8 million) (2018: ZMW181.7 million [USD14.8 million]; ZMW15.2 million [USD1.5 million]) is
affected by price changes in different market segments, and ZMW613.5 million (USD49.8 million) (2018: ZMW634.9 million [USD64 million]) is affected
by physical changes in different segments. Refer note to 16.
Inventories are measured at the lower of cost and net realizable value. In estimating net realizable values, management takes into account the most
reliable evidence available at the times the estimates are made. Future realization of the carrying amounts of inventory assets of ZMW941.2 million
(USD71.3 million) (2018: ZMW639.8 million [USD52.3 million]) is affected by price changes in different market segments.
(v) Deferred liability
The deferred liability is estimated on an actuarial basis. In estimating the liability, the actuarial assumptions include the discount rate (the rate used to
discount post-employment benefit obligation), rate at which salaries increase into the future and the mortality (deaths) expected of the members in the
fund before retirement.
68
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 3. Critical accounting estimates and judgements (continued)
4. Management of financial risk
The Group’s Board of Directors believes that the Group is well positioned in an improving economy. Factors contributing to the Group’s strong position
are:
(a) Growth in the Zambian economy leading to higher disposable incomes.
(b)
(c)
(d)
Increase in the retail foot print of the Group.
Increase in production facilities of the Group leading to higher volumes available for retail.
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.
4.1 Financial risk
The Group is exposed to a range of financial risks through its financial assets and financial liabilities. The most important components of this financial
risk are cash flow risk, interest rate risk, foreign exchange risk and credit risk. These risks are exposed to general and specific market movements.
The Group manages these positions with a framework that has been developed to monitor its customers and return on its investments.
4.2 Credit risk
The Group has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. The area where the Group
is exposed to credit risk is amounts due from customers.
The Group structures the levels of credit risk it accepts by placing limits on its exposure to the level of credit given to a single customer. Such risk is
subject to an annual or more frequent review. Limits on the level of credit risk by category and territory are approved annually by the Board of Directors.
4.3 Interest risk
The Group has exposure to both variable and fixed interest rates on its borrowings. The area where the Group is exposed to interest risk is where the
variable rate benchmark such as LIBOR, Zambian Treasury Bill rate, or the Bank of Zambia Policy rate may change.
The Group structures its debt with low spreads over the variable rate benchmark and protects itself with matching fixed interest rates on its borrowings.
Management periodically review economic conditions relating to such variable benchmarks and is allowed to consider alternate debt structures where
the need may arise.
69
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 4. Management of financial risk (continued)
4.4 Capital management
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns
for shareholders and benefits for other stakeholders.
The Group sets the amount of capital in proportion to its overall financing structure. The Group manages the capital structure and makes adjustments
to it in the light of the economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the
Group may adjust the amount of the dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
Capital structure
(i) In Zambian Kwacha
Cash and cash equivalents
Interest bearing liabilities
Equity
(ii) In United States Dollars
Cash and cash equivalents
Interest bearing liabilities
Equity
2019
ZMW’000s
2018
ZMW’000s
(274,425)
(611,925)
3,245,709
(135,743)
(549,183)
3,115,774
2,359,359
2,430,848
2019
USD’000s
2018
USD’000s
(20,790)
(46,358)
245,887
178,739
(11,090)
(44,868)
254,560
198,602
The Directors define capital as equity plus cash less borrowings and its financial strategy in the short term is to minimize the level of debt in the business
whilst ensuring sufficient finances are available to continue the Group’s business activities.
4.5 Foreign exchange risk
The Group is exposed to foreign exchange risk arising from exchange rate fluctuations. Foreign currency denominated purchases and sales, together
with foreign currency denominated borrowings, comprise the currency risk of the Group. These risks are minimized by matching the foreign currency
receipts to the foreign currency payments as well as holding foreign currency bank accounts and export sales.
4.6 Agricultural risk
Agricultural production by its nature contains elements of significant risks and uncertainties which may adversely affect the business and operations of
the Group, including but not limited to the following: (i) any future climate change with a potential shift in weather patterns leading to floods or droughts
and associated crop losses; (ii) potential insect, fungal and weed infestations resulting in crop failure and reduced yields; (iii) wild and domestic animal
conflicts and crop raiding; and (iv) livestock disease outbreaks. Adverse weather conditions represent a significant operating risk to the Business,
affecting the quality and quantity of production and the levels of farm inputs.
The Group minimises these risks through a robust insurance policy on biological stock (crop and livestock) and grain inventory.
70
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)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 Chief Operating Decision Maker (‘CODMs’), which is the Chief Executive
Officer and Chief Financial Officer, 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 CODM to use for such purposes. The CODM 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.
Year ended 30 September 2019
(i) In Zambian Kwacha
Segment
Retailing – Zambia
Master Meats Nigeria
Master Meats Ghana
Retailing West Africa
Total Retailing
Beef
Chicken
Zamhatch
Pork
Milk and dairy
Fish
Eggs
Total Cold Chain Food Production
Gross Combined Retail and CCFP
Less: Intra/Inter Sales
Combined Retail & CCFP
Stock Feed
Crops
Mill and Bakery
Leather and shoe
Total Other
Total
Less: Intra/Inter Group Sales
Group total
Central operating costs and other income
Operating profit
Foreign exchange losses
Finance costs
Share of loss on equity accounted investment
Profit before tax
Revenue
ZMW’000s
Revenue
ZMW’000s
Gross Profit
ZMW’000s
Gross Profit
ZMW’000s
1,853,721
172,031
27,381
14,090
127,946
52,405
60,310
38,642
67,409
7,180
13,765
30,517
8,744
138,732
46,222
474,941
247,580
112,665
252,952
206,531
36,612
57,211
183,520
26,828
184,954
2,038,675
1,388,492
3,427,167
(1,303,519)
2,123,648
986,075
474,202
210,348
3,794,273
(659,306)
3,134,967
41,471
213,502
367,657
581,159
581,159
191,011
270,116
39,261
1,081,547
1,081,547
(920,338)
161,209
(36,730)
(82,790)
(3,036)
38,653
71
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 Zambeef
ZMW’000s
Retailing
ZMW’000s
Master Pork
ZMW’000s
Other
ZMW’000s
Total
ZMW’000s
2,060,110
777,065
(195,772)
209,897
70,921
(96,500)
84,443
19,195
1,461
487,374
200,645
16,386
2,841,824
1,067,826
(274,425)
Revenue
ZMW’000s
Revenue
ZMW’000s
Gross Profit
ZMW’000s
Gross Profit
ZMW’000s
1,548,421
166,053
22,088
10,976
125,148
60,124
66,792
34,610
66,160
10,631
16,405
19,810
7,319
109,798
35,015
456,613
243,472
103,779
223,085
178,684
49,354
58,065
110,713
30,739
144,813
1,693,234
1,313,052
3,006,286
(1,001,575)
2,004,711
706,008
515,585
141,452
3,367,756
(587,167)
2,780,589
33,064
199,117
379,870
578,987
578,987
163,442
189,601
27,129
959,159
959,159
(840,889)
118,270
(19,302)
(70,215)
(742)
28,011
5. Segmental reporting (continued)
Operating assets/(liabilities)
Property plant and equipment
Biological assets and inventories
Cash, cash equivalents and bank overdrafts
Year ended 30 September 2018
Segment
Retailing – Zambia
Master Meats Nigeria
Master Meats Ghana
Retailing West Africa
Total Retailing
Beef
Chicken
Zamhatch
Pork
Milk and dairy
Fish
Eggs
Total Cold Chain Food Production
Gross Combined Retail and CCFP
Less: Intra/Inter Sales
Combined Retail & CCFP
Stock Feed
Crops
Mill and Bakery
Leather and shoe
Total Other
Total
Less: Intra/Inter Group Sales
Group total
Central operating costs and other income
Operating profit
Foreign exchange losses
Finance costs
Share of loss on equity accounted investment
Profit before tax
72
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 5. Segmental reporting (continued)
Operating assets/(liabilities)
Property plant and equipment
Biological assets and inventories
Cash, cash equivalents and bank overdrafts
Year ended 30 September 2019
(ii) In US Dollars
Segment
Retailing – Zambia
Master Meats Nigeria
Master Meats Ghana
Retail – West Africa
Total Retailing
Beef
Chicken
Zamhatch
Pork
Milk and dairy
Fish
Eggs
Total Cold Chain Food Production
Gross Combined Retail and CCFP
Less: Intra/Inter Sales
Combined Retail & CCFP
Stock Feed
Crops
Mill and Bakery
Leather and shoe
Total Other
Total
Less: Intra/Inter Group Sales
Group total
Central operating costs and other income
Operating profit
Foreign exchange losses
Finance costs
Share of loss on equity accounted investment
Profit before tax
Zambeef
ZMW’000s
Retailing
ZMW’000s
Master Pork
ZMW’000s
Other
ZMW’000s
Total
ZMW’000s
2,154,822
639,665
(76,971)
196,004
61,984
(66,994)
85,302
20,408
1,099
466,093
2,902,221
99,429
7,123
821,486
(135,743)
Revenue
USD’000s
Revenue
USD’000s
Gross Profit
USD’́000s
Gross Profit
USD’́000s
150,464
13,964
2,222
1,144
10,385
4,254
4,895
3,137
5,472
583
1,117
2,477
710
11,261
3,752
38,550
20,096
9,145
20,532
16,764
2,972
4,644
14,896
2,178
15,013
165,477
112,703
278,180
(105,806)
172,374
80,039
38,490
17,074
307,977
(53,515)
254,462
3,366
17,330
29,843
47,173
-
47,173
15,503
21,925
3,187
87,788
87,788
(74,703)
13,085
(2,981)
(6,720)
(246)
3,138
73
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 5. Segmental reporting (continued)
Operating assets/(liabilities)
Property plant and equipment
Biological assets and inventories
Cash, cash equivalents and bank overdrafts
Year ended 30 September 2018
(i) In US Dollars
Segment
Retailing – Zambia
Master Meats Nigeria
Master Meats Ghana
Retail – West Africa
Total Retailing
Beef
Chicken
Zamhatch
Pork
Milk and dairy
Fish
Eggs
Total Cold Chain Food Production
Gross Combined Retail and CCFP
Less: Intra/Inter Sales
Combined Retail & CCFP
Stock Feed
Crops
Mill and Bakery
Leather and shoe
Edible oils
Total Other
Total
Less: Intra/Inter Group Sales
Group total
Central operating costs and other income
Operating profit
Foreign exchange gains
Finance costs
Share of loss on equity accounted investment
Profit before tax
74
Zambeef
USD’000s
Retailing
USD’000s
Masterpork
USD’000s
Other
USD’000s
Total
USD’000s
156,069
58,867
(14,831)
15,901
5,373
(7,311)
6,397
1,454
111
36,923
15,200
1,241
215,290
80,894
(20,790)
Revenue
USD’000s
Revenue
USD’000s
Gross Profit
USD’000s
Gross Profit
USD’000s
156,091
16,738
2,227
1,106
12,615
6,061
6,733
3,489
6,669
1,072
1,654
1,997
739
-
11,068
3,530
46,029
24,543
10,462
22,488
18,013
4,975
5,853
11,161
3,099
-
14,598
170,689
132,363
303,052
(100,965)
202,087
71,170
51,974
14,260
339,491
(59,190)
280,301
3,333
20,071
38,293
58,364
58,364
16,476
19,113
2,736
96,689
96,689
(84,767)
11,922
(1,946)
(7,078)
(75)
2,823
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 5. Segmental reporting (continued)
Operating assets/(liabilities)
Property plant and equipment
Biological assets and inventories
Cash, cash equivalents and bank overdrafts
Zambeef
USD’000s
Retailing
USD’000s
Master Pork
USD’000s
Other
USD’000s
Total
USD’000s
176,048
52,260
(6,288)
16,013
5,064
(5,473)
38,080
8,124
581
237,110
67,115
(11,090)
6,969
1,667
90
2018
2019
Geographical
Zambia
West Africa
Rest of world
ZMW’000s
Revenues
ZMW’000s
Non-current
assets
USD’000s
Revenues
USD’000s
Non-current
assets
ZMW’000s
Revenues
ZMW’000s
Non-current
assets
USD’000s
Revenues
USD’000s
Non-current
assets
2,903,553
3,054,396
235,679
231,394
2,587,262
3,110,257
184,954
46,460
23,130
-
15,013
3,770
1,752
-
144,813
48,514
22,031
-
260,814
14,598
4,889
254,107
1,800
-
3,134,967
3,077,526
254,462
233,146
2,780,589
3,132,288
280,301
255,907
6. Other income
Other income is derived from rental income received by the letting out of guest houses on Mpongwe farm.
