Feedin g T he N atio n - B eyo n d 2020
Annual
Report2020
2
Zambeef Products PLC Annual Report 2020 Contents
Overview
Zambeef at a Glance
History & Key Milestones
Strategic Report
Chairman's Review
Chief Executive Officer’s Review
Key Market Indicators
Divisional Perfomance
Sustainability Report
Corporate Governance
Corporate Governance
Board of Directors
Report of the Directors
Statement of Directors' responsibilities
Financial Statements 30 September 2020
Independent auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated statement of financial position
Company statement of financial position
Consolidated statement of cash flows
Company statement of cash flows
Notes to the financial statements
Notice of AGM
Proxy form
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7
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11
13
15
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28
34
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48
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57
134
135
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Zambeef Products PLC Annual Report 2020 Zambeef at a Glance
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 Securities Exchange and the AIM market
of the London Stock Exchange.
It is involved in the primary production, processing,
distribution and retailing of beef, chicken, pork,
eggs, dairy, fish, flour, stockfeed and day-old chicks
throughout Zambia and the surrounding region. It
has further retail operations in Nigeria and Ghana.
Zambeef also has one of the largest row cropping
operations in Zambia, growing maize, soybeans
and wheat. Zambeef plants nearly 23,000 hectares
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 our extensive retail and distribution network 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.
4
Zambeef Products PLC Annual Report 2020 OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Zambeef at a Glance (continued)
DIVISIONS
Retail and Distribution
Zambeef’s products are retailed through 236 outlets
(2019: 226) directly to end-consumers, in a value-
added form, either through the Zambeef concession
agreement to operate Shoprite’s in-store butcheries (71
in 2020; 69 in 2019) or through Zambeef’s own retail and
wholesale distribution network in Zambia (165 in 2020;
157 in 2019).
§ 65 Zambeef retail outlets (2019: 65)
§ 39 Zambeef Macros (2019: 35)
§ 29 Novatek retail outlets (2019: 28)
§ 31 Zamshu outlets (2019: 28)
§
§ 39 Shoprite butcheries in Zambia (2019: 38)
§ 32 Shoprite butcheries in West Africa: 25 in Nigeria
1 Bakery (2019: 1)
and 7 in Ghana (2019: 31)
Zambeef also operates one of the largest transport and
trucking fleets in Zambia (244 trucks), giving Zambeef
control over its logistics and distribution.
Cold Chain Food Production
§
The largest processor of beef in Zambia.
§
Five beef abattoirs (capacity to slaughter 230,000
head p.a.) and three feedlots located across
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 3,077 cows and a
dairy parlour milking capacity of 2,000 cows per
day.
Dairy processing plant (capacity 120,000 litres/
day) to process milk, lacto and a wide range of
value-added products including yoghurt, drinking
yoghurt, cheese, butter and milk-based juices.
5
Zambeef Products PLC Annual Report 2020 Zambeef at a Glance (continued)
§
§
§
§
§
§
§
§
§
§
§
leading stockfeed producer
The
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 48% of the feed produced
to Zambeef livestock farming operations, and
supplies 141 branded shops owned by external
agents in addition to Zambeef retail outlets (2019:
132).
One of the largest row cropping operations in
Zambia.
7,787 ha of irrigated and 8,694 ha of rainfed,
arable land.
Double cropping of irrigated land means Zambeef
plants 22,737 ha p.a.
Crop production focuses on soybeans and maize
during summer and wheat during winter.
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 200,000 pairs p.a.
One bakery with the capacity to bake 1.2 million
loaves of bread p.a.
Stock feed
Cropping
Others
6
Zambeef Products PLC Annual Report 2020 OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
History & Key Milestones
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
rof ytiuqe feebmaZ %83
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
2015
2017
2020
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
Listed on the London Stock
exchange (AIM). Acquired
Mpongwe Farms
Disposal of Zamanita
Ltd to Cargill for
US$26million
Commissioning of
US$30million hatchery
and stockfeed mill at
Mpongwe Farm
Disposal of
Sinazongwe
Farm for
US$10million
4
Zambeef Products PLC Annual Report 2019
7
Zambeef Products PLC Annual Report 2020 Overview
Strategic
report
Corporate
governance
Financial
statements
Feeding a growing region
2020
2019
2018
Zambia
Zambeef Outlets
Zambeef Macros
Novatek
Bakery
Zamshu Outlets
Total Zambeef Outlets
Shoprites
Total Zambia
65
39
29
1
31
165
39
204
65
35
28
1
28
157
38
195
67
29
24
1
19
140
34
174
Nigeria
Shoprites
Master Meats
Outlets
Total Nigeria
Ghana
Shoprites
Total Ghana
2020
2019
2018
25
0
25
7
7
25
0
25
6
6
25
1
26
6
6
8
Total
Zambeef
Total
Shoprites
Total Retail
Network
2020
165
71
236
2019
157
69
226
2018
141
65
206
Zambeef Products PLC Annual Report 2019
5
Zambeef Products PLC Annual Report 2020 Overview
Strategic
report
Corporate
governance
Financial
statements
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Feeding a growing region
Chairman's Review
million (USD1.4 million) compared
with a profit before tax of ZMW38.7
million (USD3.1 million) achieved
in the prior financial year. The loss
position is mainly attributed to a
deferred
impairment,
higher financing and exchange
losses following the depreciation of
the local currency.
tax asset
The Board believes the key to
sustainable growth, while mitigating
the effects of adverse economic
cycles, lies in remaining committed
to achieving its strategic priorities.
As such, the key focus remains on
the core divisions that generate
sustainable and strong cash flows,
while reducing debt to release cash
for reinvestment in higher returning
projects.
The Economic Environment
The global economy experienced a
deep recession in 2020 as a result
of the unprecedented reduction in
production output and consumer
demand following the slowdown
in the first half of the calendar year.
This COVID-19 related slowdown
took a
the Zambian
economy, which in turn impacted
our customer base.
toll on
The COVID-19 pandemic, although
a health crisis, had far-reaching
trade and
effects on global
interaction.
social
transformed
In the Zambian context, despite
timely monetary
proactive and
and fiscal policy
interventions
by the government to support
the economy, GDP is projected
to contract by 4.2% in 2020 and
rebound to growth of 1.8% in 2021.
The Zambian economy, which was
already battling the effects of a
high debt burden, cash illiquidity
investor
and waning
global
confidence, was left vulnerable when
global commodity prices dropped
amidst the reduction in global trade
following the onset of the pandemic.
The sharp depreciation of the local
currency that came about as a result
of reduced foreign currency inflows
had a detrimental effect on the
economy. Consumer price inflation
closed at 15.7%, 730 basis points
above the rate recorded the prior
year.
sustainability
As part of our
programme,
support
to
and
Government efforts to contain the
spread of COVID-19, Zambeef, in
collaboration with partners, donated
food and non-food
items worth
ZMW1.2 million. As a Group, we
are always proud to be part of the
solution to the challenges facing the
communities in which we operate.
continues
Zambeef Debt Position
to de-risk
Zambeef
the business by focussing on the
reduction of debt to mitigate the
impact of foreign currency volatility
on future earnings. The net debt for
the Group declined by 41% in Dollar
terms and 10% in Kwacha terms
during the 2020 financial year. Term
debt repayments during the 2020
financial year amounted to USD8.9
million, reducing the total term debt
to USD18.2 million from USD27.2
million in the previous financial year.
With no new undertakings of debt,
this puts the business in a less
leveraged position and
improves
our debt service coverage ratio.
However, our exposure to currency
risk with our US Dollar denominated
debt caused an increase in our term
debt balance in Kwacha terms, due
to the depreciation of the currency.
9
It is my pleasure to present
to you my inaugural report
as Chairman of Zambeef
PLC with respect to the
financial year ended 30
September 2020.
year was
On the back of a challenging 2019
financial year, 2020 followed suit and
proved to be an even tougher year
for the Zambeef Group. The 2020
characterised
financial
by difficult economic and market
conditions that were exacerbated by
the Coronavirus (COVID-19) pandemic.
Despite significant growth
the
first half of the financial year, macro-
economic headwinds,
in particular
those associated with the Kwacha
depreciation, accumulated
the
second half and negatively impacted on
profitability.
in
in
The Group generated operating profit
of ZMW210.5million (USD13.0 million)
compared with ZMW161.2 million
(USD13.1 million) in the prior financial
year. Loss before tax was ZMW22.7
2020
2019
2018
Zambia
Zambeef Outlets
Zambeef Macros
Novatek
Bakery
Zamshu Outlets
Total Zambeef Outlets
Shoprites
Total Zambia
65
39
29
1
31
165
39
204
Nigeria
Shoprites
Master Meats
Outlets
Total Nigeria
Ghana
Shoprites
Total Ghana
25
0
25
7
7
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
2020
2019
2018
Total
Zambeef
Total
Shoprites
Total Retail
Network
2020
165
71
236
2019
157
69
226
2018
141
65
206
Zambeef Products PLC Annual Report 2019
5
Zambeef Products PLC Annual Report 2020 existing retail store performance. For
the year ended September 30, 2020,
we rolled out four new macro outlets
in strategic locations, compared to
seven in 2019. We also leveraged
Shoprite’s growth, opening three
new in-store butcheries.
Cropping
revenue grew
Cropping division
the previous year,
37%
from
despite a reduction
in volumes,
due to a good summer crop price
and translational currency effects.
However, the division experienced
a sharp escalation in costs resulting
from the increase in electricity tariffs
and US Dollar denominated costs.
Load shedding caused electricity
shortages that affected the winter
wheat yield as optimal
irrigation
programmes could not be followed.
Despite the challenges, the division
contributed positively
to Group
operating profit.
Disposal of Non-Core Assets
The Group entered into a binding
sale and purchase agreement
with Chenguang Biotech (Zambia)
Agri-Dev Limited for the sale of
Sinazongwe Farm. The disposal was
executed in March 2020 for a cash
consideration of USD10 million. Our
Chiawa farm remains listed for sale.
Dividend
As a Group, we are steadfast in our
dedication to enhancing shareholder
in view of the
value. However,
financial performance and debt
levels, the Directors have elected not
to pay a dividend for this financial
year.
Outlook
We expect
the macro-economic
climate to remain challenging in the
2021 financial year, characterised by
an increase in volatility. The country’s
national debt level remains a threat
to macro-economic stability in the
short to medium term.
anticipate
We
the COVID-19
pandemic will have minimal impact
on our operations in 2021 as Zambia
will adjust to living with the virus and
resume life under the ‘new normal’.
The Group is committed to continued
strengthening of its earnings potential
and unlocking value through reducing
debt levels in the medium term. This
will mitigate foreign exchange and,
interest rate risk exposures and free
up cash for reinvestment in higher
returning projects.
Acknowledgement
I express my sincere gratitude 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, for producing
solid performance, and for exhibiting
resilience in challenging and unusual
circumstances. The leadership our
staff has demonstrated in adhering
to safety protocols during this period
of the COVID-19 pandemic is highly
commendable.
As a Board we would like to express
our deepest gratitude to the Chair of
the Audit Committee, Dr. Lawrence
Sikutwa, who will be retiring effective
31st December 2020. His leadership,
strong commercial acumen and
professionalism will be greatly
missed. He has played a significant
role in the Group and we all wish him
the very best.
Divisional Performance review
Stockfeed
Stockfeed operations performed
well during the year against the
backdrop of the 2018/2019 drought
and operational headwinds. This
division was the largest contributor
to operating profit for the Group
due to a combination of increased
sales volumes, and robust cost
management on
the back of
improved operational efficiencies.
The division sold 242,700 tonnes of
feed in 2020, compared with 218,769
tonnes in 2019.
Retail and Cold Chain Food
Products
The combined Retail and Cold
Chain Food Products division
posted a marginal 1.8% growth in
operating profit in Kwacha terms
on the back of an 18% growth in
revenue. This was despite depressed
consumer spending that negatively
impacted sales volumes
in our
retail outlets. Cost pressures due
to the depreciation of the Kwacha,
and
continued
increased electricity tariffs further
eroded margins.
shedding
load
Zambeef’s chain of 236 retail outlets -
both own-brand and within Shoprite
supermarkets - remain at the heart
of the business, with demand from
our customers driving supply. The
Group’s
the 2020
financial year was to optimise our
focus during
10
Zambeef Products PLC Annual Report 2020
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Chief Executive Officer’s Review
the electricity tariff at the beginning
of the calendar year, significantly
increased operational costs and
eroded margins.
Despite the challenges noted above,
Zambeef achieved an operating
profit of ZMW210 million (USD13.02
million), equating to 30.6% growth in
Kwacha terms and a 0.5% reduction
in US Dollar terms, compared with
ZMW161.2 million (USD13.09 million)
in 2019.
Our revenue was ZMW3.9 billion
(USD239.6 million) and we achieved
a gross profit of ZMW1.22 billion
(USD75.2 million),
respectively
23.6% and 12.4% above the prior
year in Kwacha terms, but both down
by 5.8% and 14.4% in US Dollar
terms, respectively.
to
efficiencies
The Group’s strong underlying
performance was driven by growth
in the stockfeed, dairy and beef
divisions. Management continued
driving
enable
sustained
top-line growth while
looking for opportunities to optimise
costs. Tight management of overhead
costs resulted in strong Earnings
Before Interest, Taxes, Depreciation
and Amortisation
(EBITDA), and
improved operational leverage.
An increase in foreign exchange
losses, particularly in the second half,
resulted in an erosion of bottom-line
performance. The depreciation of the
Kwacha led to increased financing
costs and exchange losses on our
dollar denominated debt. Further,
the impairment charge on a deferred
tax asset of ZMW47 million resulted
in the Group posting a loss after tax
of ZMW135.6 million (USD8.4 million)
compared with a profit of ZMW38.7
million (USD2.9 million) in the prior
financial year, a 478% and 388%
reduction in Kwacha and Dollar terms
respectively.
The Group delivered strong growth
in operating profit during the first half
of the year, supported by a stable
macro-economic environment. The
second half of the year saw the
Group deliver encouraging results
despite the challenging operating and
economic environment, which was
worsened by COVID-19 lockdowns.
resilient
The
performance
demonstrates our strengths as a
diversified and vertically integrated
business with competitive brands,
strong customer relationships, and
an experienced management team.
continued
driving
Management
efficiencies
to enable sustained
revenue growth while continuing to
optimise costs. Our over-arching
focus remains on achieving our long-
term strategic objectives as they are
the core principles that allowed us to
achieve relative success during the
financial year under review.
Strategic focus
Our strategic focus is to optimise
our asset use and maximise
returns. Proceeds
from the sale
of the Sinazongwe Farm and the
prospective disposal of the Chiawa
farm will enable us to pay down
our debt further as we continue de-
leveraging. We remain focused on
our core businesses, in which we
strive to be the best in class.
11
Overview
The financial year ended 30th
September 2020 was characterised
by a difficult operating environment
because of adverse macro-economic
fundamentals, worsened by
the
coronavirus (COVID-19) pandemic.
impacted
COVID-19
negatively
increased
economic activity and
directly
which
unemployment,
affected the number of customers
visiting our retail outlets.
The Zambian Kwacha weakened
54% against the US Dollar during
the financial year, resulting in high
inflation and
reduced customer
spending.
supply
The Group
experienced
also
challenges stemming from reduced
electricity
of
continued load shedding, resulting in
high diesel generator fuel expenditure
and repairs and maintenance costs.
This, coupled with a 49% increase in
because
Zambeef Products PLC Annual Report 2020 delivered
Stockfeed (Novatek)
strong
division
The
operating profit growth of 72.9%
in Kwacha terms and 31.7% in
US Dollar terms, and maintained
to volume growth,
margins due
pricing and cost optimisation. Maize
prices remained high, especially in
the first half following the drought
experienced in Southern Africa in
the 2018/2019 farming season. This,
coupled with a weak currency directly
impacting input costs, necessitated
upward pricing of Novatek products.
The poultry sector continues to be
an important source of business
for Novatek, accounting for 74%
of revenue during the year. Export
sales volumes continued to grow and
were a major contributor to revenue
growth, notwithstanding that for a
large part of the year only fish feeds
could be exported due to a continuing
feed export ban.
Cropping
In the cropping division, operating
profit grew by a marginal 4.7% in
Kwacha terms and declined 20% in
US Dollar terms due to escalating
input costs and insufficient electricity
supply. Zambia experienced a good
rainfall season and the pricing of
summer commodities was favourable.
The year saw
total production
decrease by 7% to 133,547 tonnes,
mainly because of a reduction in
wheat yields and the impact of the
Sinazongwe farm sale.
Management continued to manage
the risk of disease, with the potential
for an outbreak of Bacterial Leaf
Streak (BLS) well contained during
the winter.
Outlook
Zambeef management
remains
committed to achieving bottom line
growth in line with our strategic
objective of de-risking the business.
However, we expect the volatility in
the economy to continue impacting
the
spending power of our
customers.
any
in Zambia and
escalations
The COVID-19 pandemic has
impacted the way we do business.
Although it appears to have been
the
contained
region,
could
cause enforced lockdowns, which
could negatively impact business.
The Group remains committed to
implementing and enforcing safety
protocols in our outlets and places
of work.
its
increase
depressed
uncertainty
and
Retail and Cold Chain Food
Products (CCFP)
surrounding
The
associated
COVID-19
in our
protocols affected footfall
in
stores. Despite an
customer
revenue,
spending was evident
through
volume reductions across most of
our product lines. The increase in
revenue was mainly driven by price
increases and greater sales volume
of traded goods. Shoprite in-store
butcheries were a source of revenue
growth as Shoprite expanded its
footprint with three new outlets.
High feed prices in the poultry and
pork divisions negatively impacted
input costs and resulted in margin
erosion in some of our product lines.
Despite this, the Group continued to
grow revenues in the Retail and Cold
Chain Food Products (CCFP) division
from the prior full-year period. The
beef and dairy divisions performed
well, aside from some challenges in
the supply of product.
However, retail and CCFP operating
profits
increased only marginally,
having recorded volume declines in
some product lines and cost pressures
arising from the depreciation of the
Kwacha and increased energy costs.
12
Zambeef Products PLC Annual Report 2020
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Key Market Indicators
Reporting Period Monthly Averaged Comparatives
2020
2019
Change
Economy
ROE ZMW/USD
TBS 364day
Annual Inflation rate
Copper
Commodities
Maize
Soya Beans
SE Cake
Wheat
Input Prices
Maize Bran
Broiler Grower
Pig Grower
Layer feed
Day-old chick
Selling Prices
Beef Mixed cut
Chicken Frozen
Chicken Live Market
Egg Tray
ZMW
%
%
16.2
24.5
15.7
12.3
24.7
8.4
$/Ton
6,610
6,102
252
382
403
415
207
400
442
447
32%
-1%
87%
8%
22%
-5%
-9%
-7%
$/ton
$/ton
$/ton
$/Ton
K/Ton
K/50kg
K/50Kg
K/50kg
K/DOC
K/Kg
K/Kg
K/Chicken
K/tray of 30
Eggs
1,190
1,434
-17%
310
251
231
6.8
37.7
28.2
52.0
35.6
242
200
175
5.9
36.1
28.9
38.2
28.0
28%
26%
32%
15%
4%
-2%
36%
27%
13
Zambeef Products PLC Annual Report 2020
14
Zambeef Products PLC Annual Report 2020 OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Divisional Performance
Table 1 (ZMW) and Table 2 (USD) below provide a summary of the consolidated performance of the key business
divisions to EBIT level.
Table 1: Divisional financial summary in ZMW’000
DIVISION
REVENUE
GROSS PROFIT
OVERHEADS
EBIT
2020
2019
2020
2019
2020
2019
2020
2019
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000 ZMW’000 ZMW’000
Retailing
2,396,313
2,038,675
243,377
213,502
CCFP
1,516,371
1,388,492
401,276
367,657
Less InterCo.
(1,399,926)
(1,303,519)
Combined
Retail & CCFP
2,512,758
2,123,648
644,653
581,159
(535,095)
(473,415)
109,558
107,744
Stock Feed
1,331,965
986,075
255,888
191,011
(129,539)
(103,751)
126,349
73,092
Cropping
651,560
474,202
266,405
270,116
(160,618)
(126,413)
105,787
101,082
Others
Total
Less: Intra/Inter
Group Sales
Central Over-
head
203,609
210,348
48,676
39,261
(25,226)
(21,930)
25,226
15,361
4,699,892
3,794,273
1,215,622
1,081,547
(850,478)
(725,509)
366,920
297,279
(824,788)
(659,306)
(156,389)
(136,070)
(156,389)
(136,070)
Group Total
3,875,104
3,134,967 1,215,622
1,081,547
(1,005,091)
(861,579)
210,531
161,209
15
Zambeef Products PLC Annual Report 2020 Divisional Perfomance (continued)
Table 2: Divisional financial summary in USD’000
DIVISION
REVENUE
GROSS PROFIT
OVERHEADS
EBIT
2020
2019
2020
2019
2020
2019
2020
2019
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
Retailing
148,194
165,477
15,051
17,330
CCFP
93,777
112,703
24,817
29,843
Less InterCo.
(86,576)
(105,806)
-
Combined
Retail & CCFP
155,395
172,374
39,868
47,173
(33,092)
(38,427)
6,775
8,745
Stock Feed
82,373
80,039
15,824
15,503
(8,011)
(9,571)
7,814
5,933
Cropping
40,294
38,490
16,476
21,925
(9,933)
(13,720)
6,542
8,205
Others
Total
Less: Intra/
Inter Group
Sales
Central
Overhead
12,592
17,074
3,010
3,187
(1,450)
(1,940)
1,561
1,247
290,654
307,977
75,178
87,788
(52,486)
(63,658)
22,692
24,130
(51,006)
(53,515)
-
-
-
(9,672)
(11,045)
(9,672)
(11,045)
Group Total
239,648
254,462
75,178
87,788
(62,158)
(74,703)
13,020
13,085
16
Zambeef Products PLC Annual Report 2020
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Divisional Perfomance (continued)
Taking each of our key business areas performance in turn:
Retail and Cold Chain Food Products
Table 3 (ZMW) and Table 4 (USD) below provide 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
REVENUE
GROSS PROFIT
OVERHEADS
EBIT
2020
2019
2020
2019
2020
2019
2020
2019
ZMW’000
ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000
Retailing Zambia
2,177,555
1,853,721
Retailing West Africa
218,758
184,954
Total Retailing
2,396,313
2,038,675
CCFP
1,516,371
1,388,492
Less Interco
(1,399,926)
(1,303,519)
Combined Retail &
CCFP
2,512,758
2,123,648
644,653
581,159
(535,095)
(473,415)
109,558
107,744
Table 4: Retail and Cold Chain Food Products USD’000
REVENUE
GROSS PROFIT
OVERHEADS
EBIT
DIVISION
2020
2019
2020
2019
2020
2019
2020
2019
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Retailing Zambia
134,666
150,464
Retailing West Africa
13,528
15,013
Total Retailing
148,194
165,477
CCFP
93,777
112,703
Less InterCo.
(86,576)
(105,806)
Combined Retail &
CCFP
155,395
172,374
39,868
47,172
(33,092)
(38,427)
6,776
8,746
17
Zambeef Products PLC Annual Report 2020 efficiencies
In line with our strategic focus to fully
optimise our existing infrastructure
and drive
through
our retail network, we rolled out
two new retail outlets in strategic
locations across Zambia during the
year, compared with seven in 2019.
Shoprite, in which we operate instore
butcheries, expanded by another
three retail outlets in Zambia.
Net sales in the combined Retail
and Cold Chain Food Products
(CCFP) divisions
increased by
18% to ZMW2,513 million (2019:
ZMW2,124 million) in Kwacha terms
and decreased by 10% to USD155
million (2019: USD172 million) in US
dollar terms. The gross profit margin
decreased marginally for a second
year in a row, to 25.7% (2019: 27.4%)
despite an 11% growth in gross
profit in absolute Kwacha terms, due
to escalating costs of inputs amid
high inflation and the depreciation of
the Kwacha. Overheads increased
by 14% to ZMW535 million (2019:
ZMW473 million) in Kwacha terms,
but fell by 14% in US dollar terms to
USD33 million (2019: USD38 million).
The combined Retail and CCFP
divisions generated an EBIT margin
of 4.4% (2019: 5.1%). The adverse
macro-economic conditions and
increased generator fuel costs led to
the increase in input costs. Operating
profit increased by 1.7% to ZMW110
million (2019: ZMW108 million) in
Kwacha terms and decreased by
22.5% to USD6.8 million
(2019:
USD8.7 million) in US dollar terms.
revenue
Zambia Retail
Zambia
increased
retail
17.5% to ZMW2,178 million (2019:
ZMW1,854 million) while gross profit
increased by 9.7%. However, due
to the depreciation in the Kwacha
relative to the US dollar, revenue
decreased by 10.5% to USD135
million (2019: USD150 million) in US
dollar terms.
