Zambeef Products
Annual Report 2022

Plain-text annual report

ANNUAL REPORT 2022 1 Annual Report 2022Zambeef Products PLC2 Annual Report 2022Zambeef Products PLCCONTENTS Overview Zambeef at a Glance History and Key Milestones Strategies report Chairman’s Report Chief Executive Officer’s Report Sustainability Report Corporate Governance Board reports Board of Directors Director’s Report Statement of Directors’ Responsibilities Independent Auditor’s Report Financial Statements 30 September 2022 Statement of profit or loss and other comprehensive income Consolidated Statement of Financial Position Company Statement of Financial Position Consolidated Statement of Changes in Equity Company Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Supplementary Information - presented in USD (unaudited) Notice of AGM Proxy form 4 6 8 10 14 17 24 26 29 30 36 38 39 40 41 42 43 100 106 114 3 Annual Report 2022Zambeef Products PLC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, 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 wheat, soya beans and maize. Zambeef plants nearly 20,987 hectares annually, with most of the resulting crops being used in the Zambeef animal feed and flour milling businesses. Our Purpose To be the food provider of choice through accessible, affordable and reliable supply. We aspire to be the most sustainable social, environmental and financially viable business in the diversified foods industry within Zambia and the region. 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 BUSINESS SEGMENTS Retailing and Food Production Zambeef’s products are retailed through 223 outlets (2021: 207) directly to end-consumers, in a value-added form, either through the Zambeef concession agreement to operate Shoprite’s in-store butcheries (41 in 2022; 41 in 2021) or through Zambeef’s own retail and wholesale distribution network in Zambia (182 in 2022; 165 in 2021). Zambeef operates inhouse bucheries in West Africa - Nigeria and Ghana. Zambeef also operates one of the largest transport and trucking fleets in Zambia (252 trucks), giving Zambeef control over its logistics and distribution. 4 Annual Report 2022Zambeef Products PLCZambeef at a Glance (continued) • The largest processor of beef in Zambia. • Five active beef abattoirs (capacity to slaughter 230,000 head p.a.) and five feedlots located across Zambia (standing capacity 16,000 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 9.4m broilers p.a.). The Group’s breeding and hatchery operations also supply large quantities of day-old broiler chicks (capacity 25m p.a.) to small- and medium-scale poultry producers. • One of the largest pork processing plants in Zambia, producing bacon, pork sausages and other meat products. (capacity to slaughter 102,000 heads p.a.) • Dairy farm with approximately 3,410 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. Cropping and Milling • The leading stockfeed producer in Zambia, operating two feed mills, in Lusaka and Mpongwe, with a capacity of 300,000 tonnes p.a. • Novatek is the only stockfeed producer in Zambia with ISO 22,000 Food Safety Management certification. • Novatek supplies feed to Zambeef livestock farming operations and also supplies 168 branded shops owned by external agents (2021: 157) in addition to Zambeef retail outlets. • One of the largest row cropping operations in Zambia. • In winter Zambeef plants 6191Ha and a total 14,848ha is planted in Summer. Due to double cropping of irrigated land the total area planted annually is 21,039 ha. • Crop production focuses on soyabeans and maize during summer and wheat during winter. • Wheat mill with a capacity to mill 25,000 MT of wheat p.a. • • The largest tannery in Zambia, with a processing capacity of 144,000 hides p.a. The largest shoe manufacturing plant in Zambia, with a production capacity of 153,000 pairs p.a. • One bakery with the capacity to bake 1.2 million loaves of bread p.a. 5 Annual Report 2022Zambeef Products PLCHistory & Key Milestone 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, Amanita Soya crushing and refining plant) 2011 Listed on the London Stock exchange (AIM). Acquired Mpongwe Farms 2017 Commissioning of US$30million hatchery and stockfeed mill at Mpongwe Farm 2020 Disposal of Sinazongwe Farm for US$10million 12 13 14 15 16 2016 BII formerly known as CDC Group PLC acquires 38% Zambeef equity for US$65million. Put option settled to RCL Foods for full interests in Zamchick & Zamhatch 2018 IDC Zambia acquires 90% of Zampalm ltd for US$16million 2022 USD$100 million major expansion plan 1 3 5 7 9 2 4 6 8 10 11 1995 Secured concession to operate the butcheries in all Shoprite stores in Zambia 2003 Listed on Lusaka Stock Exchange. 2005 Sinazongwe Abattoir built 2009 Zampalm and Novatek Animal Feeds established 2013 Entered into joint venture with Rainbow Chickens on Zamchick & Zamhatch 2015 Disposal of Zamanita Ltd to Cargill for US$26million 6 Annual Report 2022Zambeef Products PLCFeeding a growing region Ghana Shoprites Total Ghana 2022 2021 7 7 7 7 Nigeria Shoprites Master Meats Outlets Total Nigeria 2022 2021 25 0 25 25 0 25 Zambia Zambeef Outlets Zambeef Macros Novatek Bakery Zamshu Outlets Total Zambeef Outlets Shoprites Total Zambia Total Zambeef Total Shoprites Total Retail Network 2022 2021 60 50 36 1 35 182 41 223 63 41 30 1 31 166 41 207 2022 2021 182 73 255 166 72 238 Zambeef Operations Current Export Market 7 Annual Report 2022Zambeef Products PLCCHAIRMAN’S REPORT disruptions on international trade, added layers of production complexities to the business as lead times for imported goods increased. Commodity prices, particularly crude oil, fertilisers and grain, escalated as a result of the Russia - Ukraine conflict. In addition, the period saw the outbreak of animal diseases such as, the African Swine Fever and Contagious Bovine Pleuropneumonia (CBPP) which respectively impacted our pork and beef businesses. Despite the headwinds, management worked tirelessly to keep the business performing by focusing on enhanced bio-security risk, cost management, revenue maximisation and market share growth. As a result, the business posted positive financial results and is well- positioned on the path to actualising its short to medium-term strategy. The Group’s performance demonstrates its ability to remain resilient in the evolving market and the strengths of integrated business model, which is key to creating sustainable long-term shareholder value. its vertically illustrates Strategy The Group’s medium-term strategy is centred around optimising existing assets and investing in capacity for the future. It is with this in mind that the Group announced a US$100 million expansion programme during the year. This investment strategy is expected to increase the Groups various value chain capacities, and deliver developmental impact to the Zambian economy through increased tax revenue job creation, and supporting ancillary businesses such as small-scale farmers and small to medium-sized businesses. The expansion is expected to double the Mpongwe Farm row cropping capacity, and also to deliver significantly improved production efficiency and capacity through the downstream food value chains. The first crop from the expanded cropping operations is expected to be planted in the 2023/2024 financial with capacity upgrades to milling and processing facilities being run in parallel. As part of the $100m expansion plan, we remain committed to maintaining a responsible business by building on the Environmental, Social and Governance (ESG) agenda. Therefore, the investment will see an improvement in the Group’s carbon footprint and livestock health and welfare. Dear Shareholder, I have the pleasure of presenting my report to you for the financial year ending 30th September 2022. The financial year saw an improvement in economic sentiment following the successful holding of the general election in August 2021 and the peaceful transition of government. The Kwacha appreciated significantly and remained stable during the period. However, global economic headwinds contributed to the disruption of an otherwise positive trajectory for Zambia’s macroeconomic environment. The spill-over effects of the Covid-19 pandemic related supply The Group’s performance demonstrates its ability to remain resilient in the evolving market and illustrates the strengths of its vertically integrated business model... 8 As part of the divesture of non-core and low-returning assets, the Group exited from pig farming, pullet rearing and egg production during the year. Chiawa farm remains an asset held for sale. These divestitures will enable the business to focus on becoming best in class and improve the Group’s profitability. The Board remains committed to achieving the Group’s strategic priorities while navigating the seasonal market and economic challenges. The following are the pillars on which the five-year strategy is underpinned: • • • • • Focus and strengthen our core business by investing in capacity and growing market share Divestiture of non-core assets to free up resources Develop a human capital strategy that aligns with business objectives Strengthen partnerships Enhancement value our strategic of shareholders’ The Economic Environment Despite the year 2022 being the second year since the outbreak of Covid-19, its impact on the economy compared to the prior year reduced tremendously due to the success of governments vaccination campaigns and the public’s adherence to public health measures. The economy rallied in comparison to the corresponding period under review and saw stability in macroeconomic fundamentals. The ZMW/USD exchange rate averaged 17.18 down by 19% compared to 21.12 averaged in the previous corresponding period. The local currency has seen a steady appreciation since the start of the financial year despite moments of volatility. A tight monetary policy which saw the Monetary Policy Rate remain stable at 9%, relatively high copper prices and market confidence arising from the peaceful transition of power have been key in keeping the currency stable. Inflation reduced significantly during the period under review, closing at 9.9% compared to 22.1% in the previous year. This drop came as a result of currency appreciation and a reduction in food inflation despite the escalation in diesel and petrol pump prices. Customers disposable income remained Annual Report 2022Zambeef Products PLCCHAIRMAN’S REPORT (continued) under stress as the effect of stable macroeconomic fundamentals had not yet fully trickled down to the consumers. Inflation for the period under review averaged 13.4% compared to 21.7% for the previous corresponding period. Outlook We anticipate macro-economic stability to continue, supported by improved investor sentiment leading to increased foreign direct investment. The Kwacha is also expected to remain stable across the 2023 financial year. The copper prices, which is a major foreign exchange earner for the country, is expected to stabilise at current levels as the worst effects of the manufacturing slowdown have tapered off. The inflation rate is expected to remain stable, although the outcome of the Russia - Ukrainian tensions could lead to further rises in global food and energy prices which still pose a risk of higher inflation locally. Of key concern is the emergence of escalating cost of funding as foreign currency liquidity migrates to the United States of America and the United Kingdom, where interest rates are rising. Executive Management Changes I am pleased to advise that on 1 July 2022, Ms Faith Mukutu was appointed Chief Executive Officer. She succeeded Mr Walter Roodt who served as Chief Executive Officer since January 2020. Mr Roodt will continue full-time with the company focussing on Large livestock and Strategic Projects in an executive capacity the expansion programme referred to above. To ensure a smooth transition, Walter remains on the Board until 1st December, 2022. to support The appointment of Faith represents the confidence the Board has in her ability to lead the business through the new phase. Since joining the Group in September 2019, as the Chief Financial Officer, Faith has been instrumental in driving the realisation of commercial value from our business having introduced a cost control culture, restructuring the group balance sheet and streamlining finance operations and reporting. I am delighted that at the date of this report, the Board had announced the appointment of M’boo John Mumba as Chief Financial Officer, Mboo has also been appointed as an Executive Director of the Board. M’boo takes on the role, following the promotion of Faith Mukutu, to Chief Executive Officer (CEO) on 1 July 2022. He joined the Zambeef Group in May 2020 as Project Manager before he took up the role of Group Head of Treasury and Administration. He has brought to the Company skills which combine industry, financial and banking experience of more than 16 years. His established professional background and valuable expertise is an asset to the Group. Acknowledgement On behalf of the Company and the Board, I would like to express my sincere gratitude to Messrs; Yollard Kachinda and Frank Braeken who resigned from the board on 14 April 2022 and 27 May 2022, respectively. Their dedication and contributions to the business during the period they served as Directors will be greatly missed. I am also indebted to Walter Roodt who, after his reassignment to a new role remained on the Board for a smooth transition. He has played a significant role in the Group and we all wish him all the very best in his new role. I also thank my fellow board members for steering the Group through the year and positioning it for the next phase of growth. To our management and staff, I express my gratitude for another solid performance, dedicated efforts, and resilience in the face of challenges. I am proud of our achievements to date and I am excited by the potential opportunities upon which we will build our future progress. Michael M Mundashi Chairman 9 Annual Report 2022Zambeef Products PLC CHIEF EXECUTIVE OFFICER’S REPORT largely by reduced consumer spending and input increased production and the stabilisation of costs, despite environment. the macroeconomic headwinds, the Notwithstanding exceeded the results particularly market the outstanding performance in the Cropping and Milling division. expectations, Group’s Pressure on volumes and margins in the Retail and Cold Chain Food Products (CCFP) division on the back of reduced consumer spending negatively impacted performance, particularly in the first half of the year. An increase in raw material input costs, such as soya beans, precipitated a rise in feed prices, in which affected production costs our livestock business. In addition, the outbreak of African Swine Fever, over six weeks in Lusaka and in other parts of the country, affected the pork business negatively. Further, the outbreak of Contagious Bovine Pleuropneumonia (CBPP), a disease affecting cattle negatively affected our Beef business; with a cost to Company of K20.7 million. in volumes The second half of the year saw volume recovery the Retail and CCFP segments driven by price moderation. This coupled with cost control, enabled a recovery from the subdued first-half year performance. in Despite the challenges noted above, the Group posted strong results during the year in line with expectations mainly due to buoyed performance in our Cropping and Milling division. The Group delivered a profit before tax of ZMW55 million (USD3 million), representing a decline of 68% in Kwacha (61% in US dollar terms), compared to ZMW172 million (USD8 million) in the prior year. The above results posted are after the recognition of goodwill impairment amounting to ZMW142 million (USD8.3m) on the fair value of Zamchick Limited assets. Adjusting for this non-cash impairment, the Group delivered a profit before tax of ZMW197 million (USD11.5 million) representing a growth of 15%. The Group generated revenue of ZMW5.4 billion (USD314 million) and achieved a gross profit of ZMW1.6 billion (USD95 million), representing 8% and 11% above the prior year in kwacha terms, and up by 33% and 37% in US dollars, respectively. Our diversified and vertically integrated brands, business strong with supportive partners and an experienced management team helped deliver encouraging results. Strategic focus Our strategic focus is to optimise existing assets and invest in the future. We remain committed to our strategy of focussing on our core businesses, in which we strive to be the best in class. The continued divestiture of non-core assets enables us to free up cash to invest in core businesses and therefore, deliver shareholder value. As part of delivering on our strategic imperatives and as announced during the financial year under review, our $100M expansion strategy will see increased profitability in the medium to long term, thus delivering increased value to our shareholders and positively impacting the communities in which we operate. As of 30th September 2022, a total of $7.3m out the $100m expansion plan was either spent or committed by the business. Outlook Our strong brands will help us maintain customer loyalty while the vertically integrated business model positions us well to secure both supply and a market for our products. The anticipated future recovery in the economy and a strong management team have positioned us well for shareholder value maximisation in the coming years. The Group will capitalise on the positive economic outlook and invest for the future in anticipation of improved consumer spending. The Russia-Ukraine conflict poses risks but at the same time presents opportunities for our business. The consequent rise in input costs such as fertiliser and energy could negatively impact our profitability while the rise in commodity prices, such as wheat and soya, will benefit our Cropping and Milling division. Higher soya and maize prices would translate into higher stock feed costs which would negatively impact the profitability of our Retail and Cold Chain Food products business. Consolidating our balance sheet through disposals of low-returning assets and expanding capacity remains a key focus to enhance shareholder value. In the coming years, the Group is set to make significant strides in our US$100 million expansion program with the Cropping and Milling segment set for expansion in the 2022/2023 financial year. Overview It is my pleasure to give my inaugural report as Chief Executive Officer, to you, our esteemed shareholders. I wish to thank the Board for their confidence in my abilities to lead your Company through the next exciting phase of our growth strategy. I also wish to thank Mr Walter Roodt, my predecessor, for steering the Group through the challenging times of the last two years. Without a doubt, this was another challenging year characterised by a trading environment driven difficult The Group generated revenue of ZMW5.4 billion (USD314 million) and achieved a gross profit of ZMW1.6 billion (USD95 million), representing 8% and 11% above the prior year in kwacha terms, and up by 33% and 37% in US dollars, respectively. 10 Annual Report 2022Zambeef Products PLCCHIEF EXECUTIVE OFFICER’S REVIEW (continued) Divisional Performance Table 1 (ZMW) and Table 2 (USD) below provide a summary of the consolidated performance of the key business divisions reported at an operating profit level. Table 1: Divisional financial summary in ZMW'000 Sep-22 Division Retailing and Food Production Cropping and Stock Feed Revenue 2022 Revenue 2021 Gross Profit  2022 Gross Profit  Overheads  Overheads  2021 2022 2021 Operating Profit  2022 Operating Profit  2021 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 3,138,305 3,254,929 716,420 827,447 (628,683) (611,027) 87,737 216,420 3,369,186 2,845,518 916,766 643,269 (467,870) (378,546) 452,936 264,723 Total 6,507,491 6,100,447 1,633,186 1,470,716 (1,096,553) (989,573) 540,673 481,143 Less: Intra/ Inter Group Sales Central Overhead (1,112,730) (1,126,096) (362,969) (234,744) (362,969) (234,744) Group Total 5,394,761 4,974,351 1,633,186 1,470,716 (1,459,522) (1,224,317) 173,664 246,399 Table 2: Divisional financial summary in USD'000 Revenue 2022 Revenue 2021 Gross Profit  2022 Gross Profit  Overheads  Overheads  2021 2022 2021 Operating Profit  2022 Operating Profit  2021  Division USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 Retailing Zambia 182,672 154,116 41,701 39,178 (36,594) (28,931) 5,107 10,247 Cropping and Milling 196,111 134,731 53,362 30,458 (27,233) (17,924) 26,129 12,534 Total 378,783 288,847 95,063 69,636 (63,827) (46,855) 31,236 22,781 Less: Intra/ Inter Group Sales Central Overhead (64,769) (53,319) - - (21,127) - (11,115) - (21,127) (11,115) Group Total 314,014 235,528 95,063 69,636 (84,955) (57,970) 10,108 11,667 Taking the performance of each of our key business areas in turn: Retail and Cold Chain Food Products (CCFP) Sales volumes came under pressure on the back of reduced consumer spending on proteins and oils, resulting from the trading down to cheaper nutritional alternatives. A price moderation strategy across all protein categories led to volume recovery in the second half of the year. The period saw the outbreak of African Swine Fever in Lusaka and other Provinces, which resulted in our pork processing operation being shut down and consequently impacted operations during the period of the animal movement ban. The year also saw the outbreak of CBPP which negatively impacted our beef business. Chicken sales volumes struggled as the price of chicken products remained relatively high compared with other proteins due to sustained high stock feed prices. Given the above challenges, the Retail and CCFP business registered a revenue decline of 4% compared to the prior year. Higher input prices, particularly feed and fuel, resulted in a reduction of gross profit by 13% from the prior year. 11 Annual Report 2022Zambeef Products PLC                                                                  CHIEF EXECUTIVE OFFICER’S REVIEW (continued) The Retail and CCFP division generated an EBIT margin of 5.1% which decreased by 6.6% from the previous financial year to ZMW160 million (2021: ZMW216 million) in Kwacha terms. Cropping and Milling (Cropping, Stockfeed, and Wheat Milling) The division registered strong results owing to growth in stock feed revenues and higher grain prices in Cropping, despite lower soya bean yields across the country due to sporadic rainfall patterns. The stockfeed business registered good growth due to improved supply chain planning. The export ban that existed in the first quarter of the year impacted export sales with an increase in demand for feed being noticeable in the period after the lifting of the ban. The Cropping business saw margins improve on the back of higher grain prices despite an escalation in input costs, particularly fertiliser. Revenue in the Cropping and Milling division grew by 18% in Kwacha terms and 46% in USD terms, while the operating profit grew by 70% to ZMW 449 million (2021: ZMW265 million) and by over 100% to USD26 million (2021: USD13 million) in dollar terms. Finally, I would like to thank our Board of Directors and all staff and partners of Zambeef for their contribution to the continued success of the Group. I look forward to what we will be able to achieve in the coming year as we continue to implement our growth strategy. Faith Mukutu Chief Executive Officer 2 December 2022. 12 Annual Report 2022Zambeef Products PLC13 Annual Report 2022Zambeef Products PLCSUSTAINABILITY REPORT performance that sound social and We believe environmental drives business value. Zambeef is committed to provide a safe and healthy workplace its employees and contractors, for protecting the environment and being a responsible corporate citizen in the communities where we have a presence. This commitment is enshrined in our Environmental & Social, Health and Safety & Welfare Policies. Zambeef has committed to uphold the principles set out in the International Finance Corporation (IFC) Performance Standards and World Bank Group Environmental, Health, and Safety Guidelines on and social sustainability. This commitment is our Environmental, Social and Governance (ESG) Strategic Plan. environmental demonstrated further in The Board of Directors provides oversight through its ESG Committee. Through this Committee the Board provides strategic advice and guidance regarding systemic and strategic environmental and social matters. The Committee ensures that the Group has adequate and robust systems in place for monitoring the environmental, health & safety, and social management & performance, in accordance with applicable legislation and good international industry best practice. Zambeef is dedicated to compliance and improvement as well as to environmental and social activities through its robust Sustainability team which supports the business at operational level. Economic Contribution Zambeef is a significant contributor to the country’s economic activities, with a turnover of more than 1% of the national gross domestic product, averaged over the last five years. Taxes The Group is a significant contributor to government revenues. Local capital markets A significant percentage of the Group’s shareholding is owned by local institutional investors and pension funds, including the National Pension Scheme Authority (NAPSA); every working Zambian has a stake in the Group. Employment Export earnings Zambeef continues to be one of the largest employers in the country, with 7,528 staff, 13 % of who are females. § The Group is a member of the Zambia Development Agency’s elite million- dollar club of leading exporters. 60% of the of the current Executive Team are female. § Over 99.5% of employees are Zambian. The Group’s cropping division provides significant employment to rural communities, where poverty levels are higher than in urban areas. Most of Zambeef’s raw material suppliers are located and provide employment to communities in rural areas. In the year under review, the Group recorded foreign exchange export income of over USD1.5 million, while total Group USD-denominated revenues were USD 31.2 million. Social performance Zambeef continues to align its social investments the United Nations Sustainable Development Goals (UN SDGs). to Skills development ü The Group is to developing and employees at all levels. fully committed its training § § § § § We work closely with small & medium scale farmers; § They supply beef cattle, broiler chickens, pigs & milk to our Retail and Cold Chain Food Divisions § They supply soya beans and maize to our stock feed operations § Average annual spend is ZMW 1billion § We render support to the vulnerable (hospices/hospitals, orphanages, care homes) through food products donation programs; these include products processed by the Group § We fund and support public healthcare institutions in areas where we operate and also run Group owned medical facilities on our farms. § The Group supports community and government schools located in communities around its farming operations. § The Group has constructed new class room blocks and rehabilitated public-school infrastructure. ü During the year, specific trainings in food safety, occupational health and safety, safe handling of hazardous materials, quantifying and reporting greenhouse gas emissions were offered to employees. ü The Group’s continual reinvestment in human resources and a deliberate focus on diversity and inclusion has resulted in many senior positions being held by Zambians and females. Food security Zambeef continues to play a significant role in national and regional food security. The Group produced over 85,000 metric tons of grain, in the financial year. Food Quality and Safety Group continued making The improvements in the quality and safety of foods it manufactures and offers for sale to the public. 