7. Operating profit
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
Operating profit is stated after charging/(crediting):
Depreciation
– Owned assets
– Leased assets
Staff costs
Legal and other professional fees
Directors’ remuneration
– Executive
– Non-Executive
Auditors’ remuneration
– Audit services
– Non audit services
Impairment of trade receivables
Profit/(loss) on disposal of property, plant and equipment
Rentals under operating leases
109,453
12,468
453,701
7,178
19,020
4,727
23,747
2,104
-
2,259
1,201
986
12,842
64,766
6,283
250,627
3,065
19,020
4,727
23,747
1,303
-
1,458
652
1,821
-
102,708
3,081
420,787
25,741
13,237
2,699
15,936
2,494
-
2,494
2,863
(220)
10,583
58,295
3,081
234,758
18,248
13,237
2,699
15,936
2,460
-
2,460
205
1,457
-
75
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019
7. Operating profit (continued)
Operating profit before taxation is stated after charging/(crediting):
2019
2018
Group
USD’́000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
Depreciation
– Owned assets
– Leased assets
Staff costs
Legal and other professional fees
Directors’ remuneration
– Executive
– Non-Executive
Auditors’ remuneration
– Audit services
– Non audit services
Impairment of trade receivable
Profit/(loss) on disposal of property, plant and equipment
Rentals under operating leases
8,884
1,012
36,826
583
1,543
384
1,927
171
-
184
97
80
1,042
5,257
510
20,346
249
1,543
384
1,927
106
-
119
53
147
-
8. Staff costs
The Group employed an average of 7,407 employees during the year ended 30 September 2019 (2018: 7,555).
Zambeef Products PLC, Zambeef Retailing Limited, Zam Chick Limited, Zamhatch Limited & Zamleather Limited
Master Pork Limited
Foreign Subsidiaries
Total
Employee costs for all employees of the Group, including Executive Directors, were:
10,354
311
42,418
2,595
1,335
269
1,604
251
-
251
289
(220)
1,067
5,876
311
23,665
1,840
1,335
269
1,604
248
-
248
21
-
-
2019
Number
2018
Number
6,803
284
320
7,407
6,935
275
345
7,555
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
436,227
12,856
4,618
453,701
35,408
1,043
375
36,826
370,158
31,506
19,123
420,787
37,314
3,176
1,928
42,418
Salaries and wages
Social security costs
Pension costs
76
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 8. Staff costs (continued)
2019
Short term benefits
Salary and fees
Bonus
Pension contributions
Airfare Allowance
Employment taxes
Total
2019
Short term benefits
Salary and fees
Bonus
Pension contributions
Airfare Allowance
Employment taxes
Total
2018
Short term benefits
Salary and fees
Bonus
Pension contributions
Airfare Allowance
Employment taxes
Total
2018
Short term benefits
Salary and fees
Bonus
Pension contributions
Airfare Allowance
Employment taxes
Total
Details of Directors’ contracts may be found in the Directors’ Report.
Francis
Grogan
ZMW’000s
Walter
Roodt
ZMW’000s
Faith
Mukutu
ZMW’000s
Danny
Museteka
ZMW’000s
Total
ZMW’000s
3,995
2,959
-
365
4,236
11,555
1,545
359
10
-
1,244
3,158
201
-
1
-
100
302
1,821
240
10
365
1,569
4,005
7,562
3,558
21
730
7,149
19,020
Francis
Grogan
USD’000s
Walter
Roodt
USD’000s
Faith
Mukutu
USD’000s
Danny
Museteka
USD’000s
Total
USD’000s
324
240
-
30
344
938
125
29
1
-
101
256
16
-
-
-
8
24
148
19
1
30
127
325
613
288
2
60
580
1,543
Francis
Grogan
ZMW’000s
Yusuf Koya
ZMW’000s
Danny
Museteka
ZMW’000s
Total
ZMW’000s
3,655
2,198
3
11
225
2,307
6,201
3
11
178
1,405
3,795
1,550
199
11
285
1,196
3,241
7,403
205
33
688
4,908
13,237
Francis
Grogan
USD’000s
Yusuf Koya
USD’000s
Danny
Museteka
USD’000s
Total
USD’000s
368
-
1
23
233
625
222
-
1
18
142
383
156
20
1
29
121
327
746
20
3
70
496
1,335
77
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 8. Staff costs (continued)
Share based employee remuneration
Share options and weighted average exercise prices were as follows for the reporting periods presented:
Outstanding at 30 September 2017
Granted
Forfeited
Exercised
Outstanding at 30 September 2018
Exercisable at 30 September 2018
Exercisable at 30 September 2019
LTIP 2
Number of shares
Weighted average
exercise price per
share
13,050,000
-
(13,050,000)
-
-
-
-
0.15
-
0.15
-
-
-
-
The options lapsed in June 2018. There were no options granted or exercised during the reporting period.
The Long-Term Incentive Plan 2 (“LTIP 2”) had the following key terms/conditions:
a)
b)
Structure: market value option shares (“Options”);
Exercise price: 15 pence;
c) Maximum shares: The annual award base value (number of shares multiplied by the share price on the date of grant plus number of Options
multiplied by the exercise price) may not exceed three times the Executive’s base salary (this term/condition does not apply to the two CEO under
the JCEO LTIP Scheme) and
d) Vesting period: three years from 2015 to 2018; exercisable by June 2018.
e)
The Options could only be exercised if Zambeef achieves the following targets:
xi)
If the share price reached 40 pence, then 25 per cent. of the Options become exercisable.
xii)
If the share price reached 48 pence, a further 25 per cent. of the Options become exercisable.
xiii)
If the share price reached 56 pence, a further 25 per cent. of the Options become exercisable.
xiv)
If the share price reached 65 pence, the final 25 per cent. of the Options become exercisable.
xv) Zambeef achieving a debt-to-equity (gearing) ratio of less than 35 per cent. in the audited accounts immediately prior to exercising the Options.
xvi) Zambeef achieving a current ratio (current assets divided by current liabilities) of 1.5 or higher in the audited annual accounts immediately prior to
the exercising of the options.
xvii) Zambeef generating free cash flows.
xviii) The Zambeef share price triggers set above would have been considered achieved if in the 14 days immediately prior to exercising the Options,
the shares had traded continuously at not less than these prices for 14 days.
xix) The Options were exercisable at any time for 2 years after the 3 year period from the issue of the Options have lapsed.
The Options could only be exercised if the relevant executives were still employed by the Company.
78
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 9. Finance costs
Interest on bank loans and overdrafts
Finance lease cost
Total
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
79,296
3,494
82,790
6,436
284
6,720
65,777
4,438
70,215
6,631
447
7,078
10. Taxation
The Group has various tax rates applicable on the basis of individual entities being defined as agricultural entities or divisions (income tax rate of 10%)
or manufacturing entities or divisions (income tax rate of 35%). The Group has further obtained tax holidays through investment incentives offered by
the Zambian Government.
(i) In Zambian Kwacha
(a) Tax charge
Current tax:
Tax charge
Deferred tax:
Deferred taxation (note 10(e))
Tax charge/(credit) for the year
(b) Reconciliation of tax charge
Profit/(loss) before taxation
Taxation on accounting (loss)/profit
Effects of:
Permanent differences:
Disallowable expenses
Timing differences:
Capital allowances and depreciation
Livestock and crop valuations adjustment
Other income
Unrealised exchange (gains)/ losses
Unrealised tax losses
Tax charge for the year
(c) Movement in taxation account
Taxation recoverable at 1 October
Charge for the year
Taxation paid
Taxation payable/(recoverable) as at 30 September
Analysed as follows:
Taxation payable
Taxation recoverable
Tax returns for the year ended 30 September 2019 will be made on the due date.
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
9,222
6,803
9,046
6,084
(6,442)
2,780
27,388
34,191
(4,789)
4,257
1,638
7,722
38,653
(24,681)
55,795
6,805
28,011
(15,231)
22,877
5,822
3,774
533
4,353
680
22,375
1,924
1,342
(903)
(1,051)
2,780
(960)
9,222
(9,652)
(1,390)
1,377
(2,767)
(1,390)
31,047
1,923
4
(834)
(5,287)
34,191
(2,510)
6,803
(5,822)
(1,529)
-
(1,529)
(1,529)
(9,420)
176
59
(997)
25,317
4,257
1,612
9,046
(11,618)
(960)
2,925
(3,885)
(960)
(428)
486
39
2,101
(978)
7,722
1,588
6,084
(10,182)
(2,510)
-
(2,510)
(2,510)
79
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 10. Taxation (continued)
(e) Deferred taxation
Represented by:
Biological valuation
Accelerated tax allowances
Provisions
Tax loss
Analysis of movement:
Deferred tax asset as at 1 October
Charge/(credit) to profit and loss account (note 10(a))
Deferred tax asset as at 30 September
Deferred tax asset
Deferred tax liability
(ii) In US Dollars
(a) Tax charge
Current tax:
Tax charge
Deferred tax:
Deferred taxation (note 10(e))
Tax charge/ (credit) for the year
(b) Reconciliation of tax charge
Profit/(loss) before taxation
Taxation on accounting profit/(loss)
Effects of:
Permanent differences:
Disallowable expenses
Timing differences:
Livestock and crop valuations adjustment
Other income
Unrealised exchange (gains)/losses
Unrealised tax loss
Tax charge for the year
80
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
14,162
58,464
(8,736)
(111,277)
(47,387)
(40,945)
(6,442)
(47,387)
(56,525)
9,138
(47,387)
13,716
60,872
(2,783)
(65,175)
6,630
(20,758)
27,388
6,630
-
6,630
6,630
13,444
38,384
(6,019)
(86,754)
(40,945)
(36,156)
(4,789)
(40,945)
(47,854)
6,909
(40,945)
13,012
32,733
(1,808)
(64,695)
(20,758)
(22,396)
1,638
(20,758)
(24,792)
4,034
(20,758)
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
749
553
912
614
(523)
226
2,223
2,776
(483)
429
165
779
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
3,138
(2,003)
4,529
552
2,823
(1,535)
2,307
587
306
156
109
(73)
(85)
226
43
156
1
(67)
(429)
2,776
440
18
6
(100)
2,550
429
68
49
4
212
(98)
779
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 10. Taxation (continued)
Capital allowances and depreciation
Livestock and crop valuations adjustment
Other income
Unrealised exchange (gains)/losses
Unrealised tax loss
Tax charge for the year
(c) Movement in taxation account
Taxation recoverable at 1 October
Charge for the year
Taxation paid
Foreign exchange differences
Taxation payable /(recoverable) as at 30 September
Analysed as follows:
Taxation payable
Taxation recoverable
(d) Tax returns for the year ended 30 September 2019 will be made on the due date.
(e) Deferred taxation
Represented by
Biological valuation
Accelerated tax allowances
Provisions
Tax loss
Analysis of movement:
Deferred tax asset as at 1 October
Charge/(credit) to profit and loss account (note 10(a))
Foreign exchange
Deferred tax asset as at 30 September
Deferred tax asset
Deferred tax liability
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
1,816
2,520
156
109
(73)
(85)
226
156
1
(67)
(429)
2,776
(950)
18
6
(100)
2,550
429
(43)
49
4
212
(98)
779
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
(78)
749
(783)
6
(106)
104
(210)
(106)
(205)
553
(473)
10
(115)
-
(115)
(115)
167
912
(1,171)
14
(78)
239
(317)
(78)
164
614
(1,026)
43
(205)
-
(205)
(205)
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
1,073
4,429
(662)
(8,430)
(3,590)
(3,345)
(523)
278
(3,590)
(4,282)
692
1,113
4,941
(226)
(5,326)
502
(1,695)
2,223
(26)
502
-
502
1,098
3,136
(492)
(7,087)
(3,345)
(3,739)
(483)
877
(3,345)
(3,910)
565
1,312
3,300
(182)
(6,125)
(1,695)
(2,316)
165
456
(1,695)
(2,025)
330
81
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 10. Taxation (continued)
(e) Deferred taxation
11. Equity dividends
Dividends declared or paid
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
(3,590)
502
(3,345)
(1,695)
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
-
-
-
-
There has been no dividend paid or proposed for 2019 (2018: ZMW nil).