Strong revenue growth was driven by
stockfeed, chicken, cooking oil and
other traded goods. Difficult trading
conditions and disruptions in supply
channels resulted in volume declines
across most product lines. However,
18
pricing adjustments helped the Retail
division offset that volume related
revenue decline.
which positively contributed to sales
volumes for Zamhatch and Novatek
stockfeeds.
West Africa Retail
Optimising operations was the main
focus in our West Africa business this
past year. Revenue increased 18.3%
in Kwacha terms and declined 10%
in Dollar terms from ZMW185 million
(USD15.0 million) in 2019 to ZMW219
million (USD13.5 million) in 2020.
During the period, the overhead costs
in Kwacha rose by 23%. West African
retail contributes 9% to Group retail
revenue, and remains profitable. The
driver of profitability was mutton and
pork sales, which increased, while
chicken and beef sales decreased
due to supply constraints.
is
the
Beef
largest contributor
Beef
to revenue in the CCFP division.
Beef sales volumes decreased by
1.8% compared with the previous
the reduced
financial year, with
number of cattle slaughtered owing
to supply constraints following a
drought in the previous year that also
impacted average slaughter weights.
Notwithstanding, the division posted
10% growth in revenue and 28%
growth in gross profit due to a
favourable sales mix and pricing.
Poultry (Zamchick, Zamhatch and
ZamEgg)
Combined revenue from the three
poultry divisions increased by 17%
in 2020. Despite revenue growth,
gross profit declined by 27% from
ZMW126 million in 2019 to ZMW92
million in 2020, mainly due to higher
feed prices. The divisions recorded
a combined operating profit of
ZMW2.6 million for 2020, a 95%
(ZMW49
decline
million) and the sharpest decline in
operating performance amongst our
divisions during the financial year.
last year
from
The informal and small-scale chicken
farming sector
increased supply
where the formal sector could not
supply effectively due to operational
headwinds.
Increased costs and
electricity supply challenges had a
lower impact on the informal sector,
4%
and
revenue
Zamchick volumes and
21%
increased by
respectively compared with the prior
year. High stockfeed price negatively
impacted margins, resulting in a
26% reduction in gross profit for the
division. Operational challenges were
experienced during the 2019/2020
summer rain season as the industry
faced widespread dysbacteriosis,
which negatively impacted broiler
growth performance.
egg
division, which
The
is
characterised by price elasticity,
experienced a 12% reduction in
volumes sold following average price
increases of 22%. Despite a 6.6%
increase in revenue, gross profit fell
by 100% when compared to prior
year.
in
Pork (Masterpork)
Supply chain disruptions
the
Masterpork division stemming from
high pig rearing costs led to a 12%
in volumes sold. The
reduction
division performed better than the
prior year, with revenue and gross
profit growing by 13% and 38%
respectively, mainly due to pricing
adjustments. Management focussed
on optimising the carcass quality of
pigs slaughtered through advances
in the grading and pricing system.
Milk (ZamMilk)
Milk revenue
increased by 6%,
and gross profit increased by 36%
to ZMW92 million (2019: ZMW67
million). Sales volumes fell by 7%
due to a COVID-19-related reduction
in demand.
Milk production at Kalundu Dairy
increased by 11% from an average
of 26.6 litres/cow in 2019 to 29.6
litres/cow in 2020, with a total of
1,379 cows being milked daily at the
year end. The feed cost of the milking
herd increased by 10% due to the
price of maize ingredients (maize
meal and maize silage) included in
dairy feeds.
Zambeef Products PLC Annual Report 2020
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Stockfeed (Novatek)
REVENUE
GROSS PROFIT
OVERHEADS
EBIT
2020
2019
2020
2019
2020
2019
2020
2019
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
1,331,965
986,075
255,888
191,011
(129,539)
(117,919)
126,349
73,092
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
82,373
80,039
15,824
15,503
(8,011)
(9,571)
7,814
5,933
Stockfeed performance was strong. Revenue in Kwacha terms grew by 35% (3% in US dollar terms), which translated into
a growth of 73% in operating profit. The gross profit margin was maintained at 19% from the previous reporting period,
as cost of sales grew at the same pace as revenue. Increased production costs due to running backup diesel generators
for prolonged periods, and the increase in transport demands from the logistics fleet, led to a 10% increase in overheads.
The large and growing poultry sector in Zambia consumes 74% of the feed sales generated by Zambeef. The division also
recorded an impressive 45% increase in export sales despite export restrictions. The division exported to 11 other African
countries, generating much-needed foreign currency revenue.
19
Zambeef Products PLC Annual Report 2020 Cropping
REVENUE
GROSS PROFIT
OVERHEADS
EBIT
2020
2019
2020
2019
2020
2019
2020
2019
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
651,560
474,202
266,405
270,116
(160,618)
(169,034)
105,787
101,082
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
40,294
38,490
16,476
21,925
(9,933)
(13,720)
6,542
8,205
The cropping division is the foundation of Zambeef’s vertically integrated business model, providing raw material inputs
for value-added processing within the Group and serving as a hedge against the depreciation of the Kwacha, due to its
ability to generate US Dollar cash flow.
Revenue for the year was up 37% to ZMW652 million (2019: ZMW474 million) while overheads decreased by 5% to
ZMW161 million (2019: ZMW169 million). An increase in cost of sales of 89% resulted in gross profit margin erosion from
57% in 2019 to 41% in 2020. Consequently, and despite a reduction in overheads by 28% in US Dollar terms, operating
profit fell by 20% in US Dollar terms.
The summer harvest for soya beans totalled 37,616 tonnes versus 44,982 tonnes in 2019. Improved yields, pushed
maize production to 24,065 tonnes, from 19,233 tonnes. The sale of Sinazongwe farm resulted in a reduction in the area
of winter wheat planted from 7,047 hectares in 2019 to 5,485 hectares in 2020, with the harvest dropping by 22.4% to
39,077 tonnes (2019: 50,398 tonnes). The slight reduction in wheat yields by 0.4% followed erratic electricity supply.
20
Zambeef Products PLC Annual Report 2020 OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Other Businesses
REVENUE
GROSS PROFIT
OVERHEADS
EBIT
2020
2019
2020
2019
2020
2019
2020
2019
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
ZMW’000
203,609
210,348
48,676
39,261
(23,450)
(23,900)
25,226
15,361
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
12,592
17,074
3,010
3,187
(1,450)
(1,940)
1,561
1,247
Total revenue from the Group’s other business units decreased by 3% from ZMW210 million in 2019, to ZMW203 million
this financial year. Despite the revenue reduction, gross profit increased by 24% and EBIT increased by 64% in Kwacha
terms.
Flour Milling
Flour sales volumes for the year declined 25% due to reduced demand following price increments. The drastic drop in
maize price at half-year meant that consumers had the option to buy cheaper maize products as a substitute. Despite
a 5% drop in revenue, the milling division achieved a 16% growth in operating profit partly due to overhead reductions.
Zamleather
Zamshu shoe sales grew by 7% compared with the previous year. Revenues were up 12% on prior year due to pricing and
increased wet-blue leather exports, despite a slowdown of export channels due to the onset of the COVID-19 pandemic.
The pandemic also impacted local shoe sales following the suspension of school activities across the country. Zamleather
margins increased by 160 basis points as the division sold more higher-grade leather and value-added shoes.
21
Zambeef Products PLC Annual Report 2020 Sustainability Report
is
to
to
its operations
committed
‘triple bottom
a
Zambeef
line’
sustainable
approach
in
order to help deliver a positive
economic, social, and environmental
impact. We believe that economic
sustainability is not our traditional
corporate capital, but is measured
in how our business impacts its
economic environment. We believe
that when our business strengthens
the local economy, it will continue
to succeed, since it contributes to
the overall economic health of its
support networks and community.
The societal and environmental
consequences of our actions play a
significant role in how our business
is managed.
delivering
We believe that we can economically
a
succeed whilst
sound social and environmental
performance. Zambeef is committed
to provide a healthy and safe
employees
for
workplace
and contractors, protecting
the
environment and being a responsible
corporate citizen in the communities
its
22
where we have a presence. This
commitment is enshrined in both our
Environmental & Social Policy and
Health, Safety & Welfare Policy.
has
committed
to
Zambeef
uphold the principles set out in the
International Finance Corporation
(IFC)
Standards
(PS) on environmental and social
sustainability.
Performance
The Board of Directors provides
oversight through its Environmental
and Social Committee. Through
this Committee, the Board provides
strategic advice and guidance
regarding systemic and strategic
issues.
environmental and social
The Committee ensures that the
Company
and
robust systems in place for the
management and monitoring of the
environmental, health, safety and
social performance, under applicable
legislation and Good International
Industry Practice. Zambeef has an
environmental and social action
plan (ESAP) that has been agreed
on with its development finance
adequate
has
partners to help ensure continuous
improvement at an operational level.
The Committee also monitors the
adequacy of the resources allocated
to implementing the ESAP.
a
in
has
compliance
Zambeef
dedicated
environmental and social corporate
team comprising ten employees,
and
to
dedicated
the operational
improvements
Divisions. Across
various
business entities, there are twenty-
six additional employees who are
dedicated
to environmental and
social activities at the operational
level.
the
Environmental performance
Zambeef strives toward international
best practice through continuous
improvement in environmental and
social management practices.
company
submitted
the year under
review,
During
the
four
Environmental Project Briefs (EPB)
the Zambia Environmental
to
Management Agency
(ZEMA) as
governed by Statutory Instrument
Zambeef Products PLC Annual Report 2020 No. 28 of 1997
‘Environmental
Impact Assessments Regulations’
the Environmental
together with
Management Act (EMA) No. 12 of
2011. This practice also fulfils the
requirements of IFC Performance
‘Assessment and
Standard 1:
Management of Environmental and
Social Risks and Impacts’.
The projects
approved by the ZEMA Board;
listed below were
1. Replacement of an old wood
fired
incinerator at Mongu
Abattoir with a 200 kg/hour
whose
incinerator,
diesel
emissions comply with EU
standards.
2. Construction of
two
new
agrochemical storage facilities
at Nampamba and Chambatata
Farms in the Mpongwe District
of the Copperbelt Province.
3.
4.
Installation of a 50,000
litre
above ground diesel tank at
the Zamhatch operation
in
Mpongwe.
Installation of three 22,500 litre
above ground diesel tanks at
Huntley Farm in the Chibombo
District of Central Province.
Zambeef carried out several other
upgrades in its operations, aimed
at improving compliance in various
areas.
1. Animal Welfare
i. Construction of group housing
for weaned calves at Kalundu
Dairy Farm
ii. Construction of
for
broiler chickens at Huntley Farm
lairage
iii. Replacement of a significant
portion of the roof at the Huntley
Farm cattle feedlot
2. Occupational Health and Safety
i. Upgrade of the agrochemical
store at Huntley Farm in order
improve ventilation and
to
segregation
3. Employee Welfare
i. New employee housing units at
Kalundu Dairy Farm
4. Resource Efficiency
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
i. Bulk water flow meters were
installed in order to enhance
measurement and monitoring of
trends in both our agricultural and
industrial water consumption
ii. Water
yield
sustainability
studies at Mpongwe, Huntley
and Kalundu Farms were also
commissioned.
Social performance
Zambeef continues to align its social
investments to the United Nations
Sustainable Development Goals (UN
SDGs).
Inclusive business model: Zambeef
believes in inclusivity and continues
to source the bulk of its raw materials
from rural communities in Zambia.
100% of the beef processed by
the business is sourced from local
farmers, 80% of the pork processed
by Masterpork is externally sourced
from
farmers. Out-growers
supply 70% of the broiler chickens
processed by Zamchick and 85%
the maize used at Novatek
of
Animal Feeds is externally sourced
from small and medium scale rural
farmers.
local
This strong linkage to rural based
suppliers helps fight poverty
in
these
‘economically
excluded’ communities, meeting the
aspirations of UN SDG 1, of ‘ending
poverty in all its forms everywhere’.
otherwise
Community engagement: Zambeef
continues engaging with neighbouring
in the areas where
communities
we operate. Consultations are held
regularly and more specifically
when developmental projects are
sites.
undertaken at company
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 (hospices, hospitals,
orphanages, care homes) through
is
donations of
done on a weekly basis for those
institutions
adequate
without
storage facilities. There are currently
institutions hosting vulnerable
21
people that the company supports
through the food supply program.
foodstuffs. This
This gesture by the company aligns
strongly with UN SDG 2, whose main
aspiration is to ‘end hunger, achieve
food security and improved nutrition..’
to
educational
and
Support
healthcare
institutions: Zambeef
continues to fund educational and
healthcare institutions. This includes
institutions like the Mpongwe School
and Mpongwe Medical Clinic,
wholly owned by the company. The
teachers, teaching aids, healthcare
workers, equipment and facilities
are fully funded by the company.
The Mpongwe School and Medical
Clinic
to
US$170,000.00 in the year under
review.
amounted
expenses
also
company
supports
The
community and government schools
and healthcare institutions in the
communities where it operates.
These company activities align with
UN SDG 3 and 4, whose aspirations
are to ‘ensure healthy lives and
promote well-being for all at all ages’
and ‘ensure inclusive and equitable
quality education and promote
lifelong learning opportunities for all’.
Zambeef also supports several
traditional ceremonies and sporting
activities.
Economic performance
Zambeef is a significant contributor
to the country’s economic activities,
with a gross
turnover of 1.9%
(USD 0.38 billion) of the country’s
(GDP)
Gross Domestic Product
which is forecasted at 19.70 billion
by the end of 2020.
Employment
§ Zambeef continues to be one
of the largest employers in the
country, with 7,082 staff, 14 % of
who are females.
§ 99% of employees are Zambian
citizens.
§ 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
are
provide
employment to communities in
rural areas.
located
and
23
Zambeef Products PLC Annual Report 2020 Sustainability Report (continued)
Taxes
Skills development
§ The Group is a significant contributor to government
§ 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, safe handling of
hazardous materials
(asbestos, chemicals) were
offered to employees.
§ The Group’s continual
in human
resources has resulted in many senior positions being
held by Zambians.
reinvestment
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 and a
surplus for export to help feed neighbouring countries.
The company produced over 133,547 metric tonnes of
grains (39,077 MT of wheat, 37,616 MT of Soya beans
and 24,065 MT of maize) in the year under review.
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. 25% of the Group’s total shares
were held by Pension funds at the close of the 2020
FY.
Export earnings
§ The Group is a member of the Zambia Development
Agency’s elite Million Dollar Club of leading exporters.
§ For the FYE 30 September 2020, the Group recorded
foreign exchange export income of over USD2.3
million, while total Group USD-denominated revenues
were USD29.4 million.
24
Zambeef Products PLC Annual Report 2020 SDG 1:
No Poverty
We work closely with small
and medium scale farmers
supplying beef, chicken, pork
and milk to our cold chain food
products businesses.
We also receive soya beans
and maize at our Novatek stock
feed operations.
SDG 2:
Zero Hunger
We render support to
the vulnerable (hospices,
hospitals orphanages and
care homes) through the
donation of foodstuffs
Social
Performance
SDG 4:
Quality Education
SDG 3:
Good Health &
Wellbeing
The company funds and
supports public healthcare
institutions and medical clinics
owned wholly by the company
The company supports community
and government schools located
within the vicinities of the various
farms it owns.
In some cases the company
has constructed class rooms
and rehabilitated public school
infrastructure.
25
Zambeef Products PLC Annual Report 2020 26
Zambeef Products PLC Annual Report 2020 Corporate
Governance
27
Zambeef Products PLC Annual Report 2020 Corporate Governance
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
trust.
framework, and building
The Company will provide annual
updates on its compliance with the
QCA Code in its Annual Report.
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.
Board
comprises
The
11
Directors, of whom nine are Non-
Executive Directors, and two are
Executive Directors. Six Non-
Executive Directors are considered
independent by the Board in terms of
the guidelines prescribed in the QCA
Code. They are Michael Mundashi,
Dr Lawrence Sikutwa, John Rabb,
Margaret Kunda Chalwe Mudenda,
Prof. Enala Lyson Tembo-Mwase
and Jonathan Andrew Kirby.
Details of the current Directors, their
roles and background are available
on the Company’s website at www.
zambeefplc.com.
The Board believes that its overall
composition
is appropriate, with
no individual or group dominating
the decision-making process, and
with a good balance of knowledge,
experience and independence. The
role of the Chairman is separate
from that of the Chief Executive
Officer (CEO) and considered to be
independent.
transparency
Zambeef Products Plc (“Zambeef”
or the “Company”) values excellence
in corporate governance, and the
principles that enhance openness,
integrity,
and
accountability. High ethical standards
in the conduct of business, and a
verifiable framework of corporate
governance policies and procedures,
underpin all of 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.
Corporate Governance Codes
The Board has a Corporate
Governance Code that complies
with the Lusaka Securities Exchange
Corporate Governance
(LuSE)
Code. Further to this, the Company
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
The role of the Chairman is to
28
provide
leadership to the Board
and ensure its effectiveness in all
aspects of its remit, and provide
leadership in corporate governance
implementation and practice.
The role of the CEO is to lead the
strategic development of the Group,
its clear communication
ensure
to the Board and, once approved
by the Board, its implementation.
In addition, the CEO oversees the
management of the Group and its
executive management.
Interaction with stakeholders in
line with QCA Code guidelines
views
institutional
Zambeef has several shareholder
through
meetings,
formally
Annual General Meetings
(AGM),
Extraordinary General Meetings
(EGM), where required, and informally
through
meetings
half-yearly
shareholders.
with
Shareholders’
are
communicated in an open and frank
manner, with senior management
taking due note of their concerns
when expressed. The Board believes
that these engagements have proven
successful, as shareholder views
have fed into the current corporate
strategy. The CEO and Chief
Financial Officer (CFO) meet and
conduct formal results presentations
with shareholders on a half-yearly
basis.
all
shareholder
The Group publishes the outcome
of
resolutions
immediately after each AGM or
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
the
identified and underscores
importance of maintaining strong
working relationships with:
Zambeef Products PLC Annual Report 2020 OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
key small-scale suppliers across
grains and livestock;
from the UK Corporate Governance
Code.
•
•
•
•
•
•
larger commercial raw material/
input suppliers and livestock
suppliers;
its wide customer base across
food
stockfeed, cold chain
products, and other products;
regulators such as the Zambia
Environmental
Management
Agency (ZEMA), Patents and
Companies Registration Agency
(PACRA), Water Resources
Management Agency (WARMA),
Lusaka Securities Exchange
(LuSE), Securities and Exchange
Commission
(SEC), and AIM
Nominated Advisor;
financiers; and
social responsibility partners in
communities.
written
Their feedback is received through
face-to-face meetings, the customer
careline, technical advisor meetings
and
communication.
Product improvement programmes
are adopted based on customer
feedback. Corporate governance
advice is continually received and
implemented from LuSE and AIM.
CORPORATE GOVERNANCE
ACTION
IN
Listing on exchanges in Lusaka and
London requires the Company to
comply with LuSE and UK specific
corporate governance codes. The
UK Corporate Governance Code
to companies
does not apply
floated on the Alternative Investment
Market (AIM) of the London Stock
Exchange, the market on which
Zambeef is listed. For the purposes
of being listed on AIM, the Company
has agreed to maintain standards
of corporate governance. In this
regard, and bearing in mind the
size and scale of the operations of
the Company, the Company has
adopted the QCA Code and the
earlier QCA guidelines as the basis of
its corporate governance standards.
Further and where appropriate, the
Company has introduced features
together
practices
Company’s
corporate
The
are
governance
put
the Corporate
in
Governance Handbook that was
approved by the Board in September
2019. In doing this, the Company
has had regard to the provisions
the Articles of Association
in
and
Investment Agreement. The
Handbook will be updated from
time-to-time as necessary.
The Handbook contains the following
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 of Reference
for the
Remuneration and Succession
Committee
Terms of Reference for the Audit
and Risk Committee
for the
Terms of Reference
AIM and MARS Compliance
Committee
Terms of Reference
and
Environmental
Committee
for the
Social
- Memorandum
on
Inside
Information and;
- Group Code of Ethics
Some of
policies are outlined below:
the above mentioned
Share Dealing Code
The Company has adopted a
share-dealing code
for dealings
in shares by Directors and senior
employees 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 steps to ensure
the Company’s
compliance by
including
employees,
relevant
obtaining the advice and opinion
of its AIM Nominated Advisor. In
compliance with the Market Abuse
Regulation (MAR), the Non-Executive
Director Margaret Mudenda
is
responsible for share dealings by the
Directors, assisted by the Company
Secretary as the Compliance Officer.
Risk Management
regular
An effective Group Risk Assessment/
tool, based
Risk Management
recommended best practice
on
and
from senior
inputs
management, is formally reviewed
quarterly. Formal risk assessments
are carried out at group level, and
are carried out per company and
division, 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 on 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.
Internal Audit
to
The dedicated and
independent
Internal Audit function, operating
Internal Audit Charter,
under an
reports directly
the Audit
Committee of the Board, to maintain
its independence and objectivity. It
independently reviews and monitors
governance processes,
risk
management framework/processes,
and related mitigating action plans
It
implemented by management.
also provides objective assurance of
the operation and validity of internal
control systems through its regular
the
29
Zambeef Products PLC Annual Report 2020 Corporate Governance (continued)
compliance audit programmes, making recommendations
for improvements as 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.
Incident Reporting, AntiBribery and Corruption, and
Whistleblowing policies and procedures
The Company has detailed policies and procedures
covering Incident Reporting, AntiBribery and Corruption
(ABC), and Whistleblowing.
The Group’s ABC programme has been formulated in
conjunction with CDC Group PLC (CDC), following best
international practice. It is well structured, documented
and rigorously monitored.
There is a dedicated internal Whistleblowing Manager,
managing reports and complaints. These complaints can
BOARD ENGAGEMENT
Attendance by the Directors during the year:
be made in various forms, and anonymously, without fear
of adverse consequences. This policy has active senior
management encouragement and is widely communicated
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.
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 Organisational Integrity.
This Code of Ethics covers the important principles and
more detailed ethical guidelines regarding responsibility,
accountability, transparency, and fairness.
The Board firmly believes that a culture based on ethical
Board
Audit
E&S
Remuneration
B
5
1
5
5
4
4
5
4
4
5
5
5
1
4
A
-
4
-
4
-
4
-
4
4
4
4
B
-
4
-
4
-
4
-
4
3
4
3
A
-
-
4
4
-
-
4
-
-
4
-
4
B
-
-
4
4
-
-
3
-
-
4
-
3
A
-
-
3
-
3
3
-
3
3
3
-
3
B
-
3
-
2
3
-
3
3
3
-
2
NON EXECUTIVE
Michael Mundashi
*Dr. Jacob Mwanza.
Dr. Lawrence Sikutwa
John Rabb
David Osborne
Yollard Kachinda
Margeret Mudenda
Enala Mwase
Frank Braeken
Jonathan Kirby
EXECUTIVE
Walter Roodt
Faith Mukutu
*Francis Grogan
***Danny Museteka
A
5
1
5
5
5
5
5
5
5
5
5
5
1
5
* Director left during the year
** Director joined during the year
*** Company Secretary
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.
30
Zambeef Products PLC Annual Report 2020 OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Corporate Governance (continued)
values and behaviour is integral to achieving Zambeef’s
objectives. Without sound ethical behaviour, it would be
difficult for stakeholders to keep trust in the organisation
to achieve 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 has 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 to the Code is further provided by the internal
audit department’s review work on incident reports 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 is healthy.
Board Evaluation
The Board carries out an annual self assessment of its
performance during the year, based on its Board Charter’s
objectives, with the Company Secretary collating and
reporting on the findings from each Board member.
Areas covered in the self assessment include:
• Management of Board meetings and discussions;
•
•
•
External and Internal Board relationships;
Skills of Board members;
Reaction to events;
• Chairman;
• Chairman and CEO relationships;
•
Attendance and contribution in 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
The Board has three principal standing committees
led by Non-Executive Chairpersons, each with written
terms of reference. The terms of reference are in line with
recommended best practice for AIM listed companies
under the QCA Code, and also per requirements from co-
operating partners.