14 Annual Report 2022Zambeef Products PLCSUSTAINABILITY REPORT (continued) ü Customer Feedback line The dedicated customer phone (voice calls, text messages and WhatsApp), email service and Facebook platforms continue to be widely publicised, on product packaging, product transportation trucks and in trading premises. These platforms constitute an important component of our broader stakeholder engagement program. We receive valuable feedback about our products and quality of service, and that helps us to improve both the products and services we offer. ü One Health Schemes and well-being the The business continues to implement programs that seek to achieve optimal health outcomes, recognizing interconnections between people, the livestock we rear and process, the crops we cultivate and the shared environment in which all our activities are performed. Our sustainability strategy recognizes all the elements necessary to achieve our One Health. Occupational health and safety programs are being implemented to cover all areas of our operations, ensuring that occupational hazards are eliminated or minimized in the work environment. The business is embracing Good International Industry Practice in both cropping and livestock farming through the implementation of the Global Good Agricultural Practice Standard. falling in categories Pesticides Ia. (extremely hazardous) and Ib. (highly hazardous), under the World Health Organization basic clarification by hazards, are not permitted for use in any part of the business under any circumstances. Biosecurity measures at aimed livestock hosting compartmentalizing and processing sites continue to be implemented across the business. to be A Food Safety Management System ISO 22000:2018 (FSMS) based on continues rolled out across the Group’s food value chains. The FSMS ensures that the business has a continuous improvement program on the quality and safety of the food it produces and offers for sale to the public. To date, the Chicken Processing Plant, Dairy Processing Plant, Masterpork Factory Novatek Feed Lusaka Plant and the Novatek Feed Mpongwe Plant are ISO 22000 certified. The Beef Processing Plant and Wheat Flour Mill at Huntley have undergone preparatory works and are earmarked for certification in the year ending September 30th 2023. The Retailing network is also undergoing preparatory works. An environmental certification scheme is also underway. Inclusive business model: The Group continues to source the bulk of its raw materials from rural communities in Zambia. 100% of the beef and pork processed by the business were sourced from third-party farmers. Out-growers supply 65% of the broiler chickens processed by Zamchick. 93% of the maize and 62% of the soya beans used at Novatek Animal Feeds were externally supplied, predominantly by small scale rural farmers. This strong linkage to rural based suppliers helps fight poverty in these otherwise excluded’ ‘economically communities, meeting the aspirations of UN SDG 1, of ‘ending poverty in all its forms everywhere’. In the year under review, the Group bought grains and livestock from 62,026 small scale farmers across the country, spending more than ZMW1 billion. engagement: Community Zambeef continues to engage with communities in the areas where we operate. As guided by our Stakeholder Engagement Procedure, stakeholders are mapped and proactively engaged on a regular basis, and at every time developmental projects are initiated at Group sites. The Group complies with the guidelines of the IFC Performance Standard number Involuntary 1: Land Acquisition and Resettlement, land acquisition matters. in all We have a Chance Finds Procedure, that is aligned with IFC Performance 8: Culture Heritage, which allows us to preserve community and grant unhindered access to all properties and sites of archaeological, cultural, artistic, and religious significance historical, Group Support to vulnerable communities/ groups through foodstuff donations: The rendering support to the vulnerable (hospices/ hospitals, orphanages, care homes) through donations of foodstuffs. There continues are currently 22 institutions hosting vulnerable people which the Group supports food supply program. A total of ZMW2 million was spent on donations in the year under review. through the This gesture by the Group aligns strongly with UN SDG 2, whose main aspiration is to ‘end hunger, achieve food security and improved nutrition ...’ Other non-food donations, like water reticulation systems were also made. Support to educational and healthcare institutions: Zambeef continues to fund educational and healthcare institutions. This includes institutions like Mpongwe School and medical clinic, wholly owned by the Group, where teachers, teaching aids, healthcare workers, equipment and facilities are fully funded by the Group. The Mpongwe support expenditure amounted to ZMW3.10 million in the year under review. The Group also supports community, government schools and healthcare institutions located in the areas where it operates. These Group 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’, respectively. Other: Zambeef also supports a number of traditional ceremonies and sporting activities across the country. Environmental performance Zambeef continues to work towards good international industry practice’ by implementing a process of continual improvement in environmental and social management. No notifiable environmental incident or accidental release were experienced during the financial year. (ZEMA) ‘Environmental During the year under review, the Group had two Environmental Project Briefs approved by the Zambia Environmental Management Agency as governed by Statutory Instrument No. 28 of 1997 Impact Assessments Regulations’ read together with the Environmental Management Act No. 12 of 2011. The practice also fulfils the requirements of IFC PS 1: ‘’Assessment and Management of Environmental and Social Risks and Impacts.” 15 Annual Report 2022Zambeef Products PLCSUSTAINABILITY REPORT (continued) The underlisted projects were allowed by the ZEMA Board; Climate Change The Group has been developing a customized GHG Assessment Tool (based on the Global Livestock Environmental Assessment Model-i methodology and experiences of similar assessments in Africa) and climate footprint monitoring guidelines. The climate footprint monitoring guidelines included benchmarking of climate performance of recommended areas for improvement highlighting and 1. Installation of 40,000 litre above ground diesel tank at Kalundu Dairy Farm, Chisamba District, Central Province. 2. Proposed housing complex at Huntley Farm, Chibombo District, Central Province. 16 and application of best-practice climate solutions. The Tool has been developed to calculate the annual carbon footprint of the user- specified Zambeef facilities. In addition, the Tool will assist the Group to set GHG emission reduction targets and develop decarbonization strategies. to To underscore our commitment reducing the carbon footprint of its operations, a decision was made to discontinue the use of charcoal for commercial purposes. Annual Report 2022Zambeef Products PLCCORPORATE GOVERNANCE STATEMENT a Code. Further, 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. FRAMEWORK As a Company listed on exchanges in Lusaka and London, we are required to comply with LuSE and UK specific Corporate Governance codes. The UK Corporate Governance Code does not apply to companies floated on the AIM Market of the London Stock Exchange, the market on which Zambeef is listed. For the purposes of being quoted on AIM, the Company has agreed to maintain standards of corporate governance recommended by AIM. In this regard, and bearing in mind the size and scale of the operations of the Company, the Company has adopted the QCA Code as the basis of its corporate governance standards. On LuSE, Zambeef Products Plc. has established formal governance framework by way of adopting the LuSE code as well as comprehensive company policies and guidelines, audit and assurance procedures which ensure compliance with applicable laws and regulations recognized codes of good practice. This report, alongside further relevant information contained the other reports and financial statements that form part of the Annual Report for the year, therefore, aims to provide an overview of the Company’s governance practices. It is comprehensive, albeit to avoid duplicity of information. CORPORATE GOVERNANCE IN ACTION The Company’s corporate governance practices are put the Corporate Governance Handbook which is subject to review by the Board from time to time. The Handbook addresses the various areas of governance and covers the following aspects: § Share Dealing Code § Disclosure Policy § AIM Rules Compliance Policy § LuSE Listing Rules Compliance together in in Policy § Anti-Corruption and Bribery Policy including Incident reporting and whistleblowing § 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 § Terms of Reference for the Environmental and Social Committee § Memorandum on Inside Information and; is responsible § Group Code of Ethics THE BOARD OF DIRECTORS The Company has a unitary board of directors, which at the start of the year under review, comprised nine directors but later reduced to seven, retaining a number within that required per its Articles of Association, yet balancing the requisite business acumen and skills pertinent to the business. Of the seven Directors, five are Non-Executive Directors, and two are Executive Directors. Four of the five Non-Executive Directors are considered independent by the Board, in terms of the guidelines prescribed in the QCA Code and the LuSE Corporate Governance Listing Rules. the The Board for performance and direction of the Company, through the establishment of strategic objectives and key policies, as well as approving major business decisions, in accordance with its charter. its overall The Board believes that is appropriate, with no composition individual or group dominating the decision-making process, and with a good balance of knowledge, experience independence. The role of the and Chairman is separate from that of the Chief Executive Officer (CEO) and considered to be independent. New appointments to the board are carried out in a transparent manner and are made in accordance with the recommendations of the Remuneration and Succession Committee and, following approval of the board, are subject to confirmation by shareholders at the Annual General Meeting. Details of the current Directors, their roles and background are available on the Company’s website at www.zambeefplc. com. RESPONSIBILITIES OF THE BOARD The Board responsibilities are set out by a Board Charter, which requires that there is an appropriate balance of power and authority on the board. The Board Charter was reviewed during the year under review, the board satisfied its compliance is responsible therewith. The Board for the the overall stewardship of Company. The Board’s role consists of two fundamental elements: decision- making and oversight. The decision- making function is exercised through the formulation with management of fundamental policies and strategic goals and the approval of certain significant actions. The oversight function concerns the review of management decisions, the adequacy of systems and controls responsibilities in 17 Zambeef Products Plc (“Zambeef” or the “Company”) remains committed to maintaining, promoting and achieving the highest standards of corporate governance and corporate citizenship by adhering to the relevant codes of best practice, and the principles of fairness, accountability, responsibility, transparency and integrity. Recognising that achieving a long-term sustainable business depends on stable, well-functioning and well-governed environmental, social, economic and governance practices, the Company strives for continual development in these areas. Additionally, the Company through its Board of Directors has put together its basic framework on Corporate Governance and has developed a Corporate Governance Code that complies with the Lusaka Securities Exchange (LuSE) Corporate Governance Zambeef Products Plc (“Zambeef” or the “Company”) remains committed to maintaining, promoting and achieving the highest standards of corporate governance and corporate citizenship by adhering to the relevant codes of best practice, and the principles of fairness, accountability, responsibility, transparency and integrity. Annual Report 2022Zambeef Products PLCCORPORATE GOVERNANCE STATEMENT (continued) and the implementation of policies. In performing its role, the Board makes major policy decisions, participates in strategic planning, delegates to management authority and responsibility for day-to-day affairs and reviews management’s performance and effectiveness. Principles of good governance are embedded in the way the Board; its sub-committee and the executive committee operates their business. The Board applies integrity, principles of good governance and accountability throughout its activities and each director brings independence of character and judgment to their role. CHAIRMAN AND CEO ROLES The roles of the Chairman and CEO are performed by separate persons, with the Chairman being responsible for; § Providing leadership to the Board in relation to all Board Matters; § Representing the views of the Board to the public; § Acting as a conduit between the Board and being the primary point of contact between the Board and the Chief Executive Officer; § Overseeing the Board agenda and conducting all Board meetings; § Overseeing and conducting Annual General Meeting (AGM) and other shareholder meetings and; § Keeping the Board informed of all major project proposals by way of specific reports; The Board Composition Director Michael Mundashi Faith Mukutu Roman Frenkel Pearson Gowero Jonathan Kirby Title Chairman Executive Director (CEO) Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Monica K Musonda Independent Non-Executive Director Walter Roodt Executive Director Date of Appointment 04/09/2019 04/09/2019 01/03/2021 01/03/2021 03/08/2017 01/03/2021 1/03/2019 As of the date of the report, the Board comprised of the Chairman (Independent Non-Executive Director), and four Non-Executive Directors, three of whom, together with the Chairman, are considered by the company to be independent in character and judgement and free from any business or other relations that could materially interfere with the exercise of their judgement. Brief curricula vitae of the directors appear on pages 24 – 25 of this report. The Board is satisfied that all the Directors have sufficient time to devote to their roles and that it is not placing undue reliance on key individuals. MEETINGS OF THE BOARD The board has four regular meetings each year and the company’s Articles of Association make provision for decisions to be taken between meetings by way of written resolutions, when required. During the BOARD MEETING (24/11/2021) BOARD MEETING (16/02/2022) BOARD MEETING (8/06/2022) BOARD MEETING (27/10/2022) TOTAL MEETINGS ATTENDED TOTAL MEETINGS HELD                     RS   RS      RS   RS   X 4 4 2 4 4 2 4 4 3 4 4 4 4 4 4 4 4 4 DIRECTORS' NAME M Mundashi W Roodt F Braeken R Frenkel P Gowero Y Kachinda J Kirby F Mukutu M Musonda Key  X RS Attended Absent Resigned BOARD COMMITTEES To assist in exercising its responsibilities, the Board has established three committees: • • • the Audit and Risk Committee the Remuneration and Succession Committee the Environmental and Social Governance Committee. 18 Annual Report 2022Zambeef Products PLCCORPORATE GOVERNANCE STATEMENT (continued) The Board committees operate under approved mandates and terms of reference, which define their functions and responsibilities. Through the Company’s management committee, management meets and serves to assist the board to co-ordinate, guide and monitor the management and performance of the Company. Following each meeting, the committee chair reports to the Board on the committee’s activities, and makes such recommendations as are deemed appropriate in the circumstances. Minutes of committee meetings are made available to all directors on a timely basis. Non-executive directors actively participate in all committees. 1. Audit and Risk Committee The Board approved the membership to the Audit Committee of the long outstanding and independent advisor and co-opted member - Hastings Mtine in September 2021. (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 frameworks including the LuSE Corporate Governance Code and the QCA Code. • • • 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. The committee should also consider and make recommendations to the Board, to be put to shareholders for approval at the Annual General Meeting, as regards the appointment and/or reappointment of the company’s external auditor. • • Monitor the ethical conduct of the Company, its executives and senior officials. Committee Meeting Attendance Schedule NAME CATEGORY OF DIRECTOR Jonathan Kirby Chair: INED Frank Braeken* Pearson Gowero Roman Frenkel NED INED NED Hastings Mtine Committee Member 24/11/2021      14/02/2022      31/05/2022  RS    14/09/2021  RS    Key  RS Attendance Resigned 2. Remuneration and Succession Committee The committee provided oversight over the remuneration and compensation for senior management to retain and motivate staff to perform at the level of the quality required. The committee is chaired by an independent non-executive director. Chairman – Monica Musonda Members - Yollard Kachinda and Frank Braeken resigned from the Board and the committee in May 2022, Jonathan Kirby and Felicity Preacher as an observer from British International Investment (BII). 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. Responsible for identifying, evaluating and nominating, for the approval of the Board, candidates to fill Board vacancies as and when they arise. Consider 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 considering 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 19 Annual Report 2022Zambeef Products PLC CORPORATE GOVERNANCE STATEMENT (continued) • 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 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. • Committee Meeting Attendance Schedule NAME Monica Musonda Frank Braeken Yollard Kachinda Jonathan Kirby Felicity Preacher*** CATEGORY OF DIRECTOR Chair: INED NED INED NED Observer 24/11/2021 14/02/2022 30/05/2022     BA     BA  RS RS   Key  BA RS Attendance Before Appointment Resigned *** Pursuant to the Shareholder Agreement with BII, an observer is permitted to attend meetings and participate in deliberations but may not vote 3. Environmental and Social Committee Chairperson - Pearson Gowero Members – Roman Frenkel, Monica Musonda and Yollard Kachinda 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. Ensure contribution to development of the communities in which its activities are predominantly conducted, or within which its products or services are predominantly marketed. Committee Meeting Attendance Schedule NAME Pearson Gowero Roman Frenkel Yollard Kachinda Monica Musonda CATEGORY DIRECTOR Chair: INED NED INED INED 23/11/2021     14/02/2022     31/05/2022   RS  Key  RS Attendance Resigned Retirement and Election of Directors It is the Board’s policy that new directors are subject to confirmation at the first opportunity following their appointment. All directors, excluding the Executive Directors are subject to retirement and re-election on a rotational basis with one-third of the board being re-elected annually. This is in accordance with Section 206 (5) of the Companies Act. Performance Evaluation of the Board 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. 20 Annual Report 2022Zambeef Products PLC CORPORATE GOVERNANCE STATEMENT (continued) 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. The board will continue to implement its necessary changes performance. to enhance BOARD DEVELOPMENT INDUCTION AND Newly appointed directors are taken through the Company’s Articles of Association, the Board Charter, Codes of conduct, policies, listing regulations and applicable acts such as Companies Act and Securities Act. They follow a tailored induction programme facilitated by the Company Secretary which includes a scheduled trip to tour the operations. COMPANY SECRETARY The Company Secretary is responsible for implementing and sustaining high levels of corporate governance and keeps abreast of legislation, regulations and corporate governance developments which may impact on the business. All Directors have direct access to the Company Secretary. STAFF DEVELOPMENT, TRAINING AND INFORMATION TECHNOLOGY The Company is committed to staff development and training as this is a key ingredient to continued and improved operations. The Company places emphasis on information technology as key in its strategy of delivering quality products which are the first choice of our customers and consumers. STAKEHOLDER RELATIONS places in maintaining considerable ZZambeef importance active investor relations through open, fair and transparent communications. The Company ensures timely dissemination of information to its investors and other stakeholders through various media. A dedicated shareholders unit through the Transfer Secretaries is responsible for active interaction with the shareholders. The Zambeef business model has the identified importance of maintaining strong working relationships with; understands and • • • • its key small-scale suppliers across grains and livestock, its larger commercial raw material/ input suppliers and livestock suppliers, its wide customer base across stockfeed, cold chain food products, and other products, its regulators such as Zambia Environmental Management Agency (ZEMA), Patents and Companies Registration Agency (PACRA), Water Resources Management Agency (WARMA), Lusaka Stock Exchange (LuSE), Securities and Exchange Commission (SEC), AIM Nominated Advisor; • its financiers; • social responsibility partners in communities. (AGM) In addition, Zambeef has shareholder through Annual meetings, formally General Meetings and Extraordinary General Meetings (EGM), where required, and informally through half-yearly meetings with institutional shareholders. Shareholders’ views 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. The Board considers the AGM key in providing shareholders with the the Board and to ask opportunity chairperson of the Audit committee questions concerning the affairs of the Company. Accordingly, all legal and regulatory requirements, notices and information are released well in advance to stock exchange and Company websites. To this end, the Company ensures copies of the Annual Report and Accounts are made available well before the AGM as this ensures the shareholders have insight of the business performance. shareholders, regulators, The Group publishes the outcome of all shareholder resolutions immediately after each AGM or EGM. Zambeef maintains all market announcements and Annual Reports on its website for the last 10 years. Internally the Board and Management consider effective communication as being critical to the success of the business. INTERNAL AUDITORS TThe Company has an internal audit function designed to add value to the Company and improve operations. The Internal Audit function provides an independent assurance service to the Board, the Audit and Risk Committee and management. The Internal audit function is formally defined via an Internal Audit charter and assists the Company to accomplish its objectives by bringing a systematic approach in the evaluation of the effectiveness of the governance, risk management and control processes that management has put into place. The head of the internal audit function attends the Audit and Risk Committee meetings and has unrestricted access to the chairperson of the committee. 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. EXTERNAL AUDITORS External auditors are appointed by the shareholders and are subject to reappointment at the AGM. The current external auditors of the Company are PricewaterhouseCoopers (PwC). The Company together with external that quality and auditors ensures independent audits are undertaken 21 Annual Report 2022Zambeef Products PLCCORPORATE GOVERNANCE STATEMENT (continued) through regular and systematic audit planning and also rotation of client staff engaged on the audits. ORGANISATIONAL INTEGRITY In its continued efforts to foster integrity within the organisation, the Company continues to enforce the Group Code of Ethics policy and encourages all employees to make a declaration of their assets and/or business involvements’ every year. Employees are also encouraged to declare all the gifts received in the course of employment by way of a gift register, maintained by the Company Secretary. INTERNAL CONTROL The control systems are designed to safeguard the Company’s assets, maintain proper accounting records and ensure the reliability of management and financial information produced by the Company. Control systems are based on established Zambeef group policies and procedures and are implemented by trained personnel, with an appropriate segregation of duties. The effectiveness of these internal controls and systems is monitored by the internal audit department, with the aid of self-assessment audit checklists. Management is also in the transitional process of reporting Internal Controls over Financial Reporting as prescribed by the Zambian Securities and Exchange Commission. independent The external auditors, through the audit work they perform, confirm that the abovementioned monitoring procedures are being applied effectively. Nothing has come to the attention of the Directors or the independent external auditors to indicate that any material breakdown in the functioning of abovementioned internal controls and systems has occurred during the year under review. ETHICS The Company’s fundamental policy is to conduct its business with honesty and integrity and in accordance with the highest legal and ethical standards. The Company has a Code of Conduct and Business Practices, determining the minimum standards required of all staff, which is disseminated throughout the Company. The Company has implemented, and widely disseminated to all stakeholders 22 (including suppliers), a Group Code of Ethics and Conduct. INCIDENT REPORTING, ANTI- BRIBERY AND CORRUPTION AND WHISTLEBLOWING POLICIES AND PROCEDURES The Company has detailed policies and procedures covering Incident Reporting, Anti-Bribery and Corruption (ABC) and Whistleblowing. The Group’s ABC program has been formulated in conjunction with British International Investment (Bii), following best international practice. It is well structured, documented and rigorously monitored. a is and dedicated complaints. There internal Whistleblowing Manager, managing reports These complaints can be made in various forms, and anonymously, without fear of adverse consequences. This policy has active senior management encouragement 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. and is Internal Audit closely monitors, reviews and reports on all of these policies to the Audit and Risk Committee of the Board. LEGAL COMPLIANCE The board requires management to submit an annual declaration confirming that the Company’s operations complied laws and regulations. with relevant In addition, the Company complies with legislation. The Company has recourse to the group Company Secretary and external legal advice on matters of legal compliance. local INSIDER TRADING Directors and officers of the Company who have access to unpublished, price sensitive information, in respect of the Company, are prohibited from dealing in the shares of the Company, during defined including restricted periods, those periods immediately prior to the interim and final announcement of regulations financial are clearly stipulated in the Share Dealing Code section of the Corporate Governance manual. results. These SHARE DEALING The Company has adopted a share- dealing code for dealings in shares by Directors and senior employees an for appropriate AIM-quoted 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 compliance by the Company’s relevant employees, including obtaining the advice of its AIM Nominated Advisor. In compliance with the Market Abuse Regulation (MAR), the Chairman of the Board is responsible for share dealings by the the Directors, assisted by Company Secretary as the Compliance Officer. 