12. Earnings per share
Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the parent company as the
numerator, i.e., no adjustments to profit were necessary in 2018 or 2019. For diluted earnings per share, the number of shares used in the calculation
of EPS includes preference shares and outstanding options awarded to management.
Basic 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 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.
Basic earnings per share
Profit/(loss) for the year
Weighted average number of ordinary shares for the purposes of basic earnings
per share.
Weighted average number of ordinary shares for the purposes of diluted earnings
per share.
Basic earnings per share (ZMW ngwee and US cents) – Continued operations
Basic earnings per share (ZMW ngwee and US cents) – Discontinued operations
Total Basic earnings per share (ZMW ngwee and US cents)
Diluted earnings per share
Diluted earnings per share – continued operations
Diluted earnings per share – discontinued operations
Total Diluted earnings per share
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
26,929
2,186
10,601
1,068
300,580
300,580
300,630
300,630
400,638
Ngwee
400,638
US cents
401,238
Ngwee
401,238
US cents
11.80
(5.78)
6.02
8.86
(4.34)
4.52
0.96
(0.47)
0.49
0.72
(0.35)
0.37
7.90
(4.41)
3.49
5.92
(3.31)
2.61
0.80
(0.44)
0.36
0.60
(0.33)
0.27
82
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 13. Goodwill
Cost and Net Book Value
At 1 October 2017
Arising during the year
Foreign exchange difference
At 30 September 2018
Arising during the year
Foreign exchange difference
At 30 September 2019
Masterpork Limited
Zam Chick Limited
Zamhatch Limited
ZMW’000s
USD’000s
166,801
17,249
-
-
166,801
-
-
166,801
-
(3,621)
13,628
-
(992)
12,636
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
15,699
141,786
9,316
166,801
1,189
10,741
706
15,699
141,786
9,316
12,636
166,801
1,283
11,584
761
13,628
The Group tests annually for impairment, or more frequently if there are indicators that goodwill might be impaired. The recoverable amounts of the
cash generating unit (CGU) is determined from value in use calculations.
The Board’s key assumptions are based on their past experience and future expectations of the market over the longer term. The Board estimates a
discount rate of 15 per cent. post tax derived from the Group’s cost of external borrowing and dividend payment history, adjusted to reflect currency
risk and price risk, in accordance with IAS 36 ‘Impairment of Assets’. Master Pork Limited, Zam Chick Limited and Zamhatch Limited are expected to
achieve a minimum growth rate of Zambian inflation which was at 10.5% at the report date plus Zambian GDP growth, in light of continued increase in
protein consumption in the domestic market.
Due to the significant headroom within historical impairment calculations (approximately 2 times utilising a discounted cash flow for a period of three
years), assumptions including growth rates of cash flows and changes to selling prices and direct costs have not been sensitised.
The Board is not aware of any other changes that would necessitate changes to its calculations.
83
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 14. Property, plant and equipment
(i) In Zambian Kwacha
(a) Group
Cost or valuation
As at 1 October 2017
Exchange differences
Additions
Disposals
Transfers
Leasehold
land and
buildings
ZMW’000s
Aircraft
ZMW’000s
Plant and
machinery
ZMW’000s
Motor
vehicles
ZMW’000s
Furniture
and
equipment
ZMW’000s
Capital work
in progress
ZMW’000s
Total
ZMW’000s
1,772,708
865
600,082
47,350
16,416
186,914
2,624,335
181,928
59,129
-
38,863
-
-
-
-
61,939
58,748
(1,399)
96,276
(2,042)
19,947
(3,753)
4,103
(790)
6,198
(87)
1,570
-
-
-
(140,812)
241,035
144,022
(5,239)
-
As at 30 September 2018
2,052,628
865
815,646
65,605
23,307
46,102
3,004,153
Exchange differences
Additions
Disposals
Transfer to held for sale
Transfers
71,470
13,868
(2,030)
(116,020)
23,136
-
-
-
-
-
20,871
15,621
(7,108)
(27,547)
57,482
(194)
7,399
(2,505)
(876)
7,099
61
4,948
(280)
(420)
4,001
As at 30 September 2019
2,043,052
865
874,965
76,528
31,617
110
71,989
-
(698)
(91,718)
25,785
92,318
113,825
(11,923)
(145,561)
-
3,052,812
-
-
-
-
-
-
-
-
-
-
13,847
(17,016)
105,789
(688)
101,932
(1,528)
121,921
(1,133)
(10,204)
210,988
1,688
(2,113)
17,397
-
16,972
539
18,232
(77)
(4,630)
31,036
-
-
86
-
86
-
87
-
-
7,118
(10,945)
70,775
(128)
66,820
(2,044)
83,340
(222)
(5,255)
4,028
(3,206)
15,187
(552)
15,457
3
17,459
(814)
(246)
173
142,639
31,859
1,013
(752)
2,344
(8)
2,597
(26)
2,803
(20)
(73)
5,281
2,012,016
2,035,656
692
779
732,326
748,826
44,669
50,148
26,336
20,710
25,785
46,102
2,841,824
2,902,221
Depreciation
As at 1 October 2017
Exchange difference
Charge for the year
Disposals
As at 30 September 2018
Exchange difference
Charge for the year
Disposals
Transfer to held for sale
As at 30 September 2019
Net book value
At 30 September 2019
At 30 September 2018
84
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019
14. Property, plant and equipment (continued)
(ii) In US Dollars
(a) Group
Cost or valuation
As at 1 October 2017
Foreign translation
Additions
Transfers
Disposals
As at 30 September 2018
Foreign translation
Additions
Transfers
Disposals
Transfer to held for sale
As at 30 September 2019
As at 1 October 2017
Charge for the year
Disposals
Foreign Translation
As at 30 September 2018
Charge for the year
Disposals
Transfer to held for sale
Foreign Translation
As at 30 September 2019
Net book value
At 30 September 2019
At 30 September 2018
Leasehold
land and
buildings
USD’000s
Aircraft
USD’000s
Plant and
machinery
USD’000s
Motor
vehicles
USD’000s
Furniture
and
equipment
USD’000s
Capital work
in progress
USD’000s
Total
USD’000s
187,537
(28,988)
5,961
3,918
-
168,428
(7,701)
1,126
1,878
(165)
(8,789)
154,777
3,229
1,754
-
(9,969)
(4,986)
1,480
(6)
(351)
6,214
2,351
152,426
173,414
91
(20)
-
-
-
71
(5)
-
-
-
-
66
-
9
-
(2)
7
7
-
-
(1)
13
53
64
62,891
(11,045)
5,922
9,705
(141)
67,332
(4,317)
1,267
4,666
(577)
(2,087)
66,284
2,751
7,135
(13)
1,022
10,895
6,764
(18)
(397)
(6,437)
10,807
55,477
56,437
4,902
(1,538)
2,011
414
(378)
5,411
(521)
601
576
(203)
(66)
5,798
417
1,531
(56)
(243)
1,649
1,417
(66)
(19)
(568)
2,413
3,385
3,762
1,708
(548)
625
158
(9)
1,934
(210)
402
325
(23)
(32)
19,328
(3,264)
-
(14,195)
-
1,869
1,739
5,843
(7,445)
-
(53)
276,457
(45,403)
14,519
-
(528)
245,045
(11,015)
9,239
-
(968)
(11,027)
2,396
1,953
231,274
102
236
(1)
33
370
228
(2)
(6)
(190)
400
-
-
-
-
-
-
-
-
-
-
6,499
10,665
(70)
(9,159)
7,935
9,896
(92)
(773)
(982)
15,984
1,996
1,564
1,953
1,869
215,290
237,110
(a) The Group’s property, plant and equipment situated in Zambia were revalued as at 30 September 2017 by Messrs Fairworld Properties Limited,
Registered Valuation Surveyors, on the basis of market value. The surplus on valuation totalling ZMW790 million (USD82 million) was transferred
to a revaluation reserve.
(b) The depreciation charge for the year includes ZMW29.7 million (USD2.4 million) (2018: ZMW23.4 million [USD2.4 million]) which relates to the
surplus over the original cost of fixed assets shown at a valuation. As this amount should not be taken to reduce the Group’s distributable reserve,
an equivalent amount has been transferred to distributable reserve from revaluation reserve.
The carrying value of the Group’s property, plant and equipment includes an amount of ZMW55.6 million (USD4.2 million) (2018: ZMW23.4 million
[USD2.5 million]) in respect of assets held under finance leases. The depreciation charged to the income statement in respect of such assets
amounted to ZMW12.5 million (USD1 million) (2018: ZMW3.1 million [USD0.31 million]).
(c)
(d) The capital work in progress depicts all capital expenditure items on projects that are yet to be completed.
(e)
In the opinion of the Directors, the carrying values of property, plant and equipment stated above are not higher than their fair values.
85
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 Leasehold
land and
buildings
ZMW’000s
Plant and
machinery
ZMW’000s
Motor
vehicles
ZMW’000s
Furniture
and
equipment
ZMW’000s
Capital work
in progress
ZMW’000s
Total
ZMW’000s
1,431,292
429,952
16,823
189,491
-
8,590
-
61,140
1,024
20,311
(984)
1,629,373
511,443
70,294
2,121
3,107
(1,675)
(116,020)
1,587,200
-
10,564
-
10,564
11,003
(66)
(4,630)
16,871
20,195
2,264
23,238
(1,160)
(27,547)
528,433
-
45,397
(90)
45,307
53,302
(223)
(5,255)
93,131
1,758
3,971
2,427
(1,005)
23,974
249
1,766
1,984
(421)
(876)
26,676
-
4,306
(184)
4,122
5,299
(125)
(246)
9,798
414
1,856
691
(72)
27,895
1,915,760
-
42,564
(32,019)
-
252,803
49,415
-
(2,061)
12,687
38,440
2,215,917
154
1,032
2,796
(118)
(420)
16,131
-
1,109
(7)
1,102
1,445
(19)
(73)
-
16,560
(31,125)
-
(698)
23,177
-
-
-
-
-
-
-
-
90,892
23,743
-
(3,374)
(145,561)
2,181,617
-
61,376
(281)
61,095
71,049
(433)
(10,204)
121,507
9,050
2,455
1,570,329
1,618,809
435,302
466,136
17,626
19,852
13,676
11,585
23,177
38,440
2,060,110
2,154,822
14. Property, plant and equipment (continued)
(i) In Zambian Kwacha
(b) Company
Cost or valuation
At 1 October 2017
Exchange differences
Additions
Transfers
Disposals
As at 30 September 2018
Exchange differences
Additions
Transfers
Disposals
Transfer to held for sale
As at 30 September 2019
Depreciation
As at 1 October 2017
Charge for the year
Disposals
As at 30 September 2018
Charge for the year
Disposals
Transfer to held for sale
As at 30 September 2019
Net book value
At 30 September 2019
At 30 September 2018
86
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 15. Investments in subsidiaries, associates and minority interests (continued)
(ii) In US Dollars
(b) Company
Cost or valuation
As at 1 October 2017
Exchange differences
Additions
Transfers
Disposals
Foreign translation
As at 30 September 2018
Exchange differences
Additions
Transfers
Disposals
Transfer to held for sale
Foreign translation
As at 30 September 2019
Depreciation
As at 1 October 2017
Charge for the year
Disposals
Foreign translation
As at 30 September 2018
Charge for the year
Disposals
Transfer to held for sale
Foreign translation
As at 30 September 2019
Net book value
At 30 September 2019
At 30 September 2018
Leasehold
land and
buildings
USD’000s
Plant and
machinery
USD’000s
Motor
vehicles
USD’000s
Furniture
and
equipment
USD’000s
Capital work
in progress
USD’000s
Total
USD’000s
148,014
19,102
-
866
-
(34,863)
133,119
5,706
172
252
(136)
(8,789)
(10,081)
120,243
-
1,065
-
(202)
863
893
(5)
(351)
(122)
1,278
44,466
1,740
1,013
5,689
104
2,047
(99)
(10,504)
41,703
1,639
184
1,886
(94)
(2,087)
(3,198)
40,033
-
4,576
(9)
(878)
3,689
4,326
(18)
(397)
(544)
7,056
108
400
245
(101)
(365)
2,027
20
143
161
(34)
(66)
(230)
2,021
-
434
(19)
(79)
336
430
(10)
(19)
(52)
685
41
188
70
(8)
(267)
1,037
12
84
227
(10)
(32)
(97)
1,221
-
112
(1)
(21)
90
118
(2)
(6)
(14)
186
2,885
-
4,290
(3,228)
-
(807)
3,140
-
1,344
(2,526)
-
(53)
(149)
1,756
-
-
-
-
-
-
-
-
-
-
198,118
24,940
4,982
-
(208)
(46,806)
181,026
7,377
1,927
-
(274)
(11,027)
(13,755)
165,274
-
6,187
(29)
(1,180)
4,978
5,767
(35)
(773)
(732)
9,205
118,965
132,256
32,977
38,014
1,336
1,691
1,035
947
1,756
3,140
156,069
176,048
(a) The Company’s property, plant and equipment situated in Zambia were revalued as at 30 September 2017 by Messrs Fairworld Properties Limited,
Registered Valuation Surveyors, on the basis of market value. The surplus on valuation totalling ZMW651 million (USD54.1 million) was transferred
to a revaluation reserve.