•
Remuneration and Succession Committee
Chairman – John Rabb
Members - Yollard Kachinda, Jonathan Kirby, Margaret
Mudenda and Frank Braeken
Responsibilities:
•
•
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
and
identifying,
Responsible
nominating, for the approval of the Board, candidates
to fill Board vacancies as and when they arise.
evaluating
• Give full consideration to succession planning for
Directors and other senior executive management,
and in particular, for the key roles of Chairman and
CEO 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.
• Determine and agree with the Board the framework
or broad policy for the remuneration of the CEO, the
Chairman of the Board , the Executive Directors, the
Company Secretary, and such other members of the
executive management of the Group to whom the
Board has extended the remit of the committee.
• Determining the remuneration policy by taking
into account all factors which it deems necessary,
including relevant legal and regulatory requirements,
the provisions and recommendations of the QCA
Code and associated guidance. The objective of such
policy shall be to ensure that members of the Group
executive management 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.
•
The committee ensures reporting of the Remuneration
Committee’s agreed fees and remuneration, for
both the executive directors and non-executive
31
Zambeef Products PLC Annual Report 2020 Corporate Governance (continued)
directors, in the 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 questions/comments put forward
by the shareholders in the AGM regarding directors
fees and remuneration.
•
Perform evaluations of the Board, Board Committees
(and their constituents), and recommend training
where necessary.
•
Audit and Risk Committee
Chairman - Dr Lawrence Sikutwa
Members – Margaret Mudenda, David Osborne and
Jonathan Andrew Kirby
Independent advisor and co-opted 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 and 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 primary role of the Audit Committee is to ensure
the integrity of 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.
To ensure that a sound risk management and internal
control system is maintained and reviewing the
system for monitoring compliance with applicable
laws and regulations.
To give due consideration and review of corporate
governance matters in accordance with relevant
LuSE Corporate
including
frameworks
Governance Code and the QCA Code.
the
• Monitor and review the reports and function of
the internal audit department, in line with its own
charter, which requires systematic evaluation of
the effectiveness of risk management, control,
compliance and governance processes for the Group.
• Monitor and review the reports 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.
shareholders for approval at the Annual General
the appointment and/or
Meeting, as
reappointment of the company’s external auditor.
regards
• Monitor the ethical conduct of the Company, its
executives and senior officials.
•
Environmental and Social Committee
Chairperson - Professor Enala Lyson Tembo- Mwase
Members – John Rabb and David Osborne
Responsibilities:
•
•
Provide strategic advice and guidance to the Board
in relation to systemic and strategic environmental
and social (“E&S”) issues which affect 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,
in accordance with applicable 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 promotion
of equality, prevention of unfair discrimination and
reduction of corruption.
to development of
Ensure contribution
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 if 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 and appropriate management
of any approved transactions.
Related-party transactions
The committee should also consider and make
recommendations to the Board, to be put to
The board gives authorisation for any transactions carried
out by the group with any anyone or business considered
•
•
32
Zambeef Products PLC Annual Report 2020 OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Corporate Governance (continued)
a related party. Such transactions are evaluated as to
whether the parties are treated fairly and in accordance
with market conditions. For recurrent transactions carried
out with clients during the Groups’s ordinary course of
business under normal market conditions that are not
significant, the Board gives prior authorisation for the
general terms of the transaction.
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.
• Promotion of Good Corporate 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 Agency (PACRA).
• Maintenance of statutory registers.
• Key liaison for investors and contact point for
shareholders.
• Updates on relevant statutory amendments and
developments are provided.
Company Secretary
the Company Secretary, and
The Board appoints
all Directors have access to his services. If deemed
necessary, the Board may seek independent professional
advice on some matters.
The Company Secretary ensures:
• Sufficient and timeous information is provided to all the
Directors prior to Board and sub-committee meetings.
In 2019, the Board constituted 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 retired December 31,
2019. Mr Michael Mundashi replaced Dr Mwanza as
the Board Chairman effective January 1, 2020, having
been elected by the Board and confirmed at the AGM
of December 2019.
33
Zambeef Products PLC Annual Report 2020
Board of Directors
Francis Grogan
(age 59)
Retired on
December 31, 2019
Nationality: Irish
Michael Mundashi
(age 62)
Chairman
Nationality:
Zambian
Walter Roodt
(age 44)
CEO Nationality:
Namibian
Faith Mukutu
(age 40)
Chief Financial
Officer Nationality:
Zambian
Qualifications:
BSc Agriculture
(Ireland)
Experience:
Over 23 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)
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 16 years
of experience
in Agriculture in
Southern Africa.
External
appointments:
Director of City
Dental Ltd.
Experience:
Over 16 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.
Qualifications:
Bachelor of Laws
Degree (University
of
Zambia); Post
Graduate
qualification as
an Advocate of
the High Court of
Zambia
Experience:
Over 31 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
Sanlam Insurance;
Director of Nico
General Insurance.
Also, full time
Managing Partner
of the law firm of
Mulenga Mundashi
Legal Practitioners.
Margaret
Chalwe-Mudenda
(age 48)
Non-Executive
Director Nationality:
Zambian
Prof. Enala Tembo-
Mwase (age 61)
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).
Qualifications:
BSc Biological
Sciences
(University of
Zambia)
MSc Medical
Parasitology
(University of
London, UK) PhD in
Zoology
–
Entomology
(University of
London, UK)
Experience:
Over 31 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.
Experience:
Over 11 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
CitiBank Zambia
Limited, Liquid
Telecom, Madison
Financial Services
Plc.
Dr. Jacob Mwanza
(age 84)
Retired on
December 31, 2019
Nationality:
Zambian
Qualifications:
PhD (Cornell
University, (USA)
MA Economics (W.
Germany).
Experience:
Over 31 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.
34
Zambeef Products PLC Annual Report 2020
John Rabb
(age 77)
Non-Executive
Director Nationality:
South African
Yollard Kachinda
(age 57)
Non-Executive
Director Nationality:
Zambian
Dr. Lawrence
Sikutwa (age 66)
Non-Executive
Director Nationality:
Zambian
Jonathan Kirby
(age 58)
Non-Executive
Director Nationality:
South African
David Osborne
52
(age 55)
Non-Executive
Director Nationality:
British
Frank Braeken
(age 60)
Non-Executive
Director Nationality:
Belgian
Qualifications:
BSc (Agriculture)
MBA (RSA).
Experience:
Over 31 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.
Qualifications:
BSc (Ed.)
Mathematics
and Statistics
(University of
Zambia)
MSc Social
Protection
Financing
(Maastricht
University,
Netherlands)
Experience:
Over 26 years’
experience at the
Zambian National
Pension Scheme
Authority (NAPSA).
External
appointments
Director General of
NAPSA. Currently
serving on the
Board of Directors
of ZCCM-IH
Qualifications:
MBA FCII
Post Grad Diploma
in Insurance (UK).
Honorary doctorate
(University of
Lusaka)
Experience:
Over 31 years’
experience
in business
management.
Previously General
Manager of Zambia
State Insurance
Corporation
Limited.
External
appointments
Currently Chairman
of Lawrence
Sikutwa Associates
Ltd Group of
Companies.
Qualifications
Cambridge
University; Trinity
College (Natural
Sciences).
Experience:
Over 31 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
Bachelor of
Accounting
(University of the
Witwatersrand,
RSA) Higher
Diploma in Tax Law
(Rand Afrikaans
University, RSA) CA
(RSA)
Experience:
Over 31 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.
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 31 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 Buhler AG,
Alliance for a Green
Revolution in Africa,
F.M.B BWC-
LLC, Marie Stopes
International and
AECF Limited.
35
Zambeef Products PLC Annual Report 2020
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 2020.
1.
2.
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 7,787 Ha of row crops under irrigation and 8,694 Ha of rain-fed/
dry-land crops available for planting each year. The Group also has operations in West Africa in Nigeria and Ghana.
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
Issued and fully paid
Ordinary shares
30 September 2020
30 September 2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
7,000
938
7,000
938
300,579,630 of ZMW0.01 each
3,006
449
3,006
449
Preference shares – Convertible
Redeemable
100,057,658 of ZMW0.01 each
1,000
100
1,000
100
4.
Results
The Group’s results are as follows:
Group
Revenue
(Loss)/Profit before taxation
Taxation charge
Profit/ (Loss) from discontinued
operation
Notes*
2020
2020
2019
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
3,875,104
239,648
3,134,967
254,462
(22,673)
(112,957)
(1,402)
(6,986)
38,653
(2,780)
3,138
(226)
5
10
33,435
2,068
(17,379)
(1,411)
Group (loss) profit for the year
(102,195)
(6,320)
18,494
1,501
Group (loss)/profit attributable to:
Equity holders of the parent
Non-controlling interest
*See notes to the financial statements
(103,419)
(6,396)
18,100
1,224
76
394
(102,195)
(6,320)
18,494
1,469
32
1,501
36
Zambeef Products PLC Annual Report 2020
REPORT OF THE DIRECTORS (CONTINUED)
5.
6.
Dividends
There has been no dividend proposed for the year ended 30 September 2020 (2019: ZMW nil).
Management
The senior management team comprise the following:
Walter Roodt
Faith Mukutu
Mike Lovett
Danny Museteka
Yusuf Koya
Pravin Abraham
Ebrahim Israel
Murray Moore
Robert Hoskins Davies
Francis Mondomona
Richard Franklin
Mathews Ngosa
Willem Abraham Vorster
Alun Maskell
Christian Engelbrecht
Theo de Lange
Bartholomew Mbao
Lenard Mwanamumbula
Muyunda Milupi
Ivor Chilufya
Mulwanda Sichula
Nathan Chishimba
Phillip Diedericks
Mboo Mumba
Niyaas Dalal
Timothy Kunda
Simon Nkhata
Winston Magutswi
Billy Mudenda
Baron Chisola
Muyoma Hapeza
Shadreck Banda
Chizola Daka
Gbenga Ibitoye
Caroline Mulaga
Anthony Seno
Awaren Mutaka
Mathews Mbasela
Chishala Malekano
Eddie Tembo
Jones Kayawe
Devar Muzhona
Field Musongole
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
Company Secretary
Group Head – Banking & Administration
Chief Internal Auditor
General Manager – International Retailing
General Manager – Beef and Dairy
General Manager – Chiawa Farm
General Manager – Huntley Farm
General Manager – Zamleather 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 Manager
Group Financial Controller
Commercial Manager Retailing
Commercial Manager
Project Manager
Finance Manager – Zambeef Products Plc
Finance Manager – Novatek Animal Feeds
Finance Manager – Zambeef Retailing Limited
Finance Manager – Masterpork Limited
Finance Manager – Zamleather Limited
Finance Manager – Zampalm Limited, Group Inventory
Finance Manager – Zamhatch Limited, Zam Chick Limited
Financial Controller – Group Fixed Assets
Financial Controller – Group Suppliers
Financial Controller – West Africa
Group Head – Debtors and Credit Control
Head of IT
Group Head – Human Resource
Head of Payroll Processing
Marketing Manager
Chief Security Manager
Head of Environment, Health and Safety
Logistics Mananger
Maintenance Manager
37
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
REPORT OF THE DIRECTORS (CONTINUED)
6.
7.
Management (continued)
Ernest Gondwe
Francis Mulenga
Noel Chola
Rodgers Chinkuli
Hillary Anderson
Lufeyo Nkhoma
Clement Mulenga
-
-
-
-
-
-
-
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
-
-
Chairman
Chairman (Retired on 31 December 2019)
Directors and Secretary
The Directors in office during the financial period and at the date of this report were as follows:
Michael Mundashi
Dr. Jacob Mwanza
Dr. Lawrence S. Sikutwa
John Rabb
Yollard Kachinda
Prof. Enala Mwase
David Osborne
Margaret Mudenda
Jonathan Kirby
Frank Braeken
Walter Roodt
Francis Grogan
Faith Mukutu
Danny Museteka
Chief Executive Officer
Chief Executive Officer (Retired on 31 December 2019)
Chief Financial Officer
Company Secretary
-
-
-
-
8.
Directors’ interests
The Directors held the following interests in the Company’s ordinary shares at the reporting date:
Jacob Mwanza (Dr)*
Francis Grogan*
John Rabb
Frank Braeken
* Retired on 31 December 2019.
30 September 2020
30 September 2019
Direct
Indirect
Direct
Indirect
-
-
-
-
-
1,399,629
-
995,000
3,596,631
14,000,000
-
14,000,000
375,000
-
375,000
-
375,000
14,000,000
2,769,629
17,596,631
38
Zambeef Products PLC Annual Report 2020
REPORT OF THE DIRECTORS (CONTINUED)
9.
Directors fees and remuneration
ZMW
Salary
Bonus
Allowance Car Allowance
Housing
Air Fares
Allowance
Medicals
NON-EXECUTIVE
Jacob Mwanza
Michael Mundashi
Yollard Kachinda
Margaret Mudenda
Lawrence Sikutwa
Enala Mwase
Jonathan Kirby
John Rabb
Frank Braeken
EXECUTIVE
Francis Grogan
Walter Roodt
Faith Mukutu
Danny Museteka
236,615
800,000
307,472
368,966
307,472
307,472
368,966
368,966
307,736
1,665,955
3,461,822
3,567,733
2,858,697
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Company Car
Company Car
Company Car
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Yes
Yes
Yes
Yes
In addition to the above, all Executive Directors are entitled to a gratuity of 25 per cent of their gross basic salary
paid over the two-year contract term, less statutory deductions for tax.
Further, the Board co-opted Mr. Hastings Mtine into the Audit Committee as an expert advisor. Mr. Mtine’s
remuneration was ZMW83,013.52 for the year under review.
39
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
REPORT OF THE DIRECTORS (CONTINUED)
10.
Significant Shareholdings
As at 30 September 2020, 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
SBM Securities
Rhodora
Red Fort Partnership
Current Position
% of Shareholding
52,601,435
46,304,408
42,709,562
24,797,818
14,000,000
11,995,062
10,948,691
8,639,374
8,175,000
17.5%
15.4%
14.2%
8.2%
4.7%
4.0%
3.6%
2.9%
2.7%
CDC Group Plc are also the holders of 100,057,658 convertible redeemable preference shares. These shares have
three voting rights for every four preference shares held resulting in CDC having 34.8% of the voting rights.
11.
Employees
The Group employed an average of 7,082 (30 September 2019 – 7,407) employees and total salaries and
wages were ZMW493.5 million (USD30.5 million) for the year ended 30 September 2020 (30 September 2019 –
ZMW453.7million [USD36.8 million]).
The average number of persons employed by the Group in each month of the financial year is as follows:
Headcount
7,123
7,314
7,697
6,953
7,388
7,209
6,946
6,805
6,956
6,830
6,929
6,834
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
40
Zambeef Products PLC Annual Report 2020
REPORT OF THE DIRECTORS (CONTINUED)
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.
13.
14.
15.
16.
17.
18.
19.
20.
The Group provides education and healthcare services to its employees. The Group also supports various community
activities in the areas that it operates from.
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.
Gifts and donations
The Group made donations of ZMW7.9 million (USD 0.5million) (30 September 2019: ZMW2 million [USD0.165
million]) to a number of activities.
Export sales
The Group made exports of ZMW37.5 million (USD2.3 million) during the period (30 September 2019: ZMW46.5
million [USD3.8 million]).
Property, plant and equipment
Assets totalling ZMW92.7 million (USD5.7 million) were purchased by the Group during the period (30 September
2019 – ZMW113.8 million [USD9.2 million]).
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. The outbreak of the COVID-19 pandemic has had a negative effect on the country’s economy.
However, the consumer demand for Zambeef’s products stood up well and the current trading conditions are
expected to continue in the near future. The effect on the business, in terms of sales, from the pandemic has been
minimal.
Events since the year end
There have been no significant events affecting the Group since the year-end.
Annual financial statements
The annual financial statements set out on pages 48 to 132 have been approved by the directors.
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: 1st December 2020
41
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
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)
(b)
(c)
the financial statements give a true and fair view of the financial position of Zambeef Products PLC and its subsidiaries
as at 30 September 2020, and of its financial performance and its cash flows for the year then ended;
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
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 1st December 2020
Mr. Michael Mundashi
Chairman
Walter Roodt
Chief Executive Officer
42
Zambeef Products PLC Annual Report 2020 Zambeef Products PLC and its subsidiaries
Financial Statements
30 September 2020
43
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 Grant Thornton
5th Floor Mukuba
Pension House
Dedan Kimathi Road
P.O. Box 30885
Lusaka, Zambia
T +260 (211) 227722-8
F +260 (211) 223774
E gtlusaka.mailbox@zm.gt.com
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Zambeef Products PLC (the ‘Company’) and its subsidiaries
(the ‘Group’) for the year ended 30 September 2020, which comprise the consolidated statement of comprehensive
income, the consolidated and separate statement of changes in equity, the consolidated and separate statements of
financial position and the consolidated and separate statements of cash flows 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 2020, 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 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.
Partners
Edgar Hamuwele (Managing)
Christopher Mulenga
Wesley Beene
Rodia Musonda
Chilala Banda
Audit l Tax l Advisory
Chartered Accountants
Zambian Member of Grant Thornton International
VAT reg 1001696100. Registered in Lusaka. Company number 8116
Grant Thornton Zambia and other member firms are not a worldwide partnership. GTI and each member firm is separate legal entity.
Services are delivered independently by the member firms. GTI and its member firms are not agents, and do not obligate, one another
and are not liable for one another's acts or omissions.
www.gt.com.zm
44
Zambeef Products PLC Annual Report 2020
Grant Thornton
5th Floor Mukuba
Pension House
Dedan Kimathi Road
P.O. Box 30885
Lusaka, Zambia
T +260 (211) 227722-8
F +260 (211) 223774
E gtlusaka.mailbox@zm.gt.com
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENT
INDEPENDENT AUDITOR’S REPORT (continued)
TO THE SHAREHOLDERS OF ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
Key Audit Matters (continued)
Description of matter
Valuation of biological assets
How the matter was addressed in our audit
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
asset 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
subsequent yields and the quality of the crop.
We also analysed the valuations of biological assets.
Classification, measurement and impairment of
financial assets
The Group applies IFRS 9 ‘Financial Instruments’ in the
preparation of the consolidated financial statements.
We reviewed the classification of the financial assets for
compliance with the reporting standard.
The Directors are required to review the classifications
of assets and ensure these classifications are in
accordance with the requirements of IFRS 9. 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 8.3 million)
was carried in the consolidated statement of financial
position. Under IAS 36, the Company is required to
test the amount of goodwill for impairment at least
annually. 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.
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 assessed and tested the assumptions and
methodologies used by management.
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, report of the Directors, 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.
Audit l Tax l Advisory
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.
45
Partners
Edgar Hamuwele (Managing)
Christopher Mulenga
Wesley Beene
Rodia Musonda
Chilala Banda
Chartered Accountants
Zambian Member of Grant Thornton International
VAT reg 1001696100. Registered in Lusaka. Company number 8116
Grant Thornton Zambia and other member firms are not a worldwide partnership. GTI and each member firm is separate legal entity.
Services are delivered independently by the member firms. GTI and its member firms are not agents, and do not obligate, one another
and are not liable for one another's acts or omissions.
www.gt.com.zm
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 INDEPENDENT AUDITOR’S REPORT (continued)
TO THE SHAREHOLDERS OF ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
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 judgement 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 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.
46
Zambeef Products PLC Annual Report 2020 OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENT
INDEPENDENT AUDITOR’S REPORT (continued)
TO THE SHAREHOLDERS OF ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES
Auditor’s Responsibilities for the Audit of the Financial Statements (continued)
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 2020 have
been properly prepared in accordance with the Zambian Companies Act 2017 and Securities Act of Zambia and the
accounting and other records and registers have been properly kept in accordance with the Act.