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 considered 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- transactions and appropriate party approved management transactions. any of RELATED-PARTY TRANSACTIONS for The Board gives authorisation any transactions carried out by the group with any anyone or considered a related party. Such transactions are evaluated as to whether the parties are treated fairly and market conditions. For recurrent transactions carried out with clients during the GGroup’sordinary 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. MARKET DISCLOSURE prepares Company The trading statements, interim and final results as required by the AIM market, the LuSE and SEC rules and also prepares a detailed to accompany narrative statement the results. Company results are disseminated widely through the LSE, LuSE, newswires and our distribution lists. Annual Report 2022Zambeef Products PLCCORPORATE GOVERNANCE STATEMENT (continued) COMPLIANCE STATUS OF LuSE CORPORATE GOVERNANCE RULES ZAMBEEF COMPLIANCE SCHEDULE Category Total Rules Applicable Non- Applicable Full Compliance Partial Compliance Non- Compliance %N/A %FC %PC %NC General Matters 15 15 Chairman and CEO Executive and NEDs Directors' Compensation Share & Share dealings Board meetings Board evaluations Company Secretary Board committees Legal and Compliance External audit Internal audit Risk Integrated sustainability reporting Disclosure and Stakeholder Reporting Organisation integrity 5 4 9 4 4 1 4 10 2 7 12 7 7 4 6 4 4 9 4 4 1 4 10 2 7 12 7 7 4 6 101 100  1               1 15 4 4 9 4 4 - 4 9 2 7 12 7 7 4 6 97                 0       1 - 1        2 - 20               1 100 80 100 100 100 100 100 1000 100 100 100 100 100 100 100 100 98                                   Summary of areas that are not fully compliant or inapplicable Areas not applicable i. If the role of the chairperson and chief executive are performed by the same person; a. The Board must have an independent director as deputy chairperson b. There must be a complement of independent directors sufficiently involved in the annual evaluation of the chairperson’s performance 23 Annual Report 2022Zambeef Products PLCBoard of Directors Michael Mundashi (age 64) Experience Chairman Non-Executive Director Nationality: Zambian Qualifications Bachelor of Laws Degree (University of Zambia); Post Graduate qualification as an Advocate of the High Court of Zambia Over 30 years post qualification experience in both the public and private sectors. Served as Chairman of the Zambian Tax Appeals Court and as Independent Non- Executive Chairman of Standard Chartered Bank Zambia Plc. External appointments Currently serving as Chairman of Sanlam Insurance; Director of Nico General Insurance. Also, full-time Managing Partner of the law firm of Mulenga Mundashi Legal Practitioners. Faith Mukutu (age 42) Experience Executive Director: Chief Executive Officer Nationality: Zambian Qualifications A.C.C.A. (Chartered Certified Accountant) – Zambia Centre for Accountancy Studies, Zambia; Certified Accounting Technician – Zambia Centre for Accountancy Studies, Zambia Over 15 years’ experience in senior finance positions of major corporates, including Zambia Sugar Plc and Zambian Breweries (part of SABMiller Group) External appointments Current directorships include Bayport Financial Services Ltd, Good Nature Agro and Zayohub Zambia Ltd. Katebe Monica Musonda (47) Non-Executive Director Chair Remco Nationality: Zambian Qualifications LL. B (UNZA); LL.M (Corporate Law & Finance - London) Executive Management Programme (Harvard Kennedy) Jonathan Kirby (age 60) Non-Executive Director Nationality: South African Qualifications Bachelor of Accounting (University of the Witwatersrand, RSA) Higher Diploma in Tax Law (Rand Afrikaans University, RSA) CA (RSA) Experience Over 15 years PQE, Debt & Equity Capital Markets & Project Finance; 9 years in FMCG having founded Java Foods Previously worked as General Counsel to the Dangote Group External Appointments Independent Non-Executive Chair Airtel Networks Plc & Zambian Breweries Plc Non-Executive Director Arcelor Mittal South Africa Plc, Mixta Nigeria, Dangote Cement Zambia Founder & CEO Java Foods Experience Over 30 years of business management and Finance 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 boards of MIRO Forestry Products Ltd, Prime Financial Services Group, Cavalier Food (Pty) Ltd, South Africa and McWade Productions (Pty) Ltd, South Africa. 24 Annual Report 2022Zambeef Products PLCBoard of Directors (continued) Roman Frenkel (age 42) Non-Executive Director Nationality: British Qualifications Durham University MEng Mechanical Engineering; ACA (ICAEW) Experience Over 10 years of investment experience in private equity in emerging markets. Previously Investment Director at Ethemba Capital LLP, emerging markets private equity fund based in London. Previously investment banker at Merrill Lynch in London and transaction services and audit professional at KPMG in London. External Appointments Currently Director, Food & Agriculture, Direct Private Equity at BII PLC in London. Pearson Gowero (age 64) Experience Non-Executive Director Nationality: Zimbabwe Qualifications BSc (Economics) Hons (University of Zimbabwe) MBL (University of South Africa) 40 years of experience in business management including Retail and Fast- Moving Consumer Goods. He served in various senior executive roles as well as Chief Executive Officer of two listed companies. External appointments Has previously served as a Director on several boards and is currently a Director of both SeedCo Zimbabwe Limited and SeedCo International Limited. He has in-depth knowledge of Zambian and Zimbabwean Industries. Walter Roodt (age 46) Experience Executive Director – Strategic Projects & Large Livestock. 20 years of experience in Agriculture in Southern Africa Nationality: Namibian Qualifications External appointments: Director of City Dental Ltd BSc. (Agric.) Animal Science (University of Pretoria, RSA); MSc. (Agric.) Nutrition Science (University of Pretoria, RSA); Senior Executive Programme (London Business School, UK) 25 Annual Report 2022Zambeef Products PLCDirectors report For the year ended 30 September 2022 The Directors submit their report together with the audited annual financial statements for the year ended 30 September 2022, which disclose the state of affairs and performance of Zambeef Products PLC (the “Company”) and its subsidiaries (together, “the Group”). Principal activities The principal activities of the Group are 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 12,257 Hectares of row crops under irrigation and 8,750 Hecatares of rain-fed/dry-land crops available for planting each year. The Group also has retailing operations in Nigeria and Ghana. Share capital and beneficial owner(s) The authorised share capital of the Company remained unchanged at 700,000,000 ordinary shares of K0.01. each. The issued and fully paid-up share capital remained at 300,579,630 ordinary shares of K0.01 each. The Group’s notable shareholding and beneficial ownership is represented as follows: Name of shareholder British International Investment Plc Africa Life National Pension Scheme Authority (Zambia) M & G Investment Management Krohne Capital SBM Securities Sussex Trust Eastspring Investment Rhodora Number of shares 52,601,435 43,030,134 24,797,818 18,700,000 17,979,408 15,925,191 14,000,000 11,995,062 8,639,374 % of shareholding 17.5% 14.3% 8.2% 6.2% 6.0% 5.3% 4.7% 4.0% 2.9% BII Plc are also the holders of 100,057,658 convertible redeemable preference shares. These shares have four voting rights for every five preference shares held resulting in BII having 34.8% of the voting rights. Significant events during the year During the year, the goodwill on the cash generating unit, Zamchick was impaired in full. The impairment loss amounted to K142 million (2021: Nil). Results and dividend The profit for the year of K31.6 million (2021:K168.8 million) has been added to retained earnings. The Directors have not declared a dividend nor have any dividends been paid during the year (2021: Nil) Directors and remuneration The Directors who held office during the year and to the date of this report were: Name Michael Mundashi SC Faith Mukutu Yollard Kachinda Jonathan Kirby Frank Braeken Katebe Monica Musonda Pearson Gowero Roman Frenkel Walter Roodt Position Chairman Chief Executive Officer Non-executive Director Non-executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Executive Director Resigned on 14 April 2022 Resigned on 27 May 2022 26 Annual Report 2022Zambeef Products PLCDirectors report (continued) For the year ended 30 September 2022 During the year, the total Directors remuneration for services rendered by Executive Directors and Non-Executive Directors were as follows: Name Position Walter Roodt Faith Mukutu Executive Director Executive Director Michael Mundashi SC Jonathan Kirby Yollard Kachinda Frank Braeken Katebe Monica Musonda Pearson Gowero Margaret Mudenda John Rabb Lawrence Sikutwa Enala Mwase Total Non-Executive Director Non-executive Director Non-executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director 2022 K’000 5,033 5,348 10,381 920 580 260 347 580 580 - - - - 3,267 13,648 2021 K’000 5,445 4,950 10,3945 860 534 463 463 338 338 120 120 100 100 3,438 13,833 Interests register information During the year, the Group officers (a Director, Company secretary or executive officer of a Company) made declarations of interest in Company transactions and business as follows: Name of Director John Rabb* Katebe Monica Musonda 2022- shares Direct - - - Indirect 14,000,000 555 14,000,555 2021- shares Direct - - - Indirect 14,000,000 555 14,000,555 *John Rabb retired on 28 February 2021. In 2021, Frank Braeken was engaged for consultancy work at a fee of K790,200. The interests’ register, as required by the Companies Act, 2017 of Zambia, containing particulars of the above stated interests declared, is available for inspection at the Group’s registered office. Average number of employees and remuneration The total remuneration of employees during the year amounted to K667.9 million (2021: K648.5 million) and the average number of employees were as follows: Month October November December January February March Average Number 6,873 7,140 7,530 7,062 7,407 7,410 Month April May June July August September Average Number 7,410 7,314 7,679 7,681 7,640 7,528 The Group has policies and procedures to safeguard the occupational health, safety, and welfare of its employees. Gifts and donations During the year, the Group made donations of K2.0 million (2021: K2.5 million) to charitable organisations and events. Research and development The Group did not incur any costs on research and development during the year (2021: Nil). Exports During the year, the Group exported K26.4 million worth of goods from Zambia (2021: K36.6 million). 27 Annual Report 2022Zambeef Products PLCDirectors report (continued) For the year ended 30 September 2022 Property, plant and equipment During the year, the Group purchased property, plant and equipment amounting to K222.1 million (2021: K103.1 million). In the opinion of the Directors, the carrying value of property, plant and equipment is not more than their recoverable value. Group Auditor and remuneration The Auditor, PricewaterhouseCoopers Zambia, has indicated their willingness to continue in office and a resolution for their reappointment will be proposed at the next annual general meeting. The Auditor remuneration for the year related to the audit for the year ended 30 September 2022 was K4.1 million (2021: K6.5 million). Signed on behalf of the Board of Directors, _______________________ Michael Mundashi SC Director Date: 2 December 2022 _______________________ Faith Mukutu Director 28 Annual Report 2022Zambeef Products PLCStatement of Directors’ responsibilities For the year ended 30 September 2022 The Companies Act, 2017 of Zambia requires the Directors to prepare annual financial statements for each financial year that give a true and fair view of the state of affairs of the Group as at the end of the financial year and of its financial performance. It also requires the Directors to ensure that the Group keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Group. They are also responsible for safeguarding the assets of the Group. The Directors are further required to ensure the Group adheres to the corporate governance principles or practices contained in Sections 82 to 122 of Part VII of the Companies Act, 2017 of Zambia. The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable estimates, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the requirements of the Companies Act, 2017 of Zambia.  The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of annual financial statements, and for such internal controls as the Directors determine necessary to enable the preparation of annual financial statements that are free from material misstatement whether due to fraud or error. The Directors are of the opinion that the annual financial statements set out on pages 36 to 97 give a true and fair view of the state of the financial affairs of the Group and of its financial performance in accordance with IFRS as issued by the IASB and the requirements of the Companies Act, 2017 of Zambia. The Directors further report that they have implemented and further adhered to the corporate governance principles or practices contained in Sections 82 to 122 of Part VII of the Companies Act, 2017 of Zambia. Nothing has come to the attention of the Directors to indicate that the Group will not remain a going concern for at least twelve months from the date of these annual financial statements. Signed on behalf of the Board of Directors _____________________ Micheal Mundashi SC Chairman Date: 2 December 2022 _______________________ Faith Mukutu Chief Executive Officer 29 Annual Report 2022Zambeef Products PLCIndependent auditor’s report To the Shareholders of Zambeef Products PLC Report on the audit of the Group and Company annual financial statements Our opinion In our opinion, the Group and Company annual financial statements give a true and fair view of Group and Company financial position of Zambeef Products PLC (the “Company”) and its subsidiaries (together the “Group”) as at 30 September 2022, and of the Group and Company financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the requirements of the Companies Act, 2017 of Zambia and the Securities Act, 2016 of Zambia. What we have audited Zambeef Products PLC’s Group and Company annual financial statements are set out on pages 36 to 97 and comprise: • • • • the Group and Company statements of financial position as at 30 September 2022; the Group and Company statements of profit or loss and other comprehensive income for the year then ended; the Group and Company statements of changes in equity for the year then ended; the Group and Company statements of cash flows for the year then ended; and the notes to the Group and Company annual financial statements, including a summary of significant accounting policies. 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 Group and Company annual financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group and Company in accordance with the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (the “IESBA Code”). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code. 30 Annual Report 2022Zambeef Products PLCIndependent auditor’s report (continued) Key audit matter Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group and Company annual financial statements of the current period. These matters were addressed in the context of our audit of the Group and Company annual financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter Impairment of Goodwill The Group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of the cash- generating units (CGUs) is determined based on value-in- use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates. Key assumptions used in the calculation include: • • • estimating the budgeted gross margins to be generated in the future; estimating the long-term growth rate; and; determining the discount rate to be used. We determined this to be an area of focus for the audit on account of the significance of the judgments applied by the Directors in determining the recoverable amount of this Cash Generating Unit (“CGU”). Refer to Note 3 (Critical accounting estimates and assumptions) and Note 13 (Goodwill) How our audit addressed the Key audit matter • In assessing the reasonableness of the assumptions applied by the Directors, we performed the following procedures: • agreed the cash flow forecasts to the most recently approved budgets and assessed reliability of budgeted numbers against historic performance; • tested the appropriateness of assumptions used in preparing the cash flow forecasts and company budget; • assessed the reasonableness of the projected cash outflows arising on repairs and maintenance expenditure against historic performance and commitments; • assessed the reasonableness of the long-term growth rate against historical growth rate of the business; • assessed the reasonableness of the determined discount rate to ensure it was representative of the risks specific to the CGU by relying on work performed by our experts; • we evaluated the sensitivity of the Group’s goodwill to fluctuations in the key assumptions applied to ascertain the extent to which the key inputs would have to change before goodwill would be considered impaired; and • we tested the mathematical accuracy of the goodwill assessment performed and agreed information used to the general ledger. 31 Annual Report 2022Zambeef Products PLCKey audit matter Valuation of Biological assets i) Livestock In measuring the fair value of livestock and standing crop, various management estimates and judgements are required. Estimates and judgements in determining the fair value of livestock relate to market prices, average weight and quality of animals, and mortality rates. The livestock grow at different rates and there can be a considerable spread in the quality and weight of animals that affects the price achieved. An average weight is assumed for the animals based on a sample deemed to be representative of the total population per breed and genetic merit. ii) Standing Crop For standing crops, the most significant estimate relates to management’s assessment of anticipated yield per hectare. This assessment considers historic yields, climate conditions and prices. Key assumptions used in the calculations include: • estimating the average weight of animals; • estimating the market prices; and; • estimating the anticipated yields per hectare and adjustment related to the crops rate of growth. We determined this to be an area of focus for the audit on account of the significance of the judgments applied by the Directors in determining the fair value of the biological assets. Refer to Note 3 (Critical accounting estimates and assumptions) and Note 16 (Biological assets). How our audit addressed the Key audit matter • In assessing the reasonableness of the assumptions applied by the Directors, we performed the following procedures: • assessed the determined sample to ensure it was representative of the animal population by category and mix; • observed the weighing of the animals based on the sample selected and • re-calculated the average weight; • obtained the market prices from suppliers as at year end used in the valuation process; • assessed the reasonableness of anticipated yields per hectare against the subsequent yields based on the actual yields achieved • we evaluated the sensitivity of the biological asset values to fluctuations in the key assumptions applied to ascertain the extent to which the key inputs would have on the balances as at year end; • we tested the mathematical accuracy of the assessment performed and agreed information used to the general ledger. Other information The Directors are responsible for the other information. The other information comprises the Annual Report but does not include the Group and Company annual financial statements and our auditor’s report thereon. Our opinion on the Group and Company annual 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 Group and Company annual financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the Group and Company annual financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 32 Annual Report 2022Zambeef Products PLCIndependent auditor’s report (continued) Responsibilities of the Directors for the Group and Company annual financial statements The Directors are responsible for the preparation of the Group and Company annual financial statements that give a true and fair view in accordance with IFRS as issued by the IASB and the requirements of the Companies Act, 2017 of Zambia and the Securities Act, 2016 of Zambia, and for such internal control as the Directors determine is necessary to enable the preparation of Group and Company annual financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Group and Company annual financial statements, the Directors are 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 the Directors either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. The Directors are responsible for overseeing the Group’s and Company’s financial reporting process. Auditor’s responsibilities for the audit of the Group and Company annual financial statements Our objectives are to obtain reasonable assurance about whether the Group and Company annual 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 Group and Company annual financial statements. • As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the Group and Company annual 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 Company’s internal control; • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors; • Conclude on the appropriateness of the Directors’ 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 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 Group and Company annual financial statements or, if such disclosures are inadequate, to modify our opinion. 33 Annual Report 2022Zambeef Products PLCAuditor’s responsibilities for the audit of the Group and Company annual financial statements (contin- ued) 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 Company to cease to continue as a going concern; • Evaluate the overall presentation, structure and content of the Group and Company annual financial statements, including the disclosures, and whether the Group and Company annual 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 Group and Company annual financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the Directors 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 the Board of Directors 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 the Board of Directors, we determine those matters that were of most significance in the audit of the Group and Company annual 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 The Companies Act, 2017 of Zambia requires that in carrying out our audit of Zambeef Products PLC, we report on whether: i) as required by section 259 (3)(a), there is a relationship, interest or debt which, ourselves, as the Group and Company Auditor, have in the Group and Company; ii) as required by section 259 (3)(b), there are serious breaches by the Group’s and Company’s Directors, of corporate governance principles or practices contained in Sections 82 to 122 of Part VII of the Companies Act, 2017of Zambia; and iii) in accordance with section 250 (2), as regards loans made to a Group and Company Officer (a director, company secretary or executive officer of the Group and Company) the Group and Company does not state the: • • particulars of any relevant loan made during the financial year to which the accounts apply, including any loan which was repaid during that year; or amount of any relevant loan, whenever made, which remained outstanding at the end of the financial year. In respect of the foregoing requirements, we have no matters to report. The engagement partner on the audit resulting in this independent auditor’s report is Andrew Chibuye. PricewaterhouseCoopers Chartered Accountants Date: 2 December 2022. Lusaka Andrew Chibuye Practicing Certificate Number: AUD/F002378 Partner signing on behalf of the firm 34 Annual Report 2022Zambeef Products PLC Financial Statements 30 September 2022 35 Annual Report 2022Zambeef Products PLCStatement of profit or loss and other comprehensive income Revenue from contracts with customers Change in fair value of biological assets Cost of sales Gross profit Other income/(expenses) Net impairment losses on financial assets Impairment of goodwill Distribution expenses Administrative expenses Notes Group 2022 K’000 2021 K’000 Company 2022 K’000 2021 K’000 5(ii) 16 7 6 4(b) 13 7 7 5,394,761 4,974,351 3,361,428 2,880,062 349,462 828,361 307,574 545,343 (4,111,037) (4,331,996) (2,795,764) (2,630,914) 1,633,186 1,470,716 873,238 794,491 2,491 (17,869) (141,786) (65,596) (8,445) (3,306) - (66,848) (1,236,762) (1,145,718) 17,325 (7,876) (141,786) (67,118) (658,635) (10,410) (1,188) - - (636,152) Operating profit 173,664 246,399 15,148 146,741 Share of loss from equity investment Finance income Finance costs 15(ii) 8 8 (3,503) 3,541 (3,358) 45,897 (118,538) (116,916) (3,503) 3,534 (91,009) (3,358) 56,792 (84,980) Profit/(loss) before income tax 55,164 172,022 (75,830) 115,195 Income tax expense – continuing operations 10 (63,283) (31,953) (27,799) (12,600) (Loss)/profit from continuing operations Profit from discontinued operations after tax 20(i) (8,119) 39,697 140,069 28,754 (103,629) 39,697 102,595 28,754 Profit/(loss) for the year 31,578 168,823 (63,932) 131,349 Profit/(loss) attributable to: Owners of Zambeef Products PLC Non-controlling interests Other comprehensive income: Items that may be reclassified to profit or loss Translation differences - foreign operations Translation differences - Mpongwe Farms Items not reclassified to profit or loss Revaluation surplus Actuarial remeasurement losses Deferred income tax* Other comprehensive income for the year 22 22 23 26(i) 25 29,152 2,426 31,578 167,980 (63,932) 131,349 843 - - 168,823 (63,932) 131,349 (16,320) (10,847) (14,710) (271,935) - - (10,847) (271,935) - (3,150) 6,394 (23,923) 192,403 (2,813) 21,199 (75,856) - (1,058) 3,018 (8,887) 40,125 (1,408) 826 (232,392) Total comprehensive income for the year 7,655 92,967 (72,819) (101,043) 36 Annual Report 2022Zambeef Products PLCStatement of profit or loss and other comprehensive income (continued) Notes Group Company Total comprehensive income for the period is attributable to: Owners of Zambeef Products Plc Non-controlling interests Basic earnings per share Continued operations Discontinued operations Total basic earnings per share Diluted earnings per share Continued operations Discontinued operations Total diluted earnings per share 30 30 30 30 2022 K’000 4,970 2,685 7,655 2021 K’000 95,066 (2,099) 92,967 2022 K’000 2021 K’000 (72,819) (73,849) - - (72,819) (73,849) Ngwee Ngwee (3.51) 13.21 9.70 (2.63) 9.91 7.28 46.60 9.57 56.17 34.96 7.18 42.14 Ngwee (34.46) 13.21 (21.25) (25.85) 9.91 (15.94) Ngwee 34.13 9.57 43.70 25.61 7.18 32.79 *Refer to note 32 for details regarding the restatement as a result of an error. The notes on pages 43 to 97 form an integral part of these annual financial statements 37 Annual Report 2022Zambeef Products PLCConsolidated Statement of financial position ASSETS Non-current assets Property, plant and equipment Right of use assets Goodwill Investment in associate Biological assets Current assets Biological assets Inventories Trade and other receivables Cash and cash equivalents Assets classified as held for sale Current income tax asset Total assets EQUITY Share capital Share premium Preference share capital Foreign currency translation reserve Revaluation reserve Retained earnings Attributable to owners of parent entity Non-controlling interests (NCI) LIBILITIES Non-current liabilities Lease liabilities Borrowings Deferred income tax Defined benefit obligations Current liabilities Lease liabilities Borrowings Trade and other payables Contract liabilities Current income tax Total equity and liabilities Notes 11 12(a) 13 15 16 16 17 18 19 20(iii) 10 21 21 21 22 23 12(b) 24 25 26 12(b) 24 27 28 10 30-Sept-22 K’000 Restated:1-Oct-21 K’000 Restated:1-Oct-20 K’000 3,134,611 32,389 25,015 36,965 86,592 3,315,572 234,104 1,441,912 289,300 223,972 170,091 - 2,359,379 5,674,951 3,006 1,125,012 1,000 692,705 1,113,119 758,489 3,693,331 66 3,693,397 12,597 426,222 223,217 3,654 665,690 5,046 525,325 649,573 97,400 38,520 1,315,864 5,674,951 3,071,735 43,283 166,801 40,468 71,365 3,393,652 287,632 1,197,846 238,278 201,539 170,550 - 2,095,845 5,489,497 3,006 1,125,012 1,000 720,131 1,160,653 678,559 3,688,361 (2,619) 3,685,742 7,253 195,555 235,250 8,891 446,949 12,418 700,913 514,205 119,206 10,064 1,356,806 5,489,497 3,213,319 51,186 166,801 43,826 62,380 3,537,512 113,925 1,103,640 142,005 111,136 175,654 1,743 1,648,103 5,185,615 3,006 1,125,012 1,000 1,003,834 1,034,388 468,453 3,635,693 (520) 3,635,173 19,750 190,218 195,444 11,389 416,801 23,259 674,944 337,766 97,672 - 1,133,641 5,185,615 The annual financial statements on pages 36 to 97 were approved for issue by the board of directors on 30 November 2022 and signed on its behalf by: _____________________ Michael Mundashi SC Chairman _______________________ Faith Mukutu Chief Executive Officer *Refer to note 32 for details regarding the restatement as a result of an error. The notes on pages 43 to 97 form an integral part of these annual financial statements. 