(b) The carrying value of the Company’s property, plant and equipment includes an amount of ZMW30.9 million (USD2.3 million) (2018: ZMW5 million
[USD0.4 million]) in respect of assets held under finance leases. The depreciation charged to the income statement in respect of such assets
amounted to ZMW6.3 million (USD0.5 million) (2018: ZMW0.8 million [USD0.083 million]).
In the opinion of the Directors, the carrying values of property, plant and equipment stated above are not higher than their fair values.
(c)
87
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 15. Investments in subsidiaries, associates and minority interests
The principal subsidiaries and associates of the Company, their country of incorporation, ownership of their issued, ordinary share capital and the
nature of their trade are listed below:
(a) Directly owned:
Country of incorporation
Proportion of all classes
of issued share capital
owned by the Company
2019
Proportion of all classes
of issued share capital
owned by the Company
2018
Zambeef Retailing Limited
Zamleather Limited
Master Meat and Agro
Production Co of Nigeria
Limited
Master Meat (Ghana)
Limited
Masterpork Limited
Zampalm Limited
Zam Chick Limited
Zamhatch Limited
Zambia
Zambia
Nigeria
Ghana
Zambia
Zambia
Zambia
Zambia
100
100
80
90
100
10
100
100
100
100
80
90
100
10
100
100
Principal activity
Retailing of Zambeef
products
Processing and sale of
leather and production and
sale of shoes
Processing and sale of
meat products
Processing and sale of
meat products
Processing and sale
of pork and processed
products
Palm tree plantation
Processing and sale of
poultry products
Chicken breeding, rearing
and production of stock
feed
The proportion of voting rights held is the same as the proportion of shares held.
(b) Movement at cost:
At beginning of the year
Foreign translation
At end of the year
(c) The Company’s interests in its subsidiaries, which are unlisted, are as follows:
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
245,807
-
245,807
20,082
(1,460)
18,622
245,807
-
245,807
25,420
(5,338)
20,082
Name of company
Zambeef Retailing Limited
Zamleather Limited
West Africa Operations
Masterpork Limited
Zam Chick Limited
Zamhatch Limited
Total at the end of 30 September 2019
Zambeef Retailing Limited
Zamleather Limited
West Africa Operations
Masterpork Limited
Zampalm Limited
Zam Chick Limited
Zamhatch Limited
Country of
Incorporation
Assets
ZMW’000s
Liabilities
ZMW’000s
Revenues
ZMW’000s
Profit/(loss)
ZMW’000s
983,478
1,853,720
(53,340)
Zambia
Zambia
Nigeria & Ghana
Zambia
Zambia
Zambia
Zambia
Zambia
Nigeria & Ghana
Zambia
Zambia
Zambia
Zambia
899,371
91,242
21,158
234,170
854,449
654,402
63,868
68,093
142,910
633,437
444,883
26,828
184,954
252,952
247,580
420,633
2,754,792
2,336,669
2,986,667
726,987
64,292
43,911
246,924
247,996
671,584
427,465
757,746
1,584,421
30,464
83,154
155,738
79,026
473,602
275,265
30,739
144,813
223,085
424
243,472
297,476
(6,453)
2,592
(49)
23,030
57,319
23,099
(63,952)
(5,286)
(12)
(5,771)
(18,581)
34,672
48,255
Total at the end of 30 September 2018
2,429,159
1,854,995
2,524,430
(10,675)
88
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 15. Investments in subsidiaries, associates and minority interests (continued)
Name of company
Zambeef Retailing Limited
Zamleather Limited
West Africa Operations
Masterpork Limited
Zam Chick Limited
Zamhatch Limited
Total at the end of 30 September 2019
Zambeef Retailing Limited
Zamleather Limited
West Africa Operations
Masterpork Limited
Zampalm Limited
Zam Chick Limited
Zamhatch Limited
Country of
Incorporation
Assets
USD’000s
Liabilities
USD’000s
Revenues
USD’000s
Profit/(loss)
USD’000s
Zambia
Zambia
Nigeria & Ghana
Zambia
Zambia
Zambia
Zambia
Zambia
Nigeria & Ghana
Zambia
Zambia
Zambia
Zambia
68,134
73,543
150,464
6,912
1,603
17,740
64,731
49,576
4,838
5,158
10,827
47,988
26,494
2,178
15,013
20,532
20,096
34,142
208,696
168,848
242,425
59,394
5,253
3,588
20,174
20,261
54,868
34,924
61,907
159,720
2,489
6,794
11,201
6,456
38,692
22,488
3,099
14,598
22,488
43
24,543
29,987
(4,330)
(524)
210
(4)
1,869
4,653
1,874
(6,446)
(533)
(1)
(582)
(1,873)
3,495
4,864
Total at the end of 30 September 2018
198,462
150,027
254,478
(1,076)
Name of company
Zambeef Retailing Limited
Zamleather Limited
Master Meat and Agro Production Co of Nigeria Limited
Master Meat (Ghana) Limited
Masterpork Limited
Zampalm Limited (note 15 (e))
Zam Chick Limited
Zamhatch Limited
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
31
1,477
216
1,310
26,601
-
158,230
57,942
245,807
2
112
16
99
2,015
-
11,988
4,390
18,622
31
1,477
216
1,310
26,601
-
158,230
57,942
245,807
3
121
17
107
2,173
-
12,927
4,734
20,082
d)
In the opinion of the Directors, the value of the company’s interests in the subsidiary companies is not less than the amounts at which they are
stated in these financial statements.
(e) As at the reporting date, the Group has a 10% equity interest in Zampalm Limited.
The company has significant influence over Zampalm in that, it has a management contract and it is responsible for day to day management of
Zampalm. The investment is accounted for using the equity method.
Summarised financial information of the Group’s share in the associate is as follows:
Opening balance
Arising during the year
Loss from continuing operation
Foreign exchange difference
Total comprehensive income
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
15,412
-
(3,036)
-
(3,036)
1,259
-
(246)
(75)
(321)
-
16,154
(742)
-
(742)
-
1,334
(75)
-
(75)
Carrying amount of the Group’s interest
12,376
938
15,412
1,259
89
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019
16. (a) Biological assets – Group
Biological assets comprise standing crops, feedlot 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.
Gains/
(losses)
arising from
fair value
attributable
to physical
changes
ZMW’000s
Gains
arising from
fair value
attributable
to price
changes
ZMW’000s
Decrease
due to
harvest/
transferred
to inventory
ZMW’000s
178,652
158,018
140,024
2,237
134,586
613,517
6,097
2,019
-
122
2,046
(583,985)
(486,535)
(206,532)
(12,872)
(417,455)
As at 1
October
ZMW’000s
Increase
due to
purchases
ZMW’000s
42,419
56,750
48,336
4,431
29,738
181,674
384,077
312,626
67,939
10,637
297,042
1,072,321
As at 30
September
ZMW’000s
27,260
42,878
49,767
4,555
45,957
10,284
(1,707,379)
170,417
As at 1
October
USD’000s
Foreign
exchange
USD’000s
3,466
4,636
3,949
362
2,430
(169)
(263)
(295)
(27)
(265)
Increase
due to
purchases
USD’000s
31,175
25,375
5,515
863
24,111
14,843
(1,019)
87,039
Gains/
(losses)
arising from
fair value
attributable
to physical
changes
USD’000s
Gains
arising from
fair value
attributable
to price
changes
USD’000s
Decrease
due to
harvest/
transferred
to inventory
USD’000s
14,501
12,826
11,366
182
10,924
49,799
495
164
-
10
166
835
(47,402)
(39,491)
(16,764)
(1,046)
(33,884)
(138,587)
As at 30
September
USD’000s
2,066
3,247
3,771
344
3,482
12,910
(i) In Zambian Kwacha
Standing Crops
Feedlot Cattle
Dairy Cattle
Pigs
Chickens
Total
(ii) In US Dollars
Standing Crops
Feedlot Cattle
Dairy Cattle
Pigs
Chickens
Total
16. (b) Biological assets – Company
Biological assets comprise standing crops, feedlot cattle, dairy cattle, and chickens. At 30 September 2019 there were 12,335 cattle (9,229 feedlot cattle
and 3,106 dairy cattle), and 352,673 chickens (352,673 layers). A total of 43,711 feedlot cattle and 642 dairy cattle were culled during the year.
Gains/
(losses)
arising from
fair value
attributable
to physical
changes
ZMW’000s
178,652
158,018
140,024
23,811
Gains
arising from
fair value
attributable
to price
changes
ZMW’000s
Decrease
due to
harvest/
transferred
to inventory
ZMW’000s
6,097
2,019
-
2,046
(583,985)
(486,536)
(206,532)
(57,211)
As at 30
September
ZMW’000s
27,260
42,878
49,767
17,310
As at 1
October
ZMW’000s
Increase
due to
purchases
ZMW’000s
42,419
56,751
48,336
10,843
384,077
312,626
67,939
37,821
158,349
802,463
500,505
10,162
(1,334,264)
137,215
(i) In Zambian Kwacha
Standing Crops
Feedlot Cattle
Dairy Cattle
Chickens
Total
90
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 16. (b) Biological assets – Company (continued)
As at 1
October
USD’000s
Foreign
exchange
USD’000s
3,465
4,637
3,948
887
12,937
(169)
(263)
(294)
(101)
(827)
Increase
due to
purchases
USD’000s
31,175
25,375
5,515
3,070
65,135
(ii) In US Dollars
Standing Crops
Feedlot Cattle
Dairy Cattle
Chickens
Total
17. Inventories
(i) In Zambian Kwacha
Trading stocks
Abattoir stocks
Raw materials
Stock feed
Consumables
Raw hides and chemicals
(ii) In US Dollars
Trading stocks
Abattoir stocks
Raw materials
Stock feed
Consumables
Raw hides and chemicals
Gains/
(losses)
arising from
fair value
attributable
to physical
changes
USD’000s
Gains
arising from
fair value
attributable
to price
changes
USD’000s
Decrease
due to
harvest/
transferred
to inventory
USD’000s
14,501
12,826
11,366
1,933
40,626
495
164
-
166
825
As at 30
September
USD’000s
2,066
3,247
3,771
1,311
(47,401)
(39,492)
(16,764)
(4,644)
(108,301)
10,395
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
406,602
345,724
580
228,885
139,018
163,167
2,907
-
-
220,250
117,626
-
941,159
683,600
272,763
7,018
116,884
49,496
190,396
3,254
639,811
215,648
-
-
116,841
148,830
-
481,319
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
30,803
44
17,340
10,532
12,361
220
71,300
26,192
22,285
17,618
-
-
16,685
8,911
-
51,788
573
9,549
4,044
15,555
266
52,272
-
-
9,546
12,160
-
39,324
A total of ZMW2,166.7 million (USD175.9 million) (2018: ZMW1,806.2 million (USD182.1 million]) was included in profit and loss as an expense within cost
of sales. Inventory was turned every 127 days (2018: 117 days).