Chartered Accountants
Christopher Mulenga (AUD/F000178)
Name of Partner signing on behalf of the firm
Lusaka
Date: 1st December 2020
47
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2020
Group
Revenue
Net (loss)/gain arising from price changes in fair
value of biological assets
Cost of sales
Gross profit
Administrative expenses
Other income
Operating profit
Share of loss from equity accounted investment
Exchange gains on translating foreign currency
transactions and balances
Finance costs
(Loss)/profit before taxation
Taxation charge
Note
2020
2020
2019
2019
ZMW’000s USD’000s ZMW’000s USD’000s
3,875,104
239,648
3,134,967
254,462
(14,381)
(889)
10,284
835
(2,645,101)
(163,581)
(2,063,704)
(167,509)
1,215,622
75,178
1,081,547
87,788
(1,011,968)
(62,583)
(920,771)
(74,738)
6,877
210,531
(3,177)
425
433
13,020
161,209
(197)
(3,036)
35
13,085
(246)
(137,705)
(8,516)
(36,730)
(2,981)
5
16(a)
6
7
9
(92,322)
(22,673)
(82,790)
(6,720)
(5,709)
(1,402)
(6,986)
38,653
(2,780)
10
(112,957)
Group (loss)/income for the year from continuing
operations
Profit/(loss) from discontinued operations
34
Group (loss)/income for the year
Group (loss)/income attributable to:
Equity holders of the parent
Non-controlling interest
Other comprehensive income:
Items that may be reclassified
subsequently to profit or loss
Exchange gains/(losses) on translating presentational
currency
Items that will not be reclassified
subsequently to profit or loss
Remeasurement of net defined benefit liability
Remeasurement of leases
Total other comprehensive income
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
attributable to:
Equity holders of the parent
Non-controlling interest
(135,630)
(8,388)
35,873
33,435
(102,195)
2,068
(6,320)
(17,379)
18,494
(103,419)
(6,396)
1,224
76
(102,195)
(6,320)
18,100
394
18,494
3,138
(226)
2,912
(1,411)
1,501
1,469
32
1,501
625,042
(52,402)
106,391
(10,553)
6,229
315
385
20
631,586
(51,997)
529,391
(58,317)
8,829
-
115,220
133,714
717
-
(9,836)
(8,335)
525,030
(58,661)
129,935
(8,367)
4,361
344
3,779
32
529,391
(58,317)
133,714
(8,335)
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
Ngwee
(45.12)
11.12
(34.00)
(45.12)
11.12
(34.00)
Cents
(2.79)
0.69
(2.10)
(2.79)
0.69
(2.10)
12
12
12
12
12
12
Ngwee
11.80
(5.78)
6.02
8.86
(4.34)
4.52
Cents
0.96
(0.47)
0.49
0.72
(0.35)
0.37
48
Zambeef Products PLC Annual Report 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2020
(i) In Zambian
Kwacha
Issued
share
capital
Share
premium
Preference
share capital
Foreign
exchange
reserve
Revaluation
reserve
Retained
earnings
Total
attributable
to owners
of the
parent
Non-
controlling
interest
Total
equity
At 1 October 2018
3,006
1,125,012
1,000
278,923
1,228,724
479,109
3,115,774
(8,660)
3,107,114
ZMW’000s ZMW’000s
ZMW’000s ZMW’000s
ZMW’000s ZMW’000s
ZMW’000s
ZMW’000s ZMW’000s
Profit for the year
Transfer of surplus
depreciation
Other comprehensive
income:
Exchange gain
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
Adjustment on
transition to IFRS 16
-
-
-
-
-
315
315
-
315
As at 1 October 2019
3,006
1,125,012
1,000
381,929
1,199,058
536,019
3,246,024
(4,881)
3,241,143
Loss for the year
Transfer of surplus
depreciation
Other comprehensive
income:
Exchange gain
on translating
presentational currency
Remeasurement of net
defined benefit liability
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
621,905
-
-
(103,419)
(103,419)
1,224
(102,195)
(31,345)
31,345
-
-
-
-
-
-
621,905
3,137
625,042
-
-
6,229
6,229
-
6,229
-
-
-
621,905
(31,345)
(65,845)
524,715
4,361
529,076
At 30 September 2020
3,006
1,125,012
1,000
1,003,834
1,167,713
470,174
3,770,739
(520)
3,770,219
49
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2020 (CONTINUED)
(i) In US Dollars
Issued
share
capital
Share
premium
Preference
share capital
Foreign
exchange
reserve
Revaluation
reserve
Retained
earnings
Total
attributable
to owners
of the
parent
Non-
controlling
interest
Total
equity
At 1 October 2018
449
100
185,095
(186,889)
175,617
80,188
254,560
(708)
253,852
USD’000s
USD’000s
USD’000s USD’000s
USD’000s USD’000s
USD’000s
USD’000s USD’000s
Profit for the year
Transfer of surplus
depreciation
Other comprehensive
income:
Exchange (losses)/
gains on translating
presentational currency
Remeasurement of net
defined benefit liability
Total comprehensive
income
At 30 September 2019
Adjustment on
transition to IFRS 16
As at 1 October 2019
Loss for the year
Transfer of surplus
depreciation
Other comprehensive
income:
Exchange (losses)/
gains on translating
presentational currency
Remeasurement of net
defined benefit liability
Total comprehensive
income
-
-
-
-
-
449
-
449
-
-
-
-
-
-
-
-
-
-
100
-
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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)
185,095
(197,748)
173,209
84,782
245,887
-
-
-
185,095
(197,748)
173,209
20
84,802
(6,396)
20
245,907
(6,396)
-
-
-
(1,938)
1,938
-
338
(370)
(8,335)
245,517
-
20
(370)
245,537
76
-
(6,320)
-
(52,670)
-
-
-
(52,670)
(1,938)
-
(52,670)
268
(52,402)
385
385
-
385
(4,073)
80,729
(58,681)
187,226
344
(26)
(58,337)
187,200
At 30 September 2020
449
100
185,095
(250,418)
171,271
50
Zambeef Products PLC Annual Report 2020 COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2020
(i) In Zambian Kwacha
Issued share
capital
Preference
share capital
Share
premium
Revaluation
reserve
Foreign
exchange
reserve
Retained
earnings
Total equity
At 1 October 2018
Profit for the year
Transfer of surplus
depreciation
Other comprehensive
income:
Exchange gain on translating
presentational currency
Remeasurement of net
defined benefits liability
Total comprehensive
income
ZMW’000s ZMW’000s ZMW’000s
ZMW’000s ZMW’000s ZMW’000s ZMW’000s
3,006
1,000
1,125,012
890,335
268,121
502,828
2,790,302
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(28,183)
-
-
2,764
2,764
28,183
-
-
-
92,385
-
92,385
-
1,461
1,461
(28,183)
92,385
32,408
96,610
At 30 September 2019
3,006
1,000
1,125,012
862,152
360,506
535,236
2,886,912
Profit for the year
Other comprehensive
income:
Transfer of surplus
depreciation
Remeasurement of net
defined benefits liability
Exchange gain on translating
presentational currency
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(33,614)
-
-
-
-
-
26,838
26,838
33,614
-
1,836
1,836
609,324
-
609,324
(33,614)
609,324
62,288
637,998
At 30 September 2020
3,006
1,000
1,125,012
828,538
969,830
597,524
3,524,910
51
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2020
(i) In US Dollars
Issued
share
capital
Preference
share
capital
Share
premium
Revaluation
reserve
Foreign
exchange
reserve
Retained
earnings Total equity
USD’000s USD’000s USD’000s
USD’000s USD’000s USD’000s
USD’000s
At 1 October 2018
449
100
185,095
118,696
(158,456)
82,082
227,966
Profit for the year
Transfer of surplus
depreciation
Other comprehensive
income:
Exchange gain on
translating presentational
currency
Remeasurement of net
defined benefits liability
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,288)
-
-
202
202
2,288
-
-
-
(9,603)
-
(9,603)
-
140
140
(2,288)
(9,603)
2,630
(9,261)
At 30 September 2019
449
100
185,095
116,408
(168,059)
84,712
218,705
Profit for the year
Other comprehensive
income:
Transfer of surplus
depreciation
Remeasurement of net
defined benefits liability
Exchange gain on
translating presentational
currency
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,079)
-
-
-
-
-
-
1,661
1,661
-
2,079
-
-
114
114
(45,460)
-
(45,460)
(2,079)
(45,460)
3,854
(43,685)
At 30 September 2020
449
100
185,095
114,329
(213,519)
88,566
175,020
52
Zambeef Products PLC Annual Report 2020 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 SEPTEMBER 2020
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
Cash and cash equivalents
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Preference share capital
Share premium
Other reserves
Non-controlling interest
Non-current liabilities
Interest bearing liabilities
Leases
Deferred liability
Deferred tax liability
Current liabilities
Interest bearing liabilities
Leases
Trade and other payables
Provisions
Amounts due to related companies
Taxation payable
Bank overdrafts
Total equity and liabilities
Note
2020
ZMW’000s
2020
USD’000s
2019
ZMW’000s
2019
USD’000s
13
14
15(e)
10(e)
16
17
18
34
19
10(c)
20
21
21
22
23
24
25
10(e)
23
24
26
27
28
10(c)
20
166,801
3,264,505
43,826
9,552
3,484,684
176,305
1,103,640
132,668
175,654
9,337
1,784
111,136
1,710,524
5,195,208
3,006
1,000
1,125,012
2,641,721
3,770,739
(520)
3,770,219
190,218
19,750
11,389
69,950
291,307
326,899
23,259
321,648
113,347
443
41
348,045
1,133,682
5,195,208
8,282
162,091
2,176
474
173,023
8,754
54,798
6,587
8,722
464
89
5,518
84,932
257,955
449
100
185,095
1,582
187,226
(26)
187,200
9,445
981
565
3,473
14,464
16,231
1,155
15,971
5,629
22
2
17,281
56,291
257,955
166,801
2,841,824
12,376
56,525
3,077,526
170,417
941,159
98,025
135,357
41,554
2,767
56,753
1,446,032
4,523,558
3,006
1,000
1,125,012
2,116,691
3,245,709
(4,881)
3,240,828
228,099
19,297
16,362
9,138
272,896
343,042
21,487
259,585
52,914
251
1,377
331,178
1,009,834
4,523,558
12,636
215,290
938
4,282
233,146
12,910
71,300
7,426
10,254
3,148
210
4,299
109,547
342,693
449
100
185,095
60,243
245,887
(370)
245,517
17,280
1,462
1,240
692
20,674
25,988
1,628
19,665
4,009
19
104
25,089
76,502
342,693
The financial statements on pages 48 to 132 were approved by the Board of Directors on 1st December 2020 and were
signed on its behalf by:
Michael Mundashi
Chairman
Walter Roodt
Chief Executive Officer
53
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 COMPANY STATEMENT OF FINANCIAL POSITION 30 SEPTEMBER 2020
FOR THE YEAR ENDED 30 SEPTEMBER 2020
ASSETS
Non-current assets
Property, plant and equipment
Investment in subsidiaries
Investment in associate
Current assets
Biological assets
Inventories
Assets held for disposal
Trade and other receivables
Amounts due from related companies
Income tax recoverable
Cash and cash equivalents
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Preference share capital
Share premium
Other reserves
Non-current liabilities
Interest bearing liabilities
Leases
Deferred liability
Deferred tax liability
Current liabilities
Interest bearing liabilities
Leases
Trade and other payables
Provisions
Amounts due to related companies
Bank overdrafts
Note
14
15(b)
15(e)
16
17
34
18
19
10(c)
20
21
21
22
2020
ZMW’000s
2020
USD’000s
2019
ZMW’000s
2019
USD’000s
2,476,394
122,959
2,060,110
245,807
43,826
12,205
2,176
245,807
12,376
156,069
18,622
938
2,766,027
137,340
2,318,293
175,629
139,501
814,081
175,654
50,555
6,927
40,421
8,722
2,510
137,215
683,600
135,357
28,153
1,320,117
65,547
1,078,745
565
12,645
2,513,118
5,279,145
28
628
1,529
11,844
124,783
2,076,443
262,123
4,394,736
157,304
332,933
3,006
1,000
1,125,012
2,395,892
3,524,910
449
100
3,006
1,000
185,095
1,125,012
(10,624)
1,757,894
175,020
2,886,912
23
24
25
10(e)
23
24
26
27
28
20
190,218
8,172
3,356
41,153
242,899
326,899
14,461
232,844
61,200
705,110
170,822
9,445
406
167
2,043
12,061
16,231
718
11,561
3,039
35,011
8,482
228,099
11,505
3,655
6,630
343,042
18,266
158,504
40,462
490,045
207,616
1,511,336
75,042
1,257,935
249,889
18,931
10,395
51,788
10,254
2,133
81,722
115
897
449
100
185,095
33,061
218,705
17,280
872
277
502
25,988
1,384
12,008
3,065
37,124
15,728
95,297
Total equity and liabilities
5,279,145
262,123
4,394,736
332,933
The financial statements on pages 48 to 132 were approved by the Board of Directors on 1st December 2020 and were
signed on its behalf by:
Michael Mundashi
Chairman
Walter Roodt
Chief Executive Officer
54
Zambeef Products PLC Annual Report 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
Note
2020
ZMW’000s
2020
USD’000s
2019
ZMW’000s
2019
USD’000s
Cash inflow from operating activities
(Loss)/profit before taxation
Finance costs
Loss / (profit) on disposal of property, plant and
equipment
Depreciation
Charge on right of use assets
Share of loss on equity accounted investment
Profit/(loss) on discontinued operations
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
Increase in inventory
(Increase)/decrease in trade and other receivables
(Increase)/decrease in amounts due from related
companies
Increase/(decrease) in trade and other payables
Increase in amounts due to related companies
Decrease in deferred liability
Income tax paid
Net cash inflow/(outflow) from/(on) operating
activities
Investing activities
Purchase of property, plant and equipment
Right of use assets
Proceeds from the sale of assets
Proceeds from the sale of assets/investments
Net cash inflow/(outflow) from /(on) investing
activities
Net cash inflow/ (outflow) before financing
activities
Financing activities
Long term loans repaid
Repayment short term funding
Receipt of short-term funding
Lease finance repayment
Lease finance obtained
Finance costs
Net cash outflow on financing activities
Decrease 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
9
14
14
16
10(c)
14
29
29
29
29
29
9
20
20
20
(22,673)
92,322
4,796
141,408
8,362
3,177
1,529
14,381
186,272
429,574
(20,269)
(162,481)
(34,643)
(2,410)
122,496
192
(1,256)
(5,525)
(1,402)
5,709
297
8,745
517
196
95
889
11,495
26,541
(1,253)
(10,048)
(2,142)
(149)
7,575
12
(102)
(342)
38,653
82,790
(986)
121,921
-
3,036
(17,379)
(10,284)
7,153
224,904
21,541
(301,348)
58,289
8,718
(27,028)
19
(6,249)
(9,652)
3,138
6,720
(80)
9,896
-
246
(1,411)
(835)
581
18,255
1,748
(24,460)
4,731
708
(2,194)
2
(507)
(783)
328,190
20,296
(30,806)
(2,500)
(92,664)
(15,425)
6,452
167,264
(5,731)
(954)
399
10,344
(113,825)
-
11,776
-
(9,239)
-
956
-
65,627
4,058
(102,049)
(8,283)
393,817
24,354
(132,855)
(10,783)
(162,217)
(623,231)
487,320
(35,478)
14,329
(92,322)
(411,599)
(17,782)
(274,425)
(10,032)
(38,542)
30,137
(2,194)
886
(5,709)
(25,454)
(1,100)
(20,790)
(96,913)
(215,124)
334,580
(47,007)
47,714
(82,790)
(59,540)
(192,395)
(135,743)
55,298
(236,909)
10,127
(11,763)
53,713
(274,425)
111,136
(348,045)
(236,909)
5,518
(17,281)
(11,763)
56,753
(331,178)
(274,425)
(7,866)
(17,461)
27,157
(3,816)
3,873
(6,720)
(4,833)
(15,616)
(11,090)
5,916
(20,790)
4,299
(25,089)
(20,790)
55
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
Note
2020
2020
2019
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
Cash inflow from operating activities
Profit before taxation
Finance costs
Depreciation
Fair value price adjustment
Loss on disposal of property, plant and equipment
Share of loss on equity accounted investment
Loss on discontinued operations
14
16
34,203
68,747
80,462
15,464
1,216
3,177
1,529
2,115
4,252
4,976
956
75
196
95
Net unrealised foreign exchange differences
180,954
11,193
54,334
67,371
71,049
(10,162)
1,821
3,036
(17,379)
6,223
4,389
5,469
5,767
(825)
148
246
(1,411)
505
Earnings before interest, tax, depreciation and
amortisation, fair value adjustments and net unrealised
foreign exchange losses
(Increase)/ decrease in biological assets
Increase in inventory
(Increase)/decrease in trade and other receivables
385,752
23,858
176,293
14,288
(2,286)
(130,482)
(22,402)
(141)
(8,069)
(1,385)
31,296
2,541
(202,281)
(16,419)
63,228
5,133
Increase in amounts due from related companies
(275,999)
(17,069)
(282,239)
(22,910)
Increase/ (decrease) in trade and other payables
Increase in amounts due to related companies
(Decrease)/ increase in deferred liability
Income tax paid
10(c)
74,340
215,065
(299)
(5,314)
4,597
13,300
(18)
(329)
(31,817)
161,412
57
(5,822)
(2,583)
13,102
26
(473)
Net cash inflow/(outflow) from/(on) operating activities
238,375
14,744
(89,873)
(7,295)
Investing activities
Purchase of property, plant and equipment
14
Proceeds from disposal of investment
Proceeds from sale of assets
Net cash inflow/(outflow) from/(on) investing activities
(35,385)
167,264
4,205
136,084
(2,188)
10,344
260
8,416
(23,743)
(1,927)
-
1,120
-
91
(22,623)
(1,836)
Net cash inflow before financing activities
374,459
23,160
(112,496)
(9,131)
Financing activities
Long term loans repaid
Short term funding repaid
Short term funding obtained
Lease finance repayment
Lease finance obtained
Interest paid
29
29
29
29
29
(162,217)
(10,032)
(96,913)
(7,866)
(623,231)
(38,542)
(215,124)
(17,461)
487,320
(30,835)
14,329
30,137
(1,907)
334,580
(43,953)
886
47,714
(68,747)
(4,252)
(67,371)
27,157
(3,568)
3,873
(5,469)
(3,334)
Net cash outflow on financing activities
(383,381)
(23,710)
(41,067)
Decrease in cash and cash equivalents
(8,922)
(550)
(153,563)
(12,465)
Cash and cash equivalents at beginning of the year
(195,772)
(14,381)
(76,971)
(6,288)
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
56
20
20
20
46,517
7,077
34,762
3,922
(158,177)
(7,854)
(195,772)
(14,831)
12,644
628
11,844
897
(170,821)
(8,482)
(207,616)
(15,728)
(158,177)
(7,854)
(195,772)
(14,831)
Zambeef Products PLC Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
1.
The Group
Zambeef Products PLC and its subsidiaries (“Group”) is one of the largest agri-businesses in Zambia. The Group
is principally involved in the production, processing, distribution and retailing of beef, chicken, pork, milk, dairy
products, eggs, edible oils, stock feed and flour. The Group also has large row cropping operations (principally
maize, soya beans and wheat), with approximately 7,787 Ha of row crops under irrigation and 8,694 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 off 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 off
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 ZMW347.2
million (USD17.2 million) [2019: ZMW364.5 million (USD27.6 million)]. After reviewing the available
information including the Group’s strategic plans and continuing support from the Group’s working capital
funders, the Directors have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
The Group will settle all current liabilities from the continued liquidation of stock and expected increase in
income from the key markets in stockfeed and cropping which continue to perform well. The stocks are fast
moving consumer goods. The Group also has access to bank financing facilities for working capital funding.
The outbreak of the COVID-19 pandemic has had a negative effect on the country’s economy. However, the
consumer demand for Zambeef’s products stood up well and the current trading conditions are expected
to continue in the near future. The effect on the business, in terms of sales, from the pandemic has been
minimal but has been negatively affected by the steep depreciation of the currency resulting in exchange
losses.
57
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(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.
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; 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 ZMW609.3 million (2019: ZMW92.4 million) upon translating all assets and liabilities, which has
been recognised as an unrealised gain in the statement of comprehensive income of the Company.
All the assets and liabilities for Mpongwe are translated from the functional currency USD to the local
currency ZMW which gives rise to exchange differences.
(d)
58
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(d)
Foreign currencies (continued)
(i)
(ii)
Presentation and functional currency (continued)
The Group’s reporting currency is Kwacha (ZMW). The presentation of the financial statements and
related disclosures in USD is supplementary information.
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
Average exchange rate
Closing exchange rate
Year ended 30 September 2019
Year ended 30 September 2020
12.32
16.17
13.20
20.14
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.
59
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(d)
Foreign currencies (continued)
(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.
ZMW: Nigeria Naira
Average exchange rate
Closing exchange rate
Year ended 30 September 2019
Year ended 30 September 2020
29.21
23.10
27.25
19.00
ZMW: Ghana Cedi
Average exchange rate
Closing exchange rate
Year ended 30 September 2019
Year ended 30 September 2020
0.42
0.35
0.41
0.29
(e)
New standards adopted as at 1 October 2019
The Group has adopted the new accounting pronouncements which have become effective in 2019, and
are as follows:
IFRS 16 ‘Leases’
IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ along with three Interpretations (IFRIC 4 ‘Determining whether
an Arrangement contains a Lease’, SIC 15 ‘Operating Leases-Incentives’ and SIC 27 ‘Evaluating the
Substance of Transactions Involving the Legal Form of a Lease’). The new Standard has been applied using
the modified retrospective approach, with the cumulative effect of adopting IFRS 16 being recognised in
equity as an adjustment to the opening balance of retained earnings for the current period. Prior periods
have not been restated.
For contracts in place at the date of initial application, the Group has elected to apply the definition of
a lease from IAS 17 and IFRIC 4 and has not applied IFRS 16 to arrangements that were previously not
identified as lease under IAS 17 and IFRIC 4.
The Group has elected not to include initial direct costs in the measurement of the right-of-use asset for
operating leases in existence at the date of initial application of IFRS 16, being 1 October 2019. At this
date, the Group has also elected to measure the right-of-use assets at an amount equal to the lease liability
adjusted for any prepaid or accrued lease payments that existed at the date of transition.
Instead of performing an impairment review on the right-of-use assets at the date of initial application, the
Group has relied on its historic assessment as to whether leases were onerous immediately before the date
of initial application of IFRS 16.
60
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(e)
New standards adopted as at 1 October 2019 (continued)
IFRS 16 ‘Leases’ (continued)
On transition, for leases previously accounted for as operating leases with a remaining lease term of less
than 12 months and for leases of low-value assets the Group has applied the optional exemptions to
not recognise right-of-use assets but to account for the lease expense on a straightline basis over the
remaining lease term.
For those leases previously classified as finance leases, the right-of-use asset and lease liability are
measured at the date of initial application at the same amounts as under IAS 17 immediately before the
date of initial application.
On transition to IFRS 16 the weighted average incremental borrowing rate applied to lease liabilities
recognised under IFRS 16 was 15.5%.
The Group has benefited from the use of hindsight for determining lease term when considering options to
extend and terminate leases.
The following is a reconciliation of the financial statement line items from IAS 17 to IFRS 16 at 1 October
2019:
Carrying
amount at
30 September
2019 Remeasurement
IFRS 16
carrying
amount at 1
October 2019
Property, plant and equipment
Lease liabilities
Total
Property, plant and equipment
Lease liabilities
Total
ZMW’000
ZMW’000
15,425
2,857,249
(15,425)
(56,209)
-
2,801,040
ZMW’000
2,841,824
(40,784)
2,801,040
Carrying
amount at
30 September
2019 Remeasurement
US$’000
215,290
(3,090)
212,200
US$’000
766
(766)
-
IFRS 16
carrying
amount at 1
October 2019
US$’000
216,056
(3,856)
212,200
61
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(e)
New standards adopted as at 1 October 2019 (continued)
IFRS 16 ‘Leases’ (continued)
The following is a reconciliation of total operating lease commitments at 30 September 2019 to the lease
liabilities recognised at 1 October 2019:
Total operating lease commitments disclosed at 30 September 2019
15,881
1,203
ZMW’000
USD’000
Recognition exemptions:
Leases of low value assets
Leases with remaining life less than 12 months
Operating lease liabilities before discounting
Discounted using incremental borrowing rate
Operating lease liabilities
Finance lease obligations
Total lease liabilities recognised under IFRS 16 at 1 October 2019
(1,359)
(13,079)
1,443
(254)
7,063
40,784
49,036
(103)
(991)
109
(19)
351
3,090
3,531
(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, other standards and amendments that are not yet
effective and have not been adopted early by the Group include:
•
•
•
•
IFRS 17 Insurance Contracts
Definition of a Business (Amendments to IFRS 3)
Definition of Material (Amendments to IAS 1 and IAS 8)
Conceptual Framework for Financial Reporting
These amendments are not expected to have a significant impact on the financial statements in the period
of initial application and therefore the disclosures have not been made.
62
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(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.
All transactions and balances between Group companies are eliminated on consolidation, including
unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-
group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a
Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies adopted by the Group.
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.
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.
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.
(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.
Non-current assets classified as held for sale are presented separately and measured at the lower of their
carrying amounts immediately prior to their classification as held for sale and their fair value less costs to
sell.
Once classified as held for sale, the assets are not subject to depreciation or amortisation. Any profit or
loss arising from the sale of a discontinued operation or its remeasurement to fair value less costs to sell is
presented as part of a single line item, profit or loss from discontinued operations.
63
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(i)
Impairment testing of goodwill and property, plant and equipment
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 a related business combination and represent the
lowest level within the Group at which management monitors goodwill.
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 of disposal 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 discount 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 current market
assessments of the time value of money and asset-specific risk 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 loss is reversed if the asset’s or cash-
generating unit’s recoverable amount exceeds its carrying amount.
(j)
Revenue recognition
Revenue arises mainly from the sale of cold chain food products, stock feed and cropping.
To determine whether to recognise revenue, the Group follows a 5 step process:
1)
2)
3)
4)
5)
identifying the contracts with a customer;
identifying the performance obligations;
determining the transaction price;
allocating the transaction price to the performance obligations; and
recognising revenue when/as performance obligations are satisfied.
Revenue is recognised at the point in time when control has passed to the customer. This is when delivery
of the product is made to the customers or when customers collect the product from one of the group’s
locations.
A liability is reconginsed for all amounts received in advance for which the performance obligation of transferring
the goods to the customer has not been met. Similarly, if the Group satisfies a performance obligation before it
receives consideration, the Group recognises a receivable in the statement of financial position.
Cropping
Revenue from cropping is from the sale of wheat, soya and maize grain. The price of the grain is agreed as
per the contract with the customers and the customers are only invoiced when customer takes delivery of
the grain. Revenue is recognised when performance obligations are satisfied by delivering the grain.
Cold chain food products
The cold food chain products are mainly beef, chicken, pork, fish, milk and dairy products. These products
are sold through the group’s retailing network, most of which is through cash sales. The credit sales are only
invoiced when the products are delivered to the customer or when the customer collects the products.
64
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(j)
Revenue recognition (continued)
Stockfeed
Stockfeed is sold though the Group’s retail network and on contract to certain customers. The sales through the
retail network are cash sales. The credit sales are invoiced when the customer takes delivery of the stock feed.
Chicks
Revenue for the sale of day-old chicks is generated through direct sales to customers through the Zambeef
outlets and through agents. Customers and agents make advance payments before getting delivery of the
chicks.
Mill and bakery
The revenue for mill and bakery is from the sale of flour mill and bread. The flour mill and bread are sold
through the Group’s retail network and are mainly for cash sales.
(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. Revaluations are conducted at least every five years.
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.
Management considers available market information at the reporting date to assess whether the asset
values are appropriate.
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.
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
Aircraft
Furniture & equipment
Plant & machinery
2%
20%
10%
10%
10%
Land and capital work in progress are not depreciated.
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.
65
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(l)
Leased assets
As described in Note 2 (e), the Group has applied IFRS 16 using the modified retrospective approach
and therefore comparative information has not been restated. This means comparative information is still
reported under IAS 17.
Accounting policy applicable from 1 October 2019
The Group as a lessee
For any new contracts entered into on or after 1 October 2019, the Group considers whether a contract is,
or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an
asset (the underlying asset) for a period of time in exchange for consideration’.
To apply this definition the Group assesses whether the contract meets three key evaluations which are
whether:
the contract contains an identified asset, which is either explicitly identified in the contract or
implicitly specified by being identified at the time the asset is made available to the Group
the Group has the right to obtain substantially all of the economic benefits from use of the identified
asset throughout the period of use, considering its rights within the defined scope of the contract
the Group has the right to direct the use of the identified asset throughout the period of use.
The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout
the period of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance
sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease
liability.
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group
also assesses the right of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily
available or the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including
in substance fixed), variable payments based on an index or rate, amounts expected to be payable under
a residual value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for
interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance
fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset,
or profit and loss if the right-of-use asset is already reduced to zero.