38 Annual Report 2022Zambeef Products PLC30-Sept-22 K’000 Restated:1-Oct-21 K’000 Restated:1-Oct-20 K’000 Company statement of financial position ASSETS Non-current assets Property, plant and equipment Right of use assets Investment in subsidiaries Investment in associate Biological assets Current assets Biological assets Inventories Trade and other receivables Cash and cash equivalents Assets classified as held for sale Current income tax asset Total assets EQUITY Share capital Share premium Preference share capital Foreign currency translation reserve Revaluation reserve Retained earnings LIABILITIES Non-current liabilities Lease liabilities Borrowings Deferred income tax Defined benefit obligations Current liabilities Lease liabilities Borrowings Trade and other payables Contract liabilities Current income tax Total equity and liabilities Notes 11 12(a) 14 15 16 16 17 18 19 20(iii) 10 21 21 21 22 23 12(b) 24 25 26 12(b) 24 27 28 10 2,158,021 23,591 104,020 36,965 86,592 2,409,189 183,061 977,667 786,517 136,149 170,091 - 2,253,485 4,662,674 3,006 1,125,012 1,000 687,048 712,279 739,665 3,268,010 5,354 426,222 140,280 366 572,222 4,878 337,669 367,814 97,400 14,681 822,442 4,662,674 2,143,680 22,803 245,807 40,468 71,365 2,524,123 236,583 772,972 872,256 113,193 170,550 2,520 2,168,074 4,692,197 3,006 1,125,012 1,000 697,895 739,522 774,394 3,340,829 1,873 195,555 138,117 2,124 337,669 6,597 517,126 395,491 94,485 - 1,013,699 4,692,197 The annual financial statements on pages 36 to 97 were approved for issue by the board of directors on 30 November 2022 and signed on its behalf by: _____________________ Micheal Mundashi SC Chairman _______________________ Faith Mukutu Chief Executive Officer *Refer to note 32 for details regarding the restatement as a result of an error. The notes on pages 43 to 97 form an integral part of these annual financial statements. 2,453,920 22,474 245,807 43,826 62,380 2,828,407 77,121 814,081 1,370,672 12,645 175,654 565 2,450,738 5,279,145 3,006 1,125,012 1,000 969,830 745,684 597,340 3,441,872 8,172 190,218 124,190 3,356 325,936 14,461 497,721 906,879 92,276 - 1,511,337 5,279,145 39 Annual Report 2022Zambeef Products PLC Consolidated statement of changes in equity Share Capital Share premium Preference share capital Foreign currency translation reserve Revaluation reserve Retained earnings Total attributable to owners of parent entity Non- controlling interests Total Year ended 30 September 2021 K’000 K’000 K’000 K’000 K’000 K’000 K’000 K’000 As previously presented 3,006 1,125,012 1,000 1,003,834 1,167,713 470,174 3,770,739 (520) 3,770,219 Correction of error (Note 32) - - - - (133,325) (1,721) (135,046) - (135,046) At start of year – restated 3,006 1,125,012 1,000 1,003,834 1,034,388 468,453 3,635,693 (520) 3,635,173 Profit for the year Other comprehensive income: Revaluation surplus Transfer of excess depreciation Actuarial remeasurement losses Deferred income tax (Note 25) Translation differences (Note 22) Total comprehensive income for the year - - - - - - - - - - - - - - - - - - - - - - - - - 167,980 167,980 843 168,823 192,403 - 192,403 (44,377) 44,377 - - (2,813) (2,813) (21,761) 562 (21,199) - - - - 192,403 - (2,813) (21,199) - - - - - (283,703) - - (283,703) (2,942) (286,645) (283,703) 126,265 42,126 (115,312) (2,942) (118,254) (283,703) 126,265 210,106 52,668 (2,099) 50,569 At start of year 3,006 1,125,012 1,000 720,131 1,160,653 678,559 3,688,361 (2,619) 3,685,742 Year ended 30 September 2022 At start of year Profit for the year Other comprehensive income: Transfer of excess depreciation Actuarial remeasurement losses Deferred income tax (Note 25) Translation differences (Note 22) Total comprehensive income for the year 3,006 1,125,012 1,000 720,131 1,160,653 678,559 3,688,361 (2,619) 3,685,742 - 29,152 29,152 2,426 31,578 - - - - - - - - - - - - - - - - - - - - - - - - - (53,928) 53,928 - - (3,150) (3,150) 6,394 6,394 - - - - (3,150) 6,394 - - (27,426) - (27,426) 259 (27,167) (27,426) (47,534) 50,778 (24,182) 259 (23,923) (47,534) 79,930 4,970 2,685 7,655 (27,426) At year end 3,006 1,125,012 1,000 692,705 1,113,119 758,489 3,693,331 66 3,693,397 The notes on pages 43 to 97 are an integral part of these annual financial statements. 40 Annual Report 2022Zambeef Products PLCCompany statement of changes in equity Share premium Preference share capital Foreign currency translation reserve Revaluation reserve K’000 K’000 K’000 K’000 Share Capital K’000 Year ended 30 September 2021 As previously presented 3,006 1,125,012 1,000 969,830 Correction of error (Note 32) - - - - At start of year - restated 3,006 1,125,012 1,000 969,830 Profit for the year Other comprehensive income: Revaluation surplus Transfer of excess depreciation Actuarial remeasurement losses Deferred income tax (Note 25) Translation losses on Mpongwe farms (Note 22) Total comprehensive income for the year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (271,935) (271,935) Retained earnings K’000 Total 597,524 3,524,910 (184) 597,340 131,349 (83,038) 3,441,872 131,349 - 40,125 46,972 (1,408) 141 - (1,408) 826 - (271,935) 828,538 (82,854) 745,684 - 40,125 (46,972) - 685 - (6,162) 45,705 (232,392) (271,935) (6,162) 177,054 (101,043) At start of year 3,006 1,125,012 1,000 697,895 739,522 774,394 3,340,829 Year ended 30 September 2022 At start of year Profit for the year Other comprehensive income: Transfer of excess depreciation Actuarial remeasurement losses Deferred income tax (Note 25) Translation losses on Mpongwe farms (Note 22) Total comprehensive income for the year 3,006 1,125,012 1,000 697,895 739,522 774,394 (63,932) 3,340,829 (63,932) - - - - - - - - - - - - - - - - - - - - - - - - - - (30,155) - 2,912 30,155 (1,058) 106 (10,847) (10,847) - - (27,243) 29,203 - (1,058) 3,018 (10,847) (8,887) (10,847) (27,243) (34,729) (72,819) At year end 3,006 1,125,012 1,000 687,048 712,279 739,665 3,268,010 The notes on pages 43 to 97 are an integral part of these annual financial statements. 41 Annual Report 2022Zambeef Products PLCConsolidated statement of cash flows Cash flows from operating activities Cash generated from operations Interest paid on borrowings Interest paid on leases Benefits paid Income tax paid Group 2022 K’000 308,323 (53,473) (1,813) (9,672) (44,877) 2021 K’000 206,761 (38,998) (3,268) (6,970) (4,734) Company 2022 K’000 2021 K’000 153,025 (53,473) (784) (3,247) (9,828) 119,664 (35,380) (1,634) (3,472) (2,997) Notes 29(i) 29(ii) 29(ii) 26(i) 10 Net cash in/(out)flow from operating activities 198,488 152,791 85,867 76,181 Cash flows from investing activities Purchase of property, plant and equipment 11 (222,135) (103,051) (109,858) (37,394) Proceeds from disposal assets 2,819 - - 124 Net cash outflow from investing activities (219,316) (103,051) (109,858) (37,270) Cash flows from financing activities Proceeds from borrowings Principal repayments of borrowings Principal elements of lease payments 29(ii) 29(ii) 29(ii) 722,995 669,619 722,995 669,619 (526,205) (740,611) (526,205) (740,611) (14,965) (30,879) (7,322) (14,163) Net cash in/(out)flow from financing activities 181,825 (101,871) 189,468 (85,155) Net increase/(decrease) for the year 160,997 (52,131) 165,303 (46,244) Movement in cash and cash equivalents At start of year Net increase /(decrease) Exchange differences (288,665) (236,909) (193,224) (158,177) 160,997 (52,131) 165,303 (40) 375 45 (46,244) 11,197 At year end 19 (127,708) (288,665) (27,876) (193,224) The notes on pages 43 to 97 are an integral part of these annual financial statements. 42 Annual Report 2022Zambeef Products PLCNotes to annual financial statements For the year ended 30 September 2022 1 General information Zambeef Products PLC (the “Company”) is incorporated in Zambia under the Zambia Companies Act as a public limited company, listed on the Lusaka Stock Exchange and is domiciled in Zambia. The Company and its subsidiaries (together “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 12,257 Hectares of row crops under irrigation and 8,780 Hectares of rain-fed/dry-land crops available for planting each year. The Group also has operations in West Africa in Nigeria and Ghana. The Group’s registered office is: Plot 4970, Manda Road Industrial Area Lusaka Zambia 2 Summary of significant accounting policies This note provides a list of the significant accounting policies adopted in the preparation of these annual financial statements to the extent they have not already been disclosed in the other notes above. These policies have been consistently applied to all the years presented, unless otherwise stated. The annual financial statements are for the Group consisting of Zambeef Products PLC and its subsidiaries. a) Basis of preparation Compliance with IFRS The annual financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The annual financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB). Historical cost convention The annual financial statements have been prepared on historical cost basis, except where otherwise stated in the accounting policies below. The annual financial statements are presented in Zambia Kwacha (K). Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current period. In accordance with the Companies Act, 2017 of Zambia, the annual financial statements for the year ended 30 September 2022 have been approved for issue by the Directors. The preparation of annual financial statements in conformity with IFRS requires the use of estimates and assumptions. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving higher degree of judgement or complexity, or where assumptions and estimates are significant to the annual financial statements are disclosed in Note 3. i) New and amended standards adopted by the Group The Group has adopted the applicable new, revised or amended accounting pronouncements as issued by the International and Accounting Standards Board (IASB), which were effective for the Group from 1 October 2021. The amendments to accounting standards below effective for the reporting period 1 October 2021 did not have any material impact on the Group’s accounting policies and required no retrospective adjustments to the annual financial statements of the Group. Amendments to IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments: Recognition and Measurement’, IFRS 7 ‘Financial Instruments: Disclosures’, IFRS 4 ‘Insurance Contracts’ and IFRS 16 ‘Leases’ – interest rate benchmark (IBOR) reform (Phase 2).Annual periods beginning on or after 1 January 2021 (Published August 2020).The Phase 2 amendments address issues that arise from the implementation of the reform of an interest rate benchmark, including the replacement of one benchmark with an alternative one. IFRS 16, ‘Leases’ COVID-19-Related Rent Concessions Amendment. Annual periods beginning on or after 1 June 2020 (early adoption is permitted) (Published June 2020).The IASB has provided lessees (but not lessors) with relief in the form of an optional exemption from assessing whether a rent concession related to COVID-19 is a lease modification, provided that the concession meets certain conditions. Lessees can elect to account for qualifying rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concession as a variable lease payment. ii) New and amended standards not yet adopted by the Group Certain new accounting standards and interpretations have been published that are not mandatory for 30 September 2022 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. 43 Annual Report 2022Zambeef Products PLC2 Summary of significant accounting policies (continued) ii) New and amended standards not yet adopted by the Group (continued) Amendment to IFRS 3, ‘Business combinations’ Asset or liability in a business combination clarity. Annual periods beginning on or after 1 January 2022 (Published May 2020) The Board has updated IFRS 3, 'Business combinations', to refer to the 2018 Conceptual Framework for Financial Reporting, in order to determine what constitutes an asset or a liability in a business combination. In addition, the Board added a new exception in IFRS 3 for liabilities and contingent liabilities. The exception specifies that, for some types of liabilities and contingent liabilities, an entity applying IFRS 3 should instead refer to IAS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’, or IFRIC 21, ‘Levies’, rather than the 2018 Conceptual Framework. The Board has also clarified that the acquirer should not recognise contingent assets, as defined in IAS 37, at the acquisition date. Amendments to IAS 16 ‘Property, Plant and Equipment’: Proceeds before Intended Use. Annual periods beginning on or after 1 January 2022 (Published May 2020).The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any proceeds received from selling items produced while the entity is preparing the asset for its intended use (for example, the proceeds from selling samples produced when testing a machine to see if it is functioning properly). The proceeds from selling such items, together with the costs of producing them, are recognised in profit or loss. Amendments to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ on Onerous Contracts—Cost of Fulfilling a Contract. Annual periods beginning on or after 1 January 2022 (Published May 2020). The amendment clarifies which costs an entity includes in assessing whether a contract will be loss-making. This assessment is made by considering unavoidable costs, which are the lower of the net cost of exiting the contract and the costs to fulfil the contract. The amendment clarifies the meaning of ‘costs to fulfil a contract’. Under the amendment, costs to fulfil a contract include incremental costs and the allocation of other costs that relate directly to fulfilling the contract. Annual improvements cycle 2018 -2020. Annual periods beginning on or after 1 January 2022 (Published May 2020). These amendments include minor changes to: • • • IFRS 1, ‘First time adoption of IFRS’ has been amended for a subsidiary that becomes a first-time adopter after its parent. The subsidiary may elect to measure cumulative translation differences for foreign operations using the amounts reported by the parent at the date of the parent’s transition to IFRS; IFRS 9, ‘Financial Instruments’ has been amended to include only those costs or fees paid between the borrower and the lender in the calculation of “the 10% test” for derecognition of a financial liability. Fees paid to third parties are excluded from this calculation; IFRS 16, ‘Leases’, amendment to the Illustrative Example 13 that accompanies IFRS 16 to remove the illustration of payments from the lessor relating to leasehold improvements. The amendment intends to remove any potential confusion about the treatment of lease incentives. Amendment to IAS 1 ‘Presentation of Financial Statements’ on Classification of Liabilities as Current or Non-current. Annual periods beginning on or after 1 January 2022. (Published Jan 2020). The amendment clarifies that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by expectations of the entity or events after the reporting date (for example, the receipt of a waiver or a breach of covenant). b) Principles of consolidation and equity accounting i) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the Group Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of financial position respectively. b) Principles of consolidation and equity accounting (continued) ii) Associates Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting after initially being recognised at cost. 44 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC2 Summary of significant accounting policies (continued) iii) Equity method Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment. Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group. The carrying amount of equity-accounted investments is tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. iv) Changes in ownership interests The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Zambeef Products PLC. When the Group ceases to consolidate or equity account for an investment because of a loss of control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. c) Business combinations The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the: • • • • • fair values of the assets transferred; liabilities incurred to the former owners of the acquired business; equity interests issued by the Group; fair value of any asset or liability resulting from a contingent consideration arrangement, and; fair value of any pre-existing equity interest in the subsidiary Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred. The excess of the: • • • consideration transferred, amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. 45 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC2 Summary of significant accounting policies (continued) Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value, with changes in fair value recognised in profit or loss. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss. d) Impairment of non-financial assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets 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 carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. e) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The Board of Zambeef Products PLC has appointed a strategic steering committee which assesses the financial performance and position of the Group and makes strategic decisions. The steering committee, which has been identified as being the CODM, consists of the Chief Executive Officer and the Chief Financial Officer. f) Foreign currency translation i) Functional and presentation currency Items included in the annual financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Zambian Kwacha (K), which is Zambeef Products PLC’s functional and presentation currency. ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are recognised in profit or loss. They are deferred in equity if they are attributable to part of the net investment in a foreign operation. Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis within other income or other expenses. Translation differences arising on Mpongwe Farms, whose assets and liabilities are denominated in US Dollars are posted in other comprehensive income. In December 2021, management aligned the functional currency of Mpongwe Farms to that of Zambeef Products PLC as the farm is a direct and integral extension of the reporting entity. iii) Group companies The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; • income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and; • all resulting exchange differences are recognised in other comprehensive income On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale. g) Revenue recognition The Group’s contracts with customers exist in various forms and typically take the form of signed agreements, approved customer purchase orders, invoices to customers, terms and conditions documents and customary business practices, all of which have commercial substance and impact the Company’s future cash flows. Revenue is recognised at point in time upon delivery of products and customer acceptance. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. 46 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC2 Summary of significant accounting policies (continued) Retailing and food production The cold food chain products are mainly beef, chicken, pork, fish, milk and dairy products. These products are sold through the Group’s retail 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. Revenue is recognised at point in time when performance obligations are satisfied by delivering the products. Stockfeed is sold through 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. Revenue is recognised at point in time when performance obligations are satisfied by delivering the stockfeed. 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. Revenue is recognised when the customer collects the chicks and is invoiced. A contract 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. Cropping and milling 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 at point in time when performance obligations are satisfied by delivering the grain. The flour mill and bread are sold through the Group’s retail network and are mainly for cash sales. Revenue is recognised at point in time upon accptance of products by the customer. Financing components The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money. h) Interest income Interest income is presented as finance income where it is earned from financial assets that are held for cash management purposes. Any other interest income is included in other income. Interest income is recognised using the effective interest method. i) Property, plant and equipment All items of property, plant and equipment are initially recognised at cost and subsequently shown at fair value, based on valuations by external independent valuers, less accumulated depreciation. Valuations are performed with sufficient regularity to ensure that the fair value does not differ materially from its carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. 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. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Increases in the carrying amounts arising on revaluation of property, plant and equipment are recognised, net of tax, in other comprehensive income and accumulated in reserves in shareholders’ equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to profit or loss and depreciation based on the asset’s original cost, net of tax, is reclassified from the property, plant and equipment revaluation surplus to retained earnings Depreciation is calculated using the straight-line method to allocate the cost or revalued amounts of the assets, net of their residual values, over their estimated useful lives as follows: Buildings Plant & machinery Motor vehicles Plant & machinery Aircraft Land 2% 10% 20% 10% 10% Unexpired remaining life Assets classified as land are not depreciated. 47 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC2 Summary of significant accounting policies (continued) Capital work in progress, which represents additions to property, plant and equipment that have not yet been brought into use, is not depreciated. Additions are transferred into the above depreciable asset classes once they are brought into use. Capital work in progress is measured at cost less impairments. The asset’s residual values and useful lives of the assets are reviewed, and adjusted if appropriate, at the end of each reporting period. Property, plant and equipment are reviewed 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 carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. When revalued assets are sold, it is Group policy to transfer any amounts included in other reserves in respect of those assets to retained earnings. j) Leases The following sets out the Group’s lease accounting policy for all leases with the exception of leases with low-value and short term of less than 12 months for which the Group has taken the exemption under the standard and are expensed to profit or loss as incurred. i) Right of use assets The Group recognises right of use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use under the contract). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date (which do not form part of the lease liability value at the commencement date). Right of use assets are depreciated on a straight-line basis over the shorter of their estimated useful life and the lease term. Buildings Plant & machinery Motor vehicles 10 years 10 years 4 years Lease term Lease term Lease term The right-of-use assets are tested for impairment in accordance with IAS 36 “Impairment of Assets”. ii) Lease liabilities At the commencement date of the lease, the group recognises lease liabilities measured at the present value of all remaining lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments where the contracts specify fixed or minimum uplifts) and variable lease payments that depend on an index or a rate. The variable lease payments that do not depend on an index or a rate are recognized as an expense in the period in which the event or condition that triggers the payment occurs. Due to the nature of the leased assets the interest rate implicit in the lease is usually not readily determinable, the Group therefore uses the incremental borrowing rate in calculating the present value of lease payments at the lease commencement date. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term or a change in the in-substance fixed lease payments. k) Goodwill Goodwill is measured as described in Note (c). Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments. l) Biological assets Biological assets are measured at fair value less cost to sell, based on market prices at auction of livestock of similar age, breed and genetic merit, with adjustments, where necessary, to reflect the differences. Costs to sell include the incremental selling costs, including auctioneers’ fees, commission paid to brokers and dealers, and estimated costs of transport to the market, but exclude finance costs and income taxes. 48 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC2 Summary of significant accounting policies (continued) Changes in fair value of livestock and growing crop are recognised in profit or loss. Farming costs such as feeding, labour costs, pasture maintenance, veterinary services and shearing are expensed as incurred. The cost of purchase of sheep plus transportation charges are capitalised as part of biological assets. Cattle and Pigs are measured at fair value based on market prices of similar age, breed and genetic merit, with adjustments, where necessary, to reflect the differences. Market prices are obtained from local active market. Cattle and Pigs are classified as current assets if they are to be sold within one year.Standing crops (Maize, Soya and Wheat) are measured 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. The cost model is adopted for the measurement of Chickens and agricultural produce (parent breeding stock, commercial layers, set eggs and unset eggs) as the fair values cannot be reliably measured. Breeding stock and commercial layers are capitalized at cost at the beginning of their productive cycleand amortised on a straight-line method over the anticipated productive cycle, to its estimated net realizable value. All the expenses incurred in establishing and maintaining the assets are recognized in cost of sales. All costs incurred in acquiring biological assets until point of production are capitalised. Set and unset eggs are measured on costs with expenses incurred in maintaining the assets included within “cost of sales” in profit or loss for the period in which they arise. m) Inventories Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of first in first out. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. n) Financial instruments Financial assets and liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instruments. Classification and measurement Financial assets The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. The group reclassifies debt investments when and only when its business model for managing those assets changes. At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. The Group measures its debt instruments at amortised cost as assets are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included in finance income using the effective interest rate method. The Group's financial assets are trade receivables and cash and cash equivalents. i) Trade and receivables Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less loss allowance. ii) Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. Financial liabilities The Group's financial liabilities are classified as amortised cost. Financial liabilities are recognised initially at fair value and inclusive of directly attributable transaction costs. The Group's financial liabilities are borrowings and trade and other payables (excluding statutory liabilities). 49 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC2 Summary of significant accounting policies (continued) i) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. ii) Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. Impairment The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Refer to Note 4(b) for further details. Derecognition Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses.The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. Substantial modification A substantial modification of the terms of an existing debt instrument or part of it is accounted for as an extinguishment of the original debt instrument and the recognition of a new debt instrument. Gains or losses arising from the modification of the terms of a debt instrument are recognised immediately in profit or loss where the modification does not result in the derecognition of the existing instrument. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. As at the reporting period, there were no assets and liabilities off-set relating to financial instruments. The legally enforceable right is not contingent on future events and is enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty. o) Other current assets These amounts generally arise from transactions outside the usual operating activities of the Group. Interest may be charged at commercial rates where the terms of repayment exceed six months. Collateral is not normally obtained. Prepayments are amounts paid in advance during the accounting period for an underlying asset that will be consumed in a future period. When the asset is used or consumed, the prepayments are amortised, and costs are recognised in operating expenses. Prepayments are stated at their nominal values in the financial statements. p) Borrowings costs General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings, pending their expenditure on qualifying assets, is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred. 50 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC2 Summary of significant accounting policies (continued) q) Non-current assets (or disposal groups) held for sale and discontinued operation Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the noncurrent asset (or disposal group) is recognised at the date of derecognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position. A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss. r) Share capital and share premium Ordinary shares are classified as share capital in equity. Mandatorily redeemable preference shares are classified as liabilities. However, the Group classifies preference shares as equity as they do not meet the definition of a financial liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Any premium received over and above the par value of the shares is classified as share premium in equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as deduction from the proceeds. s) Earnings per share i) Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares. ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after- income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. t) Employee benefits i) Short term obligations Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the statement of financial position. ii) Post-employment obligations The Group operates various post-employment schemes, including both defined contribution and benefit plans. Defined contribution plan The Group and all its employees pay contributions to the National Pension Scheme Authority (NAPSA), a publicly administered pension scheme on a mandatory basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. 51 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC2 Summary of significant accounting policies (continued) t) Employee benefits (continued) ii) Post-employment obligations (continued) Defined benefit pension plan The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period. The plan is unfunded. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation. This cost is included in employee benefit expense in the statement of profit or loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the statement of financial position. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service costs. Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value. u) Income tax The income tax expense or credit for the period is the tax payable on the current period’s taxable income, based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Group measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the annual financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. 52 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC3 Critical accounting estimates and judgements The preparation of annual financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s accounting policies. Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. The areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong are as follows: i) Estimated Goodwill impairment The Group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of the cash-generating units (CGUs) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates. ii) Valuation of biological assets In measuring the fair value of livestock and standing crop, various management estimates and judgements are required. Estimates and judgements in determining the fair value of livestock relate to market prices, average weight and quality of animals, and mortality rates. The livestock grow at different rates and there can be a considerable spread in the quality and weight of animals that affects the price achieved. An average weight is assumed for the animals based on a sample deemed to be representative of the total population per breed and genetic merit. For standing crop, the most significant estimate relates to management’s assessment of anticipated yield per hectare and and adjustment related to the crops rate of growth.This assessment considers historic yields, climate conditions and prices. iii) Estimation of defined benefit obligation (DBO) Management’s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses amount. iv) Impairment of financial assets The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history and existing market conditions, as well as forward-looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in Note 4(b). 4 Financial risk management The Group’s risk management is predominantly controlled by a central treasury department (group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. 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: • • • Increase in the retail footprint 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. a) Market risk i) Foreign exchange risk exposure Foreign exchange risk arises when recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency. The Group is exposed to foreign currency risk arising from various currency exposures, primarily with respect to the United States Dollar (US$). 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. 53 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 4 Financial risk management (continued) The Group’s exposure to foreign currency risk, primarily with respect to the United States Dollar (US$), at the end of the reporting period, expressed in Zambian Kwacha is detailed in the table below. As at 30 September 2022 Financial assets: Cash and cash equivalents Trade and other receivables Financial liabilities: Bank overdrafts Bank loans Trade and other payable Lease liabilities Net exposure As at 30 September 2021 Financial assets: Cash and cash equivalents Trade and other receivables Financial liabilities: Bank overdrafts Bank loans Trade and other payables Lease liabilities Net exposure Sensitivity Group US$ K’000 2,658 75,841 78,499 (11,577) (24,754) (88,858) (7,127) (132,316) (53,817) 76,631 151,824 228,455 (83,234) (82,133) (276,122) (12,959) (454,448) (225,993) Company US$ K’000 1,801 57,493 59,294 (11,561) (24,754) (88,858) (7,127) (132,300) (73,006) 23,807 45,270 69,077 (83,234) (82,133) (191,899) (12,959) (370,225) (301,148) At 30 September 2022, if the Zambian Kwacha had weakened/strengthened by 10% (2021: 10%) against the United States Dollar (US$) with all other variables held constant, the effect on post-tax profit for the year and shareholders' equity would have been as follows: Impact on profit and equity Group Company 2022 K’000 85,030 2021 K’000 136,725 2022 K’000 115,350 2021 K’000 12,397 54 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 4 Financial risk management (continued) a) Market risk (continued) ai) Cash flow and fair value Interest rate risk The Group’s main interest rate risk arises from borrowings with variable rates, which expose the Group to cash flow interest rate risk. To manage the risks, 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 reviews economic conditions relating to such variable benchmarks and is allowed to consider alternate debt structures where the need may arise. The exposure of the Group’s borrowings to interest rate changes at the end of the reporting period are as follows: Group Variable rate borrowings 647,547 68% 896,468 100% 2022 K’000 % of total loans 2021 K’000 % of total loans Company Variable rate borrowings 459,891 60% 712,681 100% The percentage of total loans shows the proportion of loans that are currently at variable rates in relation to the total amount of borrowings. As at 30 September 2022, with all other variables held constant, a 5 % (2021: 5%) decrease/increase in the base interest rate would have resulted in change in post-tax profit for the year and shareholders' equity as follows: Impact on profit and equity IBOR reforms Group Company 2022 K’000 47,577 2021 K’000 44,823 2022 K’000 38,194 2021 K’000 35,634 During the year, the Group repaid all outstanding loans and renewed both short-term working capital facilities and long-term debt based on the SOFR rate. There were no long-term facilities transitioned from LIBOR to SOFR to warrant an assessment of debt modifications or extinguishments. bi) Price risk The Group does not hold any financial instruments subject to price risk (2021: Nil). b) Credit risk Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to outstanding receivables. i) Risk management For banks and financial institutions, the Group only accepts reputable well-established financial institutions. Through selective granting of credit, the Group’s risk control unit assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. The Group does not grade the credit quality of receivables. Individual risk limits are set based on internal ratings in accordance with limits set by the Board. The utilisation of credit limits is regularly monitored. Sales to retail customers are required to be settled in cash mitigating credit risk. There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions. The Directors believe the credit risk of trade receivables is low. ii) Security The Group does not obtain security on outstanding trade receivables iii) Impairment of financial assets The Group has three types of financial assets that are subject to the expected credit loss model: • trade receivables • Cash and cash equivalents • Other financial assets at amortised cost 55 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 4 Financial risk management (continued) b) Credit risk (continued) Trade receivables The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The Group’s historical credit loss experience does not show significantly different loss patterns for the various customer segments. Therefore, the grouping of trade receivables is not disaggregated into further risk profiles other than days past due. The expected loss rates are based on the payment profiles of sales over a period of 12 months before 30 September 2022 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Group has identified the inflation and interest rates of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors. The outstanding trade receivables subjected to expected credit loss calculation are net of debtors where there is a legal right to offset. There were no changes in the estimation techniques or significant assumptions made as at the reporting period. The amount that best represents the Company’s maximum exposure to credit risk is the carrying value of its financial assets as presented in the statement of financial position. On that basis, the loss allowance as at 30 September 2022 and 30 September 2021 was determined as follows for trade receivables: 30 September 2022 Group Gross carrying amount Right to offset balances Expected loss rate Loss allowance Other allowance Amortised cost Company Gross carrying amount Right to offset balances Expected loss rate Loss allowance Other allowance Amortised cost 30 September 2021 Group Gross carrying amount Expected loss rate Loss allowance Amortised cost Company Gross carrying amount Expected loss rate Loss allowance Amortised cost Current K’000 120,034 (16,667) 103,367 5.0% (5,168) (13,767) 84,432 46,112 (16,667) 29,445 7% (2,061) (6,281) 21,103 Current K’000 137,825 3.96% (5,456) 132,369 74,056 0.3% (222) 73,834 31 -60 days past due K’000 5,871 - 5,871 7.0% (411) - 5,460 61 – 90 days past due K’000 793 - 793 61% (484) - 309 Over 90 days past due K’000 10,867 - 10,867 90% (9,780) - 1,087 2,072 - 2,072 26% (539) - 1,533 220 - 220 100% (220) - - 5,387 - 5,387 100% (5,387) - - 31 -60 days past due K’000 20,830 3.55% (740) 61 – 90 days past due K’000 1,784 7.06% (126) Over 90 days past due K’000 6,026 89.99% (5,421) Total K’000 137,565 (16,667) 120,898 (15,843) (13,767) 91,288 53,791 (16,667) 37,124 (8,207) (6,281) 22,636 Total K’000 166,465 (11,743) 20,090 1,658 605 154,722 15,397 3.0% (461) 14,936 101 11.0% (11) 90 5,843 92.0% (5,369) 474 The loss allowances for trade receivables as at 30 September reconcile to the opening loss allowances as follows: At start of year Charge recognised in profit or loss Utilised 56 Group 2022 K’000 11,743 17,869 - 29,612 2021 K’000 10,723 3,306 (2,286) 11,743 Company 2022 K’000 6,603 7,876 - 14,479 95,397 (6,063) 89,334 2021 K’000 5,298 1,188 (423) 6,063 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 4 Financial risk management (continued) b) Credit risk (continued) Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 90 days past due. Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item. The loss allowance recognised is categorised as follows: Performing debtors Non-performing debtors - over 90 days Cash and cash equivalents Group Company 2022 K’000 6,065 23,547 2021 K’000 6,322 5,421 29,612 11,743 2022 K’000 2,811 5,421 8,232 2021 K’000 1,234 5,369 6,063 While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial. Other financial assets at amortised cost Other financial assets at amortised cost relate to receivables from related parties, staff debtors, and sundry debtors. All of the Group’s other financial assets at amortised cost are considered to have a low risk of default and the debtors have a strong capacity to meet their contractual cash flow obligations in the near term. c) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Group treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the group’s liquidity reserve (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at local level in the operating companies of the Group, in accordance with practice and limits set by the Group. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the Group’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring financial position liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans. 57 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 4 Financial risk management (continued) c) Liquidity risk (continued) i) Financing arrangements The Group had access to the following undrawn borrowing facilities (Bank loans and overdrafts) at the end of the reporting period: Floating rate Expiring within one year Group 2022 K’000 2021 K’000 Company 2022 K’000 2021 K’000 384,764 257,857 572,420 441,644 The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in in denominated currency and have an average maturity of 1 years (2021:1 years). ii) Maturities of financial liabilities The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. Less than 1 year K’000 Between 1 and 2 years K’000 Between 2 and 5 years K’000 Over 5 years Total contractual cash flows At 30 September 2022 Group Trade and other payables* Borrowings Lease liabilities Company Trade and other payables* Borrowings Lease liabilities At 30 September 2021 Group Trade and other payables* Borrowings Lease liabilities Company Trade and other payables* Borrowings Lease liabilities 612,842 598,871 7,094 1,218,807 362,760 384,943 5,790 753,493 496,359 397,456 13,085 906,900 388,273 382,873 6,945 778,091 - 55,732 6,453 62,185 - 55,732 5,225 60,957 - 122,456 5,434 127,890 - 106,737 3,159 109,896 - 430,161 5,791 435,952 - 430,161 - 430,161 - - 1,563 1,563 - - - - - 7,991 7,991 - - - - - - 3,345 3,345 - - - 612,842 1,084,764 27,329 1,724,935 362,760 870,836 11,015 1,244,611 496,359 519,912 23,427 1,039,698 388,273 489,610 10,104 887,987 *Trade and other payables exclude statutory liabilities as these are imposed by law and therefore do not meet the definition of financial instruments. 58 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 4 Financial risk management (continued) d) 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: • any future climate change with a potential shift in weather patterns leading to floods or droughts and associated crop losses; • potential insect, fungal and weed infestations resulting in crop failure and reduced yields; • wild and domestic animal conflicts and crop raiding and; • 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. e) Capital risk management The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio which is calculated as Net debt divided by Total ‘equity’ (as shown in the statement of financial position). During 2022, the Group’s strategy, which was unchanged from prior year, was to maintain a gearing ratio of less than 70%.The gearing ratio is not part of the contractual debt covenants imposed by the lenders. Therefore, there is no adverse financing implications on the Group in the event that the ratio deteriorates. The gearing ratios at 31 December 2022 and 31 December 2021 were as follows: Net debt (Note 29 (ii)) Total equity attributable to parent Group Company 2022 K’000 745,217 3,693,331 2021 K’000 714,600 3,688,361 2022 K’000 637,978 3,268,010 2021 K’000 607,958 3,340,829 Gearing ratio 20% 20% 19% 19% 59 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 4 Financial risk management (continued) f) Fair value measurements This note explains the judgements and estimates made in determining the fair values of the non-financial assets and liabilities that are recognised and measured at fair value in the financial statements. As at the end of the reporting period, the Group had no financial instruments measured at fair value. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its non-financial assets and liabilities into the three levels prescribed under the accounting standards as below: • Level 1: The fair value of non-financial instruments traded in active markets is based on quoted market prices at the end of the reporting period; • Level 2: The fair value of non-financial instruments that are not traded in an active market is determined using valuation techniques that maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2; • Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. At 30 September 2022 Group Non-financial assets: Property plant and equipment Biological assets Company Non-financial assets: Property plant and equipment Biological assets At 30 September 2021 Group Non-financial assets: Property plant and equipment Biological assets Company Non-financial assets: Property plant and equipment Biological assets Level 1 K’000 Level 2 K’000 Level 3 K’000 Total K’000 - - - - - - - - - - - - - 320,699 3,134,611 - 3,134,611 320,699 320,699 3,134,611 3,455,310 - 269,652 2,158,021 - 2,158,021 269,652 269,652 2,158,021 2,427,673 358,997 3,071,735 - 3,071,735 358,997 358,997 3,071,735 3,430,732 307,754 2,158,613 - 2,158,613 307,754 307,754 2,158,613 2,466,367 There were no transfers between the levels for recurring fair value measurements during the year. 60 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 4 Financial risk management (continued) f) Fair value measurements (continued) Property, plant and equipment Level 3 fair values were derived using comparable value of similar items of property, plant and equipment and adjusted for differences in key attributes such as property size and condition. Depreciated replacement cost approach was used for specialized buildings, furniture and fittings, motor vehicles and office equipment. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available the directors consider information from a variety of sources including current prices in an active market for properties of a different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences. Biological assets Biological assets are measured at fair value less cost to sell. Refer to Note 3(ii) for further information on the inputs used in determining the fair value. g) Financial instruments by category Financial assets at amortised cost Trade and other receivables* (excluding prepayments) Cash and cash equivalents Financial liabilities at amortised cost Borrowings Lease liabilities Trade and other payables** (excluding prepayments) Group 2022 K’000 2021 K’000 Company 2022 K’000 2021 K’000 131,056 223,973 201,763 201,539 723,976 136,149 869,868 111,136 355,029 403,302 860,125 981,004 951,547 17,643 896,468 19,671 763,891 10,232 712,681 8,470 612,842 496,359 362,760 388,273 1,582,032 1,412,498 1,136,883 1,109,424 61 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 5 Segment reporting The Group’s Chief Operating Decision Makers (CODMs), (consisting of the Chief Executive Officer and the Chief Financial Officer), examine the Group’s performance from a product perspective and has identified two aggregated reportable segments of its business as shown in the table below. The business activities are grouped in these segments based on the nature of their products and services. • Retailing and food production: This part of business sells cold food chain products are mainly beef, chicken, pork, fish, milk and dairy products as well as sale of day-old chicks and stockfeed. • Cropping and milling: This part of business sells wheat, soya and maize grain as well as flour mill and bread. The individual segments ((beef, chicken, pork, fish, dairy products, day-old chicks and stockfeed) have been aggregated into Retailing and food production as they have similar average gross margins and similar expected growth rates. The same applies to the Cropping and milling segment. The CODMs primarily use a measure of gross profit to assess the performance of the operating segments. Interest income, finance costs and assets are not allocated to segments, as these activities are driven by the central treasury function which manages the cash position of the Group while assets are shared between the segments. There is no single customer of the Group making up 10% of revenue. i) Segment revenue from contracts with customers The Group derives revenue from the transfer of goods at a point in time by operating segment as follows: Group 2022 Segment revenue Inter-segment eliminations External revenue Gross profit 2021 Segment revenue Inter-segment eliminations External revenue Gross profit Company 2022 Segment revenue Gross profit 2021 Segment revenue Gross profit Retailing and Food Production K’000 5,363,544 (2,034,457) 3,329,087 743,970 5,010,359 (1,705,770) 3,304,589 853,462 Retailing and Food Production K’000 1,103,568 292,687 1,043,621 287,869 Cropping & Milling K’000 3,314,797 (1,249,123) 2,065,674 889,216 2,795,857 (1,126,095) 1,669,762 617,254 Cropping & Milling K’000 2,257,860 580,551 1,836,441 506,622 Total K’000 8,678,341 (3,283,580) 5,394,761 1,633,186 7,806,216 (2,831,865) 4,974,351 1,470,716 Total K’000 3,361,428 873,238 2,880,062 794,491 62 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 5 Segment reporting (continued) i) Segment revenue (continued) Gross profit by segment reconciles to operating profit as follows: Group 2022 Gross profit by segment Other income/(expenses) Distribution and administrative expenses Impairment of goodwill Impairment of investment in subsidiaries Operating profit 2021 Gross profit by segment Other income/(expenses) Distribution and administrative expenses Impairment of goodwill Operating profit Company 2022 Gross profit by segment Other income/(expenses) Distribution and administrative expenses Impairment of goodwill Impairment of investment in subsidiaries Operating profit 2021 Gross profit by segment Other income/(expenses) Distribution and administrative expenses Impairment of goodwill Operating profit Operating profit Unallocated: Share of loss from equity investment Finance income Finance costs Retailing and Food Production K’000 716,420 (34,267) (628,683) (141,786) - (88,316) 827,447 (4,949) (722,524) - 99,974 292,687 2,835 (217,726) - (141,786) (63,990) 287,869 (3,479) (22,653) - 61,736 Cropping & Milling K’000 916,766 18,889 (673,675) - - 261,980 643,269 (6,802) (490,042) - 146,425 580,551 6,614 (508,027) - - 79,138 506,622 (8,119) (413,499) - 85,005 Group 2022 K’000 2021 K’000 173,664 246,399 (3,503) 3,541 (3,358) 45,897 (118,538) (116,916) Company 2022 K’000 15,148 (3,503) 3,534 (91,009) Total K’000 1,633,186 (15,378) (1,302,358) (141,786) - 173,664 1,470,716 (11,751) (1,212,566) - 246,399 873,238 9,449 (725,753) - (141,786) 15,148 794,491 (11,598) (636,152) - 146,741 2021 K’000 146,741 (3,358) 56,792 (84,980) Profit before income tax 55,164 172,022 (75,830) 115,195 63 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC5 Segment reporting (continued) ii) Disaggregated revenue streams Retailing Beef Chicken Pork Fish Dairy products Stockfeed  Day-old chicks Wheat Soya Maize grain Flour mil Other Less: intercompany sales Group Company 