Biological assets totalling ZMW1,707.4 million (USD138.6 million) (2018: ZMW1,553.1 million [USD156.6 million]) were transferred to inventories during
the year.
91
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 18. Trade and other receivables
(i) In Zambian Kwacha
Gross trade receivables
Less: provision for impairment of trade receivables
Trade receivables
Prepayments
Other receivables
(ii) In US Dollars
Gross trade receivables
Less: provision for impairment of trade receivables
Trade receivables
Prepayments
Other receivables
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
55,758
(4,910)
50,848
18,024
29,153
18,820
(1,913)
16,907
11,246
-
122,237
(4,822)
117,415
13,444
25,455
59,710
(1,331)
58,379
33,002
-
98,025
28,153
156,314
91,381
2019
2018
Group
USD’000
Company
USD’000
Group
USD’000
Company
USD’000
4,224
(372)
3,852
1,364
2,210
7,426
1,426
(145)
1,281
852
-
2,133
9,987
(394)
9,593
1,098
2,080
12,771
4,878
(109)
4,769
2,697
-
7,466
(a) Provision for impairment of trade receivables
The Directors have made a provision against some of the trade receivables that are long standing. Before accepting any new customer, the Group
assesses the potential customer’s credit quality and defines credit limits by customer.
The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value.
Movements on the Group’s provision for impairment of trade receivables are set out in the table below:
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
4,822
(1,113)
1,201
4,910
1,331
(70)
652
1,913
4,786
(2,827)
2,863
4,822
2,254
(1,128)
205
1,331
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
394
(29)
(90)
97
372
109
(11)
(6)
53
145
466
(76)
(285)
289
394
233
(32)
(113)
21
109
(i) In Zambian Kwacha
At 1 October
Utilised
Charge for the year
At 30 September
(ii) In US Dollars
At 1 October
Foreign exchange
Utilised
Charge for the year
At 30 September
92
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019
18. Trade and other receivables (continued)
Some of the unimpaired trade receivables are past due as at the reporting date. Financial assets past due but not impaired are shown below:
(i) In Zambian Kwacha
More than 3 months but not more than 6 months
More than 6 months but not more than a year
More than one year
Total
(ii) In US Dollars
More than 3 months but not more than 6 months
More than 6 months but not more than a year
More than one year
Total
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
2,147
-
-
2,147
315
-
-
315
2,345
-
-
2,345
341
-
-
341
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
163
-
-
163
24
-
-
24
192
-
-
192
34
-
-
34
Management reviews recoverability of trade receivables on a continuous basis and where necessary makes provision for impairment on long
outstanding receivables.
The matrix for the calculation of the expected credit losses is as detailed below.
30 September 2019
Trade receivable days past due
Expected credit loss rate
Gross carrying amount - ZMW'000
Lifetime expected credit loss - ZMW'000
Current
More than
More than
More than
Total
2.5%
45,719
1,137
30 days
60 days
90 days
4.7%
774
36
17.1%
4,268
731
60.1%
4,998
3,006
55,758
4,910
1 October 2018
Trade receivable days past due
Expected credit loss rate
Gross carrying amount - ZMW'000
Lifetime expected credit loss - ZMW'000
Current
More than
More than
More than
Total
30 days
60 days
90 days
1.5%
105,912
1,552
4.5%
8,670
388
11.4%
3,811
435
63.6%
3,843
2,447
122,237
4,822
30 September 2019
Trade receivable days past due
Expected credit loss rate
Gross carrying amount - USD'000
Lifetime expected credit loss - USD'000
Current
More than
More than
More than
Total
2.5%
3,464
86
30 days
60 days
90 days
4.7%
59
3
17.1%
323
55
60.1%
379
228
4,224
372
1 October 2018
Trade receivable days past due
Current
More than
More than
More than
Total
Expected credit loss rate
Gross carrying amount - USD'000
Lifetime expected credit loss - USD'000
1.5%
8,653
127
30 days
60 days
90 days
4.5%
708
32
11.4%
311
36
63.6%
314
200
9,987
394
93
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 19. Amounts due from related companies
(i) In Zambian Kwacha
Chisamba Ranching and Cropping
Danny Museteka
Tractorzam Limited
Tembilo Farms Limited
Wellspring Limited
Lilian Limbuka
Zamleather Limited
Zampalm Limited
Master Meat & Agro Production Co. of Nigeria Limited
Zam Chick Limited
Master Meat (Ghana) Limited
Zamhatch Limited
(ii) In US Dollars
Chisamba Ranching and Cropping
Tractorzam Limited
Danny Museteka
Tembilo Farms Limited
Wellspring Limited
Lilian Limbuka
Zamleather Limited
Zampalm Limited
Zam Chick Limited
Mastermeat & Agro Production Co. of Nigeria Limited
Master Meat (Ghana) Limited
Zamhatch Limited
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
258
70
-
59
5,624
508
-
35,035
-
-
-
-
601
70
-
-
5,624
-
40,154
20,184
60,977
534,335
2,728
414,072
-
-
1,321
174
889
-
-
47,888
-
-
-
-
41,554
1,078,745
50,272
-
-
1,321
-
889
-
19,821
32,732
60,168
421,639
2,076
257,860
796,506
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
20
-
5
4
427
38
-
2,654
-
-
-
-
3,148
45
-
5
427
-
3,042
1,529
40,479
4,619
207
31,369
81,722
-
108
14
73
-
-
3,912
-
-
-
-
4,107
-
108
-
73
-
1,619
2,674
34,448
4,915
169
21,067
65,073
The above balances relate to arm’s length transactions between the transacting parties. External parties that fall under the ‘Related Party’ disclosure
is with respect to all common shareholding companies of the Board of Directors of the Group. Unless otherwise stated, none of the transactions
incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash.
94
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 20. Cash and cash equivalents
(i) In Zambian Kwacha
Cash in hand and at bank
Bank overdrafts (note (b))
(ii) In US Dollars
Cash in hand and at bank
Bank overdrafts (note (b))
(a) Banking facilities
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
56,753
(331,178)
11,844
101,123
(207,616)
(236,866)
(274,425)
(195,772)
(135,743)
54,357
(131,328)
(76,971)
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
4,299
(25,089)
(20,790)
897
(15,728)
(14,831)
8,262
(19,352)
(11,090)
4,441
(10,729)
(6,288)
The Group has overdraft facilities totalling ZMW74.6 million (2018: ZMW74.6 million) and USD5 million (2018: USD5 million) with Citibank Zambia
Limited. The Citibank overdrafts bear interest rates of Bank of Zambia Policy rate plus 4.5 per cent. on the Kwacha facility and 3 month USD LIBOR
rate plus 4 per cent. on the USD facility. During the period under review the Group obtained an additional headroom overdraft facility totalling
USD2.3 million with Citibank Zambia Limited which bears an interest rate of 3 month USD LIBOR rate plus 5 per cent.
The Group has overdraft facilities totalling ZMW30 million (2018: ZMW30 million) and USD2 million (2018: USD2 million) with Standard Chartered
Bank Zambia Plc. The Standard Chartered Bank overdrafts bear interest rates of Bank of Zambia Policy rate plus 4.5 per cent. on the Kwacha
facilities and 1 month USD LIBOR rate plus 4 per cent. on the USD facilities.
The Group has overdraft facilities totalling ZMW118.3 million (2018: ZMW98.3 million) with Zanaco Bank Plc. The Zanaco Bank overdraft bears an
interest rate of Bank of Zambia Policy rate plus 4.5 per cent. on the Kwacha facility.
The Group has overdraft facilities totalling ZMW57.5 million (2018: ZMW57.5 million) and USD2 million (2018: USD2 million) with Stanbic Bank
Zambia Limited. The Stanbic Bank overdrafts bear interest rate of Bank of Zambia Policy rate plus 5.5 per cent. on the Kwacha facility and 3 month
USD LIBOR rate plus 4 per cent. on the USD facility.
(b) Bank overdrafts
(i) In Zambian Kwacha
Zanaco Bank Plc
Citibank Zambia Limited
Stanbic Bank Zambia Limited
Standard Chartered Bank Zambia Plc
(ii) In US Dollars
Zanaco Bank Plc
Citibank Zambia Limited
Stanbic Bank Zambia Limited
Standard Chartered Bank Zambia Plc
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
(114,029)
(119,071)
(69,060)
(29,018)
-
(109,538)
(69,060)
(29,018)
(95,709)
(57,022)
(56,935)
(27,200)
-
(47,193)
(56,935)
(27,200)
(331,178)
(207,616)
(236,866)
(131,328)
2019
2018
Group
USD’000
Company
USD’000
Group
USD’000
Company
USD’000
(8,638)
(9,021)
(5,232)
(2,198)
-
(8,298)
(5,232)
(2,198)
(7,819)
(4,659)
(4,652)
(2,222)
-
(3,855)
(4,652)
(2,222)
(25,089)
(15,728)
(19,352)
(10,729)
(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 (ZMW118.3 million), and Stanbic Bank Zambia Limited (ZMW132 million).
All overdrafts are annual revolving facilities.
95
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019
Notes to the Financial Statements (continued)
For the year ended 30 September 2019
21. Share capital
(a) Ordinary share capital
Authorised
700,000,000 ordinary shares of ZMW0.01 each
(2018: 700,000,000 ordinary shares of ZMW0.01 each)
Issued and fully paid
At 1 October
Issued during the year
At 30 September
300,579,630 ordinary shares of ZMW0.01 each
(2018: 300,579,630 ordinary shares of ZMW0.01 each)
(b) Preference share capital
Issued and fully paid
At 1 October
Issued during the year
At 30 September
100,057,658 preference shares of ZMW0.01 each
(2018: 100,057,658 preference shares of ZMW0.01 each)
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
7,000
938
7,000
938
3,006
-
3,006
1,000
-
1,000
449
-
449
100
-
100
3,006
-
3,006
1,000
-
1,000
449
-
449
100
-
100
The preference shares are convertible in whole or in part by CDC into ordinary shares on a one-for-one basis for the first eight years and thereafter on
a basis of 3.0833 ordinary shares for each preference share. These shares have four voting rights for every five preference shares held.
Zambeef has the right to redeem all or part of the preference shares at the redemption price, which will give CDC a 12% compounded return on
investment.
The zero-coupon preference shares pay a dividend only if a dividend is paid to ordinary shareholders, and in such cases, the dividend per share will
be the same as that for ordinary shares.
22. Share premium
At 1 October
Arising during the year
At 30 September
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
1,125,012
185,095
1,125,012
185,095
-
-
-
-
1,125,012
185,095
1,125,012
185,095
Proceeds received in addition to the nominal value of the shares issued have been included in share premium.
96
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 23. Interest bearing liabilities
(i) In Zambian Kwacha
DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH (note (a))
Zanaco Bank Plc (note (b))
Standard Chartered Bank Zambia Plc (note (c))
IFC – International Finance Corporation (note (d))
Stanbic Bank Zambia Limited (note (e))
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
197,604
13,286
212,381
118,870
29,000
571,141
197,604
13,286
212,381
118,870
29,000
571,141
231,413
19,929
107,213
152,217
-
231,413
19,929
107,213
152,217
-
510,772
510,772
Less: Short term portion (repayable within next 12 months)
(343,042)
(343,042)
(202,460)
(202,460)
Long term portion (repayable after 12 months)
228,099
228,099
308,312
308,312
(ii) In US Dollars
DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH (note (a))
Zanaco Bank Plc (note (b))
Standard Chartered Bank Zambia Plc (note (c))
IFC – International Finance Corporation (note (d))
Stanbic Bank Zambia Limited (note (e))
Less: Short term portion (repayable within next 12 months)
Long term portion (repayable after 12 months)
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
14,970
1,006
16,090
9,005
2,197
43,268
(25,988)
17,280
14,970
1,006
16,090
9,005
2,197
43,268
(25,988)
17,280
18,907
1,628
8,759
12,436
-
41,730
(16,541)
25,189
18,907
1,628
8,759
12,436
-
41,730
(16,541)
25,189
(a) (i) DEG Term Loan 3
The Group has a loan facility of USD4.97 million (2018: USD6.39 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:
•
•
First ranking legal mortgage over R/E of Farm No. 4906, Lot No. 18835/M and Lot No. 18836/M (Sinazongwe farm); and
First ranking legal mortgage over Farm No. 10097, R/E of Farm No. 5063 and Lot No. 8409/M (Chiawa farm).