66
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(l)
Leased assets(continued)
The Group has elected to account for short-term leases and leases of low-value assets using the practical
expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are
recognised as an expense in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been included in property, plant and equipment
and lease liabilities have been presented on the face of the balance sheet. Take-on values of right of use assets
and liabilities have been based on future lease payments, discounted at the prevailing incremental borrowing rate
to present values. The incremental borrowing rates are based on the cost of borrowing from third party financiers.
Accounting policy applicable before 1 October 2019
Management applies judgment in considering the substance of a lease agreement and whether it transfers
substantially all the risks and rewards incidental to ownership of the leased asset. Key factors considered include
the length of the lease term in relation to the economic life of the asset, the present value of the minimum lease
payments in relation to the asset’s fair value, and whether the Group obtains ownership of the asset at the end of
the lease term.
For leases of land and buildings, the minimum lease payments are first allocated to each component based on
the relative fair values of the respective lease interests. Each component is then evaluated separately for possible
treatment as a finance lease, taking into consideration the fact that land normally has an indefinite economic life.
(m)
Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire,
or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
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).
67
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(m)
Financial instruments (continued)
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.
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.
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 at fair value through other comprehensive income (FVOCI)
The Group accounts for financial assets at FVOCI if the assets meet the following conditions:
they are held under a business model whose objective it is “hold to collect” the associated cash
flows and sell and
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.
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition
of the asset.
68
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(m)
Financial instruments (continued)
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 replaced 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.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as
contract assets and records the loss allowance as lifetime expected credit losses. These are the expected
shortfalls in contractual cash flows, considering the potential for default at any point during the life of
the financial instrument. In calculating, the Group uses its historical experience, external indicators and
forward-looking information to calculate the expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess shared credit
risk characteristics, they have been grouped based on the days past due. Refer to Note 18 for a detailed
analysis of how the impairment requirements of IFRS 9 are applied.
Classification and measurement of financial liabilities
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.
69
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(n)
Biological 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.
(o)
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.
(p) Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank overdrafts, deposits held at call with banks and
balances held with banks.
Bank overdrafts are defined as facilities which are repayable on demand and classified as current liabilities.
70
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(q)
(r)
(s)
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.
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.
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.
71
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(t)
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 in exchange for the termination of an employee’s employment as a
result of either its termination of an employee’s employment before normal retirement date or when
an employee decides to accept an offer of benefits in exchange for the termination of employment.
(u) 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.
(v)
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.
Preference shares are classified as equity if they are non-redeemable and any dividends are discretionary,
or are redeemable but only at the group’s option. Dividends on preference share capital classified as equity
are recognised as distributions within equity.
The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant
and equipment. This reserve is non-distributable.
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.
72
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
2.
Principal accounting policies (continued)
(w) 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 and the Chief Financial Officer who are
the Chief Operating Decision Makers (CODMs) to allocate resources and to assess their performance. The
Group operates 12 main reportable divisions which match the main external revenues earned by the Group:
•
•
•
•
•
•
•
•
•
•
•
•
Retailing Zambia
Retailing – West Africa
Beef
Chicken
Day-old chicks
Pork
Milk and dairy
Eggs
Stockfeed
Crops
Mill and Bakery
Leather and shoe
The business activities are grouped in these segments based on the nature of their business and in the case
of Retailing - West Africa the geographical area in which they conduct their business.
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
Master Pork
Other
The ‘Other’ segment includes the foreign subsidiaries, Zamleather Limited, Zam Chick 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.
(x)
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.
73
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
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
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. Management applies judgement in assessing whether a
deferred tax asset is recognised on carried forward trading losses based on anticipated future profits. This takes
into account projections made by the business and expected future market conditions.
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)
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 considers 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 considers historic yields, climate conditions
and certain other key factors. Realisation of the carrying amounts of biological assets of ZMW176.3 million
(USD8.7 million); ZMW14.4 million (USD0.9 million) (2019: ZMW170.4 million [USD12.9 million]; ZMW10.3
million [USD0.8 million]) is affected by price changes in different market segments, and ZMW524.4 million
(USD32.4 million) (2019: ZMW613.5 million [USD49.8 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 considers the most reliable evidence available at the times the estimates are made. Future
realization of the carrying amounts of inventory assets of ZMW1,103.6 million (USD54.8 million) (2019:
ZMW941.2 million [USD71.3 million]) is affected by price changes in different market segments.
74
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
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)
(b)
(c)
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.
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.
75
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
4.
Management of financial risk (continued)
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
2020
ZMW’000s
(236,909)
(560,126)
3,770,739
2,973,704
2020
USD’000s
(11,763)
(27,812)
187,226
147,651
2019
ZMW’000s
(274,425)
(611,925)
3,245,709
2,359,359
2019
USD’000s
(20,790)
(46,358)
245,887
178,739
4.5
4.6
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.
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 minimised by matching the foreign currency receipts to the
foreign currency payments as well as holding foreign currency bank accounts and export sales.
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.
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 Makers (‘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 margins and other operating results are reviewed by the CODM and used for
such purposes; some of the other costs are shared. 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.
76
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
5.
Segmental reporting (continued)
Year ended 30 September 2020
The segment information for the reporting period is as follows:
(i) In Zambian Kwacha
Segment
Retailing – Zambia
Master Meats Nigeria
Master Meats Ghana
Retailing West Africa
Total Retailing
Beef
Chicken
Day old chicks
Pork
Milk and dairy
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
Loss before tax
Segment
Revenue
Revenue Gross Profit Gross Profit
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
2,177,555
188,754
37,924
16,699
164,307
39,037
53,126
53,194
91,760
(148)
34,107
14,569
164,275
54,483
522,585
300,668
128,326
285,581
218,207
61,004
173,659
29,950
218,758
2,396,313
1,516,371
3,912,684
(1,399,926)
2,512,758
1,331,965
651,560
203,609
4,699,892
(824,788)
3,875,104
54,623
243,377
401,276
644,653
644,653
255,888
266,405
48,676
1,215,622
1,215,622
(1,005,091)
210,531
(137,705)
(92,322)
(3,177)
(22,673)
Zambia
Nigeria
Ghana
Total
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
Cold Chain Food Production
3,693,926
164,275
54,483
3,912,684
Stockfeed
Cropping
Other
Sub-total
1,331,965
-
-
1,331,965
651,560
-
-
651,560
203,609
-
-
203,609
5,881,060
164,275
54,483
6,099,818
Intra/inter group sales
(2,224,714)
-
-
(2,224,714)
Total
3,656,346
164,275
54,483
3,875,104
77
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
5.
Segmental reporting (continued)
Year ended 30 September 2020
(i)
In Zambian Kwacha
Operating assets/(liabilities)
Zambeef
Retailing Masterpork
Other
Total
Property plant and equipment
Biological assets and inventories
Cash, cash equivalents and bank
overdrafts
Trade and other receivables
Trade and other payables
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
78
ZMW’000s
ZMW’000s
ZMW’000s ZMW’000s ZMW’000s
2,476,394
224,825
81,835
481,451
3,264,505
953,583
81,293
25,930
219,139
1,279,945
(158,177)
(119,683)
5,257
35,694
(236,909)
50,555
15,436
14,121
52,556
132,668
(232,842)
(33,502)
(3,589)
(51,715)
(321,648)
Revenue
Revenue Gross Profit Gross Profit
ZMW’000s
ZMW’000s
ZMW’000s
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
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
5.
Segmental reporting (continued)
Year ended 30 September 2019
Segments
Zambia
Nigeria
Ghana
Total
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
Cold Chain Food Production
3,242,213
138,732
46,222
3,427,167
Stockfeed
Cropping
Other
Sub-total
986,075
474,202
210,348
-
-
-
-
-
-
986,075
474,202
210,348
4,912,838
138,732
46,222
5,097,792
Intra/inter group sales
(1,962,825)
-
-
(1,962,825)
Total
2,950,013
138,732
46,222
3,134,967
Operating assets/(liabilities)
Zambeef Retailing Masterpork
Other
Total
Property plant and equipment
Biological assets and inventories
Cash, cash equivalents and bank
overdrafts
Trade and other receivables
Trade and other payables
Year ended 30 September 2020
(ii)
In US Dollars
Segment
Retailing – Zambia
Master Meats Nigeria
Master Meats Ghana
Retail – West Africa
Total Retailing
Beef
Chicken
Day old chicks
Pork
Milk and dairy
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
Loss before tax
ZMW’000s ZMW’000s
ZMW’000s ZMW’000s ZMW’000s
2,060,110
209,897
777,065
70,921
84,443
19,195
487,374
2,841,824
200,645
1,067,826
(195,772)
(96,500)
1,461
16,386
(274,425)
28,153
10,129
(158,504)
(49,327)
11,912
(19,654)
47,831
98,025
(32,100)
(259,585)
Revenue
USD’000s
Revenue
USD’000s
134,666
Gross Profit
USD’000s
Gross Profit
USD’000s
11,673
2,345
1,033
10,161
2,414
3,285
3,291
5,675
(9)
2,109
901
10,159
3,369
32,318
18,594
7,936
17,661
13,495
3,773
10,740
1,852
13,528
148,194
93,777
241,971
(86,576)
155,395
82,373
40,294
12,592
290,654
(51,006)
239,648
3,378
15,051
24,817
39,868
-
39,868
15,824
16,476
3,010
75,178
75,178
(62,158)
13,020
(8,516)
(5,709)
(197)
(1,402)
79
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
5.
Segmental reporting (continued)
Year ended 30 September 2020
(ii)
In US Dollars
Segment
Zambia
Nigeria
Ghana
Total
USD’000s
USD’000s
USD’000s
USD’000s
Cold Chain Food Production
228,444
10,159
3,369
241,972
Stockfeed
Cropping
Other
Sub-total
82,373
40,294
12,592
-
-
-
-
82,373
-
40,294
-
12,592
363,703
10,159
3,369
377,231
Intra/inter group sales
(137,583)
-
-
(137,583)
Total
226,120
10,159
3,369
239,648
Operating assets/(liabilities)
Zambeef
Retailing Masterpork
Other
Total
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
122,959
47,347
(7,854)
2,510
(11,561)
11,163
4,036
(5,943)
766
(1,663)
4,063
1,288
261
701
(519)
23,906
10,881
1,773
2,610
(2,228)
162,091
63,552
(11,763)
6,587
(15,971)
Property plant and equipment
Biological assets and inventories
Cash, cash equivalents and
bank overdrafts
Trade and other receivables
Trade and other payables
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
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
80
Revenue
USD’000s
Revenue
USD’000s
150,464
Gross Profit
USD’000s
Gross Profit
USD’000s
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
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
5.
Segmental reporting (continued)
Year ended 30 September 2019
Segment
Cold Chain Food Production
Stockfeed
Cropping
Other
Sub-total
Intra/inter group sales
Total
Zambia
USD’000s
263,166
80,039
38,490
17,074
398,769
(159,320)
239,449
Nigeria
USD’000s
11,261
-
-
-
11,261
-
11,261
Ghana
USD’000s
3,752
-
-
-
3,752
-
3,752
Total
USD’000s
278,179
80,039
38,490
17,074
413,782
(159,320)
254,462
Operating assets/(liabilities)
Zambeef
Retailing Masterpork
Other
Total
Property plant and equipment
Biological assets and inventories
Cash, cash equivalents and bank overdrafts
Trade and other receivables
Trade and other payables
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
156,069
58,867
(14,831)
2,132
(12,282)
15,901
5,373
(7,311)
767
(3,737)
6,397
1,454
111
902
36,923
15,200
1,241
3,625
215,290
80,894
(20,790)
7,426
(1,489)
(2,158)
(19,666)
Geographical
Zambia
West Africa
Rest of world
Revenues
ZMW’000s
3,618,848
218,759
37,497
3,875,104
ZMW’000s
3,236,288
28,217
-
3,264,505
2020
Non-current
assets Revenues
2019
Non-current
assets
Non-
current
assets Revenues
Non-
current
assets
USD’000s USD’000s ZMW’000s ZMW’000s USD’000s USD’000s
213,538
1,752
-
215,290
2,903,553
184,954
46,460
3,134,967
2,818,694
23,130
-
2,841,824
235,679
15,013
3,770
254,462
223,794
13,529
2,325
239,648
160,690
1,401
-
162,091
Revenues
6.
Other income
Other income is mainly derived from rental income received by the letting out of guest houses on Mpongwe farm
and from sales of scrap.
7.
Operating profit
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
Allowance for credit losses
(Loss)/profit on disposal of property, plant and
equipment
Rentals under leases
2020
2019
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
125,150
16,258
493,484
7,568
11,555
3,374
14,929
4,825
-
4,825
6,980
74,440
6,022
255,721
7,229
11,555
3,374
14,929
4,560
-
4,560
3,937
(4,796)
(1,216)
109,453
12,468
453,701
7,178
19,020
4,727
23,747
2,104
-
2,104
1,201
986
1,359
-
12,842
64,766
6,283
250,627
3,065
19,020
4,727
23,747
1,303
-
1,303
652
1,821
-
81
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
7.
Operating profit (continued)
Operating profit
Operating profit before taxation 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
Allowance for credit losses
(Loss)/profit on disposal of property, plant and
equipment
Rentals under operating leases
8.
Staff costs
2020
2019
Group
Company
Group
Company
USD’000s
USD’000s
USD’000s
USD’000s
7,740
1,005
30,518
468
4,604
372
15,815
447
716
209
925
298
-
298
432
(32)
84
716
209
925
282
-
282
243
(75)
-
8,884
1,012
36,826
583
1,543
384
1,927
171
-
171
97
80
1,042
5,257
510
20,346
249
1,543
384
1,927
106
-
106
53
147
-
The Group employed an average of 7,082 employees during the year ended 30 September 2020 (2019: 7,407).
Zambeef Products PLC, Zambeef Retailing Limited, Zam Chick Limited,
Zambeef Products PLC, Zambeef Retailing Limited, Zam Chick Limited,
Zamhatch Limited & Zamleather Limited
Zamhatch Limited & Zamleather Limited
Master Pork Limited
Master Pork Limited
Foreign Subsidiaries
Foreign Subsidiaries
Total
Total
2020
2020
Number
Number
2019
2019
Number
Number
6,467
6,467
299299
316316
7,082
7,082
6,803
6,803
284284
320320
7,407
7,407
Employee costs for all employees of the Group, including Executive Directors, were:
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
Salaries and wages
Social security costs
Pension costs
449,513
21,980
21,991
493,484
27,799
1,359
1,360
30,518
436,227
12,856
4,618
453,701
2020
Francis
Grogan Walter Roodt Faith Mukutu
Danny
Museteka
35,408
1,043
375
36,826
Total
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
Salaries and fees
Bonus
Pension contributions
Airfare Allowance
Employment taxes
Total
1,083
2,240
2,309
1,848
7,480
-
-
-
-
10
10
-
-
-
583
1,666
1,212
3,462
1,249
3,568
-
10
-
1,001
2,859
-
30
-
4,045
11,555
82
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
8.
Staff costs (continued)
2019
Francis
Grogan Walter Roodt
Faith Mukutu
Danny
Museteka
Total
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
7,562
3,558
21
730
7,149
19,020
Total
Salaries and fees
3,995
1,545
201
1,821
Bonus
2,959
359
-
240
Pension contributions
-
10
1
10
Airfare Allowance
365
-
-
365
Employment taxes
4,236
1,244
11,555
3,158
100
302
1,569
4,005
Total
2020
Francis
Grogan Walter Roodt
Faith Mukutu
Danny
Museteka
USD’000s
USD’000s
USD’000s
USD’000s
USD’000 s
Salaries and fees
67
139
143
114
463
Bonus
-
-
-
Pension contributions
-
1
1
Airfare Allowance
-
-
-
-
1
-
-
3
-
Employment taxes
36
75
77
62
250
Total
2019
103
215
221
177
716
Francis
Grogan Walter Roodt
Faith Mukutu
Danny
Museteka
Total
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
Salaries and fees
324
125
16
148
613
Bonus
240
29
-
19
288
Pension contributions
-
1
-
1
2
Airfare Allowance
Employment taxes
Total
30
-
-
30
60
344
101
8
127
580
938
256
24
325
1,543
Details of Directors’ contracts may be found in the Directors’ Report.
9.
Finance costs
Interest on bank loans and overdrafts
Finance lease cost
Total
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
90,190
2,132
92,322
5,577
132
5,709
79,296
3,494
82,790
6,436
284
6,720
83
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
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
2020
2019
Group
Company
Group
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
(a) Tax charge
Current tax:
Tax charge
Deferred tax:
5,172
6,277
9,222
6,803
Deferred taxation (note 10(e))
Tax charge for the year
107,785
112,957
34,523
40,800
(6,442)
2,780
27,388
34,191
(b) Reconciliation of tax charge
(Loss)/profit before taxation
Taxation on accounting (loss)/profit
Effects of:
Permanent differences:
Disallowable expenses
Timing differences:
Livestock and crop valuations adjustment
Other income
Unrealised exchange losses/(gains)
Other disallowable items
Tax charge
(c) Movement in taxation account
Taxation recoverable at 1 October
Charge for the year
Taxation paid
Taxation recoverable as at 30 September
Analysed as follows:
Taxation payable
Taxation recoverable
(22,673)
(27,631)
66,109
7,390
38,653
(24,681)
55,795
6,805
27,087
17,612
3,774
533
2,328
(2,897)
7,975
(1,690)
5,172
(1,390)
5,172
(5,525)
(1,743)
41
(1,784)
(1,743)
-
(2,754)
8,106
(24,077)
6,277
(1,529)
6,278
(5,314)
(565)
-
(565)
(565)
1,924
1,342
(903)
27,766
9,222
(960)
9,222
(9,652)
(1,390)
1,377
(2,767)
(1,390)
1,923
4
(834)
(1,628)
6,803
(2,510)
6,803
(5,822)
(1,529)
-
(1,529)
(1,529)
84
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
10.
Taxation (continued)
(d)
(e)
Tax returns for the year ended 30 September 2020 will be made on the due date.
Deferred taxation
Group
Recognised
in profit or
Company
Recognised
in profit or
1 October
loss 30 September
1 October
loss 30 September
ZMW’000s
ZMW’000s
ZMW’000s ZMW’000s
ZMW’000s
ZMW’000s
Year ended 30
September 2020
Temporary Differences/
Biological Valuation
14,162
4,125
18,287
13,716
1,213
14,929
Property and Equipment
58,464
47,734
106,198
60,872
2,428
63,300
Tax Loss
(111,277)
56,831
(54,446)
(65,175)
Other Provisions
(8,736)
(905)
(9,641)
(2,783)
32,101
(1,219)
(33,074)
(4,002)
(47,387)
107,785
60,398
6,630
34,523
41,153
Deferred Income Tax
Liability
Year ended 30
September 2019
Temporary Differences/
Biological Valuation
Property and Equipment
13,444
38,384
718
20,080
14,162
58,464
13,012
32,733
Tax Loss
(86,754)
(24,523)
(111,277)
(64,695)
Other Provisions
(6,019)
(2,717)
(8,736)
(1,808)
704
28,139
(480)
(975)
13,716
60,872
(65,175)
(2,783)
Deferred Income Tax
Liability
(40,945)
(6,442)
(47,387)
(20,758)
27,388
6,630
Summary
2020
2019
Deferred tax asset
Deferred tax liability
Group
Company
Group
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
(9,552)
69,950
60,398
-
41,153
41,153
(56,525)
9,138
(47,387)
-
6,630
6,630
85
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
10.
Taxation (continued)
(ii) In US Dollars
2020
2019
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
(a) Tax charge
Current tax:
Tax charge
Deferred tax:
320
388
749
553
Deferred taxation (note 10(e))
Tax charge for the year
6,666
6,986
2,135
2,523
(523)
226
2,223
2,776
(b)
Reconciliation of tax charge
(Loss)/profit before taxation
Taxation on accounting (loss)/profit
Effects of:
Permanent differences:
Disallowable expenses
Timing differences:
Livestock and crop valuations
adjustment
Other income
Unrealised exchange losses/(gains)
Other disallowable items
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 recoverable as at 30 September
Analysed as follows:
Taxation payable
Taxation recoverable
2020
2019
Group
USD’000s
(1,402)
(1,709)
Company
USD’000s
4,088
457
Group
USD’000s
3,138
(2,003)
Company
USD’000s
4,529
552
1,675
1,089
306
43
144
(179)
494
(105)
320
-
(170)
501
(1,489)
388
156
109
(73)
2,254
749
156
1
(67)
(132)
553
2020
2019
Group
Company
Group
Company
USD’000s
USD’000s
USD’000s
USD’000s
(106)
320
(342)
41
(87)
2
(89)
(87)
(115)
388
(328)
27
(28)
-
(28)
(28)
(78)
749
(783)
6
(106)
104
(210)
(106)
(205)
553
(473)
10
(115)
-
(115)
(115)
(d)
Tax returns for the year ended 30 September 2020 will be made on the due date.
86
Zambeef Products PLC Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
10.
Taxation (continued)
(e)
Deferred taxation
Group
Recognised
in profit or
1 October
loss 30 September
1 October
Company
Recognised
in profit or
loss
30 September
USD’000s
USD’000s
USD’000s USD’000s
USD’000s
USD’000s
Year ended 30
September 2020
Temporary Differences/
Biological Valuation
Property and Equipment
Tax Loss
Other Provisions
Deferred Income Tax
Liability
Year ended 30
September 2019
Temporary Differences/
Biological Valuation
Property and Equipment
Tax Loss
Other Provisions
Deferred Income Tax
Liability
1,073
4,429
(8,430)
(662)
-
(3,590)
1,098
3,136
(7,087)
(492)
-
(3,345)
(165)
844
5,727
183
77
6,666
(25)
1,293
(1,343)
(170)
(278)
(523)
908
5,273
1,113
4,941
(2,703)
(5,326)
(479)
(226)
-
2,999
-
502
1,073
4,429
1,312
3,300
(8,430)
(6,125)
(662)
(182)
-
-
(3,590)
(1,695)
(190)
(1,026)
2,779
(22)
594
2,135
(199)
1,641
799
(44)
26
2,223
923
3,915
(2,547)
(248)
-
2,043
1,113
4,941
(5,326)
(226)
-
502
Summary
2020
2019
Deferred tax asset
Deferred tax liability
Group
USD’000s
Company
USD’000s
Group
USD’000s
Company
USD’000s
(474)
3,473
2,999
-
2,043
2,043
(4,282)
692
(3,590)
-
502
502
All deferred tax assets (including tax losses and other tax credits) have been recognised in the statement of financial
position.
11.
Dividends
Dividends declared or paid
-
-
-
-
There has been no dividend paid or proposed for 2020 (2019: ZMW nil).
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
87
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
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 2019 or 2020. 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.
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share
are as follows:
Basic earnings per share
(Loss)/profit 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
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
(103,419)
(6,396)
18,100
1,469
300,580
300,580
300,580
300,580
400,638
400,638
400,638
400,638
Ngwee
US cents
Ngwee
US cents
(45.12)
(2.79)
11.80
0.96
11.12
0.69
(5.78)
(0.47)
(34.00)
(2.10)
6.02
0.49
Diluted earnings per share – continued operations
(45.12)
(2.79)
8.86
0.72
Diluted earnings per share – discontinued
operations
Total diluted earnings per share
11.12
0.69
(4.34)
(0.35)
(34.00)
(2.10)
4.52
0.37
88
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
13. Goodwill
Cost and Net Book Value
At 1 October 2018
Arising during the year
Foreign exchange difference
At 30 September 2019
Arising during the year
Foreign exchange difference
At 30 September 2020
ZMW’000s
USD’000s
166,801
13,628
-
-
166,801
-
-
166,801
-
(992)
12,636
-
(4,354)
8,282
For the purpose of annual impairment testing, goodwill is allocated to the following cash-generating units, which
are the units expected to benefit from the synergies of the business combinations in which the goodwill arises, as
set out below, and is compared to its recoverable value:
Masterpork Limited
Zam Chick Limited
Zamhatch Limited
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
15,699
141,786
9,316
166,801
779
7,040
463
8,282
15,699
141,786
9,316
166,801
1,189
10,741
706
12,636
The recoverable amount of each segment was determined based on value-in-use calculations, covering a detailed
five-year forecast, followed by an extrapolation of expected cash flows for the remaining useful lives using a growth
rate determined by management. The present value of the expected cash flows of each segment is determined by
applying a discount rate which reflects the Group’s cost of borrowing and adjusted for specific risks that apply to
each segment.
The Group tests annually for impairment, or more frequently if there are indicators that goodwill might be impaired.