2022 K’000 3,098,958 694,603 463,003 362,024 2,186 338,894 3,458,062 280,504 114,303 337,329 52,485 261,863 87,404 (3,156,858) 2021 K’000 2,906,466 630,140 436,035 396,788 14,465 278,913 1,747,742 224,577 152,854 395,671 53,805 280,478 73,150 (2,616,732) 2022 K’000 - 683,836 16,291 936 2,186 220,427 1,584,367 - 114,303 337,329 52,485 261,863 87,404 - 2021 K’000 - 621,397 11,972 21,089 14,465 240,715 1,014,466 - 152,854 395,671 53,805 280,478 73,150 - 5,394,761 4,974,351 3,361,428 2,880,062 iii) Segment assets and liabilities The Group’s assets and liabilities are not allocated to each segment. However, the CODMs review information regarding the operating assets and liabilities of the main reporting entities within the Group as shown in the table below. For the purpose of allocating assets and liabilities, the ‘Other’ segment comprises of the foreign subsidiaries (Master Meats Nigeria and Ghana), Zamleather Limited, Zamchick Limited and Zamhatch Limited. As at 30 September 2022 Total assets Total liabilities As at 30 September 2021 Total assets Total liabilities 6 Other income/(expenses) Rental income Loss on disposal of fixed assets Exchange losses on working capital Company Retailing Ltd Masterpork K’000 K’000 K’000 Other K’000 Total K’000 4,181,638 1,285,576 824,979 258,337 256,869 190,320 567,634 241,737 5,831,120 1,975,970 4,692,197 1,351,368 453,106 251,458 214,485 110,028 129,709 90,901 5,489,497 1,803,755 Group Company 2022 K’000 6,069 (29,386) 25,808 2021 K’000 14,120 (2,260) (20,305) 2022 K’000 5,339 (21,772) 33,758 2021 K’000 12,870 (553) (22,727) 2,491 (8,445) 17,325 (10,410) 64 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 7 Breakdown of expenses by nature Group Company Cost of sales of providing goods: Changes in inventory – Retail products Changes in inventory – Beef products Changes in inventory – Poultry products Changes in inventory – Consumables Changes in inventory – Feed Changes in inventory – Grain Changes in inventory – Milling products Changes in inventory – Farm inputs Production and overhead costs Fuel expenses Transport Veterinary Other miscellaneous expenses Distribution expenses: Employee benefits expense (Note 9) Depreciation Repairs and maintenance Levies and licenses Transport Boarding and Lodging Insurance Satellite Travel Other Administrative expenses: Depreciation Employee benefits expense (Note 9) Legal and other professional fees Directors’ remuneration Auditors’ remuneration Repairs and maintenance Water and electricity Other miscellaneous expenses Total expenses 8 Finance income and costs Finance income: Exchange gains on borrowings (Note 29(ii)) Exchange gains on leases (Note 29(ii) Finance costs: Interest expense on bank overdrafts Interest expense on borrowings (Note 29(ii)) Interest expense on leases (Note 29(ii)) Net finance costs 2022 K’000 588,272 536,286 129,531 234,278 1,524,799 47,481 10,487 602,930 55,488 41,151 88 15,459 324,787 4,111,037 29,447 16,612 4,735 6,483 1,682 - 1,022 696 701 4,218 65,596 105,471 638,489 24,639 13,648 4,100 118,256 72,532 259,627 1,236,762 2021 K’000 507,909 364,410 66,999 273,210 1,453,678 137,529 66,270 1,062,415 50,588 30,768 1,189 14,693 302,338 4,331,996 21,771 14,527 11,641 5,985 5,680 2,709 1,730 1,262 559 984 66,848 145,944 626,772 30,124 16,675 5,700 119,157 70,980 130,366 1,145,718 2022 K’000 - 316,606 2,069 97,822 1,022,700 33,836 11,488 285,247 177,254 41,151 7,813 16,708 813,548 2,826,242 - - - - 67,118 - - - - - 67,118 48,343 360,683 19,012 13,648 6,504 66,182 43,592 100,671 658,635 2021 K’000 - 247,938 6,671 146,676 1,048,326 155,078 67,065 183,666 274,633 22,459 20,997 17,838 439,567 2,630,914 - - - - - - - - - - - 94,913 352,995 30,124 16,675 3,600 53,929 28,554 55,362 636,152 5,413,395 5,544,562 3,551,995 3,267,066 3,188 353 3,541 (63,252) (53,473) (1,813) (118,538) (114,997) 39,860 6,037 45,897 (74,650) (38,998) (3,268) (116,916) (71,019) 3,188 346 3,534 (36,752) (53,473) (784) (91,009) (87,475) 39,860 16,932 56,792 (47,966) (35,380) (1,634) (84,980) (28,188) 65 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC9 Employee benefit expense Salaries and other staff costs Retirement benefits costs: Social security costs Pension costs Allocated as: Distribution expenses Administrative expenses 10 Income tax expense Group Company 2022 K’000 571,910 49,207 46,819 667,936 29,447 638,489 667,936 2021 K’000 576,112 39,518 32,913 648,543 21,771 626,772 648,543 2022 K’000 331.662 14,668 14,352 360,682 - 360,682 360,682 2021 K’000 310,831 28,879 13,285 352,995 - 352,995 352,995 This note provides an analysis of the Group’s income tax expense and how the tax expense is affected by non-assessable and nondeductible items. Current income tax charge Deferred tax charge (Note 25) Group Company 2022 K’000 73,333 (5,639) 67,694 2021 K’000 16,541 18,607 35,148 2022 K’000 27,029 5,181 32,210 2021 K’000 1,042 14,753 15,795 i) Numerical reconciliation of income tax expense to prima facie tax payable Applicable tax rates range from 10% to 30% depending on the activities of the entities within the Group. The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the statutory income tax rate as follows: Profit before income tax from: Continuing operations Discontinued operations Group 2022 K’000 55,164 44,108 99,272 2021 K’000 172,022 31,949 203,971 Company 2022 K’000 (75,830) 44,108 (31,722) 2021 K’000 115,195 31,949 147,144 Tax at rate of 10% (2021: 10%) 9,927 20,397 (3,172) 14,714 Tax effects of: Expenses not deductible for tax purposes Effect of difference in tax rates Income tax expense is attributable to: Profit from continuing operations Profit from discontinued operation 45,988 11,779 6,550 8,201 35,382 - 1,081 - 67,694 35,148 32,210 15,795 63,283 4,411 31,953 3,195 27,799 4,411 12,600 3,195 67,694 35,148 32,210 15,795 66 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 10 Income tax expense (continued) ii) Movement in current income tax on the statement of financial position At start of year Current income tax charge Payments made during the year At end of year iii) Analysis of tax losses Group Company 2022 K’000 10,064 73,333 (44,877) 2021 K’000 (1,743) 16,541 (4,734) 2022 K’000 (2,520) 27,029 (9,828) 2021 K’000 (565) 1,042 (2,997) 38,520 10,064 14,681 (2,520) During the year, the Group carried forward tax losses of K275.4 million (2021: K413.5 million). Unutilised losses expire after 5 years as shown in the table below: Period end 30 September 2017 30 September 2018 30 September 2019 30 September 2020 30 September 2021 30 September 2022 Total Tax loss c/f Expiry date K’000 - 214,157 16,729 4,794 37,549 2,159 275,388 30 September 2022 30 September 2023 30 September 2024 30 September 2025 30 September 2026 30 September 2027 67 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 11 Property, plant and equipment Group As at 30 September 2020 Cost or fair value Accumulated depreciation Land and buildings Aircraft Plant and machinery Motor vehicles Furniture and equipment Capital work in progress Total K’000 2,431,488 K’000 865 K’000 945,804 K’000 95,392 K’000 38,607 K’000 K’000 11,022 3,523,178 (44,568) (259) (205,291) (50,905) (8,836) - (309,859) Net book value 2,386,920 606 740,513 44,487 29,771 11,022 3,213,319 Year ended 30 September 2021 Opening net book value 2,386,920 606 740,513 Additions Transfers Revaluation surplus Disposals -cost Disposals-accumulated depreciation 8,956 18,688 83,720 - - (865) 19,004 11,898 48,463 4,544 44,487 19,671 865 52,756 (2,106) - 259 (1,388) (96,918) (44,617) 1,102 (24,404) (583) 29,771 11,022 3,213,319 8,276 556 7,464 (69) 60 (4,618) (568) 47,144 103,051 (32,007) - - - - 192,403 1,504 33 (143,165) (42) (295,410) Depreciation charge Exchange differences (17,225) (249,600) Net book value 2,231,459 As at 30 September 2021 Cost or fair value 2,234,711 Accumulated depreciation (3,252) Net book value 2,231,459 - - - - - - 681,499 91,788 40,872 26,117 3,071,735 685,643 93,729 41,970 26,159 3,082,212 (4,144) (1,941) (1,098) (42) (10,477) 681,499 91,788 40,872 26,117 3,071,735 Assets classified as capital work in progress mainly relate to the costs incurred for the ongoing farm expansion projects at the Group's locations. 68 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC  11 Property, plant and equipment (continued) Group As at 30 September 2021 Cost or fair value Accumulated depreciation Land and buildings K’000 2,234,711 (3,252) Plant and machinery K’000 685,643 (4,144) Motor vehicles K’000 93,729 (1,941) Furniture and equipment K’000 41,970 (1,098) Capital work in progress K’000 26,159 Total K’000 3,082,212 (42) (10,477) Net book value 2,231,459 681,499 91,788 40,872 26,117 3,071,735 Year ended 30 September 2022 Opening net book value 2,231,459 681,499 Additions Transfers Revaluation surplus Disposals -cost Disposals-accumulated depreciation Depreciation charge Exchange differences 4,071 15,953 1,219 968 93,300 - 91,788 9,924 24,116 - (15,234) (5,329) (1,096) 770 (16,034) (10,963) - (61,095) (9,870) 6 (24,385) (57) 40,872 26,117 3,071,735 3,492 8,177 - (49) 5 (9,577) (19) 203,680 222,135 (141,546) - - 1,219 (7,550) (29,258) - - - 781 (111,092) (20,909) Net book value 2,211,241 699,473 100,296 42,900 80,701 3,134,611 As at 30 September 2022 Cost or fair value Accumulated depreciation 2,230,527 (19,286) 764,712 (65,239) 126,622 (26,326) 53,575 (10,675) 80,701 3,256,137 - (121,526) Net book value 2,211,241 699,473 100,296 42,900 80,701 3,134,611 Assets classified as capital work in progress mainly relate to the costs incurred for the ongoing farm expansion projects at the Group's locations. 69 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC  11 Property, plant and equipment (continued) Company Land and buildings Plant and machinery As at 30 September 2020 K’000 K’000 Cost or fair value 1,972,733 603,570 Motor vehicles K’000 23,415 Accumulated depreciation (21,191) (135,818) (12,456) Furniture and equipment K’000 19,534 (4,143) Capital work in progress K’000 8,276 Total K’000 2,627,528 0 (173,608) Net book value 1,951,542 467,752 10,959 15,391 8,276 2,453,920 Year ended 30 September 2021 Opening net book value 1,951,542 467,752 Additions Transfers Revaluation surplus Disposals-cost Disposals-accumulated depreciation Depreciation charge Exchange differences 10,959 3,261 0 14,441 (141) 11,311 5,854 (12,855) (1,385) 1,249 12,607 35,103 0 0 751 110 (8,612) (249,603) (66,185) (53,934) (5,058) (980) 15,391 3,518 8,276 2,453,920 18,055 37,394 0 (18,461) 3,436 (64) 52 (2,205) (505) 0 0 0 0 0 0 40,125 (1,590) 913 (82,060) (305,022) Net book value 1,742,286 351,309 22,592 19,623 7,870 2,143,680 As at 30 September 2021 Cost or fair value 1,742,286 351,309 22,592 19,623 7,870 2,143,680 Accumulated depreciation - - - - - - Net book value 1,742,286 351,309 22,592 19,623 7,870 2,143,680 Assets classified as capital work in progress mainly relate to the costs incurred for the ongoing farm expansion projects at the Group's locations. 70 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC  11 Property, plant and equipment (continued) Company As at 31 30 September 2021 Land and buildings K’000 Plant and machinery Motor vehicles Furniture and equipment Capital work in progress K’000 K’000 K’000 K’000 Total K’000 Cost or fair value 1,742,286 351,309 22,592 19,623 7,870 2,143,680 Accumulated depreciation - - - - - - Net book value 1,742,286 351,309 22,592 19,623 7,870 2,143,680 Year ended 30 September 2022 Opening net book value 1,742,286 351,309 Additions Transfers Revaluation surplus Disposals-cost Disposals-accumulated depreciation Depreciation charge Exchange differences 1,440 3,804 - 3,711 55,812 - (215) (30,292) 0 2,196 (7,361) (10,963) (30,903) (2,081) 22,592 2,010 3,263 - (101) 6 (4,752) (57) 19,623 590 2,920 - (3) 1 (4,181) (19) 7,870 2,143,680 102,107 (65,799) - 109,858 - - (6,792) (37,404) - - - 2,203 (47,197) (13,120) Net book value 1,728,991 349,752 22,961 18,931 37,386 2,158,021 As at 30 September 2022 Cost or fair value 1,736,352 368,954 Accumulated depreciation (7,361) (19,202) 24,826 (1,865) 23,111 (4,180) 37,386 2,190,699 - (32,608) Net book value 1,728,991 349,752 22,961 18,931 37,386 2,158,021 Assets classified as capital work in progress mainly relate to the costs incurred for the ongoing farm expansion projects at the Group's locations. The register showing the details of property as required by Section 30 of the Companies Act, 2017 of Zambia is available during the business hours at the registered office of the Group. 71 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC  11 Property, plant and equipment (continued) i) Non-current assets pledged as security All assets disclosed are pledged as security on the Group’s borrowings for each reporting period and title is restricted. The Group had no contractual commitments for the acquisition of property, plant and equipment and no amount of compensation from third parties for items of property, plant and equipment that were impaired, lost or given up that is included in profit or loss ii) Carrying amounts that would have been recognised if assets were stated at cost If items of property, plant and equipment were stated on the historical cost basis, the amounts would be as follows: Cost Accumulated depreciation 12 Leases Group 2022 K’000 1,877,967 (1,008,426) 2021 K’000 1,679,925 (896,794) Company 2022 K’000 1,360,195 (903,307) 2021 K’000 1,277,585 (846,742) 869,541 783,131 456,888 430,843 The Group leases various offices and retail stores (classified as buildings) and farm and production equipment and trailers (classified as plant and machinery). Lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. a) Right of use assets Group As at 30 September 2020 Cost Accumulated depreciation Buildings K’000 15,425 (8,362) Plant and machinery K’000 60,381 (16,258) Net book value 7,063 44,123 Year ended 30 September 2021 Opening net book value Additions Derecognised - cost Derecognised - accumulated depreciation Depreciation charge Net book value As at 30 September 2021 Cost Accumulated depreciation Net book value 7,063 7,843 - - (9,404) 5,502 23,268 (17,766) 5,502 44,123 5,735 (5,964) 1,789 (7,902) 37,781 60,152 (22,371) 37,781 Total K’000 75,806 (24,620) 51,186 51,186 13,578 (5,964) 1,789 (17,306) 43,283 83,420 (40,137) 43,283 72 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC   12 Leases (continued) a) Right of use assets (continued) Group As at 30 September 2021 Cost Accumulated depreciation Buildings K’000 23,268 (17,766) Plant and machinery K’000 60,152 (22,371) Net book value 5,502 37,781 Year ended 30 September 2022 Opening net book value Additions Derecognised – cost Derecognised - accumulated depreciation Depreciation charge Net book value As at 30 September 2022 Cost Accumulated depreciation Net book value Company As at 30 September 2020 Cost Accumulated depreciation Net book value Year ended 30 September 2021 Opening net book value Additions Depreciation charge Net book value As at 30 September 2021 Cost Accumulated depreciation Net book value 5,502 4,919 - - (1,518) 8,903 28,187 (19,284) 8,903 - - - - - - - - - 37,781 10,156 (24,963) 9,985 (9,473) 23,486 47,134 (23,648) 23,486 29,454 (6,980) 22,474 22,474 5,735 (5,406) 22,803 35,189 (12,386) 22,803 Total K’000 83,420 (40,137) 43,283 43,283 15,075 (24,963) 9,985 (10,991) 32,389 75,321 (42,932) 32,389 29,454 (6,980) 22,474 22,474 5,735 (5,406) 22,803 35,189 (12,386) 22,803 73 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC    12 Leases (continued) a) Right of use assets (continued) Year ended 30 September 2022 Buildings Plant and machinery Company Opening net book value Additions Depreciation charge Net book value As at 30 September 2022 Cost Accumulated depreciation Net book value b) Lease liabilities Current Non-current 22,803 10,156 (9,368) 23,591 45,345 (21,754) - - - - - - 23,591 23,591 Group 2022 K’000 5,046 12,597 2021 K’000 12,418 7,253 Company 2022 K’000 4,878 5,354 17,643 19,671 10,232 Total 22,803 10,156 (9,368) 23,591 45,345 (21,754) 2021 K’000 6,597 1,873 8,470 2021 K’000 3,495 1,634 8,237 13,366 Refer to Note 29 (ii) for details on the movement in lease liabilities on the statement of financial position. ai) Amounts recognised in the statement of profit or loss Depreciation charge: Interest expense on lease liabilities Expense relating to short-term leases Group Company 2022 K’000 10,451 1,822 20,783 33,056 2021 K’000 17,306 1,634 8,237 27,177 2022 K’000 8,222 784 5,790 14,796 During the year, there were no expenses relating to low-value assets and variable lease payments recognised in profit or loss (2021: Nil). bi) Maturity analysis of contractual lease payments outstanding Within 1 year Between 1 and 2 years Between 2 and 3 years Between 3 and 4 years Between 4 and 5 years Later than 5 years Minimum lease payments Finance charges Net present value Group Company 2022 K’000 7,094 6,453 1,843 1,972 1,976 7,991 27,329 (9,686) 17,643 2021 K’000 13,085 5,434 625 469 469 3,345 23,427 (3,756) 19,671 2022 K’000 5,790 5,225 - - - - 11,015 (784) 10,231 2021 K’000 6,945 3,159 - - - - 10,104 (1,634) 8,470 The Group did not receive any COVID-19-related rent concessions during the year (2021: Nil). 74 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC  13 Goodwill Goodwill is monitored by management at the level of the three cash-generating units (CGU). During the year, the Directors assessed the future economic performance of Zamchick and were of the view that the goodwill on this CGU was impaired as the market was challenged. A CGU-level summary of the goodwill allocation is presented below: At start of year Impairment of Goodwill At end of year Masterpork 15,699 - 15,699 Zamchick 141,786 (141,786) - Zamhatch 9,316 9,316 Total 166,801 (141,786) 25,015 The following table sets out the key assumptions for those CGUs that have significant goodwill allocated to them: Year ended 30 September 2022 Budgeted average operating margins Discount rates Long-term growth rate Year ended 30 September 2021 Budgeted average operating margins Discount rates Long-term growth rate Masterpork Zamchick Zamhatch 2% 22.8% 7.3% 4% 17% 10% 10% 21.2% 6.3% 9% 15.5% 8% 17% 22.8% 7.3% 16% 15% 6% Management has determined the values assigned to each of the above key assumptions as follows: • Budgeted operating margins: Based on past performance and management’s expectations for the future; • Discount rates: Reflect specific risks relating to the relevant segments and the countries in which they operate; • Long-term growth rate: This is the weighted average growth rate used to extrapolate cash flows beyond the budget period. The rates are consistent with forecasts included in industry reports. The sensitivity of Goodwill (excluding the CGU impaired) to changes in the weighted principal assumptions is: Year ended 30 September 2022 Budgeted average operating margins (-2%) Discount rates (+1%) Long-term growth rate (-2%) Year ended 30 September 2021 Budgeted average operating margins (-2%) Discount rates (+1%) Long-term growth rate (-2%) Masterpork K’000 (50,067) (8,021) (7,133) (133,906) (42,962) (61,233) Impact on headroom Zamchick K’000 - - - (120,806) (91,750) (127,064) Zamhatch K’000 (170,921) (109,589) (130,333) (112,107) (125,938) (165,772) A reduction in the average operating profit margine of 2% in the Masterpork - CGU will give rise to an impairment. The recoverable amount of the cash generating unit (CGU) calculated based on value in use exceeded the carrying value of the net assets as follows: Masterpork Limited Zamchick Limited Zamhatch Limited 2022 K’000 18,610 - 854,733 2021 K’000 185,633 321,184 801,831 75 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 14 Investment in subsidiaries a) Subsidiaries The Group’s investments in subsidiaries at 30 September 2022 are set out below. Following the impairment of Goodwill on Zamchick, the Directors were of the view that the investment in the same entity was impaired. Subsidiary Investment in subsidiaries Impairment (Note 13) Subsidiary Zambeef Retailing Limited Zamleather Limited Master meat (Nigeria) Ltd Master meat (Ghana) Ltd Masterpork Limited Zamchick Limited Zamhatch Limited 2022 K’000 245,807 (141,787) 104,020 2022 K’000 31 1,477 216 1,310 26,601 16,443 57,942 104,020 2021 K’000 245,807 - 245,807 2021 K’000 31 1,477 216 1,310 26,601 158,230 57,942 245,807 Unless otherwise stated, the entities have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation or registration is also their principal place of business. Place of Name of subsidiary Zambeef Retailing Ltd Zamleather Limited Master meat (Nigeria) Ltd Master meat (Ghana) Ltd Masterpork Limited ZamChick Limited Zamhatch Limited Principal activities incorporation Ownership interest 2021 100% Retailing of Zambeef products 100% Processing and sale of leather & shoes 80% Processing and sale of meat products 90% Processing and sale of meat products 100% Processing and sale of pork 100% Processing and sale of poultry products 100% Chicken breeding, rearing and production of stock feed Zambia Zambia Nigeria Ghana Zambia Zambia Zambia 2022 100% 100% 80% 90% 100% 100% 100% b) Non-controlling interest (NCI) Set out below is summarised financial information for each subsidiary that has non-controlling interests. The amounts disclosed for each subsidiary are before inter-company eliminations. Nigeria - Master Meat Ltd Ghana - Master Meat Ltd Statement of profit or loss Revenue Profit for the year Other comprehensive income Total comprehensive income Profit allocated to NCI Dividends paid to NCI Statement of financial position Current assets Current liabilities Net current liabilities Non-current assets Non-current liabilities Net non-current assets Net (liabilities)/assets Accumulated NCI Statement of cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net increase in cash 76 2022 K’000 238,317 11,895 - 11,895 2,379 - 29,087 (71,989) (42,902) 30,424 - 30,424 2021 K’000 256,481 3,831 - 3,831 766 - 33,500 (80,424) (46,924) 33,090 - 33,090 (12,478) (13,834) 1,638 11,895 (109) - 11,786 (741) 3,811 (477) - 3,334 2022 K’000 53,672 470 - 470 47 - 3,435 (5,536) (2,101) 704 (31) 673 (1,428) (1,572) 470 (10) - 460 2021 K’000 70,079 771 - 771 77 - 6,842 (6,159) 683 840 (47) 793 1,476 (1,878) 771 (33) - 738 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 15 Investment in associates Set out below is the associate of the Group as at 30 September 2022 which, in the opinion of the Directors, is material to the Group. The entity has share capital consisting solely of ordinary shares, which are held directly by the Group. The country of incorporation or registration is also the entity’s principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held. Name of subsidiary Place of incorporation Zampalm Limited Zambia Ownership interest 2022 10% 2021 10% Nature of relationship Associate 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. As at the end reporting date, the Group had a 10% equity interest in Zampalm Limited. The Group has reasonable influence over Zampalm Limited as it has representation on the Board of Directors, participates in policy making decisions and provides essential farming technical information. Based on the discounted cashflow projections on a five-year period, the Directors are of the opinion that the investment in associate is not impaired. The following table sets out the key assumptions for those CGUs that have significant goodwill allocated to them: Budgeted average operating margins Discount rates Long-term growth rate 2022 K’000 6.65% 23.5% 5% 2021 K’000 6% 20% 4.5% Management has determined the values assigned to each of the above key assumptions as follows: • Budgeted operating margins: Based on past performance and management’s expectations for the future; • Discount rates: Reflect specific risks relating to the relevant segments and the countries in which they operate; • Long-term growth rate: This is the weighted average growth rate used to extrapolate cash flows beyond the budget period. The rates are consistent with forecasts included in industry reports. The sensitivity of the investment in associate to changes in the weighted principal assumptions is: Budgeted average operating margins (-2%) Discount rates (+1%) Long-term growth rate (-2%) 2022 K’000 (6,920) (2,424) (831) 2021 K’000 (6,682) (2,318) (659) If the budgeted gross margin used in the value-in-use calculation for the Investment in associate had been 2% lower than management’s estimates at year end (4.65% instead of 6.65%), the Group would have had to recognise an impairment against the carrying amount of Investment in associate of K4.7m (2021: K4.4 million). The recoverable amount of the investment in associate calculated based on value in use exceeded the carrying value of the net assets as follows: Investment in associate 2022 K’000 2,242 2021 K’000 2,300 The Group had no commitments and contingent liabilities in respect of associate (2021: Nil). 77 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 15 Investment in associates (continued) i) Summarised financial information for associate The information disclosed below reflects the amounts presented in the annual financial statements of the relevant associate, Zampalm Limited and not the Group’s share of those amounts. Statement of profit or loss: Revenue Loss from continuing operations Profit from discontinued operations Loss for the year Other comprehensive income Total comprehensive income Statement of financial position: Non-current assets Current assets Total assets Capital and reserves Non-current liabilities Current liabilities Total equity and liabilities ii) Reconciliation of carrying amounts: At start of year Share of loss for the year Share of other comprehensive income At end of year 2022 K’000 2,854 (35,028) - (35,028) - (35,028) 262,279 17,384 279,663 75,609 185,374 18,680 279,663 40,468 (3,503) - 36,965 2021 K’000 4,313 (33,582) - (33,582) - (33,582) 270,693 31,757 302,450 111,278 173,768 17,404 302,450 43,826 (3,358) - 40,468 78 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 16 Biological assets The Group’s biological assets comprise standing crops, feedlot cattle, dairy cattle, pigs and chickens. i) Analysis by group of biological assets Group As at 30 September 2021 Standing crop K’000 Feedlot cattle K’000 Dairy cattle K’000 Pigs K’000 Chickens K’000 Total K’000 At start of year Increase due to purchases Change in fair value of biological assets: Due to biological transformation Due to price changes 16,626 518,097 40,652 324,237 62,380 102,248 434,115 - 434,115 71,910 - 71,910 39,818 3,323 43,141 4,120 13,241 7,323 3,328 10,651 52,527 474,082 176,305 1,431,905 268,544 - 268,544 821,710 6,651 828,361 Transfer of harvest to inventory Decrease due to slaughter/sale (914,253) - - (280,485) - (136,404) - (20,394) - (726,038) (914,253) (1,163,321) At end of year Current Non-current As at 30 September 2022 At start of year Increase due to purchases Change in fair value of biological assets: Due to biological transformation Due to price changes 54,585 156,314 71,365 7,618 69,115 358,997 54,585 - 156,314 - - 71,365 7,618 - 69,115 - 287,632 71,365 54,585 156,314 71,365 7,618 69,115 358,997 54,585 404,645 156,314 407,488 71,365 119,963 7,618 12,977 69,115 174,992 358,997 1,120,065 292,823 - 292,823 75,124 - 75,124 22,290 - 22,290 4,960 (1,262) 3,698 (42,379) (2,094) (44,473) 352,818 3,356 349,462 Transfer of harvest to inventory Decrease due to slaughter/sale (684,072) - - (427,150) - (8,876) - (24,293) - (148,588) (684,072) (608,907) At end of year Current Non-current 67,981 115,077 86,592 67,981 - 115,077 - - 86,592 67,981 115,077 86,592 - - - - 51,046 320,696 51,046 - 234,104 86,592 51,046 320,696 All assets disclosed are pledged as security on the Group’s borrowings for each reporting period and title is restricted. There were no commitments for the development or acquisition of biological assets. For standing crops, contributory asset charges have been incorporated into the fair value of the biological assets. 