(ii) DEG Term Loan 4
The Group has a loan facility of USD10 million (2018: USD12.5 million and the 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 September 2023.
The DEG term loan 4 is secured by:
•
•
Second ranking legal mortgage over R/E of Farm No. 4906, Lot No. 18835/M and Lot No. 18836/M (Sinazongwe farm); and
Second ranking legal mortgage over Farm No. 10097, R/E of Farm No. 5063 and Lot No. 8409/M (Chiawa farm).
(b) Zanaco Bank Plc
The Group has a loan facility of ZMW13.3 million (2018: ZMW19.9 million and original amount of ZMW46.5 million) with Zanaco Bank Plc. Interest on the
loan is 4.5 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 a structured agricultural facility with an annual revolving limit totalling USD20 million (2018 – 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 and is for
270 days. The balance on the facilities at year end was USD16.1 million (2018: USD8.8 million). Interest on the facility is 3 month USD LIBOR plus 3.25 per
cent. per annum calculated on the daily overdrawn balances.
97
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 23. Interest bearing liabilities (continued)
(d) International Finance Corporation Loan 2
The Group has a loan facility of USD7.6 million and ZMW18.8 million (2018: USD10.3 million and ZMW25.7 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 through a first ranking legal mortgage over R/E of Farm No. 4450, R/E of Farm No. 4451 & R/E of Farm No. 5388 (Mpongwe farm).
(e) Stanbic Bank Zambia Limited
During the period under review the Group obtained a seasonal loan facility with an annual revolving limit totalling ZMW29 million from Stanbic Bank
Zambia Limited. The balance on the facility at year end was ZMW29 million. Interest on the facility is 5.75 per cent. above the Bank of Zambia policy
rate per annum payable monthly in arrears.
This facility is 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 (ZMW118.3 million),
and Stanbic Bank Zambia Limited (ZMW132 million).
24. Obligations under finance leases
(i) In Zambian Kwacha
Freddy Hirsch Group Zambia Limited (note (a))
Stanbic Bank Zambia Limited (note (b))
Less: Payable within 12 months
Repayable after 12 months
(ii) In US Dollars
Freddy Hirsch Group Zambia Limited (note (a))
Stanbic Bank Zambia Limited (note (b))
Less: Payable within 12 months
Repayable after 12 months
The ageing for the finance leases is as detailed below:
(i) In Zambian Kwacha
2019
Lease payments
Finance charges
Net present values
2018
Lease payments
Finance charges
Net present values
98
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
11,013
29,771
40,784
(21,487)
19,297
-
29,771
29,771
(18,266)
11,505
14,067
24,344
38,411
(18,248)
20,163
-
24,344
24,344
(11,841)
12,503
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
835
2,255
3,090
(1,628)
1,462
-
2,256
2,256
(1,384)
872
1,149
1,989
3,138
(1,491)
1,647
-
1,989
1,989
(967)
1,022
Within 1
year
ZMW’000s
1 to 5 years
ZMW’000s
After 5
years
ZMW’000s
Total
ZMW’000s
22,018
(531)
21,487
18,678
(430)
18,248
20,295
(998)
19,297
21,179
(1,016)
20,163
-
-
-
-
-
-
42,313
(1,529)
40,784
39,857
(1,446)
38,411
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 24. Obligations under finance leases (continued)
(ii) In US Dollars
2019
Lease payments
Finance charges
Net present values
2018
Lease payments
Finance charges
Net present values
Within 1
year
USD’000s
1 to 5 years
USD’000s
After 5
years
USD’000s
Total
USD’000s
1,668
(40)
1,628
1,526
(35)
1,491
1,538
(76)
1,462
1,730
(83)
1,647
-
-
-
-
-
-
3,206
(116)
3,090
3,256
(118)
3,138
(a) Masterpork Limited, a subsidiary of the Group, has hire purchase facilities of ZMW11.013 million (2018 – ZMW14.067 million) with Freddy Hirsch
Group Zambia Ltd. The following equipment is on hire purchase and are interest free: HirschPro 400, Ulma, Cozzini Blender, 2 x Smokehouse
machines and Spiral Dryer. The principle on the Kwacha hire purchase facilities is repayable in 48 equal monthly instalments totalling ZMW0.29
million (USD0.02 million).
(b) The Stanbic Bank Zambia Limited finance lease relates to the purchase of motor vehicles and agricultural machinery with terms of 48 months. The
Group has a facility of USD2 million and ZMW 25million. The interest on the finance lease is charged at 3 month USD LIBOR plus 4 per cent on the
USD facility and the Bank of Zambia Policy Rate plus 6.75 per cent. on the Kwacha facility. The obligations under finance leases are secured by the
lessor’s absolute ownership over the leased assets comprehensively insured with the bank’s interest noted as first loss payee.
25. Deferred liability
Under the terms of employment, employees are entitled to certain terminal benefits. Provision has been made during the year towards these benefits.
This statutory entitlement, which is lost if the employee is summarily dismissed, becomes payable only when the employee retires after attaining the
age of 55 years and that employee has been employed for more than ten years. Uncertainty exists over the amount of future outflows due to staff
turnover levels, but are not considered material to the Group.
(i) In Zambian Kwacha
At 1 October
Provision/ (movements) during the year
Payments made during the year
At 30 September
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
22,611
(4,673)
(1,576)
16,362
5,059
(836)
(568)
3,655
16,756
7,557
(1,702)
22,611
3,659
2,319
(919)
5,059
The company engaged a professional actuary, Quantum Consultants & Actuaries, to perform an actuarial valuation of the liability arising from the
employee defined benefit plan as at 30 September 2019. As of the report date, the actuary had finalised the report and the provision was adjusted to
agree to the report.
(ii) In US Dollar
At 1 October
Provision/ (movements) during the year
Payments made during the year
Foreign translation
At 30 September
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
1,847
(379)
(128)
(100)
1,240
413
(67)
(46)
(23)
277
1,733
762
(172)
(476)
1,847
378
234
(93)
(106)
413
The assumptions developed by management with the assistance of independent actuaries. Discount factors are determined close to each year-
end by reference to market yields of bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity
approximating to the terms of the related pension obligation. Other assumptions are based on current actuarial benchmarks and management’s
historical experience.
99
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 25. Deferred liability (continued)
(ii) In US Dollar
Defined benefit obligation 1 October
Current service cost before deduction of beneficiary contributions
Interest expense
Remeasurement - actuarial losses from changes in demographic assumptions
Remeasurement - actuarial losses from changes in financial assumptions
Experience (gains)/Losses
Benefits paid
Translation Difference
Past Service cost
Defined benefit obligation 30 September
Unfunded
Partly or wholly funded
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
22,611
887
3,850
-
(3,097)
(5,731)
(2,158)
-
16,362
-
16,362
1,847
72
313
-
(251)
(465)
(175)
(101)
-
1,240
-
1,240
16,756
1,300
3,313
-
3,113
(1,061)
(810)
22,611
-
22,611
1,733
131
334
-
314
(107)
(82)
(476)
-
1,847
-
1,847
The significant acturial assumptions for the determination of the defined obligation are the discount rate, the salary growth rate and the average life
expectancy. The assumptions used for the valuation of the defined benefit obligation are as follows:
Discount rate at date shown
Salary growth rate
Average life expectancies:
- 25 years of age at reporting date
- 30 years of age at reporting date
- 35 years of age at reporting date
- 40 years of age at reporting date
- 45 years of age at reporting date
- 50 years of age at reporting date
Current service cost
Past service cost
Net interest expenses
Total expenses recognised in profit or loss
30
September
30
September
2019
20%
14.50%
2018
17.50%
14.50%
47%
57%
66%
72%
78%
86%
47%
57%
66%
72%
78%
86%
2019
ZMW’000s
2019
USD’000s
2018
ZMW’000s
2018
USD’000s
887
-
3,850
4,737
72
-
313
385
1,300
-
3,313
4,613
131
-
334
465
Amounts recognised in other comprehensive income related to the group’s defined benefit plan are as follows;
100
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 25. Deferred liability (continued)
Actuarial losses from changes in demographic assumptions
Actuarial losses from changes in financial assumptions
Experience (gains)/losses
Return on plan assets (excluding amounts included in net interest)
Total expenses recognised in other comprehensive income
26. Trade and other payables
(i) In Zambian Kwacha
Trade payables
Accruals
(ii) In US Dollars
Trade payables
Accruals
2019
ZMW’000s
2019
USD’000s
2018
ZMW’000s
2018
USD’000s
-
(3,097)
(5,731)
(8,829)
-
(251)
(465)
0
(717)
-
3,113
(1,061)
2,052
-
314
(107)
0
207
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
233,245
26,340
259,585
152,362
6,142
241,715
55,675
162,644
42,031
158,504
297,390
204,675
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
17,670
1,995
19,665
11,543
465
12,008
19,747
4,547
24,294
13,288
3,434
16,722
The average credit period taken in 2019 was 33 days (2018: 47 days).
All amounts shown under trade and other payables fall due for payment within one year. The carrying value of trade and other payables are considered
to be a reasonable approximation of fair value.
27. Provisions
Group
Carrying amount 1 October 2018
Additional provisions
Amount utilised
Foreign translation
Staff
ZMW’000
Others
ZMW’000
Total
ZMW’000
Staff
USD’000
Others
USD’000
Total
ZMW’000s
39,188
30,367
(21,964)
-
2,949
113,743
(111,369)
-
42,137
144,110
(133,333)
-
Carrying amount 30 September 2019
47,591
5,323
52,914
Company
Carrying amount 1 October 2018
Foreign translation
Additional provisions
Amount utilised
Carrying amount 30 September 2019
10,971
-
23,818
(6,950)
27,839
15,137
-
92,305
(94,819)
12,623
26,108
-
116,123
(101,769)
40,462
3,202
2,465
(1,783)
(278)
3,606
896
(156)
1,933
(564)
2,109
241
9,232
(9,040)
(30)
403
1,236
(76)
7,492
(7,696)
956
3,443
11,697
(10,823)
(308)
4,009
2,132
(232)
9,425
(8,260)
3,065
Staff provisions relate to gratuity, leave pay and other related claims. Other provisions relate to suppliers’ claims for goods and services provided.
101
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019
28. Amounts due to related companies
(i) In Zambian Kwacha
Zambian Pig Genetics
Zambeef Retailing Limited
Masterpork Limited
Zambezi Ranching and Cropping Limited
Tractorzam
Non-current
Current
(ii) In US Dollars
Zambian Pig Genetics
Zambeef Retailing Limited
Masterpork Limited
Zambezi Ranching and Cropping Limited
Tractorzam
Non-current
Current
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
-
-
-
-
251
251
-
251
-
417,832
71,962
-
251
490,045
-
490,045
45
-
-
187
-
232
-
232
-
261,466
67,035
132
-
328,633
-
328,633
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
-
-
-
-
19
19
-
19
-
31,654
5,451
19
37,124
-
37,124
4
-
-
15
19
-
19
-
21,362
5,477
10
-
26,849
-
26,849
The above balances relate to arm’s length transactions with the related parties. External parties that fall under the ‘Related Party’ disclosure are with
respect to all common shareholding companies of the Board of Directors of the Group. Unless otherwise stated, none of the transactions incorporate
special terms and conditions and no guarantees were given or received.
29. Financial instruments
Financial assets
The Group’s principal financial assets are bank balances and cash and trade receivables. The Group maintains its bank accounts with major banks
in Zambia of high credit standing. Trade receivables are stated at amounts reduced by appropriate allowances for estimated irrecoverable amounts.
Financial liabilities
The Group’s financial liabilities are bank overdrafts, long term loans and trade payables. Financial liabilities are classified according to the substance of
the contractual arrangements entered into. Trade payables and loans are stated at their nominal value.