The Board’s key assumptions are based on their past experience and future expectations of the market over the
longer term. The Group’s cost of external borrowing adjusted for dividend payment history, currency risk and
in accordance with IAS 36 ‘Impairment of Assets’ is 15%. In arriving at the individual segment discount rate,
management considered risks that are specific to each unit. The discount rates used in the value in use calculation
for Masterpork, Zamchick and Zamhatch are 17%, 15.5% and 15% respectively.
Masterpork, Zamchick and Zamhatch are expected to achieve a minimum revenue and profitability growth rate of
10%, 9%, 6% based on past growth recorded and future expected growth, and in light of projected increase in
Zambia’s population and therefore protein consumption.
89
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
13. Goodwill (continued)
Due to the significant headroom within historical impairment calculations, assumptions including growth rates
of cash flows and changes to selling prices and direct costs have not been sensitised. Therefore, management
is not aware of any significant risk of material adjustment to the goodwill figure in the next financial year.
Management’s key assumptions on the cashflow include stable increase in profit margins based on the increase
in consumption in the domestic market.
Recoverable amount of each operating unit is as follows:
Masterpork
Zamchick
Zamhatch
Total
2020
2020
2019
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
125,313
6,222
106,687
489,678
24,314
602,360
8,082
45,633
1,171,154
1,786,145
58,151
88,687
1,942,175
147,135
2,651,222
200,850
The Board is not aware of any other changes that would necessitate changes to its calculations.
14.
Property, plant and equipment
(i) In Zambian Kwacha
(a) Group
Land and
buildings
Aircraft
Plant and
machinery
Motor
vehicles
Furniture
and
equipment
Capital
work in
progress
Total
ZMW’000s
ZMW’000s ZMW’000s
ZMW’000s
ZMW’000s ZMW’000s
Cost or valuation
As at 1 October 2018
2,052,628
865
815,646
65,605
23,307
46,102
3,004,153
Exchange differences
Additions
Disposals
Transfer to held for
sale
Transfers
As at 30 September
2019
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
110
92,318
71,989
113,825
-
(11,923)
(698)
(145,561)
(91,718)
-
2,043,052
865
874,965
76,528
31,617
25,785
3,052,812
Exchange differences
516,215
7,938
15,425
(1,153)
(146,063)
11,499
-
-
-
-
-
-
128,710
1,369
27,071
10,079
-
-
(4,875)
(3,203)
(48,406)
(787)
28,720
11,406
820
4,551
-
(55)
(387)
2,061
-
647,114
43,025
92,664
-
15,425
(4,102)
(13,388)
-
(195,643)
(53,686)
-
2,446,913
865
1,006,185
95,392
38,607
11,022
3,598,984
Additions
Adjustment for
transition to IFRS16
Disposals
Transfer to held for
sale
Transfers
As at 30 September
2020
90
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS – 30 SEPTEMBER 2020
14.
Property, plant and equipment (continued)
Land and
Land and
buildings
buildings
Aircraft
Aircraft
Plant and
Plant and
machinery
machinery
Motor
Motor
vehicles
vehicles
Furniture
Furniture
and
and
equipment
equipment
Capital
Capital
work in
work in
progress
progress
Total
Total
ZMW’000s ZMW’000s ZMW’000s ZMW’000s ZMW’000s ZMW’000s ZMW’000s
(a) Group (continued)
(a) Group (continued)
Depreciation
As at 1 October 2018
Exchange difference
Charge for the year
Disposals
Transfer to held for sale
As at 30 September 2019
Exchange difference
Charge for the year
Charge on right of use assets
Disposals
Transfer to held for sale
As at 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
16,972
539
18,232
(77)
(4,630)
31,036
(728)
19,304
8,362
-
(5,044)
52,930
86
-
87
-
-
66,820
(2,044)
83,340
(222)
(5,255)
15,457
3
17,459
(814)
(246)
173
142,639
31,859
-
86
-
-
-
(1,897)
95,912
-
(598)
(14,507)
259
221,549
(982)
21,893
-
(1,536)
(329)
50,905
44,487
44,669
2,597
(26)
2,803
(20)
(73)
5,281
(543)
4,213
-
(6)
(109)
8,836
-
-
-
-
-
-
-
-
-
-
-
-
101,932
(1,528)
121,921
(1,133)
(10,204)
210,988
(4,150)
141,408
8,362
(2,140)
(19,989)
334,479
29,771
26,336
11,022
3,264,505
25,785
2,841,824
2,393,983
2,012,016
606
692
784,636
732,326
b)
Included in the net carrying amount of property, plant and equipment are right-of-use assets as follows:
Land and
Land and
buildings
buildings
Plant and
Plant and
Motor vehicles
machinery Motor vehicles
machinery
Total
Total
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
Gross carrying amount
At 1 October 2019
-
Adjustment on transition to IFRS 16
15,425
Additions
Disposals
At 30 September 2020
Depreciation and impairment
At 1 October 2019
Disposals
Depreciation
At 30 September 2020
-
-
15,425
54,801
-
-
-
54,801
-
8,519
-
8,362
8,362
-
6,410
14,929
1,560
-
4,020
-
5,580
366
-
963
1,329
56,361
15,425
4,020
-
75,806
8,885
-
15,735
24,620
Carrying amount 30 September 2020
7,063
39,872
4,251
51,186
91
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
14.
Property, plant and equipment (continued)
Land and
buildings
Aircraft
Plant and
machinery
Motor
vehicles
Furniture
and
equipment
Capital
work in
progress
Total
USD’000s USD’000s USD’000s USD’000s USD’000s USD’000s USD’000s
(ii) In US Dollars
(a) Group
Cost or valuation
As at 1 October 2018
Foreign translation
Additions
Transfer to held for sale
Transfers
Disposals
As at 30 September 2019
Foreign translation
Additions
Adjustment for transition to
IFRS16
Transfers
Disposals
168,428
(7,701)
1,126
(8,789)
1,878
(165)
154,777
(26,534)
491
954
711
(71)
Transfer to held for sale
As at 30 September 2020
(9,033)
121,295
Depreciation
As at 1 October 2019
Charge for the year
Disposals
Transfer to held for sale
Foreign Translation
As at 30 September 2019
Charge for the year
Charge on right of use assets
Disposals
Transfer to held for sale
Foreign Translation
As at 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
(4,986)
1,480
(6)
(351)
6,214
2,351
1,194
517
-
(312)
(1,020)
2,730
118,565
152,426
92
71
(5)
-
-
-
-
66
(23)
-
-
-
-
-
67,332
(4,317)
1,267
(2,087)
4,666
(577)
66,284
5,411
(521)
601
(66)
576
(203)
5,798
(16,480)
(2,144)
1,674
623
-
1,776
(301)
(2,994)
-
705
(198)
(49)
1,934
(210)
402
(32)
325
(23)
1,869
245,045
1,739
(11,015)
5,843
9,239
(53)
(11,027)
(7,445)
-
-
(968)
2,396
1,953
231,274
(861)
281
-
128
(3)
(23)
(104)
(46,146)
2,661
5,730
-
(3,320)
954
-
(254)
(827)
-
(12,099)
43
49,959
4,735
1,918
936
178,886
7
7
-
-
(1)
13
5
-
-
-
(5)
13
30
53
10,895
6,764
(18)
(397)
(6,437)
10,807
5,931
-
(37)
(897)
(4,623)
11,181
38,778
55,477
1,649
1,417
(66)
(19)
(568)
2,413
1,354
-
(95)
(20)
(1,219)
2,433
2,302
3,385
370
228
(2)
(6)
(190)
400
261
-
-
(7)
(216)
438
-
-
-
-
-
-
-
-
-
-
-
-
7,935
9,896
(92)
(773)
(982)
15,984
8,745
517
(132)
(1,236)
(7,083)
16,795
1,480
1,996
936
162,091
1,953
215,290
Zambeef Products PLC Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
14.
Property, plant and equipment (continued)
(a)
(b)
(c)
(d)
(e)
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.
The depreciation charge for the year includes ZMW31.3 million (USD1.9 million) (2019: ZMW29.7 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 capital work in progress depicts all capital expenditure items on projects that are yet to be completed.
In the opinion of the Directors, the carrying values of property, plant and equipment stated above are not higher
than their fair values.
If the cost model had been used, the carrying amounts of the property plant and equipment would be ZMW2,096,592
thousand (2019: ZMW1,642,766 thousand). The revalued amounts include a revaluation surplus of ZMW1,167,913
thousand before tax (2019: ZMW1,199,058 thousand), which is not available for distribution to the shareholders of
Zambeef Products PLC.
(f)
Included in the net carrying amount of property, plant and equipment are right-of-use assets as follows:
Gross carrying amount
At 1 October 2019
Adjustment on transition to IFRS 16
Additions
Exchange differences
At 30 September 2020
Depreciation and impairment
At 1 October 2019
Exchange differences
Depreciation
At 30 September 2020
Carrying amount 30 September
2020
Land and
Land and
buildings
buildings
USD’000s
USD’000s
-
953
-
(188)
765
Plant and
Plant and
Motor vehicles
machinery Motor vehicles
machinery
USD’000s
USD’000s
USD’000s
USD’000s
4,152
-
-
(1,430)
2,722
118
-
249
(90)
277
Total
Total
USD’000s
USD’000s
4,270
953
249
(1,708)
3,764
-
(102)
517
415
646
(300)
396
742
28
(21)
60
67
674
(423)
973
1,224
350
1,980
210
2,540
93
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
14. Property, plant and equipment (continued)
(i) In Zambian Kwacha
(b) Company
Cost or valuation
Land and
buildings
Plant and
machinery
Motor
vehicles
Furniture
and
equipment
Capital
work in
progress
Total
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
At 1 October 2018
1,629,373
511,443
23,974
12,687
38,440
2,215,917
Exchange differences
Additions
70,294
2,121
20,195
2,264
Assets held for sale
(116,020)
(27,547)
Disposals
Transfers
(1,675)
3,107
(1,160)
23,238
249
1,766
(876)
(421)
1,984
154
1,032
(420)
(118)
-
16,560
90,892
23,743
(698)
(145,561)
-
(3,374)
2,796
(31,125)
-
As at 30 September 2019
1,587,200
528,433
26,676
16,131
23,177
2,181,617
Exchange differences
510,532
129,184
Additions
Transfers
Disposals
4,926
17,291
(1,153)
17,404
4,482
(3,653)
Transfer to held for sale
(146,063)
(48,406)
1,804
3,238
-
(1,936)
(787)
934
2,304
607
(55)
(387)
-
642,454
7,513
35,385
(22,380)
-
(34)
(6,831)
-
(195,643)
As at 30 September 2020
1,972,733
627,444
28,995
19,534
8,276
2,656,982
Depreciation
As at 1 October 2018
Assets held for sale
Charge for the year
Disposals
As at 30 September 2019
Charge for the year
Disposals
Assets held for sale
As at 30 September 2020
Net book value
10,564
(4,630)
11,003
(66)
16,871
9,364
-
(5,044)
21,191
45,307
(5,255)
53,302
(223)
93,131
63,374
(529)
(14,507)
141,469
At 30 September 2020
1,951,542
485,975
At 30 September 2019
1,570,329
435,302
4,122
(246)
5,299
(125)
9,050
5,921
(857)
(329)
13,785
15,210
17,626
1,102
(73)
1,445
(19)
2,455
1,803
(6)
(109)
4,143
-
-
-
-
-
-
-
-
-
61,095
(10,204)
71,049
(433)
121,507
80,462
(1,392)
(19,989)
180,588
15,391
13,676
8,276
2,476,394
23,177
2,060,110
94
Zambeef Products PLC Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
14.
Property, plant and equipment (continued)
(ii) In US Dollars
(b) Company
Cost or valuation
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
As at 1 October 2018
133,119
41,703
2,027
1,037
3,140
181,026
Exchange differences
Additions
5,706
172
1,639
184
Assets held for sale
(8,789)
(2,087)
Transfers
Disposals
Foreign translation
As at 30 September 2019
Exchange differences
Additions
Transfers
Disposals
252
(136)
(10,081)
120,243
31,573
305
1,069
(71)
1,886
(94)
(3,198)
40,033
7,989
1,076
277
(226)
Assets held for sale
Foreign translation
(7,252)
(2,403)
(47,916)
(15,592)
20
143
(66)
161
(34)
(230)
2,021
112
200
-
(120)
(39)
(734)
As at 30 September 2020
97,951
31,154
1,440
Depreciation
As at 1 October 2018
Charge for the year
Assets held for sale
Disposals
Foreign translation
As at 30 September 2019
Charge for the year
Disposals
Transfer to held for sale
Foreign translation
As at 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
863
893
(351)
(5)
(122)
1,278
579
-
(250)
(555)
1,052
3,689
4,326
(397)
(18)
(544)
7,056
3,919
(33)
(720)
(3,198)
7,024
96,899
118,965
24,130
32,977
336
430
(19)
(10)
(52)
685
366
(53)
(16)
(297)
685
755
1,336
12
84
(32)
227
(10)
(97)
-
1,344
7,377
1,927
(53)
(11,027)
(2,526)
-
-
(274)
(149)
(13,755)
1,221
1,756
165,274
58
142
38
(3)
(19)
(467)
970
90
118
(6)
(2)
(14)
186
112
-
(5)
(87)
206
-
465
(1,384)
(2)
-
39,732
2,188
-
(422)
(9,713)
(424)
(65,133)
411
131,926
-
-
-
-
-
-
-
-
-
-
-
4,978
5,767
(773)
(35)
(732)
9,205
4,976
(86)
(991)
(4,137)
8,967
764
1,035
411
122,959
1,756
156,069
(a)
(b)
(c)
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.
In the opinion of the Directors, the carrying values of property, plant and equipment stated above are not
higher than their fair values.
If the cost model had been used, the carrying amounts of the property plant and equipment would be
ZMW1,614,242 thousand (2019: ZMW1,169,775 thousand). The revalued amounts include a revaluation
surplus of ZMW828,538 thousand before tax (2019: ZMW862,152 thousand), which is not available for
distribution to the shareholders of Zambeef Products PLC.
95
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
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/partially owned:
Country of
incorporation
Zambeef Retailing Limited
Zambia
Zamleather Limited
Zambia
Master Meat and Agro
Production Co. of Nigeria
Limited
Nigeria
Master Meat (Ghana) Limited
Ghana
Masterpork Limited
Zampalm Limited
Zam Chick Limited
Zambia
Zambia
Zambia
Zamhatch Limited
Zambia
Proportion of all
classes of issued
share capital
owned by the
Company 2020
Proportion of all
classes of issued
share capital
owned by the
Company 2019 Principal activity
100
100
80
90
100
10
100
100
Retailing of Zambeef
products
100
Processing and sale of
leather and production
and sale of shoes
100
Processing and sale of
meat products
Processing and sale of
meat products
80
90
Processing and sale
of pork and processed
products
100
10 Palm tree plantation
Processing and sale of
poultry products
100
Chicken breeding,
rearing and production
of stock feed
100
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
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
245,807
-
245,807
18,622
(6,417)
12,205
245,807
-
245,807
20,082
(1,460)
18,622
96
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
15.
Investments in subsidiaries and associates (continued)
(c)
The Company’s interests in its subsidiaries, which are unlisted, are as follows:
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
2020
Zambeef Retailing Limited
Zamleather Limited
West Africa Operations
Masterpork Limited
Zam Chick Limited
Zamhatch Limited
Total at the end of 30 September
2019
Name of company
Zambeef Retailing Limited
Zamleather Limited
Country of
Incorporation
Assets
ZMW’000s
Liabilities
ZMW’000s
Revenues
ZMW’000s
Profit/(loss)
ZMW’000s
Zambia
Zambia
Nigeria &
Ghana
Zambia
Zambia
Zambia
Zambia
Zambia
Nigeria &
Ghana
Zambia
Zambia
Zambia
1,158,827
1,399,097
2,149,113
(171,151)
101,258
76,548
29,950
(2,665)
73,344
73,545
218,759
7,595
253,585
167,145
290,584
(4,069)
1,079,335
851,278
300,668
1,189
811,454
539,538
591,707
40,384
3,477,803
3,107,151
3,580,781
(128,717)
899,371
983,478
1,853,720
(53,340)
91,242
63,868
26,828
(6,453)
21,158
68,093
184,954
2,592
234,170
142,910
252,952
(49)
854,449
633,437
247,580
23,030
654,402
444,883
420,633
57,319
2,754,792
2,336,669
2,986,667
23,099
Country of
Incorporation
Assets
USD’000s
Liabilities
USD’000s
Revenues
USD’000s
Profit/(loss)
USD’000s
Zambia
Zambia
West Africa Operations
Nigeria & Ghana
Masterpork Limited
Zam Chick Limited
Zamhatch Limited
Total at the end of 30 September
2020
Zambeef Retailing Limited
Zamleather Limited
Zambia
Zambia
Zambia
Zambia
Zambia
West Africa Operations
Nigeria & Ghana
Masterpork Limited
Zam Chick Limited
Zamhatch Limited
Zambia
Zambia
Zambia
Total at the end of 30 September
2019
57,539
69,469
132,907
(10,584)
5,028
3,642
3,801
1,852
3,652
13,529
12,607
8,299
17,977
53,592
42,268
18,594
(165)
470
(252)
74
40,291
26,789
36,593
2,497
172,699
154,278
221,452
68,134
73,543
150,464
6,912
1,603
4,838
2,178
5,158
15,013
17,740
10,827
20,532
64,731
47,988
20,096
49,576
26,494
34,142
208,696
168,848
242,425
(7,960)
(4,330)
(524)
210
(4)
1,869
4,653
1,874
97
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
15.
Investments in subsidiaries and associates (continued)
Name of company
Zambeef Retailing Limited
Zamleather Limited
Master Meat and Agro Production Co of
Nigeria Limited
Master Meat (Ghana) Limited
Masterpork Limited
Zam Chick Limited
Zamhatch Limited
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
31
1,477
216
1,310
26,601
158,230
57,942
245,807
2
73
10
64
1,321
7,858
2,877
12,205
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
(d)
(e)
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.
As at the reporting date, the Group has a 10% equity interest in Zampalm Limited.
The company has significant influence over Zampalm Limited in that, it has representation on the Board of Directors,
participates in policy making decisions and provides essential farming technical information. The company had
a management contract which expired in September 2020 and was responsible for day to day management of
Zampalm Limited. The investment is accounted for using the equity method.
Zampalm Limited’s principal activity is the establishment of a palm oil plantation and processing plant and the
production of crude palm oil. The company is still in the developmental stage and is expected to start generating
profits in 2024.
The summarised financial information for Zampalm Limited is as below;
Revenue
Gross Loss
Loss before tax
Non-current assets
Current assets
Total assets
Capital and reserves
Current liabilities
Total equity and liabilities
2020
2019
ZMW’000s
USD’000’s
ZMW’000s
USD’000s
3,868
(1,625)
(31,770)
273,811
6,625
280,436
106,846
173,590
280,436
239
(100)
(1,965)
13,595
329
13,924
5,305
8,619
13,924
1,339
(10,674)
(30,356)
270,301
8,040
278,341
138,616
139,725
278,341
109
(866)
(2,464)
20,477
609
21,086
10,501
10,585
21,086
Summarised financial information of the Group’s share in the associate is as follows:
2020
2019
ZMW’000s
USD’000’s
ZMW’000
USD’000
Opening balance
Arising during the year
Loss from continuing operation
Foreign exchange difference
Total comprehensive income
Carrying amount of the Group’s interest
12,376
34,627
(3,177)
-
31,450
43,826
938
2,141
(196)
(707)
1,238
2,176
15,412
-
(3,036)
-
(3,036)
12,376
1,259
-
(246)
(75)
(321)
938
(i)
There was no cash movement during the year. The movement shown above relates to a balance that was
owed by the associate which was converted to equity during the year.
98
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
16.
(a)
Biological assets – Group
Biological assets comprise standing crops, feedlot cattle, dairy cattle, pigs and chickens. At 30 September 2020
there were 349 hectares of standing crops, 9,774 cattle (6,697 feedlot cattle and 3,077 dairy cattle) and 731,710
chickens (106,555 breeding, 425,824 layers and 199,331 broilers), and 3,521 pigs. A total of 40,410 feedlot
cattle, 771 dairy cattle, 8,568 pigs and 7,809,410 chickens were culled during the year.
(i) Zambian Kwacha
Gains/
(losses)
arising from
fair value
attributable
to physical
changes
Gains/
(losses)
arising from
fair value
attributable
to price
changes
Decrease
due to
harvest/
transferred
to inventory
As at 30
September
As at 1
October
Increase due
to purchases
Standing Crops
Feedlot Cattle
Dairy Cattle
Pigs
Chickens
Total
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
27,260
42,878
49,767
4,555
341,400
229,142
76,917
12,197
45,957
393,865
401,948
(34,956)
(719,026)
34,900
(7,698)
1,316
93,895
6,838
(273,106)
12,654
1,083
(69,260)
(15,031)
-
(481,190)
16,626
40,652
62,380
4,120
52,527
170,417
1,053,521
524,361
(14,381)
(1,557,613)
176,305
(ii) In US Dollars
As at 1
October
Foreign
exchange
Increase
due to
purchases
Gains/
(losses)
arising
from fair
value
attributable
to physical
changes
Gains
arising
from fair
value
attributable
to price
changes
Decrease
due to
harvest/
transferred
to
inventory
As at 30
September
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
Standing Crops
Feedlot Cattle
Dairy Cattle
Pigs
Chickens
Total
2,066
3,247
3,771
344
3,482
12,910
(583)
(1,091)
(1,454)
(113)
(1,280)
(4,521)
21,113
14,171
4,757
754
24,358
65,153
24,859
(2,162)
(44,467)
2,158
(476)
81
5,807
32,429
423
783
67
-
(16,890)
(4,283)
(930)
(29,758)
(889)
(96,328)
826
2,018
3,098
203
2,609
8,754
99
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
16.
(b) Biological assets – Company
Biological assets comprise standing crops, feedlot cattle, dairy cattle, and chickens. At 30 September 2020
there were 349 hectares of standing crops, 9,774 cattle (6,697 feedlot cattle and 3,077 dairy cattle), and 304,536
chickens. A total of 40,410 feedlot cattle, 771 dairy cattle and 267,920 chickens were culled during the year.
(i) Zambian
Kwacha
Standing Crops
Feedlot Cattle
Dairy Cattle
Chickens
Total
(ii) In US Dollars
Gains/(losses)
arising from
fair value
attributable
to physical
changes
Gains/
(losses)
arising from
fair value
attributable
to price
changes
Decrease
due to
harvest/
transferred to
inventory
As at 30
September
As at 1
October
Increase due
to purchases
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
27,260
42,878
49,767
17,310
341,400
229,142
76,917
61,919
401,948
(34,956)
(719,026)
34,900
(7,698)
(6,698)
6,838
(273,106)
12,654
-
(69,260)
(52,688)
16,626
40,652
62,380
19,843
137,215
709,378
422,452
(15,464)
(1,114,080)
139,501
Gains/
(losses)
arising
from fair
value
attributable
to physical
changes
Gains/
(losses)
arising
from fair
value
attributable
to price
changes
Decrease
due to
harvest/
transferred
to
inventory
As at 30
September
As at 1
October
Foreign
exchange
Increase
due to
purchases
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
Standing Crops
Feedlot Cattle
Dairy Cattle
Chickens
Total
2,066
3,247
3,771
1,311
(583)
(1,091)
(1,454)
(482)
21,113
14,171
4,757
3,829
24,858
(2,162)
(44,467)
2,158
(476)
(414)
423
783
-
(16,890)
(4,283)
(3,258)
10,395
(3,610)
43,870
26,126
(956)
(68,898)
825
2,018
3,098
986
6,927
100
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
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
2020
Group
2019
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
595,376
1,817
325,242
23,930
151,290
5,985
516,046
1,817
187,028
8,364
100,826
-
1,103,640
814,081
406,602
345,724
-
-
220,250
117,626
-
683,600
580
228,885
139,018
163,167
2,907
941,159
2019
2020
Group
Company
USD’000s
Group
USD’000s
Company
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
29,562
90
16,149
1,188
7,512
297
25,623
90
9,287
415
5,006
-
54,798
40,421
30,803
44
17,340
10,532
12,361
220
71,300
26,192
-
-
16,685
8,911
-
51,788
A total of ZMW2,645.6 million (USD163.5 million) (2019: ZMW2,063.7 million (USD167.5 million]) was included in
profit and loss as an expense within cost of sales. Inventory was turned every 152 days (2019: 127 days).
Biological assets totalling ZMW1,557.6 million (USD96.3 million) (2019: ZMW1,707.4 million [USD138.6 million])
were transferred to inventories during the year.
101
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
18.