79 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 16 Biological assets (continued) i) Analysis of group of biological assets (continued) Company As at 30 September 2021 At start of year Increase due to purchases Change in fair value of biological assets: Due to biological transformation Due to price changes Standing crop K’000 Feedlot cattle K’000 Dairy cattle K’000 Chickens K’000 Total K’000 16,626 518,097 434,115 - 434,115 40,652 324,237 62,380 102,248 71,910 - 71,910 39,818 3,323 43,141 19,843 74,919 (3,823) - (3,823) 139,501 1,019,501 542,020 3,323 545,343 Transfer of harvest to inventory Decrease due to slaughter/sale (914,253) - - (280,485) - (136,404) - (65,255) (914,253) (482,144) At end of year Current Non-current 54,585 156,314 71,365 25,684 307,948 54,585 - 156,314 - - 71,365 25,684 - 236,583 71,365 54,585 156,314 71,365 25,684 307,948 As at 30 September 2022 At start of year Increase due to purchases Change in fair value of biological assets: Due to biological transformation Due to price changes 54,585 404,645 292,823 - 292,823 156,314 310,789 75,125 - 75,125 Transfer of harvest to inventory Decrease due to slaughter/sale (684,069) - - (427,151) 71,365 1,813 22,290 - 22,290 - (8,876) 25,684 75,811 (52,186) - (52,186) 307,948 793,058 338,052 - 338,052 - (49,309) (684,069) (485,336) At end of year Current Non-current 67,984 115,077 86,592 67,984 - 115,077 - - 86,592 67,984 115,077 86,592 - - - - 269,653 183,061 86,592 269,653 All assets disclosed are pledged as security on the Group’s borrowings for each reporting period and title is restricted. There were no commitments for the development or acquisition of biological assets. For standing crops, contributory asset charges have been incorporated into the fair value of the biological assets. 80 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 16 Biological assets (continued) ii) Number of hectares and livestock As at 30 September 2022, the Group had the following number of hectares and livestock Number of hectares Standing crop Number of livestock Feedlot cattle Dairy cattle Chickens Pigs Culled animals Feedlot cattle Dairy cattle Pigs Chickens iii) Key assumptions Group 2022 928 9,036 3,254 229,475 - 41,039 1,186 5,319 6,753,961 2021 811 12,836 3,407 759,611 3,744 32,591 976 6,459 8,225,446 Company 2022 928 9,036 3,254 - - 41,039 1,186 5,319 - 2021 811 12,836 3,407 282,695 - 32,591 976 - - The significant assumptions in the determination of the fair value of biological assets are the average weight per animal and average yield per hectare for standing crop. The assumptions used for the valuation of the biological assets are as follows: Average weight - kg Bulls Heifers Steers Cows Average yields per hectare - tons Wheat iv) Sensitivity Group 2022 605 401 433 464 8.0 2021 685 373 501 469 8.13 Company 2022 605 401 433 464 8.0 2021 685 373 501 469 8.13 The sensitivity of the biological assets to changes in the weighted principal assumptions is: Change in assumption Average weight (-1%) Average yields per hectare (-1%) Impact on biological assets Group Company 2022 K’000 (1,510) (680) 2021 K’000 (2,637) (573) 2022 K’000 (1,510) (680) 2021 K’000 (2,638) (573) 81 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 17 Inventory Trading stocks Abattoir stocks Raw materials Stock feed Consumables Raw hides and chemicals Group Company 2022 K’000 544,345 27,302 132,250 506,136 220,337 11,542 2021 K’000 455,847 23,628 117,962 388,548 203,175 8,686 2022 K’000 429,358 27,302 73,106 304,245 143,656 - 2021 K’000 306,922 23,628 90,734 256,057 95,631 - 1,441,912 1,197,846 977,667 772,972 Inventories recognised as an expense 3,674,064 3,932,420 1,769,768 1,855,420 18 Trade and other receivables Trade receivables Loss allowance (Note 4(b)) Amounts due from related parties (Note 31) Loans receivable (Note 31) Prepayments Other receivables Group Company 2022 K’000 137,565 (29,612) 107,953 3,123 - 158,244 19,980 2021 K’000 166,465 (11,743) 154,722 4,202 - 36,515 42,839 2022 K’000 53,791 (14,479) 39,312 609,450 67,683 62,541 7,531 2021 K’000 95,377 (6,063) 89,314 710,080 70,474 2,388 - 289,300 238,278 786,517 872,256 Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value. As at the end of the reporting period, there were no trade receivables subject to a factoring arrangement (2021: Nil). 19 Cash and cash equivalents Group 2022 K’000 2021 K’000 Company 2022 K’000 2021 K’000 Cash at bank and in hand 223,972 201,539 136,149 113,193 The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year as follows: Balances as above Bank overdrafts (Note 24) Group Company 2022 K’000 223,973 (351,681) 2021 K’000 201,539 (490,204) 2022 K’000 136,149 (164,025) 2021 K’000 113,193 (306,417) Balances per statement of cash flows (127,708) (288,665) (27,876) (193,224) As at the reporting period, there were no deposits at call nor any restricted cash. 82 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 20 Discontinued operations In 2020, the Group announced its intention to exit Chiawa Farm unit and initiated an active program to locate a buyer for its assets, primarily consisting of property, plant and equipment. The associated assets and liabilities were consequently presented as held for sale in subsequent years. While there have been several interested parties, the Group has maintained the farm under active marketing as a suitable bidder is yet to be found. Based on the recent offer letters received from prospective buyers, the Directors are of the opinion that the carrying amount of the assets does not exceed their recoverable value as at the end of the reporting period. Financial information relating to the discontinued operation for the year is set out below. i) Financial performance Revenue Expenses Profit before income tax Income tax expense Profit for the year Other comprehensive income Total comprehensive income for the year ii) Cashflow information Net cash inflow from operating activities Net cash inflow from investing activities Net cash from financing activities Net increase in cash generated by the farm iii) Assets and liabilities of disposal group classified as held for sale 2022 K’000 107,039 (62,931) 44,108 (4,411) 39,697 - 39,697 44,108 - - 44,108 The following assets were reclassified as held for sale in relation to the assets classified as held for sale: Assets classified as held for sale Property plant and equipment Additions Depreciation* 2022 K’000 170,550 6,748 (7,207) 2021 K’000 181,519 (149,570) 31,949 (3,195) 28,754 - 28,754 31,949 - - 31,949 2021 K’000 175,654 - (5,104) *As the assets have been under active marketing since 2020, the Group depreciates the assets at end of each period reporting period as the assets are still in use. There were no liabilities directly associated with assets classified as held for sale during the year (2021: Nil). 170,091 170,550 83 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 21 Share capital and share premium Ordinary shares Authorised 2022 Shares 2021 Shares 2022 K’000 2021 K’000 700,000,000 700,000,000 7,000,000 7,000,000 Issued and fully paid 300,579,630 300,579,630 3,006 3,006 Share premium 1,125,012 1,125,012 1,125,012 1,125,012 Preference shares Authorised and issued -fully paid i) Ordinary shares 100,057,658 100,057,658 1,000 1,000 Ordinary shares have a par value of K0.01. They entitle the holder to participate in dividends, and to share in the proceeds of winding up the Group in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote, and on a poll each share is entitled to one vote. Of the 300,579,630 issued and fully paid shares, 137,675,979 are held by shareholders on the AIM London and 162,903,611 are held by shareholders on the Lusaka Stock Exchange. ii) Preference shares The major shareholder, British International Investment Plc (BII), is the holder of 100,057,658 convertible redeemable preference shares with a par value of K0.01. These shares have four voting rights for every five preference shares held resulting in BII having 34.8% of the voting rights The preference shares are convertible in whole or in part by BII 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. The Group has the right to redeem all or part of the preference shares at the redemption price, which will give BII a 12% compounded return on investment. The zero-coupon preference shares pay a dividend only if a dividend is paid to ordinary shareholders, and in such cases, the dividend per share will be the same as that for ordinary shares. 22 Foreign currency translation reserve This represents the accumulated foreign exchange differences arising from the translation of foreign retail operations in Nigeria and Ghana. For the Company, reserve arose from the translation of Mpongwe Farms which were foreign denominated up until 31 December 2021. The reserves are non-distributable. At start of year Translation differences - foreign operations Translation differences - Mpongwe Farms Less translation difference - NCI Group Company 2022 K’000 720,131 (16,320) (10,847) (259) 2021 K’000 1,003,834 (14,710) (271,935) 2,942 2022 K’000 697,895 - (10,847) - 2021 K’000 969,830 - (271,935) - At end of year 692,705 720,131 687,048 697,895 84 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 23 Revaluation reserve Items of property, plant and equipment are recognised at fair value based on periodic, but at least triennial valuations performed by external independent valuers, less subsequent depreciation. The reserve is used to record increments and decrements on the revaluation of non-current assets. The fair value of property, plant and equipment was revalued on 30 September 2021 by Messrs, Fairworld Properties Limited.The reserves are non-distributable to the shareholders and are recognised net of deferred income tax. In the event of a sale of an asset, any balance in the reserve in relation to the asset is transferred to retained earnings. At start of year Revaluation surplus (Note 11) Excess depreciation Deferred income tax (Note 25) At end of year 24 Borrowings Non-Current Bank loans Current Bank loans Bank overdrafts Group 2022 K’000 2021 K’000 Company 2022 K’000 1,160,653 1,034,388 739,522 - (53,928) 6,394 192,403 (44,377) (21,761) - (30,155) 2,912 2021 K’000 745,684 40,125 (46,972) 685 1,113,119 1,160,653 712,279 739,522 Group 2022 K’000 2021 K’000 Company 2022 K’000 2021 K’000 426,222 195,555 426,222 195,555 173,644 351,681 525,325 210,709 490,204 700,913 173,644 164,025 337,669 210,709 306,417 517,126 951,547 896,468 763,891 712,681 Refer to Note 29 (ii) for details on the movement in borrowings on the statement of financial position. ii) Bank loans Standard Chartered Bank Zambia Plc The Group has a structured agricultural facility with an annual revolving limit. The purpose of the facility is the financing of wheat, soya beans and maize under collateral management agreements. Interest on the facility is SOFR plus 4.45 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 and is repayable in 270 days. As at the end of the reporting period, the effective interest rate was 7.41 %(2021: 3.25%) International Finance Corporation (IFC) During the year the Group entered into an Eight (8) year amortizing the Kwacha loan facility with the IFC. Interest is fixed at 16 per cent per annum. 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) and is fully repayable in June 2030. The First ranking legal mortgage ranks pari passu between Absa Bank Zambia Plc . As at the end of the reporting period, the effective interest rate was 16 %(2021: 12 %). Stanbic Bank Zambia Limited The Group has a seasonal loan facility with an annual revolving limit. Interest on the facility is 8.5 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 Group. The floating charge/debenture ranks pari passu between Standard Chartered Bank Zambia Plc. The loan is repayable by July 31st in respect of summer cropping and January 31st in respect of Winter Cropping As at the end of the reporting period, the effective interest rate was 17.5 %(2021: 17%). 85 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 24 Borrowings (continued) Absa Bank Zambia Plc The Group has an amortizing loan at an interest rate of Bank of Zambia policy rate plus 6.5%. The facility 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). The first ranking charge ranks pari passu with the International Finance Corporation (IFC) and is repayable in February 2026. As at the end of the reporting period, the effective interest rate was 15.5% (2021:15%). iii) Bank-overdrafts The Group has annual revolving bank overdraft facilities held with various banks namely, Zambia National Commercial Bank, Stanbic Bank Zambia Limited, Citi Bank Zambia Limited, Standard Chartered Bank Zambia Limited and First National Bank. Interest on the bank overdrafts are payable at, in respect of ZMW limits, the prevailing Bank of Zambia (BOZ) Monetary Policy Rate plus a liquidity premium and a margin ranging from 3.5 % to 7.5% and in respect of USD limits, the prevailing SOFR rate plus a margin ranging from 3.5% to 4%. As at the end of the reporting period, the average effective interest rate was 8.5 % (2021: 9.67%). The 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, Stanbic Bank Zambia Limited and First National Bank (FNB). iv) Compliance with loan covenants Under the terms of the borrowing facilities, the Group is required to comply with the following financial covenants: Interest cover ratio: (EBITDA/Interest charges) Current ratio: (Current assets/Current liabilities) Debt service cover ratio: (EBITDA/Debt service) Net debt to EBITDA ratio (Total debt- cash)/EBITDA) Loan to covenant value (Total debt/Total assets) Liabilities to tangible net worth ratio (Total liabilities/(Equity-Goodwill-Deferred tax) Target 2022 2021 >2.5 >1.3 >1.5 <3.0 <130% <1.0 3.7 1.8 1.53 0.7 10% 0.5 4.0 1.6 1.7 1.4 12% 0.5 The Group complied with the financial covenants of its borrowing facilities throughout the reporting period. v) Fair value The fair values are not materially different from their carrying amounts. 25 Deferred income tax Deferred income tax is calculated using the enacted income tax rate of range of 10% to 30%% depending of the activity of the entities within the Group The movement on the deferred income tax account is as follows: At start of year Charge/(credit) in profit or loss Charge/(credit) in equity Group Company 2022 K’000 235,250 (5,639) (6,394) 2021 K’000 195,444 18,607 21,199 2022 K’000 138,117 5,181 (3,018) 2021 K’000 124,190 14,753 (826) At end of year 223,217 235,250 140,280 138,117 Deferred tax assets and liabilities in each jurisdiction are offset as there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax balances where these relate to the same taxation authority. 86 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 25 Deferred income tax (continued) Deferred income tax assets and liabilities and deferred income tax charge/(credit) in profit or loss and equity are attributable to the following items. Group Year ended 30 September 2022 Deferred income tax liabilities Property, plant and equipment Revaluation surplus Change in fair value of biological assets Deferred income tax assets Tax losses carried forward Defined benefit obligation Other temporary differences Year ended 30 September 2021 Deferred income tax liabilities Property, plant and equipment Revaluation surplus Change in fair value of biological assets Deferred income tax assets Tax losses carried forward Defined benefit obligation Other temporary differences Company Year ended 30 September 2022 Deferred income tax liabilities Property, plant and equipment Revaluation surplus Change in fair value of biological assets Deferred income tax assets Tax losses carried forward Defined benefit obligation Other temporary differences Year ended 30 September 2021 Deferred income tax liabilities Property, plant and equipment Revaluation surplus Change in fair value of biological assets Deferred income tax assets Tax losses carried forward Defined benefit obligation Other temporary differences At start of year K’000 Profit or loss K’000 Equity K’000 At end of year K’000 92,526 155,086 35,899 - (28,183) (1,989) (18,089) 26,440 - (4,335) - (4,382) (10,080) (13,282) - (6,394) - - - - - 118,966 148,692 31,564 - (32,565) (12,069) (31,371) 235,250 (5,639) (6,394) 223,217 106,198 133,325 18,287 (54,446) (1,427) (6,493) (13,672) - 17,612 26,263 - (11,596) - 21,761 (562) - 92,526 155,086 35,899 - (28,183) (1,989) (18,089) 195,444 18,607 21,199 235,250 57,281 82,169 30,795 (18,290) (1,415) (12,423) 17,478 - (3,829) (9,193) (1,751) 2,476 - (3,018) - - - - 74,759 79,151 26,966 (27,483) (3,166) (9,947) 138,117 5,181 (3,018) 140,280 63,300 82,854 14,929 (33,074) (1,274) (2,545) 124,190 (6,019) 15,866 14,784 - (9,878) 14,753 - (685) - - (141) - (826) 57,281 82,169 30,795 (18,290) (1,415) (12,423) 138,117 87 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC26 Defined benefit obligations The Group awards terminal benefits to its employees upon retirement. This scheme is unfunded, and the 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. The regulator, Pensions and Insurance Authority, does not regulate gratuity schemes such as this one. However, entities that provide an additional and separate unfunded gratuity in their annual financial statements should operate within the governing covenants and agreements with employee representative bodies. Taxation of this scheme falls under the framework and administration of this arrangement, including decisions as to whether to prefund the benefit costs, or amend the arrangement design. The Group’s accrued liability in respect of each employee is the present value of the benefits in respect of service completed to the valuation date but based on projected earnings to retirement or date of payment. The total accrued liability (or the required provision) at the valuation date is a summation of the accrued liability in respect of each employee. i) Amounts recognised in statement of financial position The amounts recognised in the statement of financial position and the movements in the net defined benefit obligation over the year are as follows: Group Company At start of year Current service cost Past service cost Interest cost Amount recognised in profit or loss Actuarial remeasurements Change in demographic assumptions Change in financial assumptions Early settlement (gains)/losses Experience adjustment Amount recognised in equity Benefit payments Per statement of financial position Present value of unfunded obligation ii) Actuarial assumptions 2022 K’000 8,891 168 598 519 1,285 - - 2,895 255 3,150 (9,672) 3,654 3,654 2021 K’000 11,389 427 - 1,234 1,661 (1,596) 2,710 - 1,697 2,813 (6,970) 8,891 8,891 2022 K’000 2,124 56 201 174 431 - - - 972 86 1,058 2021 K’000 3,356 214 - 618 832 (798) 1,356 850 1,408 (3,247) (3,472) 366 366 2,124 2,124 The significant actuarial assumptions in 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 Salary growth rate Group 2022 27% 20% 2021 27% 20% Company 2022 27% 20% 2021 27% 20% 88 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 26 Defined benefit obligations (continued) ii) Actuarial assumptions (continued) Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in the local environment. These assumptions translate into an average life expectancy in years for a pensioner retiring at age 55: 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 iii) Risk exposure Probability of reaching retirement age in service Group Company 2022 2021 2022 2021 47% 57% 66% 72% 78% 86% 47% 57% 66% 72% 78% 86% 47% 57% 66% 72% 78% 86% 47% 57% 66% 72% 78% 86% The Group is exposed to a number of risks, the most significant of which are detailed below: Changes in bond yields The plan liabilities are calculated using a discount rate set with reference to Zambian government bond yields. A decrease in government bond yields will increase the plan liabilities. Changes in salaries The plan benefits are calculated with reference to employees’ salaries. An increase in salaries will increase the plan liabilities. This risk becomes higher as the expectations of short-term inflation rise increase, due to the weakened strength of the Zambian Kwacha against other currencies. Life expectancy The plans’ obligations are to provide benefits for the life of the member. Therefore, increases in life expectancy will result in an increase in the plans’ liabilities. Liquidity The plan is unfunded and therefore there is a risk that resources may not be available when needed to pay the benefits as they fall due. iv) Sensitivity The sensitivity analysis is based on changes in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in at end of the reporting period. 89 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 26 Defined benefit obligations (continued) iv) Sensitivity (continued) The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is: Change in assumption Discount rate (-1%) Salary growth rate (+1%) life expectancy (-1 year) Impact on defined benefit obligation Group Company 2022 K’000 215 234 867 2021 K’000 203 233 871 2022 K’000 108 117 469 2021 K’000 106 112 462 The scheme does not have any assets and therefore benefits are met as they become due. The weighted average duration of the defined benefit obligation is 12.1 years (2021: 12.1 years). v) Maturity analysis The expected maturity analysis of undiscounted pension benefits is as follows: Within 1 year Between 1 - 2 years Between 2 - 5 years Over 5 years 27 Trade and other payables Trade payables Amounts due to related parties (Note 31) Gratuity and leave pay provisions Legal and other related claims Statutory liabilities Other payables Group Company 2022 K’000 - - 203 3,451 3,654 2021 K’000 - - 177 8,714 8,891 2022 K’000 - - 21 345 366 Group Company 2022 K’000 344,186 - 126,962 107,901 26,566 43,958 2021 K’000 265,270 - 105,755 63,552 17,846 61,782 2022 K’000 166,173 - 82,565 107,901 6,041 5,134 2021 K’000 - - 18 2,106 2,124 2021 K’000 180,999 77,273 64,076 55,573 7,218 10,352 649,573 514,205 367,814 395,491 Trade payables are unsecured and are usually paid within 30 days of recognition. Gratuity and leave pay provisions are paid as and when they fall due but mainly in December at the end of employee contracts. Legal and other claim are paid within 3 months average of recognition. The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature. 90 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 28 Contract liabilities Contract liabilities relate to advance payments received from customers on grain, day-old chicks, stock feed and other related to contracts with customers: products. The Group has recognised following liabilities related the At start of year Revenue recognised from opening liability Receipts from customer at period end Group Company 2022 K’000 119,206 (119,206) 97,400 2021 K’000 97,672 (97,672) 119,206 2022 K’000 94,485 (94,485) 97,400 2021 K’000 92,276 (92,276) 94,485 At end of year 97,400 119,206 97,400 94,485 During the year, there was no revenue recognised from performance obligations satisfied in previous periods (2021: Nil). Contract liabilities increased due to the negotiation of larger prepayments and an increase in overall contract activity. All revenue streams under contract liabilities are for periods of one year. As permitted under IFRS 15, the transaction price allocated to these unsatisfied performance obligations is not disclosed. 29 Cash generated from operations Profit before income tax from: Continuing operations Discontinued operations (Note (20(i) Adjustments for: Changes in employee benefits (Note 26(i)) Interest expense on leases (Note 8) Exchange gains on leases (Note 8) Interest expense on borrowings (Note 8) Exchange gains on borrowings (Note 8) Loss on disposal of assets (Note 6) Depreciation on fixed assets (Note 11) Depreciation on right of use assets (Note 12(a)) Depreciation on assets held for sale (Note 20 (ii)) Share of loss of associate (Note 15(ii)) Impairment of goodwill Impairment of investment in subsidiaries (Note 14) Change in fair value of biological assets (Note 16) Foreign exchange differences Changes in working capital: Biological assets* Inventories Trade and other receivables Trade and other payables Contract liabilities Group 2022 K’000 55,164 44,108 99,272 1,287 1,813 (353) 53,473 (3,188) 29,386 111,092 10,991 459 3,503 141,786 - (349,462) 2,027 387,763 (244,066) (51,022) 135,370 (21,806) 2021 K’000 172,022 31,949 203,971 1,661 3,268 (6,037) 38,988 (39,860) 2,260 143,165 17,306 5,104 3,358 - - (828,361) 8,775 645,669 (94,206) (96,273) 176,439 21,534 Company 2022 K’000 (75,831) 44,108 (31,723) 431 784 (346) 53,473 (3,188) 21,772 47,197 9,368 459 3,503 - 141,786 (338,052) 14,949 376,347 (204,695) 85,739 (27,678) 2,915 2021 K’000 115,195 31,949 147,144 832 1,634 (16,932) 35,380 (39,860) 553 83,971 3,495 5,104 3,358 - - (545,343) 30,087 379,895 41,109 498,416 (511,388) 2,209 Cash generated from operations 308,323 206,761 153,025 119,664 *The movement in biological assets excludes the change in fair value of biological assets already adjusted for. 91 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 29 Cash flow information (continued) ii) Net debt reconciliation This section sets out an analysis of net debt and the movements in net debt for each of the periods presented. Group Company 2022 K’000 223,973 (599,866) (351,681) (17,643) 2021 K’000 201,539 (406,264) (490,204) (19,671) 2022 K’000 136,149 (599,866) (164,025) (10,232) 2021 K’000 113,193 (406,264) (306,417) (8,470) (745,217) (714,600) (637,974) (607,958) Liabilities from financing activities Net Cash/ (Bank-overdrafts) Total Bank loans K’000 (517,116) (669,619) (38,998) 740,611 38,998 39,860 (406,264) (406,264) (722,995) (53,473) 526,205 53,473 3,188 (599,866) (517,116) (669,619) (35,380) 740,611 35,380 39,860 (406,264) (406,264) (722,995) (53,473) 526,205 53,473 3,188 (599,866) Leases K’000 (43,009) (13,578) (3,268) 30,879 3,268 6,037 (19,671) (19,671) (13,290) (1,813) 14,965 1,813 353 (17,643) (35,946) (3,619) (1,634) 14,163 1,634 16,932 (8,470) (8,470) (9,430) (784) 7,322 784 346 (10,232) K’000 (236,909) (51,756) (74,650) - 74,650 - (288,665) (288,665) 160,957 (63,252) - 63,252 - (127,708) (158,177) (35,047) (47,966) - 47,966 - (193,224) (193,224) 165,436 (36,752) - 36,752 (88) (27,876) K’000 (797,034) (734,953) (116,916) 771,490 116,916 45,897 (714,600) (714,600) (575,328) (118,538) 541,170 118,538 3,541 (745,217) (711,239) (708,285) (84,980) 754,774 84,980 56,792 (607,958) (607,958) (566,989) (91,009) 533,527 91,009 3,446 (637,974) Cash and cash equivalents (Note 19) Bank loans (Note 24) Bank overdrafts (Note 24) Lease liabilities (Note 12(b)) Net debt Group 2021 At start of year Additions Interest charged Principal repayments Interest paid Foreign exchange gains At end of year 2022 At start of year Additions Interest charged Principal repayments Interest paid Foreign exchange gains At end of year Company 2021 At start of year Additions Interest charged Principal repayments Interest paid Foreign exchange gains At end of year 2022 At start of year Additions Interest charged Principal repayments Interest paid Foreign exchange gains At end of year 92 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 30 Earnings per share (EPS) Group Company Basic earnings per share Continuing operations Discontinued operations Total basic earnings per share Diluted earnings per share Continuing operations Discontinued operations Total diluted earnings per share 2022 Ngwee (3.51) 13.21 9.70 (2.63) 9.91 7.28 2021 Ngwee 46.60 9.57 56.17 34.96 7.18 42.14 2022 Ngwee (34.46) 13.21 (21.25) (25.85) 9.91 (15.94) 2021 Ngwee 34.13 9.57 43.70 25.61 7.18 32.79 i) Reconciliations of earnings used in calculating earnings per share Profit attributable to the ordinary equity holders of the Company used in calculating basic and diluted earnings per share is as follows: Continuing operations Discontinued operations Group 2022 K’000 (8,119) 39,697 2021 K’000 140,069 28,754 Company 2022 K’000 (103,629) 39,697 2021 K’000 102,595 28,754 31,578 168,823 (63,932) 131,349 ii) Weighted average number of shares used as the denominator Ordinary shares used in calculating basic EPS Preferences shares 2022 shares 300,579,630 100,057,658 2021 shares 300,579,630 100,057,658 Total weighted average shares used in calculating diluted EPS 400,637,288 400,637,288 93 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 31 Related party transactions The Group is listed on the Lusaka Stock Exchange (LuSE) and has various shareholders. There is no ultimate controlling parent entity. The major shareholder, BII Plc which has 17.3% shareholding, is also the holder of 100,057,658 convertible redeemable preference shares. These shares have four voting rights for every five preference shares held resulting in BII having 34.8% of the voting rights. Name BII i) Subsidiaries Type Place of incorporation Ownership interest Major shareholder London 2021 17.3% 2020 17.3% Interests in subsidiaries are set out in Note 14. ii) Key management personnel compensation Key management includes Directors (executive and non-executive) and members of senior management. The compensation paid or payable to key management for employee services is shown below: Short-term employee benefits Retirement benefit cost - NAPSA Group Company 2022 K’000 141,028 796 2021 K’000 141,669 1,453 2022 K’000 106,453 584 141,824 143,122 107,037 iii) Transactions with other related parties The following transactions occurred with related parties: Sales of: Animal feed and bran Beef products Poultry products Pork products Purchases of: Beef products Poultry products Pork products Distribution services Company Group 2022 K’000 2021 K’000 - - - - - - - - - - - - - - - - - - - - 2022 K’000 188 1,276,861 214,169 51,375 1,542,593 5,988 33,858 2,894 - 42,740 2021 K’000 108,889 1,074 109,963 2021 K’000 1,799 996,507 315,958 29,430 1,343,694 2,239 9,044 19,956 3,810 35,049 The Group sales and purchases transactions are with Director owned companies while for the Company, the transactions are made with fellow subsidiaries. 