Monetary assets and liabilities in foreign currencies
The tables below show the extent to which Group companies have monetary assets and liabilities in currencies other than their local currency:
(i) In Zambian Kwacha
Financial assets
- Cash at bank
- Trade receivables
- Other receivables
Financial liabilities
- Bank overdrafts
102
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
30,575
58,257
3
3,115
52,372
-
95,129
61,539
8,890
49,978
39,376
4,342
(194,909)
(71,329)
(110,171)
(4,634)
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 29. Financial instruments (continued)
(i) In Zambian Kwacha
- Trade and other payables
- Bank loans
- Finance leases
Net exposure
(ii) In US Dollars
Financial assets
- Cash at bank
- Trade receivables
- Other receivables
Financial liabilities
- Bank overdrafts
- Trade and other payables
- Bank loans
- Finance leases
Net exposure
(i) In Zambian Kwacha
2019 - Group
Financial Assets
- Cash at bank
- Trade receivables
- Other receivables
Financial Liabilities
- Bank overdrafts
- Trade and other payables
- Bank loans
- Finance leases
Net exposure
(ii) In Zambian Kwacha
2018 - Group
Financial Assets
- Cash at bank
- Trade receivables
- Other receivables
Financial Liabilities
- Bank overdrafts
- Trade and other payables
- Bank loans
- Finance leases
Net exposure
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
(138,151)
(297,660)
(19,423)
(108,193)
(297,660)
(19,423)
(211,769)
(465,188)
(19,140)
(136,763)
(465,188)
(19,140)
(561,308)
(441,118)
(640,710)
(532,029)
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
2,316
4,413
-
(14,766)
(10,465)
(22,550)
(1,471)
236
3,968
-
(5,404)
(8,197)
(22,550)
(1,471)
7,772
5,028
726
(9,001)
(17,301)
(38,006)
(1,564)
4,083
3,217
355
(379)
(11,173)
(38,006)
(1,563)
(42,523)
(33,418)
(52,346)
(43,466)
US Dollar
ZMW’000s
SA Rand
ZMW’000s
Other
ZMW’000s
Total
ZMW’000s
2,578
55,191
-
(80,589)
(106,330)
(297,660)
(19,423)
1,303
1,984
3
-
(10,458)
-
-
26,694
1,082
-
(114,321)
(21,362)
-
-
30,575
58,257
3
(194,910)
(138,150)
(297,660)
(19,423)
(446,233)
(7,168)
(107,907)
(561,308)
US Dollar
ZMW’000s
SA Rand
ZMW’000s
Other
ZMW’000s
Total
ZMW’000s
51,393
40,083
4,566
(7,394)
(116,969)
(465,188)
(19,140)
403
-
575
43,333
21,456
3,749
95,129
61,539
8,890
-
(102,777)
(110,171)
(21,118)
(73,682)
-
-
-
-
(211,769)
(465,188)
(19,140)
(512,649)
(20,140)
(107,921)
(640,710)
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OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 29. Financial instruments (continued)
(i) In US Dollars – Group - 2019
Financial Assets
- Cash at bank
- Trade receivables
- Other receivables
Financial Liabilities
- Bank overdrafts
- Trade and other payables
- Bank loans
- Finance leases
Net exposure
(ii) In US Dollars – Group - 2018
Financial Assets
- Cash at bank
- Trade receivables
- Other receivables
Financial Liabilities
- Bank overdrafts
- Trade and other payables
- Bank loans
- Finance leases
Net exposure
US Dollar
USD’000s
SA Rand
USD’000s
Other
USD’000s
Total
USD’000s
195
4,181
-
(6,105)
(8,055)
(22,550)
(1,471)
99
150
-
-
(792)
-
-
2,022
82
-
(8,661)
(1,618)
-
-
2,316
4,413
-
(14,766)
(10,465)
(22,550)
(1,471)
(33,805)
(543)
(8,175)
(42,523)
US Dollar
USD’000s
SA Rand
USD’000s
Other
USD’000s
Total
USD’000s
4,199
3,275
373
(604)
(9,556)
(38,006)
(1,564)
(41,883)
33
-
47
-
(1,725)
-
-
3,540
1,753
306
(8,397)
(6,020)
-
-
7,772
5,028
726
(9,001)
(17,301)
(38,006)
(1,564)
(1,645)
(8,818)
(52,346)
Exposure to currency exchange rates arise from the Group’s sales and purchases which are primarily denominated in US Dollar and South African
Rand. It also arises from the retranslation of its foreign subsidiaries in West Africa. The Group activities expose it to a variety of financial risks. The main
risks faced by the Group relate to foreign exchange rates, the risk of default by counter-parties to financial transactions and the availability of funds to
meet business needs.
These risks are managed as described below:
(i) Currency risk
Some of the interest bearing borrowings are denominated in foreign currencies and therefore lead to a risk of fluctuation of value due to changes in
the foreign exchange rate. This risk is partially hedged by holding United States Dollar bank balances and United States Dollar denominated exports.
The table below shows the extent to which Group companies have interest bearing liabilities in currencies other than their functional currency:
DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH
International Finance Corporation
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
197,604
100,056
297,660
14,970
7,580
22,550
231,413
126,562
357,975
18,907
10,340
29,247
(ii) Foreign currency risk sensitivity analysis
Zambian Kwacha/United States Dollar exchange risk
The following tables illustrate the sensitivity of the net result for the year and equity with regard to the Group’s foreign currency borrowings “with all
other things being equal”. It assumes a +/-10 per cent. and 5 per cent., movement in the United States Dollar/Zambian Kwacha exchange rate for the
year ended 30 September 2019.
If the Zambian Kwacha had weakened against the United States dollar by 10 per cent. (2018: 10 per cent.) then this would have resulted in the following
impact on net profit and equity:
104
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 29. Financial instruments (continued)
Weakening of the Kwacha
Net profit/(loss)
Equity
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
(2,443)
(180)
(25,291)
3,215,943
221,484
3,079,990
(2,318)
228,757
If Zambian Kwacha had strengthened against the United States Dollar by 5 per cent. (2018: 5 per cent) then this would have resulted in the following
impact on net profit and equity:
Strengthening of the Kwacha
Net profit/(loss)
Equity
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
42,206
3,606
28,385
3,012
3,260,592
260,015
3,133,666
269,493
There is no material difference between the carrying value and the fair value of the Group’s financial liabilities.
(iii) Interest rate risk
As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in
market interest rates.
The Group’s interest rate risk arises from overdraft facilities and long-term borrowings. Borrowings issued at variable rates expose the Group to interest
rate risk. The interest rates to which the Group is exposed are set out in notes 20, 23 and 24. The risk of interest rate movements is managed through
on-going monitoring of the Group’s overdrafts and long-term borrowings, the spreading of debt between a number of financial institutions and the
denomination of debt in Zambian Kwacha and USD.
The Group’s term facilities are medium to long term with fixed spread over LIBOR. A 0.5 per cent. movement in the LIBOR rate would not have a material
impact on the interest expense for the Group.
(iv) Market risk
The Group is not exposed to the risk of the value of its financial assets fluctuating as a result of changes in market prices.
(b) Credit risk
(i) Trade receivables
The Directors believe the credit risk of trade receivables is low. The credit risk is managed by the selective granting of credit.
(c) Liquidity risk
Liquidity risk is the risk that the Group might be unable to meet its obligations associated with its financial liabilities. The Group monitors rolling forecasts
of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on any undrawn
borrowing facilities so that the Group does not breach limits or covenants (where applicable) on any of its borrowing facilities. The maturity of the
Group’s financial liabilities with respect to borrowings is set out in notes 20, 23 and 24.
30 September 2019
Interest bearing liabilities
Other bank borrowings
Finance lease obligations
Trade and other payables
Current
Non-current
Within 6
months
6 to 12
months
1 to 5 years
later than 5
years
ZMW’000
ZMW’000
ZMW’000
ZMW’000
50,830
-
10,743
312,499
50,831
241,381
10,744
-
228,099
-
19,297
-
-
-
-
-
105
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019
29. Financial instruments (continued)
30 September 2019
Interest bearing liabilities
Other bank borrowings
Finance lease obligations
Trade and other payables
Current
Non-current
Within 6
months
6 to 12
months
1 to 5 years
later than 5
years
USD’000
USD’000
USD’000
USD’000
3,851
-
814
23,674
3,851
18,286
814
-
17,280
-
1,462
-
-
-
-
-
30. 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 30 September
2019, 30 September 2018, and 1 October 2017.
Level 1
Level 2
Level 3
Total
ZMW’000
ZMW’000
ZMW’000
ZMW’000
-
-
-
-
-
-
-
88,874
88,874
88,874
88,874
(297,660)
(297,660)
(297,660)
-
-
(297,660)
(297,660)
88,874
(208,786)
Level 1
Level 2
Level 3
Total
ZMW’000
ZMW’000
ZMW’000
ZMW’000
-
-
-
-
117,415
117,415
117,415
117,415
(465,188)
(465,188)
-
-
(465,188)
(347,250)
(465,188)
117,415
(347,773)
30 September 2019
Financial assets
Trade receivables
Total Assets
Financial liabilities
US-dollar loans
Total Liabilities
Net fair value
30 September 2018
Financial assets
Trade receivables
Total Assets
Financial liabilities
US-dollar loans
Total Liabilities
Net fair value
106
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 30. Fair value measurement (continued)
1 October 2017
Financial assets
Trade receivables
Total Assets
Financial liabilities
US-dollar loans
Total Liabilities
Net fair value
30 September 2019
Financial assets
Trade receivables
Total Assets
Financial liabilities
US-dollar loans
Total Liabilities
Net fair value
30 September 2018
Financial assets
Trade receivables
Total Assets
Financial liabilities
US-dollar loans
Total Liabilities
Net fair value
Level 1
Level 2
Level 3
Total
USD’000s
USD’000s
USD’000s
USD’000s
-
-
-
-
61,651
61,651
61,651
61,651
-
-
-
(407,498)
(407,498)
-
-
(407,498)
(407,498)
(407,498)
61,651
(345,847)
Level 1
Level 2
Level 3
Total
USD’000s
USD’000s
USD’000s
USD’000s
-
-
-
-
-
-
-
6,733
6,733
6,733
6,733
(22,550)
(22,550)
-
-
(22,550)
(22,550)
(22,550)
6,733
(15,817)
Level 1
Level 2
Level 3
Total
USD’000s
USD’000s
USD’000s
USD’000s
-
-
-
-
-
-
-
9,593
9,593
9,593
9,593
(38,006)
(38,006)
-
-
(38,006)
(38,006)
(38,006)
9,593
(28,413)
107
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 30. Fair value measurement (continued)
1 October 2018
Financial assets
Trade receivables
Total Assets
Financial liabilities
US-dollar loans
Total Liabilities
Net fair value
Level 1
Level 2
Level 3
Total
USD’000s
USD’000s
USD’000s
USD’000s
-
-
-
-
-
-
-
6,376
6,376
6,376
6,376
(42,140)
(42,140)
(42,140)
-
-
6,376
(42,140)
(42,140)
(35,764)
There were no transfers between Level 1 and Level 2 in 2019 or 2018.
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 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.
108
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 30. Fair value measurement (continued)
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 30 September 2019, 30
September 2018, and 1 October 2017:
30 September 2019
Property, plant and equipment:
Land held for production in Zambia
Office building in Zambia
30 September 2018
Land held for production in Zambia
Office building in Zambia
1 October 2017
Land held for production in Zambia
Office building in Zambia
30 September 2019
Property, plant and equipment:
Land held for production in Zambia
Office building in Zambia
30 September 2018
Land held for production in Zambia
Office building in Zambia
1 October 2017
Land held for production in Zambia
Office building in Zambia
Level 1
Level 2
Level 3
Total
ZMW’000
ZMW’000
ZMW’000
ZMW’000
-
-
1,166,494
48,856
-
-
1,166,494
48,856
Level 1
Level 2
Level 3
Total
ZMW’000
ZMW’000
ZMW’000
ZMW’000
-
-
1,182,870
40,225
-
-
1,182,870
40,225
Level 1
Level 2
Level 3
Total
ZMW’000
ZMW’000
ZMW’000
ZMW’000
-
-
Level 1
1,178,526
39,407
Level 2
-
-
Level 3
1,178,526
39,407
Total
USD’000
USD’000
USD’000
USD’000
-
-
Level 1
88,371
3,701
Level 2
-
-
Level 3
88,371
3,701
Total
USD’000
USD’000
USD’000
USD’000
-
-
Level 1
96,640
3,286
Level 2
-
-
Level 3
96,640
3,286
Total
USD’000
USD’000
USD’000
USD’000
-
-
121,874
4,075
-
-
121,874
4,075
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.