Trade and other receivables
(i) In Zambian Kwacha
Group
Company
Group
Company
Gross trade receivables
85,386
37,518
55,758
18,820
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
2020
2019
Less: allowance for expected credit
losses
Trade receivables
Prepayments
Other receivables
Less: other provisions
(5,075)
80,311
25,295
32,710
(5,648)
132,668
(1,516)
36,002
18,335
-
(3,782)
50,555
(4,910)
50,848
18,024
29,153
-
(1,913)
16,907
11,246
-
-
98,025
28,153
2020
2019
(ii) In US Dollars
Group
Company
Group
Company
USD’000s
USD’000s
USD’000s
USD’000s
Gross trade receivables
Less: allowance for expected credit
losses
Trade receivables
Prepayments
Other receivables
Less: other provisions
4,240
(252)
3,988
1,256
1,623
(280)
6,587
1,863
(75)
1,788
910
-
(188)
2,510
4,224
(372)
3,852
1,364
2,210
-
7,426
1,426
(145)
1,281
852
-
-
2,133
(a)
Allowance for credit losses
The trade receivables do not have a significant financing component and the simplified approach has been
applied to calculate the loss allowance on life time expected credit losses. The allowance for credit losses is
calculated for each business unit based on the historical loss experience and its particular customer profile
with shared and specific characteristics which are influenced by the nature of their business.
The fair value of these short term financial assets is not individually determined as the carrying amount is a
reasonable approximation of fair value.
All of the Group’s trade and other receivables in the comparative periods have been reviewed for indicators
of impairment. The impaired trade receivables are mostly due from customers in the business-to-business
market that are experiencing financial difficulties.
Note 29(b) includes disclosures relating to the credit risk exposures and analysis relating to the allowance
for expected credit losses. Both the current and comparative impairment provisions apply the IFRS 9
expected loss model.
102
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
18.
Trade and other receivables (continued)
Movements on the Group’s provision for allowance for expected credit losses and other provisions are set out in
the table below:
(i) In Zambian Kwacha
At 1 October
Utilised
Charge for the year
At 30 September
Analysed as follows:
Expected credit losses
Other provisions
Total
(ii) In US Dollars
At 1 October
Foreign exchange
Utilised
Charge for the year
At 30 September
Analysed as follows:
Expected credit losses
Other provisions
Total
Trade receivables have a 15 or 30 day credit period.
2020
2019
Group
ZMW’000s
Company
ZMW’000s
Group
ZMW’000s
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
4,910
(1,167)
6,980
10,723
5,075
5,648
10,723
2020
Group
1,913
(552)
3,937
5,298
1,516
3,782
5,298
1,331
(70)
652
1,913
1,913
-
1,913
4,822
(1,113)
1,201
4,910
4,910
-
4,910
2019
Company
USD’000s
Group
USD’000s
Company
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
372
(200)
(72)
432
532
252
280
532
145
(91)
(34)
243
263
75
188
263
394
(29)
(90)
97
372
372
-
372
109
(11)
(6)
53
145
145
-
145
103
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
18.
Trade and other receivables (continued)
The matrix for the calculation of the expected credit losses is as detailed below.
30 September 2020
Trade receivables days past due
Current More than More than More than
Total
30 days
60 days
90 days
Expected credit loss rate
4.1%
3.6%
Gross carrying amount - ZMW’000
70,306
11,723
7.2%
1,518
90.0%
1,839
85,386
Lifetime expected credit loss -
ZMW’000
2,894
417
109
1,655
5,075
30 September 2019
Trade receivables days past due
Current More than More than More than
Total
30 days
60 days
90 days
Expected credit loss rate
2.5%
Gross carrying amount - ZMW’000
45,718
4.7%
774
17.1%
4,268
60.1%
4,998
55,758
Lifetime expected credit loss -
ZMW’000
1,137
36
731
3,006
4,910
30 September 2020
Trade receivables days past due
Current More than More than More than
Total
30 days
60 days
90 days
Expected credit loss rate
4.1%
Gross carrying amount - USD’000
3,492
3.6%
582
Lifetime expected credit loss -
USD’000
144
21
7.2%
90.0%
75
5
91
82
4,240
252
30 September 2019
Trade receivables days past due
Current More than More than More than
Total
30 days
60 days
90 days
Expected credit loss rate
2.5%
4.7%
17.1%
60.1%
Gross carrying amount - USD’000
3,463
Lifetime expected credit loss -
USD’000
86
59
3
323
379
4,224
55
228
372
104
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
19.
Amounts due from related companies
(i) In Zambian Kwacha
Group
Company
Group
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
2020
2019
Chisamba Ranching and Cropping
Chisamba Ranching and Cropping
Danny Museteka
Danny Museteka
Tractorzam Limited
Tractorzam Limited
Tembilo Farms Limited
Tembilo Farms Limited
Wellspring Limited
Wellspring Limited
Lillian Limbuka
Lillian Limbuka
Zamleather Limited
Zamleather Limited
Zampalm Limited
Zampalm Limited
Master Meat & Agro Production Co. of
Master Meat & Agro Production Co. of
Nigeria Limited
Nigeria Limited
Zam Chick Limited
Zam Chick Limited
Master Meat (Ghana) Limited
Master Meat (Ghana) Limited
Zamhatch Limited
Zamhatch Limited
4,185
4,185
--
--
459459
--
1,049
1,049
--
3,644
3,644
--
--
--
--
--
--
--
--
--
--
47,704
47,704
3,229
3,229
59,974
59,974
704,526
704,526
3,318
3,318
501,366
501,366
258258
7070
--
5959
5,624
5,624
508508
--
35,035
35,035
--
--
--
--
601601
7070
--
--
5,624
5,624
--
40,154
40,154
20,184
20,184
60,977
60,977
534,335
534,335
2,728
2,728
414,072
414,072
9,337
9,337
1,320,117
1,320,117
41,554
41,554
1,078,745
1,078,745
(ii) In US Dollars
Group
Company
Group
Company
USD’000s
USD’000s
USD’000s
USD’000s
2020
2019
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
208
-
-
23
-
52
-
181
-
-
-
-
464
-
-
-
-
-
-
2,369
160
34,981
2,978
165
24,894
65,547
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
The above balances relate to arm’s length transactions between the transacting parties. External parties that fall
under the ‘Related Party’ disclosure are with respect to Directors who have shareholding in companies transacting
with 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.
The amounts due from related parties have been assessed for impairment using the expected credit loss model.
The expected credit loss determined is immaterial and therefore no separate disclosure has been made.
105
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
20.
Cash and cash equivalents
(i) In Zambian Kwacha
(i) In Zambian Kwacha
Group
Group
Company
Company
Group
Group
Company
Company
20202020
20192019
Cash in hand and at bank
Bank overdrafts (note (b))
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
111,136
12,645
56,753
11,844
(348,045)
(170,822)
(331,178)
(207,616)
(236,909)
(158,177)
(274,425)
(195,772)
20202020
20192019
(ii) In US Dollars
(ii) In US Dollars
Group
Group
Company
Company
Group
Group
Company
Company
Cash in hand and at bank
Bank overdrafts (note (b))
(a)
Banking facilities
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
5,518
(17,281)
(11,763)
628
(8,482)
(7,854)
4,299
(25,089)
(20,790)
897
(15,728)
(14,831)
The Group has overdraft facilities totalling ZMW193.3 million (2019: ZMW118.3 million) with Zanaco Bank
Plc. The Zanaco Bank overdraft bears an interest rate of Bank of Zambia Policy rate plus 8 per cent. on the
Kwacha facility.
The Group has overdraft facilities totalling ZMW74.6 million (2019: ZMW74.6 million) and USD5 million
(2019: USD5 million) with Citibank Zambia Limited. The Citibank overdrafts bear interest rates of Bank of
Zambia Policy rate (BPR) plus 0.25% plus Liquidity Premium (182 day Treasury bill rate minus BPR) on the
Kwacha facility and 3 month USD LIBOR rate plus 3.5 per cent. on the USD facility. During 2019 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 which was discharged in April
2020.
The Group has overdraft facilities totalling ZMW57.5 million (2019: ZMW57.5 million) and USD2 million
(2019: USD2 million) with Stanbic Bank Zambia Limited. The Stanbic Bank overdrafts bear interest rate of
Bank of Zambia Policy rate plus 6 per cent. on the Kwacha facility and 3 month USD LIBOR rate plus 4 per
cent. on the USD facility.
The Group has overdraft facilities totalling ZMW42 million (2019: ZMW30 million) and USD3 million (2019:
USD2 million) with Standard Chartered Bank Zambia Plc. The Standard Chartered Bank overdrafts bear
interest rates of Bank of Zambia Policy rate plus 6 per cent. on the Kwacha facilities and 1 month USD
LIBOR rate plus 4 per cent. on the USD facilities.
106
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
20. Cash and cash equivalents (continued)
(b)
Bank overdrafts
(i) In Zambian Kwacha
Group
Company
Group
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
2020
2019
Bank overdrafts represented by:
Zanaco Bank Plc
Citibank Zambia Limited
Stanbic Bank Zambia Limited
Standard Chartered Bank Zambia Plc
(145,387)
(101,446)
(49,805)
(51,407)
(2)
(114,029)
-
(69,615)
(49,805)
(51,400)
(119,071)
(109,538)
(69,060)
(29,018)
(69,060)
(29,018)
(348,045)
(170,822)
(331,178)
(207,616)
(ii) In US Dollars
Group
Company
Group
Company
USD’000s
USD’000s
USD’000s
USD’000s
2020
2019
Bank overdrafts represented by:
Zanaco Bank Plc
Citibank Zambia Limited
Stanbic Bank Zambia Limited
Standard Chartered Bank Zambia Plc
(7,219)
(5,037)
(2,473)
(2,552)
(17,281)
(1)
(3,456)
(2,473)
(2,552)
(8,482)
(8,638)
(9,021)
(5,232)
(2,198)
-
(8,298)
(5,232)
(2,198)
(25,089)
(15,728)
(i)
The Zambeef Products Group bank overdrafts and Short-Term Seasonal Loan facilities are secured
by a floating charge/debenture over all the assets of the Group with a security cover of 125 per cent.
of limits. The floating charge/debenture ranks pari passu between Standard Chartered Bank Zambia
Plc, Citibank Zambia Limited, Zanaco Bank Plc and Stanbic Bank Zambia Limited.
All overdrafts are annual revolving facilities.
107
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
21. Share capital
(a) Ordinary share capital
Authorised
700,000,000 ordinary shares of ZMW0.01 each
7,000
938
7,000
938
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
(2019: 700,000,000 ordinary shares of
ZMW0.01 each)
Issued and fully paid
At 1 October
Issued during the year
At 30 September
3,006
449
3,006
449
-
-
-
-
-
-
-
-
300,579,630 ordinary shares of ZMW0.01 each
3,006
449
3,006
449
(2019: 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
(2019: 100,057,658 preference shares of
ZMW0.01 each)
1,000
100
1,000
100
-
-
-
-
-
-
-
-
1,000
100
1,000
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 from 2016 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.
108
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
22.
Share premium
At 1 October
Arising during the year
At 30 September
2020
2019
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.
23.
Interest bearing liabilities
(i) In Zambian Kwacha
Group
Company
Group
Company
2020
2019
DEG – Deutsche Investitions- und
Entwicklungsgesellschaft mbH (note (a))
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
222,547
222,547
197,604
197,604
Zanaco Bank Plc (note (b))
6,646
6,646
13,286
13,286
Standard Chartered Bank Zambia Plc (note (c))
149,877
149,877
212,381
212,381
IFC – International Finance Corporation (note (d))
109,047
109,047
118,870
118,870
Stanbic Bank Zambia Limited (note (e))
29,000
29,000
29,000
29,000
Less: Short term portion (repayable within next 12
months)
517,117
517,117
571,141
571,141
(326,899)
(326,899)
(343,042)
(343,042)
Long term portion (repayable after 12 months)
190,218
190,218
228,099
228,099
109
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
23.
Interest bearing liabilities
(ii) In US Dollars
Group
Company
Group Company
2020
2019
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))
USD’000s
USD’000s USD’000s USD’000s
11,050
11,050
14,970
14,970
330
7,442
5,414
1,440
330
7,442
5,414
1,440
1,006
1,006
16,089
16,089
9,006
2,197
9,006
2,197
25,676
25,676
43,268
43,268
Less: Short term portion (repayable within next 12
months)
(16,231)
(16,231)
(25,988)
(25,988)
Long term portion (repayable after 12 months)
9,445
9,445
17,280
17,280
(a)
(i) DEG Term Loan 3
The Group has a loan facility of USD3.55 million (2019: USD4.97 million and original amount of
USD10 million) from DEG. Interest on the loan is 4.25 per cent. above the 6 month USD LIBOR
rate per annum payable 6 monthly in arrears. The capital is repayable in 14 biannual instalments of
USD710,000 commencing May 2016 and expiring in November 2022.
The DEG term loan 3 is secured by a first ranking legal mortgage over R/E of Farm No. 4450, R/E of
F/4451 and R/E of F/5388 (Mpongwe Farm), ranking pari passu with the IFC.
(ii)
DEG Term Loan 4
The Group has a loan facility of USD7.5 million (2019: USD10 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 a first ranking legal mortgage over R/E of Farm No. 4450, R/E of
F/4451 and R/E of F/5388 (Mpongwe Farm), ranking pari passu with the IFC.
(b)
Zanaco Bank Plc
The Group has a loan facility of ZMW6.65 million (2018: ZMW13.3 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 USD18 million (2019
– 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 USD7.4 million (2019: USD16.1 million). Interest on the facility is 3 month
USD LIBOR plus 3.25 per cent. per annum calculated on the daily overdrawn balances.
The facility is secured by a fixed and floating charge over grain stocks of wheat, soya beans and maize.
110
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
23.
Interest bearing liabilities (continued)
(d)
International Finance Corporation Loan 2
The Group has a loan facility of USD4.8 million and ZMW11.98 million (2019: USD7.6 million and ZMW18.8
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), ranking pari passu with the DEG.
(e)
Stanbic Bank Zambia Limited
In the year ended 30 September 2019, 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 (2019: ZMW29 million). Interest on the facility is 6.0 per cent. above the Bank of Zambia
policy rate per annum payable monthly in arrears.
This facility is secured by a floating charge/debenture over all the assets of the Company. The floating
charge/debenture ranks pari passu between Standard Chartered Bank Zambia Plc, Citibank Zambia
Limited and Zanaco Bank Plc.
24.
Leases
In Zambian Kwacha
Current
Non-current
(ii) In US Dollar
Current
Non-current
2020
2019
Group
Company
Group
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
23,259
19,750
43,009
14,461
8,172
22,633
21,487
19,297
40,784
18,266
11,505
29,771
2020
2019
Group
Company
Group
Company
USD’000s
USD’000s
USD’000s
USD’000s
1,155
981
2,136
718
406
1,124
1,628
1,462
3,090
1,384
872
2,256
The Group has leases for its motor vehicles and trailers, farming equipment, land and buildings, retail outlets and
production equipment. With the exception of short-term leases and leases of low-value underlying assets, each
lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which
do not depend on an index or a rate (such as lease payments based on a percentage of Group sales) are excluded
from the initial measurement of the lease liability and asset. The Group classifies its right-of-use assets in a con-
sistent manner to its property, plant and equipment.
Each lease generally imposes a restriction that, unless there is a contractual right for the Group to sublet the asset
to another party, the right-of-use asset can only be used by the Group. Leases are either non-cancellable or may
only be cancelled by incurring a substantive termination fee.
Some leases contain an option to purchase the underlying leased asset outright at the end of the lease, or to
extend the lease for a further term. The Group is prohibited from selling or pledging the underlying leased assets
as security. For leases over commercial premises the Group must keep those properties in a good state of repair
and return the properties in their original condition at the end of the lease. Further, the Group must insure items of
property, plant and equipment and incur maintenance fees on such items in accordance with the lease contracts.
111
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
24.
Leases (continued)
The table below describes the nature of the Group’s leasing activities by type of right-of-use asset recognised on
the statement of financial position:
No. of
right-of-
use assets
leased
Range of
remaining
term
Average
remaining
lease term
No. of
leases with
extension
options
No. of
leases with
options to
purchase
No. of
leases with
variable
payments
linked to
an index
No. of
leases with
termination
options
4
10
0-1 year
0.3 years
2-3 years
2 years
44
2-3 years
2 years
3
68
3-4 years
3 years
1-3 years
1.5 years
6
3-4year
3 years
-
-
-
-
68
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Right-of-use
asset
Motor vehicles
Trailers
Farming
equipment
Land &
buildings
Retail Outlets
Production
equipment
The Group has leases for K43,009 thousand. The lease liabilities are secured by the related underlying assets.
Future minimum lease payments at 30 September 2020 were as follows:
Minimum lease payments due
Within 1
year
1-2 years
ZMW’000
2-3 years
ZMW’000
3-4 years
ZMW’000
4-5 years
ZMW’000
After 5
years
ZMW’000
Total
ZMW’000
ZMW’000s ZMW’000s ZMW’000s ZMW’000s ZMW’000s ZMW’000s
ZMW’000s
30 September
2020
Lease payments
Finance charges
Net present
values
30 September
2019
Lease payments
Finance charges
Net present
values
7,567
(413)
10,652
(111)
7,154
10,541
8,244
(888)
18,048
(1,903)
7,356
16,145
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,219
(524)
17,695
26,292
(2,791)
23,501
-
-
-
-
112
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
24.
Leases (continued)
Leasing
Current
Non-Current
Total
30 September 2020
30 September
2019
USD’000s
USD’000s
443
652
1,095
614
1,347
1,961
Minimum lease payments
Within 1
year 1-2 years
2-3 years
3-4 years
4-5years
After 5
years
Total
USD’000s USD’000s USD’000s USD’000s USD’000s USD’000s USD’000s
30 September 2020
Lease payments
Finance charges
Net Present Values
30 September 2019
468
(25)
443
659
(7)
652
Lease payments
669
1,465
Finance charges
(55)
(118)
-
-
-
-
-
Net Present Values
614
1,347
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,127
(32)
1,095
2,134
(173)
-
-
1,961
Lease payments not recognised as a liability
The group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12
months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-
line basis. In addition, certain variable lease payments are not permitted to be recognised as lease liabilities and
are expensed as incurred.
113
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
24.
Leases (continued)
The expense relating to payments not included in the measurement of the lease liability is as follows:
Short-term leases
Leases of low value assets
Variable lease payments
Total
30 September 2020
30 September 2020
ZMW’000s
1,359
-
-
1,359
USD’000s
84
-
-
84
Included in the finance cost of ZMW92,322 thousand (US$5,709 thousand) is interest expense for leasing
arrangements amounting to ZMW86,000 (US$6,000).
At 30 September 2020 the Group was committed to short-term leases and the total commitment at that date was
ZMW719,364 (USD 35,718).
25. Deferred liability
Under the terms of employment, employees are entitled to certain terminal benefits. Provisions have 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.
2020
2019
(i) In Zambian Kwacha
Group
Company
Group
Company
At 1 October
(Movements)/provision during the year
Payments made during the year
At 30 September
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
16,362
(3,185)
(1,788)
11,389
3,655
312
(611)
3,356
22,611
(4,673)
(1,576)
16,362
5,059
(836)
(568)
3,655
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 2020. As of the report date, the
actuary had finalised the report and the provision was adjusted to agree to the report.
114
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
25. Deferred liability (continued)
(ii) In US Dollar
Group
Company
Group
Company
2020
2019
At 1 October
(Movements)/provision during the year
Payments made during the year
Foreign translation
At 30 September
USD’000s
USD’000s
USD’000s
USD’000s
1,240
(197)
(111)
(367)
565
277
19
(38)
(91)
167
1,847
(379)
(128)
(100)
1,240
413
(67)
(46)
(23)
277
The assumptions are 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.
Defined benefit obligation 1 October
16,362
1,240
22,611
1,847
2020
2019
ZMW’000s
USD’000s ZMW’000s USD’000s
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
Benefits paid
Translation difference
Past Service cost
Defined benefit obligation 30 September
Unfunded
Partly or wholly funded
589
2,739
36 887
72
169
3,850
313
-
-
-
-
(4,929)
(1,300)
(2,072)
-
-
11,389
11,389
-
(305)
(3,097)
(251)
(80)
(5,731)
(465)
(128)
(2,158)
(175)
(367)
-
565
565
-
-
-
16,362
16,362
-
(101)
-
1,240
1,240
-
115
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
25. Deferred liability (continued)
The significant actuarial assumptions for the determination of the defined benefit 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
30 September
30 September
2020
33%
20.0%
2019
20%
14.50%
Probability
of reaching
retirement age
in service
Probability
of reaching
retirement age in
service
47%
57%
66%
72%
78%
86%
47%
57%
66%
72%
78%
86%
Amounts recognised in profit or loss related to the Group’s defined benefit plan are as follows;
Current service cost
Past service cost
Net interest expenses
Total expenses recognised in profit or loss
2020
2019
ZMW’000s
USD’000s ZMW’000s
USD’000s
589
-
2,739
3,328
36
-
169
205
887
-
3,850
4,737
72
-
313
385
Amounts recognised in other comprehensive income related to the Group’s defined benefit plan are as follows:
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
20202020
20192019
ZMW’000s
ZMW’000s
ZMW’000s
USD’000s ZMW’000s
USD’000s
USD’000s
USD’000s
(4,929)
(1,300)
(305)
(80)
-
(3,098)
(5,731)
-
(252)
(465)
-
-
-
-
(6,229)
(385)
(8,829)
(717)
116
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
26.
Trade and other payables
(a) The table below shows the trade and other payables:
Trade and other payables
Trade and other payables
(i) In Zambian Kwacha
(i) In Zambian Kwacha
Trade payables
Trade payables
Accruals
Accruals
20202020
20192019
Group
Group
Company
Company
Group
Group
Company
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
290,172
290,172
31,476
31,476
321,648
321,648
226,646
226,646
6,198
6,198
232,844
232,844
233,245
233,245
26,340
26,340
259,585
259,585
152,362
152,362
6,142
6,142
158,504
158,504
Trade and other payables
Trade and other payables
20202020
20192019
(ii) In US Dollars
(ii) In US Dollars
Group
Group
Company
Company
Group
Group
Company
Company
Trade payables
Accruals
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
USD’000s
14,409
1,562
15,971
11,253
308
11,561
17,670
1,995
19,665
11,543
465
12,008
The average credit period taken in 2020 was 43 days (2019: 33 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.
(b) Included in the other payables are balances relating to contract liabilities, these are as follows:
Group
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
Opening Balance
75,849
5,746
17,348
1,417
Receipt from Customers
776,373
48,013
685,422
55,635
Sales to Customers
Exchange Gain/Loss
Closing Stock
(754,550)
(46,663)
(626,921)
(50,886)
-
(2,246)
-
(420)
97,672
4,850
75,849
5,746
Company
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
Opening Balance
71,807
5,440
15,644
1,278
Receipt from Customers
537,341
33,231
528,770
42,920
Sales to Customers
Exchange Gain/Loss
Closing Stock
(516,872)
(31,965)
(472,607)
(38,361)
-
(2,124)
-
(397)
92,276
4,582
71,807
5,440
Advances received from customers represent customer payments received in advance of performance (contract
liability) that are expected to be recognised as revenue in 2021. The advances for supply of grain is ZMW 84,053
thousand, USD 4,173 thousand (2019: ZMW 66,000 thousand, USD 5,000 thousand), the supply of day-old
chicks is ZMW 1,465 thousand, USD 73 thousand (2019: ZMW534 thousand, USD 40 thousand), the amount
for the supply of stock feed is ZMW 10,608 thousand, USD 527 thousand (2019: ZMW 8,001 thousand, USD
606 thousand) and others were ZMW 1,546 thousand, USD 77 thousand (2019: ZMW 1,194 thousand, USD 90
thousand). All brought forward balances were recognized as in come the current year.