94 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 31 Related party transactions (continued) iv) Outstanding balances arising from sales/purchases of goods and services The following balances are outstanding at the end of the reporting period in relation to transactions with related parties: Receivables from: Directors: Danny Museteka Lillian Limbuka Subsidiaries: Zamleather Limited Master Meat Nigeria Limited Master Meat Ghana Limited Zamhatch Limited Masterpork Limited Zambeef Retailing Limited Zamchick Limted Common directorship: Tembilo Farms Limited Associates: Zampalm Limited Payables to: Subsidiary Zamchick Limited Loans receivable At start of year Loans advanced Interest receivable Loan repayments received Group 2022 K’000 - - - - - - - - - - 3,123 3,123 2021 K’000 93 683 - - - - - - - 152 - 3,274 4,202 Company 2022 K’000 - - - 73,506 64,168 3,515 250,766 102,727 102,100 80,352 - - - 2,419 679,533 2021 K’000 93 - - 50,284 67,113 3,362 110,857 56,331 489,944 - - - - 2,570 780,554 - - - 77,273 70,474 667 - (3,458) 67,683 63,292 13,057 - (5,875) 70,474 70,474 667 - (3,458) 67,683 63,292 13,057 - (5,875) 70,474 The loans receivable relates to amounts advanced to foreign subsidiaries in Nigeria of K64 million (2021: K67 million) and Ghana of K3.5 million (2021: K3.4 million) for the purposes working capital requirements. The loans are insecure, payable on demand and interest free. v) Directors’ remuneration Non-executive Director fees Executive Director salaries and short-term emoluments Retirement benefit costs – NAPSA contributions 2022 K’000 3,267 10,382 29 13,678 2021 K’000 3,438 10,394 28 13,860 95 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 32 Correction of material error in calculating deferred income tax During the year, the Group identified an omission of deferred income tax liability on revaluation surplus arising on revalued items of property, plant and equipment in accordance with IAS 12 Income taxes. The correction of the error resulted in an understatement of deferred income tax liability by K135 million for the Group on 1 October 2020 and an overstatement in revaluation reserves of K133 million and K1.7 million in retained earnings as at that date. The error has been corrected by restating each of the affected financial statement line items for the prior periods as follows: Year ended 30 September 2020 Group Statement of financial position Net deferred income tax liability Statement of changes in equity Revaluation surplus Retained earnings Company Statement of financial position Net deferred income tax liability Statement of changes in equity Revaluation surplus Retained earnings Year ended 30 September 2021 Group Statement of financial position Net deferred income tax liability Statement of changes in equity Revaluation surplus Retained earnings Company Statement of financial position Net deferred income tax liability Statement of changes in equity Revaluation surplus Retained earnings 1-Oct-20 K’000 Increase/(decrease) K’000 Restated: 1-Oct-20 K’000 60,398 135,046 195,444 1,167,713 470,174 41,153 828,538 597,524 1-Oct-21 K’000 (133,325) (1,721) 1,034,388 468,453 83,037 (82,854) (184) 124,190 745,684 597,340 Increase/(decrease) K’000 Restated: 1-Oct-21 K’000 79,005 156,245 235,250 1,315,739 679,718 (155,086) (1,159) 1,160,653 678,559 55,905 821,691 774,437 82,212 (82,169) (43) 138,117 739,522 774,394 33 Contingencies The Group is party to various legal cases whose outcome is dependent on the conclusion of the Zambian judicial process. Management makes estimates for the outcomes of these cases based on professional advice. There are some cases where, based on professional advice received, the directors have not made any provision. The value of potential claims against the Group that would likely result in an unfavourable outcome as at 30 September was nil (2021: Nil). 34 Commitments i) Capital commitments Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities was K44.6 million (2021: K3.1 million). ii) Operating commitments Contractual obligation for future purchase of raw materials not recognised as a liability was K11.896 million (2021: K13.847 million). 35 Events occurring after the reporting period Beyond 2021, the existence of novel coronavirus (Covid-19) has continued to cause disruptions to businesses and economic activity. To date, the Group has not seen, nor expects to see in the near future, a major impact on its operations by the pandemic, however, should the pandemic continue for an extended period of time, there’s a possibility that the risks will materialize and hence have a significant impact on the Company’s financial performance. 96 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC 36 Comparatives Comparative figures and disclosures have been adjusted to conform to changes in presentation in the current period for the following: • Segment reporting • Revenue • Discontinued operations • Defined benefit obligation • Borrowings 97 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLC98 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLCSupplementary Information - presented in USD (unaudited) 99 Notes to annual financial statements (continued)For the year ended 30 September 2022Annual Report 2022Zambeef Products PLCStatement of profit or loss and other comprehensive income Revenue from contracts with customers Change in fair value of biological assets Cost of sales of providing goods Group Company 2022 US$’000 314,014 18,567 (237,518) 2021 US$’000 235,528 39,222 (205,113) 2022 US$’000 195,659 17,903 (162,734) 2021 US$’000 136,367 25,821 (124,570) Gross profit 95,063 69,637 50,828 37,618 Other income/(expenses) Net impairment losses on financial assets Impairment of goodwill Distribution expenses Administrative expenses 145 (1,040) (8,253) (3,818) (71,989) (400) (556) - (3,165) (54,248) (516) (458) (8,253) (3,907) (38,337) (493) (56) - - (30,121) Operating profit 10,108 11,667 881 6,948 Share of loss from equity investment Finance income Finance costs (204) 206 (6,900) (160) 2,173 (5,536) (204) 206 (5,297) Profit before income tax 3,210 8,145 (4,414) Income tax expense (3,684) (1,664) (1,618) (Loss)/profit from continuing operation Profit from asset held for sale Profit for the year Profit attributable to: Owners of Zambeef Products PLC Non-controlling interests Other comprehensive income: Items that maybe reclassified to profit or loss Translation losses on foreign operations Translation losses on Mpongwe Farms Items not reclassified to profit or loss Revaluation surplus Actuarial remeasurement losses Deferred income tax Other comprehensive income for the year (474) 2,311 1,837 1,696 141 1,837 (946) (631) - (183) 368 (1,392) 6,481 1,513 7,994 7,954 40 7,994 (696) (12,876) 9,110 (133) (1,004) (5,599) (6,032) 2,311 (3,721) (3,721) - (3,721) - (631) - (62) 176 (517) (160) 2,689 (4,024) 5,453 (597) 4,858 1,360 6,218 6,218 - 6,218 - (12,876) 1,900 (67) 39 (11,004) Total comprehensive income for the year 445 2,395 (4,238) (4,784) 100 Annual Report 2022Zambeef Products PLCStatement of profit or loss and other comprehensive income (continued) Total comprehensive income for the period is attributable to: Owners of Zambeef Products Plc Non-controlling interests Basic earnings per share Continued operations Discontinued operations Total basic earnings per share Diluted earnings per share Continued operations Discontinued operations Total diluted earnings per share Group 2022 US$’000 Company 2021 US$’000 2022 US$’000 2021 US$’000 289 156 445 (0.19) 0.77 0.58 (0.15) 0.58 0.43 2,494 (99) 2,395 2.14 0.50 2.64 1.61 0.38 1.99 (4,238) - (4,238) (2.01) 0.77 (1.24) (1.50) 0.58 (0.92) (4,784) - (4,784) 1.57 0.50 2.07 1.17 0.38 1.55 101 Annual Report 2022Zambeef Products PLCConsolidated statement of financial position 30-Sept-22 Restated:1-Oct-21 Restated:1-Oct-20 US$’000 198,393 2,050 1,583 2,340 5,480 209,846 14,817 91,260 18,310 14,175 10,765 - 149,327 359,173 449 185,095 100 42,945 65,256 (60,091) 233,754 4 233,758 26,976 797 14,128 231 42,132 33,248 319 41,113 6,165 2,438 83,283 359,173 US$’000 US$’000 183,497 2,586 9,964 2,417 4,263 202,727 17,182 71,556 14,235 12,039 10,188 - 125,200 327,927 449 185,095 100 38,850 69,334 (77,664) 216,164 (156) 216,008 11,682 433 18,222 531 30,868 41,871 742 30,716 7,121 601 81,051 327,927 159,549 2,542 8,282 2,176 3,097 175,646 5,657 54,798 7,052 5,518 8,722 87 81,834 257,480 449 185,095 100 45,027 51,360 (106,325) 175,706 (26) 175,680 9,445 981 14,520 565 25,511 33,513 1,155 16,771 4,850 - 56,289 257,480 ASSETS Non-current assets Property, plant and equipment Right of use assets Goodwill Investment in associate Biological assets Current assets Biological assets Inventories Trade and other receivables Cash and cash equivalents Assets classified as held for sale Current income tax asset Total assets EQUITY Share capital Share premium Preference share capital Foreign currency translation reserve Revaluation reserve Retained earnings Attributable to owners of parent entity Non-controlling interests LIBILITIES Non-current liabilities Borrowings Lease liabilities Deferred income tax Defined benefit obligations Current liabilities Borrowings Lease liabilities Trade and other payables Contract liabilities Current income tax Total equity and liabilities 102 Annual Report 2022Zambeef Products PLCCompany statement of financial position ASSETS Non-current assets Property, plant and equipment Right of use assets Investment in subsidiaries Investment in associate Biological assets Current assets Biological assets Inventories Trade and other receivables Cash and cash equivalents Assets classified as held for sale Current income tax asset Total assets EQUITY Share capital Share premium Preference share capital Foreign currency translation reserve Revaluation reserve Retained earnings LIBILITIES Non-current liabilities Lease liabilities Borrowings Deferred income tax Defined benefit obligations Current liabilities Lease liabilities Borrowings Trade and other payables Contract liabilities Current income tax Total equity and liabilities 30-Sept-22 Restated:1-Oct-21 Restated:1-Oct-20 US$’000 US$’000 US$’000 136,584 1,493 6,584 2,340 5,481 152,482 11,586 61,878 49,780 8,617 10,765 - 142,626 295,108 449 185,095 100 39,096 45,081 (62,986) 206,835 339 26,976 8,879 23 36,217 309 21,371 23,282 6,165 929 52,056 295,108 128,057 1,362 14,684 2,417 4,263 150,783 14,133 46,175 52,107 6,762 10,188 151 129,516 280,299 449 185,095 100 37,521 44,177 (71,939) 195,403 112 11,682 12,420 126 24,340 394 30,892 23,626 5,644 - 60,556 280,299 121,843 1,116 12,205 2,176 3,097 140,437 3,829 40,421 68,057 628 8,722 28 121,685 262,122 449 185,095 100 43,339 37,025 (99,926) 166,082 406 9,445 10,982 166 20,999 718 24,713 45,028 4,582 - 75,041 262,122 103 Annual Report 2022Zambeef Products PLC104 Annual Report 2022Zambeef Products PLC28TH ANNUAL GENERAL MEETING 105 Annual Report 2022Zambeef Products PLCZambeef Products PLC (“Zambeef” or the “Group”) [INCORPORATED IN THE REPUBLIC OF ZAMBIA] COMPANY REGISTRATION NUMBER: 31824 SHARE CODE: ZAMBEEF ISIN: ZM0000000201 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the 28th Annual General Meeting of the members of the Company will be held virtu- ally ( https://eagm.creg.co.zw/EAGM/Login.aspx) on Tuesday, December 27 2022 at 10:00 hours; in respect of the year ended 30 September 2022. AGENDA 1. Minutes of the previous meeting To receive and note the minutes of the 28th Annual General Meeting held on 27 December, 2022 duly approved by the Chairman in accordance with the Companies Act. 2. Financial Statements TTo receive adopt and approve the reports of the Directors, the Auditors, and the Financial Statements for the year ended September 30, 2022 (Ordinary resolution number 1) 3. Ordinary Resolutions To consider and, if deemed fit, to pass, with or without modification, the following ordinary resolutions; 3.1 Ordinary Resolutions to re-election of directors retiring by rotation To re-elect each of Messer’s: 3.1.1. Roman Frenkel (Ordinary resolution number 2) 3.1.2 Pearson Gowero (Ordinary resolution number 3) and 3.1.3. Ms Monica Musonda (Ordinary resolution number 4) who retire by rotation in terms of the Companies Act, and who, being eligible, offer themselves for re-election. The board recommends their re-election to shareholders. Their details are set out in the Annual Report. 106 Annual Report 2022Zambeef Products PLC 3.2 Ordinary Resolution Number 5 – Approval of Directors Fees To approve the annual fees payable by the company to the Non-Executive Directors, for the year ending 30 September 2023, unless otherwise determined by the company in a general meeting, to be revised by 10% as follows: § § § from K 503 250 to K 553 575 for a Board member; from K 520 000 to K572 000 for a Board member and Committee Chairperson from K 920 000 to K1 012 000 for the Board Chairman. 3.3 Ordinary Resolution Number 6– Appointment of the independent auditor Pursuant to the requirements of sections 257(1) of the Companies Act No. 10 of 2017, and as nominat- ed by the company’s Audit Committee, to resolve that Messer’s PricewaterhouseCoopers be re-appoint- ed as the company’s independent registered auditor for the financial year ending 30 September 2023 and to authorise the Directors to determine their remuneration. 4. Non - Declaration of Final Dividend Due to the expansion program announced in the year, the Directors recommend that no dividend be paid for the financial year ended September 2022. It is noted that in terms of the company’s Articles, the company may only declare a dividend if the directors have recommended a dividend. 5. Other business To transact such other business as may be transacted at an annual general meeting of members. A member entitled to attend and vote at the meeting is entitled to appoint any person (whether a member of the Company or not) to attend, speak and vote in his/her stead. Proxy forms are obtainable from the Compa- ny Secretary or at the Transfer Secretaries offices. The forms must be lodged at the Registered Office of the Company not less than 48 hours before the commencement of the AGM. Queries pertaining to shareholder relations such as change of address or bank details are to be channeled through the Transfer Secretaries, whose contact address is: Corpserve Transfer Agents Limited 6 Mwaleshi Road, Olympia Park, Lusaka, Zambia Telephone Facsimile Email: - info@corpservezambia.com.zm : +260 (211) 256969/70 : +260 (211) 256975 By Order of the Board Mwansa M Mutimushi COMPANY SECRETARY 107 Annual Report 2022Zambeef Products PLC NOTES Key Sign Up instructions a). Sign Up • Use the following link to access the platform; https://eagm.creg.co.zw/EAGM/Login.aspx • • First time users are required to sign-up by clicking the “Sign Up “option. If you registered previously, you do not need to sign up again. Kindly use the same logging credentials that you used before. If you have forgotten your details, use the “Forgot Password” function on the login window to retrieve your details. • Attendees are to indicate the criteria of their attendance of the provided options i.e. Shareholder/Non-Share- holder/Proxy • Attendees are required to provide the necessary information to complete the sign-up procedure. • Once Sign-up has been completed, the admins will validate information provided before granting access to 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 “Register” on the blue button to confirm online attendance • Click “Join” to begin following video and audio transmission of meeting proceedings. • Click “Join with Computer Audio” to attend the live meeting 108 Annual Report 2022Zambeef Products PLCMINUTES OF THE 27TH ANNUAL GENERAL MEETING OF MEMBERS HELD ON 21ST DECEMBER, 2021 AT 10:00 HOURS AT THE RADISSON BLU HOTEL, LUSAKA AND FROM VARIOUS LOCATIONS VIRTUALLY 1 PRESENT DIRECTORATE: Michael Mundashi (Chairman), Walter Roodt (Chief Executive Officer), Frank Braeken, Roman Frenkel, Pearson Gowero, Yollard Kachinda, Jonathan Kirby, Monica Musonda and Faith Mukutu (Chief Financial Officer). SECRETARY: Mwansa Mutimushi (Lists of members present as attached) 2 CALL TO ORDER / QUORUM A quorum having been met, the meeting was called to order at 10:00 hours. 3 APOLOGIES FOR ABSENCE No apologies for absence were recorded. AGENDA The notice and agenda were adopted as presented. 4 MINUTES OF THE PREVIOUS MEETING The minutes of the Annual General Meeting of 24 December, 2020 were noted. 5 MATTERS ARISING No matters arose for discussion from the minutes of the previous meeting. 6 THE DIRECTORS REPORT AND FINANCIAL STATEMENTS The directors’ report, the auditor’s report and annual financial statements for the year ended 30 Septem- ber 2021 were presented. It was resolved that the directors’ report and financial statements for the year ended 30 September 2021 be approved and adopted and that all matters undertaken and discharged by the directors on behalf of the com- pany be confirmed. 109 Annual Report 2022Zambeef Products PLC 7 APPOINTMENT OF DIRECTORS It was resolved that the appointment of Messer’s Roman Frenkel, Pearson Gowero and Ms. Katebe Monica Musonda be confirmed. 8 RE- ELECTION OF DIRECTORS It was resolved that to re-elect as directors Messer’s Frank Braeken, Yollard Kachinda and Michael Mundashi who retired by rotation and offered themselves for re-election. 9 APPOINTMENT OF REMUNERATION INDEPENDENT AUDITORS AND DETERMINATION OF THEIR It was resolved that Messer’s PricewaterhouseCoopers (Zambia) be appointed as auditors of the company until the conclusion of the next Annual General Meeting and that the Board of Directors be authorised to agree their fees. 10 ANY OTHER BUSINESS There being no further business to transact, the meeting closed at 11:30 hours. _________________________ CHAIRMAN ______________________ SECRETARY Dated this 16 day of February 2022 110 Annual Report 2022Zambeef Products PLC DECEMBER 2021 AGM ATTENDANCE REGISTER 1) Proxies Name STANDARD CHARTERED ZAMBIA SECURITIES SERVICES NOMINEES LTD NATIONAL PENSION SCHEME AUTHORITY Proxy Shares Held MICHAEL MUNDASHI 52,601,435 % 17.50 MAINZA MULEYA CHISHA 24,797,819 SATURNIA REGNA PENSION TRUST FUND MUMBA MUSUNGA 14,285,259 SHAKA HOLDINGS INC JOHNN RABB BERNARD PUBLIC SERVICE PENSIONS FUND BOARD MUMBA MUSUNGA EARL FIDUCIARY AG ITO SPRAYVIEW TRUST EARL FIDUCIARY AG ITO SPRAYVIEW TRUST JOHNN RABB BERNARD ZAMBIA SUGAR PENSION TRUST -SCHEME STANBIC BANK PENSION TRUST FUND KCM PENSION TRUST SCHEME ZANACO PLC DC PENSION SCHEME MUMBA MUSUNGA MUMBA MUSUNGA MUMBA MUSUNGA MUMBA MUSUNGA STANBIC NOMINEES-MPILE LOCAL EQUITY FUND MINTU CHITEBE BARCLAYS BANK STAFF PENSION TRUST FUND MUMBA MUSUNGA 7,868,813 6,803,840 6,131,187 3,968,349 3,702,160 2,763,163 2,237,931 1,766,085 1,238,829 1,238,828 BARCLAYS BANK ZAMBIA STAFF PENSION FUND- PPMZ STANDARD CHARTERED BANK PENSION TRUST FUND LAFARGE CEMENT ZAMBIA PLC PENSION TRUST SCHEME KELVIN SHIYUNGA MUMBA MUSUNGA 1,108,671 MUMBA MUSUNGA 1,017,190 AIRTEL ZAMBIA STAFF PENSION FUND INDENI PENSION TRUST SCHEME MUMBA MUSUNGA MUMBA MUSUNGA LUBAMBE COPPER MINES PENSION TRUST SCHEME MUMBA MUSUNGA BUYANTANSHI PENSION TRUST FUND MUMBA MUSUNGA WORKERS'' COMPENSATION FUND CONTROL BOAD MOSES SIMBEYE PICZ PENSION TRUST-MONEY PURCHASE KELVIN SHIYUNGA ZAMBIAN BREWERIES PLC PENSION TRUST SCHEME MUMBA MUSUNGA CEC PENSION TRUST SCHEME SANDVIC MINNING PENSION SCHEME GOLDEN SUNSET PENSION FUND ZRA PENSION TRUST SCHEME GAME STORES PENSION TRUST SCHEME HEALTH SECTOR GRANT AIDED INSTITUTIONS PENSION SCHEME MUMBA MUSUNGA MUMBA MUSUNGA MUMBA MUSUNGA MUMBA MUSUNGA MUMBA MUSUNGA MUMBA MUSUNGA NATIONAL BREWERIES PENSION TRUST SCHEME MUMBA MUSUNGA WORKCOM PENSION TRUST SCHEME MUMBA MUSUNGA SUN INTERNATIONAL PENSION TRUST SCHEME MUMBA MUSUNGA STANBIC BANK ZAMBIA NOMINEES RAIL SYSTEMS OF ZAMBIA EXAMINATIONS COUNCIL OF ZAMBIA MINTU CHITEBE KELVIN SHIYUNGA KELVIN SHIYUNGA DELOITTE AND TOUCH PENSION TRUST SCHEMD MUMBA MUSUNGA PRUDENTIAL LIFE ASSURANCE ZAMBIA LIMITED KELVIN SHIYUNGA 997,466 990,224 909,222 866,334 740,000 616,160 589,544 563,950 493,562 421,544 361,931 317,432 257,330 202,112 196,429 194,913 178,571 175,160 171,877 165,807 154,460 8.25 4.75 2.62 2.26 2.04 1.32 1.23 0.92 0.74 0.59 0.41 0.41 0.37 0.34 0.33 0.33 0.30 0.29 0.25 0.20 0.20 0.19 0.16 0.14 0.12 0.11 0.09 0.07 0.07 0.06 0.06 0.06 0.06 0.06 0.05 111 Annual Report 2022Zambeef Products PLC1) Proxies (continued) ECOBANK ZAMBIA LIMITED PENSION TRUST SCHEME MUMBA MUSUNGA 154,259 SCZ INTERNATIONAL LTD PENSION TRUST MUMBA MUSUNGA FINANCE BANK ZAMBIA NATIONAL BUILDING SOCIETY NATIONAL INSTITUTE FOR SCIENTIFIC AND INDUSTRIAL RESARCH GOLDEN SUNSET VIA AFLIFE AFRICA 53 UTI ZAMBIA LIMITED STAFF PENSION TRUST SCHEME TOYOTA ZAMBIA WORKCOM TRUST PENSION SCHEME PPMZ KELVIN SHIYUNGA KELVIN SHIYUNGA MUMBA MUSUNGA MUMBA MUSUNGA KELVIN SHIYUNGA MUMBA MUSUNGA KELVIN SHIYUNGA KELVIN SHIYUNGA ACCESS BANK ZAMBIA LIMITED PENSION SCHEME MUMBA MUSUNGA MULTICHOICE PENSION SCHEME BUYANTANSHI PENSION TRUST FUND ZAMBEZI RIVER AUTHORITY STANBIC NOMINEES ZAMBIA LIMITED LUSAKA TRUST PENSION SCHEME FINAL SALARY HILDA''S HENS FAMILY TRUST CEC PESION TRUST SCHEME ZRL PENSION TRUST SCHEME SANLAM LIFE INSURANCE (Z) LTD STANBIC BANK ZAMBIA NOMINEES STANBIC NOMINEES LTD STANBIC NOMINEES ZAMBIA LIMITED KELVIN SHIYUNGA KELVIN SHIYUNGA KELVIN SHIYUNGA MINTU CHITEBE KELVIN SHIYUNGA KELVIN SHIYUNGA MR CHARLES MATE KELVIN SHIYUNGA KELVIN SHIYUNGA MUMBA MUSUNGA MINTU CHITEBE MINTU CHITEBE MINTU CHITEBE 141,503 137,931 110,266 100,179 99,531 91,127 81,709 65,808 59,198 51,809 50,334 47,393 40,600 14,844 14,558 13,790 10,817 8,542 5,704 4,550 900 395 3 0.05 0.05 0.05 0.04 0.03 0.03 0.03 0.03 0.02 0.02 0.02 0.02 0.02 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 142,399,337 47.37 2) Attendees - Shareholders Name SEKELI MABOSHE MBAWEMI LUNGU KAMPAMBA BETSON SCHOLASTICAH MOYO GABRIEL CHIKUSELA Proxy Shares Held 33,276 481 447 327 200 % 0.01 0.00 0.00 0.00 0.00 TOTAL 34,731 0.01 112 Annual Report 2022Zambeef Products PLC3) Attendees - Non Shareholders Name Representing Count MR MATAKA NKHOMA AUTUS SECURITIES LTD PRISCA CHIZI JAMES NDHLOVU JOSEPH PHIRI TIM HARPER WESLEY BEENE BWALYA SELAH BUPE K MOONO NDULWA MUPELA MANGA MUNSANGO NAMUNYIKA JERE NENANI SICHONE ANDREW CHIBUYE LEAH SIMASIKU JACK KANYANGA BONIFACE MWAMBA CHISHALA MALEKANO ANTHONY SENO FAITH MUKUTU MBOO MUMBA PEARSON GOWERO WALTER ROODT ROMAN FRENKEL MS MONICA MUSONDA HASTINGS MTINE IVOR CHILUFYA JONATHAN KIRBY YOLLARD KACHINDA MWANSA MUTIMUSHI CORPSERVE ZAMBIA CORPSERVE ZAMBIA CORPSERVE ZAMBIA FINNCAP GROUP GRANT THORNTON GRANT THORNTON LANGMEAD & BAKER LTD LANGMEAD & BAKER LTD LANGMEAD & BAKER LTD LUSAKA SECURITIES EXCHANGE PANGAEA SECURITIES PRICEWATERHOUSECOOPERS (PWC) SECURITIES AND EXCHANGE COMMISSION STOCKBROKERS ZAMBIA LIMITED STOCKBROKERS ZAMBIA LIMITED ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC ZAMBEEF PRODUCTS PLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 28 113 Annual Report 2022Zambeef Products PLCFORM OF PROXY For the 28th Annual General Meeting I/We _____________________________________________________________________________________________________ (Name/s in block letters) of ______________________________________________________________________________________________ (address) being a member/ member of the above-named Company hereby appoint 1. ___________________________________ of _____________________________ or in his absence Number of votes (1 share = 1 vote) 2. ___________________________________ of _____________________________or in his absence 3. the Chairman of the meeting As my/our proxy to vote for me/us on my/our behalf at the annual meeting of the company to be held virtually on Tuesday 27 December 2022 at 10:00 hours and at any adjournment thereof as follows: Resolution No. Agenda Item Mark with X where applicable In Favour Against Abstain 1 .2 3 4 5. 5. To receive adopt and approve the reports of the Directors, the Auditors and the Financial Statements for the year ended September 30, 2022 Re-election of Directors i. Roman Frenkel ii. Pearson Gowero iii. Katebe Monica Musonda To approve the annual fees payable by the company to the Non- Executive Directors, for the year ending 30 September 2023, unless otherwise determined by the company in a general meeting, to be revised by 10% Pursuant to Sec. 257 of the Companies Act: To appoint Messer’s PricewaterhouseCoopers as the independent auditors and authorise the directors to determine the auditor’s fees. Unless otherwise instructed, the proxy will vote as he thinks fit. Signed at __________________________________ on this ____________________ day of ______________________ 2022 Signature ________________________________________________________________________________________________ Assisted by me (where applicable) (see note 3) ____________________________________________________________ Full name/s of signatory/ies if signing in a representative capacity (see note 4) _____________________________ 114 Annual Report 2022Zambeef Products PLC NOTES TO THE FORM OF PROXY 1. 2. 3. 4. 5. 6. 7. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend, speak and vote in his/her stead. A proxy need not be a member of the Company. If this proxy form is returned without any indication as to how the proxy should vote, the proxy will be entitled to vote or abstain from voting as he/she thinks fit. A minor must be assisted by his/her guardian. The authority of a person signing a proxy in a representative capacity must be attached to the proxy unless the Company has already recorded that authority. In order to be effective, proxy forms must reach the registered office of the Company or the transfer secretaries before the Annual General Meeting. The delivery of the duly completed proxy form shall not preclude any member or his/her duly authorised representative from attending the meeting, speaking and voting instead of such duly appointed proxy. If two or more proxies attended the meeting, then that person attending the meeting whose name appears first on the proxy form, and whose name is not deleted, shall be regarded as the validly appointed proxy. 115 Annual Report 2022Zambeef Products PLC Notes 116 Annual Report 2022Zambeef Products PLCNotes 117 Annual Report 2022Zambeef Products PLC118 Annual Report 2022Zambeef Products PLC119 Annual Report 2022Zambeef Products PLC120 Annual Report 2022Zambeef Products PLC

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