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OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 30. Fair value measurement (continued)
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.
31. Capital commitments
Capital commitments entered into at the reporting date
Not contracted for at the reporting date
32. Operating leases
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
15,008
50,992
1,137
3,863
24,296
85,864
1,985
7,015
The total value of future minimum annual lease payments under non-cancellable operating leases is as follows:
(i) In Zambian Kwacha
Within one year
One to five years
(ii) In US Dollars
Within one year
One to five years
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
12,842
11,871
-
-
10,583
18,321
-
-
2019
2018
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
973
899
-
-
865
1,497
-
-
The Company’s subsidiary, Zambeef Retailing Limited, has operating leases for its butcheries that are for a minimum period of 12 months and a
maximum period of 5 years and renewable at the request of either party. There are no purchase options, contingent rent payments or restrictions
arising on these leases.
110
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 33. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are
not disclosed in this note. Details of the significant transactions between the Group and other related parties during the year ended 30 September 2018
are as follows:
(a)
The Group made the following sales to related parties:
Zambezi Ranching and Cropping Limited
Chisamba Ranching and Cropping
Danny Museteka
Zambia Pig Genetics Limited
Sale of
Animal feeds/bran
Animal feeds/bran
Animal feeds/bran
Animal feeds/bran
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
-
1,704
563
-
2,267
-
138
46
-
184
113
788
338
2
1,241
11
79
34
-
124
(b) The Group made the following purchases from related parties:
Purchase of
ZMW’000s
USD’000s
ZMW’000s
USD’000s
2019
2018
Zambezi Ranching and Cropping Limited
Cattle beef, wheat, soya beans
Zambian Pig Genetics
Wellspring Limited
Tembilo Farms
Tractorzam Limited
Pigs
Cattle beef
Chickens
Tractors/spares
Chisamba Ranching and Cropping
Beef
Madison Insurance
Lillian Limbuka
Insurance
Pigs
-
-
-
2,054
7,205
13,814
8,114
5,873
-
-
-
167
585
1,121
659
477
1,422
5,321
1,469
5,597
2,232
11,594
505
37,060
3,009
84,987
143
536
148
564
225
1,169
51
8,567
56,847
5,731
(c) Sales of goods to related parties were made at the Group’s usual list prices.
(d) Purchases were made at market price.
(e) The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received.
(f) No expense has been recognised in the period for bad or doubtful debts in respect of the amounts owed by related parties.
(g) The parties are related by virtue of certain Directors of the Group having a shareholding in the respective companies.
(h) Directors of the Group have shareholdings in the Company as stated in the Report of the Directors. No dividends have been paid to the Directors
via their direct and indirect shareholdings.
(i) Key management compensation.
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OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 33. Related party transactions (continued)
The remuneration of Directors and other members of key management during the year were as follows:
Short-term benefits
Post-employment benefits
Other long-term benefits
Short-term benefits
Post-employment benefits
Other long-term benefits
2019
2018
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
96,315
84,197
76,767
71,159
-
-
-
-
-
-
-
-
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
7,818
6,834
7,739
7,173
-
-
-
-
-
-
-
-
The remuneration of Directors and key executives is determined by the remuneration committee having regard to the performance of individuals and
market trends.
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Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 33. Related party transactions (continued)
(j) There were no loans to related parties and key management personnel.
(k) The Company made the following sales to related parties:
Zambeef Retailing Limited
Zambezi Ranching and Cropping Limited
Zambia Pig Genetics Limited
Masterpork Limited
Zam Chick Limited
Zamhatch Limited
Zamleather Limited
Zampalm Limited
Danny Museteka
Chisamba Ranching and Cropping
(l) The Group made the following purchases from related parties:
Zambeef Retailing Limited
Zambezi Ranching and Cropping Limited
Zamleather Limited
Zam Chick Limited
Tractorzam Limited
Masterpork Limited
Zamhatch Limited
Chisamba Ranching and Cropping
Wellspring Limited
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
989,956
80,354
869,969
87,698
-
3,478
28,182
123,200
142,402
187
7
563
1,704
-
282
2,287
10,000
11,559
15
1
46
138
113
2
16,681
106,636
91,303
1,930
-
338
788
11
-
1,681
10,750
9,204
195
-
34
79
1,289,679
104,682
1,087,760
109,652
2019
2018
ZMW’000s
USD’000s
ZMW’000s
USD’000s
2,326
-
846
264
7,205
44,027
25,148
7,831
-
87,647
189
-
69
21
584
3,574
2,041
636
-
7,114
6,629
13,070
714
123
5,597
56,082
13,490
2,232
5,321
668
1,318
72
12
564
5,653
1,360
225
536
103,258
10,408
113
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 34. Assets held for sale
During the year under review management decided to sell Sinazongwe Farm. As such the assets and liabilities of Sinazongwe are disclosed in accordance
with IFRS 5. A shareholder’s agreement was signed during the period.
Previously management decided to sell a majority stake of a 100% owned subsidiary, Zampalm Limited (Zampalm). The sale was concluded during the
2018 financial year.
The income generated by assets held for sale was generated as follows:
Revenue
Cost of sales
Administration costs
Operating loss
Finance Costs
Exchange losses
Loss from discontinued operation before tax
Tax (expense)/credit
Loss for the year
The assets and liabilities of the unit held for sale are as follows:
Property, plant and equipment
Total non-current assets
Biological assets
Inventories
Total current assets
Assets classified as held for sale
Total non-current liabilities
Trade and other payables
Cash and cash equivalents
Total current liabilities
The cash flow effects of the unit held for sale are as follows:
Cash inflow from operating activities
Cash outflow from investing activities
Cash outflow from financing activities
September
2019
ZMW’000
September
2019
USD’000
September
2018
ZMW’000
September
2018
USD’000
41,003
(34,307)
(24,075)
(17,379)
-
-
(17,379)
-
(17,379)
3,328
(2,785)
(1,954)
(1,411)
-
-
(1,411)
-
(1,411)
337
(8,128)
(6,079)
(13,870)
-
609
(13,261)
-
(13,261)
34
(821)
(614)
(1,401)
-
64
(1,337)
-
(1,337)
September
2019
ZMW’000
September
2019
USD’000
September
2018
ZMW’000
September
2018
USD’000
135,357
135,357
10,254
10,254
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
September
2018
ZMW’000
September
2018
USD’000
September
2017
ZMW’000
September
2017
USD’000
(17,379)
(1,411)
-
-
-
-
-
(6,034)
-
-
(608)
-
35 Events subsequent to reporting date
No item, transaction or event of a material and unusual nature has arisen since 30 September 2019, which in the opinion of the directors would substantially
affect the operations of the economic entity, the results of those operations or the state of affairs of the economic entity in the subsequent financial years.
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OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 116
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 117
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 Notice of Annual General Meeting and
agenda
Notice is hereby given that the 25th Annual General Meeting of Zambeef Products PLC will take place at the Taj Pamodzi Hotel, along Addis Ababa Drive,
Lusaka, on Monday, December 30, 2019 at 09:00hrs
AGENDA
To read the Notice of the Meeting and confirm that a quorum is present
To read and confirm the minutes of the 24th Annual General Meeting held on December 18, 2018.
1.
2.
3. Consider any matters arising from the minutes
4.
5.
6.
To receive the report of the Directors, the Auditors report and the Financial Statements for the year ended September 30, 2019 (Resolution 1)
To re-appoint Grant Thornton (Zambia) as Auditors for 2019/2020 and authorize the Directors to fix their remuneration. (Resolution 2)
To Ratify the appointments of the following as Directors:
a. Michael Mundashi Non-Executive Director (Resolution 3)
b. Walter Roodt Executive Director (Resolution 4)
c. Faith Mukutu Executive Director (Resolution 5)
7.
8.
9.
In terms of the Companies Act, David Osborne and John Rabb retire but are eligible to offer themselves for re-election (Resolution 6 and 7).
That pursuant to section 27 of the Companies Act, number 10 of 2017, the amended articles of association of the Company tabled at the meeting
(new Articles), be adopted as articles of association of the Company. Further that the New Articles shall be effective from the date of the Annual
General Meeting. (Special Resolution 1)
To Consider any competent business of which due notice has been given.
By order of the Board, Danny Museteka, Company Secretary
Note: A Member is entitled to appoint one or more proxies to attend, speak and vote in his or her stead. A proxy need not be a member of the Company.
Proxies must be lodged at the registered office of the Company at least 48 hours before the time fixed for the meeting.
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Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019
Proxy form
I/We, ……………………………………………………………..........................................................................................................................
of ……………………………………………………………................................................................................................................................
being a member/s of and the registered holder/s of ..........................................................................................................................................
Zambeef shares hereby appoint ……………………………………………………………...………………...................................................
of ...........................................................................................................................................................................................................................
or, in his/her absence, the Chairman of the Company.
As my/our proxy to vote for me/us on my/our behalf at the Annual/Extraordinary General Meeting of the Company at be held on the
30th day December 2019 and at any adjournment of that meeting.
In Favour of/against (please tick)
In Favour
Against
Resolution 1 To recieve, approve and adopt financial statements for the year ended 30 September
2019
Resolution 2 To re-appoint Grant Thornton as Auditors for 2019/20 and authorise the Directors to fix
their remuneration.
Resolution 3 To Ratify the Appointment of Michael Mundashi as a Non-Executive Director
Resolution 4 To Ratify the Appointment of Walter Roodt as an Executive Director
Resolution 5 To Ratify the Appointment of Faith Mukutu as an Executive Director
Resolution 6 To re-elect Mr. David Osborne as a Non-Executive Director
Resolution 7 To re-elect Mr. John Rabb as a Non-Executive Director
Special Resolution 1 Pursuant to Section 27 of the Companies Act, number 10 of 2017, the amended
articles of association of the company tabled at the meeting (new Articles), be adopted as articles of
association of the Company. Further that the New Articles shall be effective from the date of the Annual
General Meeting.
Unless otherwise instructed, the proxy will vote as he/she thinks fit.
Signed: ………………………………........................................................................................................…………………………..........................……..........
Name: ………………………………........................................................................................................……………………………..........................…...........
Date: ………………………………................................................................................………………………………...............................................................
Witnessed by: ………………………………........................................................... Signature: ………………………………...................................................
Name: ………………………………........................................................................................................……………………………….....................................
Address: ………………………………........................................................................................................……………………………….................................
.......................................................................………………………………..................................................................................................................................
119
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019
Notes to the Proxy Form
1.
2.
3.
4.
5.
6.
A shareholder may insert the name of a proxy or the names of two alternative proxies
of his/her choice in the space provided, with or without deleting “the Chairman of the
Company”. The person whose name stands first on the form of proxy and who is present
at the Annual General Meeting will be entitled to act as proxy to the exclusion of those
whose names follow. Any such proxy, who need not be a shareholder of the Company, is
entitled to attend, speak and vote on behalf of the shareholder.
A proxy is entitled to one vote on a show of hands and, on a poll, one vote for each
share held. A shareholder’s instructions to the proxy must be indicated in the appropriate
spaces.
If a shareholder does not indicate on this instrument that the proxy is to vote in favour of
or against any resolution or to abstain from voting or gives contradictory instructions, or
should any further resolution/s or any amendment/s which may be properly put before
the Annual General Meeting be proposed, the proxy shall be entitled to vote as he/she
thinks fit.
This form of proxy must be received by the Company secretary at the registered head
office, Plot 4970, Manda Road, Industrial Area, P/B 17, Woodlands, Lusaka, by no later
than 09:30 on Monday, 26th December, 2018.
Documentary evidence establishing the authority of the person signing the proxy in
representative capacity must be attached hereto unless previously recorded by the
Company’s transfer secretaries.
The completion and lodging of this form of proxy will not preclude a shareholder from
attending the Annual General Meeting and speaking and voting in person there at to the
exclusion of any proxy appointed in terms of this proxy form.
7.
signatory/ies.
Any alteration or correction made to this form of proxy must be initialed by the
8.
The Chairman of the meeting may accept or reject any form of proxy, which is completed
and/or received other than in accordance with these notes.
120
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 121
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019 122
Zambeef Products PLC Annual Report 2019Notes to the Financial Statements (continued)For the year ended 30 September 2019 123
OverviewStrategicreportCorporategovernanceFinancialstatementsZambeef Products PLC Annual Report 2019