117
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS – 30 SEPTEMBER 2020
27. Provisions
The table below shows the provisions
Provisions
Staff
Others
Total
Staff
Others
Total
ZMW’000s ZMW’000s ZMW’000s USD’000s USD’000s USD’000s
Group
Carrying amount 1 October 2019
Additional provisions
Amount utilised
Foreign translation
Carrying amount 30 Septem-
ber 2020
Company
47,591
51,709
5,323
52,914
71,127
122,836
(32,969)
(29,434)
(62,403)
-
66,331
47,016
113,347
Carrying amount 1 October 2019
27,839
12,623
40,462
Foreign translation
Additional provisions
Amount utilised
Carrying amount 30 Septem-
ber 2020
-
-
-
29,865
21,181
51,046
(17,685)
(12,623)
(30,308)
(1,094)
40,019
21,181
61,200
1,987
3,606
3,198
(2,039)
(1,471)
3,294
2,109
(875)
1,847
403
4,399
(1,820)
(647)
2,335
956
(433)
1,310
(781)
1,052
4,009
7,597
(3,859)
(2,118)
5,629
3,065
(1,308)
3,157
(1,875)
3,039
Staff provisions relate to gratuity, leave pay and other related claims. These are paid as and when they fall but
mainly in December at the end of employee contracts. Other provisions relate to suppliers claims for goods and
services provided. These are paid within 3 months average of provisioning.
28. Amounts due to related companies
(i) In Zambian Kwacha
Group
Company
Group
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
2020
2019
Zambeef Retailing Limited
Masterpork 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
-
-
443
443
-
443
634,417
70,250
443
705,110
-
705,110
-
-
251
251
-
251
417,832
71,962
251
490,045
-
490,045
2020
2019
Group
Company
Group
Company
USD’000s
USD’000s
USD’000s
USD’000s
-
-
-
-
22
22
-
22
-
31,501
3,488
-
22
35,011
-
35,011
-
-
-
-
19
19
-
19
-
31,654
5,451
19
37,124
-
37,124
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.
118
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS – 30 SEPTEMBER 2020
29.
Reconciliation of liabilities arising from financing activities
The changes in the Group’s liabilities arising from financing activities can be classified as follows:
Long-term
borrow-
ings
Short-term
borrowings
Lease
liabilities
Total
Long-term
borrowings
Short-term
borrowings
Lease
liabilities
Total
Group
ZMW’000s ZMW’000s ZMW’000s ZMW’000s USD’000s USD’000s USD’000s
USD’000s
1 October 2019
228,099
343,042
40,784
611,925
17,280
25,988
3,090
46,358
-
-
7,063
7,063
-
-
351
351
228,099
343,042
47,847
618,988
17,280
25,988
3,441
46,709
(162,217)
(623,231)
(35,478)
(820,926)
(10,032)
(38,542)
(2,194)
(50,768)
-
-
487,320
-
487,320
-
14,329
14,329
-
-
30,137
-
30,137
-
886
886
141,697
102,407
16,311
260,415
– Reclassification
(17,361)
17,361
-
-
30 September 2020
190,218
326,899
43,009
560,126
3,549
(1,352)
9,445
(2,704)
3
1,352
-
848
-
16,231
2,136
27,812
1 October 2018
308,312
202,460
38,411
549,183
25,189
16,541
3,138
44,868
(96,913)
(215,124)
(47,007)
(359,044)
(7,866)
(17,461)
(3,816)
(29,143)
-
334,580
-
334,580
-
27,157
-
27,157
-
-
47,714
47,714
-
-
3,873
3,873
Adoption of IFRS 16
Revised ‘1 October
2019
Cash-flows:
– Repayment
– Proceeds
– Additions
Non-cash:
– Exchange
difference
Cash-flows:
– Repayment
– Proceeds
– Additions
Non-cash:
– Exchange
difference
– Reclassification
(6,413)
6,413
-
-
23,113
14,713
1,666
39,492
-
(43)
(292)
(105)
(397)
43
-
-
30 September 2019
228,099
343,042
40,784
611,925
17,280
25,988
3,090
46,358
119
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS – 30 SEPTEMBER 2020
29.
Reconciliation of liabilities arising from financing activities (continued)
Long-term
borrowings
Short-term
borrowings
Lease
liabilities
Total
Long-term
borrowings
Short-term
borrowings
Lease
liabilities
Total
Company
ZMW’000s
ZMW’000s ZMW’000s ZMW’000s
USD’000s
USD’000s USD’000s USD’000s
1 October 2019
228,099
343,042
40,784
611,925
17,280
25,988
3,090
46,358
Adoption of IFRS 16
-
-
-
-
-
-
-
-
Revised ‘1 October
2019
Cash-flows:
– Repayment
– Proceeds
– Additions
Non-cash:
228,099
343,042
40,784
611,925
17,280
25,988
3,090
46,358
(162,217)
(623,231)
(30,835)
(816,283)
(10,032) (38,542)
(1,907)
(50,481)
-
487,320
-
487,320
-
30,137
-
30,137
-
-
14,329
14,329
-
-
886
886
– Exchange difference
141,697
102,406
11,668
255,771
3,549
(2,704)
3
848
– Reclassification
(17,361)
17,361
-
-
(1,352)
1,352
-
-
30 September 2020
190,218
326,898
35,946
553,062
9,445
16,231
2,072
27,748
1 October 2018
308,312
202,460
24,344
535,116
25,189
16,541
1,989
43,719
Cash-flows:
– Repayment
– Proceeds
– Additions
Non-cash:
(96,913)
(215,124)
(43,953)
(355,990)
(7,866)
(17,461)
(3,568)
(28,895)
-
334,580
-
334,580
-
27,157
-
27,157
-
-
47,714
47,714
-
-
3,873
3,873
– Exchange difference
23,113
14,713
1,666
39,492
-
(292)
(38)
(330)
– Reclassification
(6,413)
6,413
-
-
(43)
43
-
-
30 September 2019
228,099
343,042
29,771
600,912
17,280
25,988
2,256
45,524
120
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
30.
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
Group
Company
Group
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
2020
2019
Financial assets
- Cash at bank
-
Trade receivables
- Other receivables
Financial liabilities
14,532
21,622
16,043
7,139
19,485
7,867
30,575
58,257
3
3,115
52,372
-
-
-
-
-
Bank overdrafts
(146,240)
(136,999)
(194,909)
(71,329)
Trade and other payables and provisions
(198,419)
(185,163)
(138,151)
(108,193)
Bank loans
Leases
(319,622)
(319,622)
(297,660)
(297,660)
(30,341)
(18,468)
(19,423)
(19,423)
Net exposure
(642,425)
(625,761)
(561,308)
(441,118)
121
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
30.
Financial instruments (continued)
(i) In US Dollars
Group
Company
Group
Company
USD’000s
USD’000s
USD’000s
USD’000s
2020
2019
Financial assets
- Cash at bank
-
Trade receivables
- Other receivables
Financial liabilities
722
1,074
797
354
967
391
2,316
4,413
-
236
3,968
-
-
-
-
-
Bank overdrafts
(7,261)
(6,802)
(14,766)
(5,404)
Trade and other payables and
provisions
Bank loans
Leases
(9,852)
(9,194)
(10,465)
(8,197)
(15,870)
(15,870)
(22,550)
(22,550)
(1,507)
(917)
(1,471)
(1,471)
Net exposure
(31,897)
(31,071)
(42,523)
(33,418)
(i)
In Zambian Kwacha
2020 - Group
Financial Assets
- Cash at bank
-
Trade receivables
- Other receivables
Financial Liabilities
-
-
-
-
Bank overdrafts
Trade and other payables
Bank loans
Leases
Net exposure
US Dollar
SA Rand
Other
Total
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
13,074
21,607
8,294
(146,240)
(178,027)
(319,622)
(30,341)
(631,255)
731
15
3,880
727
-
3,869
-
-
(18,835)
(1,557)
-
-
-
-
14,532
21,622
16,043
(146,240)
(198,419)
(319,622)
(30,341)
(14,209)
3,039
(642,425)
122
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
30.
Financial instruments (continued)
(i)
In Zambian Kwacha - 2019 - Group
US Dollar
SA Rand
Other
Total
ZMW’000s ZMW’000s ZMW’000s ZMW’000s
2,578
55,191
-
(80,589)
1,303
1,984
3
-
26,694
1,082
-
30,575
58,257
3
(114,320)
(194,909)
Financial Assets
- Cash at bank
-
Trade receivables
- Other receivables
Financial Liabilities
Bank overdrafts
-
-
-
-
Trade and other payables
(106,330)
(10,458)
(21,363)
(138,151)
Bank loans
Leases
(297,660)
(19,423)
-
-
-
-
(297,660)
(19,423)
Net exposure
(446,233)
(7,168)
(107,907)
(561,308)
(i)
In US Dollars – Group - 2020
Financial Assets
- Cash at bank
-
Trade receivables
- Other receivables
Financial Liabilities
-
-
-
-
Bank overdrafts
Trade and other payables
Bank loans
Leases
Net exposure
US Dollar
SA Rand
Other
Total
USD’000s USD’000s USD’000s USD’000s
649
1,073
412
(7,261)
(8,839)
(15,870)
(1,507)
(31,343)
36
1
193
-
(935)
-
-
36
-
192
-
(77)
-
-
721
1,074
797
(7,261)
(9,851)
(15,870)
(1,507)
(705)
151
(31,897)
123
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
30.
Financial instruments (continued)
(i)
In US Dollars – Group - 2020
(i) In US Dollars - Group
US Dollar
SA Rand
Other
Total
USD’000s
USD’000s
USD’000s
USD’000s
2019
Financial Assets
- Cash at bank
-
Trade receivables
- Other receivables
Financial Liabilities
-
-
-
-
Bank overdrafts
Trade and other payables
Bank loans
Finance leases
Net exposure
195
4,181
-
(6,105)
(8,055)
(22,550)
(1,471)
(33,805)
99
150
-
-
(792)
-
-
2,022
82
-
(8,661)
(1,618)
-
-
(543)
(8,175)
2,316
4,413
-
(14,766)
(10,465)
(22,550)
(1,471)
(42,523)
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’s 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:
(ii) 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.
124
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
30.
Financial instruments (continued)
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
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
222,547
11,050
197,604
97,075
319,622
4,820
15,870
100,056
297,660
14,970
7,580
22,550
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 percent and 5 percent, movement in
the United States Dollar/Zambian Kwacha exchange rate for the year ended 30 September 2020.
If the Zambian Kwacha had weakened against the United States dollar by 10 percent (2019: 10 percent) then this
would have resulted in the following impact on net profit and equity:
Weakening of the Kwacha
ZMW’000s
USD’000s
ZMW’000s
USD’000s
Net loss
Equity
(130,545)
3,740,112
(7,450)
(2,443)
(180)
168,823
3,215,943
221,484
2020
2019
If the Zambian Kwacha had strengthened against the United States Dollar by 5 per cent. (2019: 5 per cent) then
this would have resulted in the following impact on net profit and equity:
Strengthening of the Kwacha
ZMW’000s
USD’000s
ZMW’000s
USD’000s
Net profit
Equity
(84,564)
(5,505)
42,206
3,788,055
197,985
3,260,592
3,606
260,015
2020
2019
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 percent movement
in the LIBOR rate would not have a material impact on the interest expense for the Group.
The following table illustrates the sensitivity of profit and equity to a reasonably possible change of interest
of +/- 5%. These changes are considered to be reasonably possible based on the current market conditions
that have been adversely affected by the outbreak of COVID-19. All other variables are held constant.
125
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
30.
Financial instruments (continued)
Changes in interest rates
30 September 2020
30 September 2019
Changes in interest rates
30 September 2020
30 September 2019
(iv) Market risk
Profit
+5%
-5%
Equity
+5%
-5%
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
(34,829)
(31,842)
34,829
31,842
(27,863)
(25,474)
Profit
+5%
-5%
Equity
+5%
22,291
20,379
-5%
USD’000s
USD’000s
USD’000s
USD’000s
(2,154)
(2,585)
2,154
2,585
(1,723)
(2,068)
1,379
1,654
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
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 2020
Interest bearing liabilities
Other bank borrowings
Finance lease obligations
Trade and other payables
30 September 2020
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’000s
ZMW’000s
ZMW’000s
ZMW’000s
88,512
-
10,164
321,648
88,512
348,045
10,164
-
190,218
-
19,297
-
-
-
-
-
Current
Non-current
Within 6
months
6 to 12
months
1 to 5
later than
years
years
USD’00s0
USD’000s
USD’000s
4,395
-
505
21,593
4,395
17,281
505
-
9,445
-
958
-
-
-
-
-
-
126
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
31.
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 Group had no financial assets within the hierarchy of financial assets and liabilities measured at fair value on
a recurring basis at 30 September 2020, 30 September 2019, and 1 October 2018.
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 recur-
ring basis at 30 September 2020, 30 September 2019, and 1 October 2018:
30 September 2020
Land held for production in Zambia
Office building in Zambia
Plant and machinery
Biological assets
30 September 2019
Land held for production in Zambia
Office building in Zambia
Plant and machinery
Biological assets
30 September 2020
Land held for production in Zambia
Office building in Zambia
Plant and machinery
Biological assets
30 September 2020
Land held for production in Zambia
Office building in Zambia
Plant and machinery
Biological assets
30 September 2019
Land held for production in Zambia
Office building in Zambia
Plant and machinery
Biological assets
1 October 2018
Land held for production in Zambia
Office building in Zambia
Plant and machinery
Biological assets
Level 1
ZMW’000s
-
-
-
-
Level 1
ZMW’000s
-
-
-
-
Level 1
ZMW’000s
-
-
-
-
Level 1
USD’000s
-
-
-
-
Level 1
USD’000s
-
-
-
-
Level 1
USD’000s
-
-
-
-
Level 2
ZMW’000s
2,396,328
50,585
1,006,185
176,305
Level 2
ZMW’000s
1,994,196
48,856
874,965
170,417
Level 2
ZMW’000s
2,012,403
40,225
815,646
181,674
Level 2
USD’000s
118,784
2,511
49,959
8,754
Level 2
USD’000s
151,076
3,701
66,284
12,910
Level 2
USD’000s
165,142
3,286
67,332
14,843
Level 3
ZMW’000s
-
-
-
-
Level 3
ZMW’000s
-
-
-
-
Level 3
ZMW’000s
-
-
-
-
Level 3
USD’000s
-
-
-
-
Level 3
USD’000s
-
-
-
-
Level 3
USD’000s
-
-
-
-
Total
ZMW’000s
2,396,328
50,585
1,006,185
176,305
Total
ZMW’000s
1,994,196
48,856
874,965
170,417
Total
ZMW’000s
2,012,403
40,225
815,646
181,674
Total
USD’000s
118,784
2,511
49,959
8,754
Total
USD’000s
151,076
3,701
66,284
12,910
Total
USD’000s
165,142
3,286
67,332
14,843
127
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
31.
Fair value measurement (continued)
Fair value of the Group’s main property assets is estimated based on appraisals performed by independent, pro-
fessionally-qualified property valuers, Fairworld Properties Limited. The significant inputs and assumptions are
developed in close consultation with management. The valuation processes and fair value changes are reviewed
by the Board of Directors and audit committee at each reporting date.
Further information is set out below.
Land held for production in Zambia (Level 2)
Land has been valued using the direct comparison method. This method has been adopted as the most appro-
priate 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. Management determined that the effect of changes in fair values
between the valuation and reporting date is immaterial.
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 alterna-
tive assumptions.
Office building in Zambia (Level 2)
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.
Plant and machinery (Level 2)
Plant and machinery have 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 plant and machinery. The plant and machinery were revalued on 30 September 2017. Management determined
that the effect of changes in fair values between the valuation and reporting date is immaterial.
Biological assets (Level 2)
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 valued at 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.
Biological assets are measured at fair value less estimated costs to sell. In estimating fair values and costs to sell,
management considers 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 establish-
ing the fair value of standing crops. This assessment considers historical yields, climate conditions and other key
factors. The significant input is adjustment related to the crops rate of growth and estimating of the biological
transformation that comprises various processes that cause qualitative and quantitative changes in the biological
asset.
32. Capital commitments
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
Capital commitments entered into at the
reporting date
Not contracted for at the reporting date
6,690
-
332
-
15,008
50,992
1,137
3,863
128
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
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 2020 are as follows:
(a)
The Group made the following sales to related parties:
Sale of
ZMW’000s
USD’000s
ZMW’000s
USD’000s
2020
2019
Wellspring Ranch
Animal feeds/bran
Chisamba Ranching and
Cropping
Animal feeds/bran
Danny Museteka
Animal feeds/bran
Squares Ranch
Animal feeds/bran
98
-
4,568
28
4,694
6
-
282
2
290
-
1,704
563
-
2,267
-
138
46
-
184
(b)
The Group made the following purchases from related parties:
Purchase of
ZMW’000s
USD’000s
ZMW’000s
USD’000s
2020
2019
Wellspring Limited
Cattle beef
Tembilo Farms
Chickens
Tractorzam Limited
Tractors/spares
5,553
1,301
6,176
343
80
382
-
2,054
7,205
-
167
585
Chisamba Ranching and
Cropping
Beef
Madison Insurance
Insurance
Lillian Limbuka
Pigs
26,495
1,638
13,814
1,121
-
4,727
44,252
-
292
8,114
5,873
659
477
2,735
37,060
3,009
(c)
Sales of goods to related parties were made at the Group’s usual list prices.
(d)
Purchases were made at market price.
(e)
(f)
(g)
(h)
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given
or received.
Expense has been recognised in the period for bad or doubtful debts in respect of the amounts
owed by related parties.
The parties are related by virtue of certain Directors of the Group having a shareholding in the
respective companies.
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.
129
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
33. Related party transactions (continued)
The remuneration of Directors and other members of key management during the year were as follow
Short-term benefits
Post-employment benefits
Other long-term benefits
Short-term benefits
Post-employment benefits
Other long-term benefits
2020
2019
Group
Company
Group
Company
ZMW’000s
ZMW’000s
ZMW’000s
ZMW’000s
81,862
70,091
96,315
84,197
-
-
-
-
-
-
-
-
Group
Company
Group
Company
USD’000s
USD’000s
USD’000s
USD’000s
5,062
4,335
7,818
6,834
-
-
-
-
-
-
-
-
The remuneration of Directors and key executives is determined by the remuneration committee having regard
to the performance of individuals and market trends.
(j)
(k)
There were no loans to related parties and key management personnel.
The company made the following sales to related parties:
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
Zambeef Retailing Limited
1,071,967
66,294
989,956
Zambia Pig Genetics Limited
Masterpork Limited
Chick Limited
Zamhatch Limited
Zamleather Limited
Zampalm Limited
Welllspring Limited
Squares Ranch
Danny Museteka
32,102
193,246
116,626
211
-
98
28
4,568
1,985
11,951
7,213
13
-
6
2
282
3,478
28,182
123,200
142,402
187
7
-
563
Chisamba Ranching and Cropping
-
-
1,704
1,418,846
87,746
1,289,679
80,354
282
2,287
10,000
11,559
15
1
-
46
138
104,682
130
Zambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
33.
Related party transactions (continued)
(l) The company made the following purchases from related parties
Zambeef Retailing Limited
Zamleather Limited
Zam Chick Limited
Tractorzam Limited
Masterpork Limited
Squares Ranch
Zamhatch Limited
Chisamba Ranching and Cropping
Wellspring Limited
2020
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
1,852
1,805
913
6,176
40,583
705
24,690
1,237
5,553
83,514
115
112
56
382
2,510
44
1,527
77
343
5,166
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
34.
Assets held for sale
During the year under review management decided to sell Chiawa Farm. As such the assets and liabilities of
Chiawa Farm are classified as assets held for sale.
Previously management decided to sell the assets of Sinazongwe Farm and the sale was concluded during the
financial year ended 30 September 2020.
The income generated by assets held for sale was generated as follows:
Revenue
Cost of sales
Administration costs
Operating profit/(loss)
Depreciation
Exchange losses
Profit from disposal of Sinazongwe
farm
Profit/Loss from discontinued
operation before tax
Tax (expense)/credit
Profit/(loss) for the year
September
2020
September
2020
September
2019
September
2019
ZMW’000s
USD’000s
ZMW’000s
USD’000s
67,465
(30,893)
(28,422)
8,150
(6,621)
-
31,906
33,435
-
33,435
4,172
(1,911)
(1,757)
504
(409)
(168)
2,141
2,068
-
2,068
41,003
(34,307)
(24,075)
(17,379)
-
-
-
3,328
(2,785)
(1,954)
(1,411)
-
-
-
(17,379)
(1,411)
-
-
(17,379)
(1,411)
131
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS - 30 SEPTEMBER 2020
34.
Assets held for sale (continued)
The assets and liabilities of the unit held for sale are as follows:
September
2020
September
2020
September
2019
September
2019
ZMW’000
USD’000
ZMW’000
USD’000
Property, plant and equipment
Total non-current assets
175,654
175,654
8,722
8,722
135,357
135,357
10,254
10,254
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:
September
2020
September
2020
September
2019
September
2019
ZMW’000
USD’000
ZMW’000
USD’000
Cash outflow from operating activities
Cash outflow from investing activities
Cash outflow from financing activities
1,529
167,264
-
95
(17,379)
(1,411)
10,344
-
-
-
-
-
Previously management decided to sell the assets of Sinazongwe Farm and the sale was concluded during the
financial year ended 30 September 2020.
The sale proceeds from the sale of Sinazongwe farm was K167.3 million (USD 10.3 million) after the payment of
property transfer tax of K8 million (USD 498.8 thousand) and other disposal costs. A profit of K31.906 million was
realised from the disposal of the property, plant and equipment which was carried at K135.36 million. r tax ofmillion
(USD 498.8 thousand) and other disposal costs.
Contingent liabilities
Various legal claims were brought against the Group during the year. Unless recognised as a provision (see Note
27), management considers these claims to be unjustified and the probability that they will require settlement at
the Group’s expense to be remote. This evaluation is consistent with external independent legal advice.
Impact of COVID-19 pandemic
All the divisions of the Group remained operational throughout the pandemic with only minor localised disruption
of business activities. Consumer demand had however remained strong throughout the period as the country did
not go into a total lockdown. Social distancing, sanitising and wearing of masks has been implemented at all work
sites among employees and also at the retail outlets for the customers.
Events subsequent to reporting date
No item, transaction or event of a material and unusual nature has arisen since 30 September 2020, 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
35.
36.
37.
132
Zambeef Products PLC Annual Report 2020
133
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSZambeef Products PLC Annual Report 2020 Notice of Annual General Meeting and agenda
NOTICE IS HEREBY GIVEN that the 26th Annual General Meeting of Zambeef Products PLC in respect of the year
ended 30th September 2020 will be held on
December 2 , 2020 at 10:00hours. The Annual General
Meeting proceedings will be conducted virtually.
AGENDA
1.
2.
3.
4.
5.
6.
7.
8.
9.
Consider any matters arising from the minutes
To receive the report of the Directors, the Auditors report and the Financial Statements for the year ended September
To Consider any competent business of which due notice has been given.
NOTES
Key Sign Up instructions
(a)
Sign Up
Use the following link to access the platform: https://eagm.creg.co.zw/EAGM/Login.aspx
Shareholder/Proxy
Attendees are required to provide the necessary information to complete the sign up procedure.
attendees. Once validated, login credentials will be delivered through email and sms.The validation process
may take a maximum period of 48hrs.
(b)
Sign in
Use the following link to access the platform: https://eagm.creg.co.zw/EAGM/Login.aspx
Enter username
Enter Password
Click Login
Click “Join” to begin following video and audio transmission of meeting proceedings.
Click “Join with Computer Audio” to attend the live meeting
Ensure that you have downloaded Google Chrome https://www.google.com/chrome/ or Microsoft Edger https://
Use of Apple devices must be done in consultation with the system Administrator, details of which are given below.
If you have problems with the login, please call, the following helplines +260950968435, +260979420470 and
+260979946143.
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
(c)
(d)
(e)
(f)
By Order of the Board
Danny Museteka
Company Secretary
134
Zambeef Products PLC Annual Report 2020
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 GenerMeeting of the Company at
be held on the 2
In Favour of/against (please tick)
In Favour
Against
remuneration.
Signed: .............................................................................................................................................................................
Name: ............................................................................................................................................................................
Date: ............................................................................................................................................................................
Witnessed by: .............................................................................................................. Signature: ..........................
Name: ..............................................................................................................................................................................
Address: ..........................................................................................................................................................................
.........................................................................................................................................................................
Zambeef Products PLC Annual Report 2020
135
Notes to the Proxy Form
1.
2.
3.
4.
5.
6.
7.
8.
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 10:00 on Monday, 21st
December, 2020.
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.
Any alteration or correction made to this form of proxy must be initialed by the signatory/ies.
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.
136
Zambeef Products PLC Annual Report 2020 137
Zambeef Products PLC Annual Report 2020 Private Bag 17, Woodlands
Plot 4970, Manda Road
Industrial Area
Lusaka, Zambia
Tel: +260 211 369 000
Fax: +26 211 369 050
www.zambeefplc.com
138
Zambeef Products PLC Annual Report 2020