Edible Oils (Zamanita) Slide: Accounts for 34% of Group turnover and 27% of operating profits. Turnover increased by 102% to from K120bn to K242.3bn, although the 2008 figures are for 9 months. Gross profit increased by 164% from K22.3bn to K58.9bn. Gross margins increased from 18.6% to 24.3%. Exchange loss of K36bn; largely due to depreciation of ZMK; Zamanita has large US$ input costs and US$ facilities to finance its stocks. Loss on forward crude oil & soya contracts entered into at a time of high commodity prices before commodity prices collapsed. Net loss for the year of K16bn. We have achieved our initial goals as far as the Zamanita acquisition is concerned: Integrate sales of edible oils through the extensive Zambeef retailing network (30% of Zamanita sales are now through Zambeef’s outlets, thereby retaining retailer margins within the Group). Standardize duties on edible oils in the region so that Zamanita was not at a duty disadvantage to neighbouring countries. Develop a world class stock feed plant next to Zamanita in order to add value to the by product of the oil seed crushing plant (animal feed cake).
Accounts for 32% of Group turnover and 27% of operating profits. Turnover increased by 32% to from K170.1bn to K224.7bn. Gross profit decreased by 3% from K62.1bn to K60.2bn. Gross margins decreased from 36.5% to 26.8%, largely due to the lifting of the ban on the movement of cattle out of the S Province, which resulted in the market being flooded with traditional cattle and beef prices reducing significantly. Trading conditions now normalizing; Zambeef has 9 abattoirs strategically located throughout the country; Beef prices have started to rise & demand remains strong.
Cropping Slide: Accounts for 11% of Group turnover and 13% of operating profits. Turnover decreased by 2% to from K78.9bn to K77.6bn. Gross profit decreased by 34% from K43.2bn to K28.6bn. Gross margins decreased from 54.8% to 36.9%. Crops planted at a time when input costs were high but grain prices crashed subsequently. Chiawa Farm expansion now completed, taking the total irrigated cropping area to just under 5,000 Ha, making Zambeef one of the largest irrigated row cropping operations in Africa. Chiawa Farm has the water and land to develop a further 1,500 Ha; most of this expansion would be relatively cheap as the infrastructure is already in place. With pressures on world food supplies and water becoming a more precious resource, Zambeef’s world class irrigated farming operations will become more valuable each year.
Chicken Slide: Accounts for 8% of Group turnover and 2% of operating profits. Turnover increased by 16% to from K51.4bn to K59.5bn. Gross profit decreased by 54% from K11.3bn to K5.2bn. Gross margins decreased from 22% to 8.7%. High soya, maize and stock feed prices. ZMK depreciation. Trading conditions are now improving; maize & soya prices have reduced significantly; feed prices are coming down; the ZMK is appreciating slowly and chicken demand and margins are beginning to improve as marginal producers have exited the sector.
Dairy Slide: Accounts for 6% of Group turnover and 8% of operating profits. Turnover increased by 27% to from K32.2bn to K40.8bn. Gross profit decreased by 5% from K19.2bn to K18.2bn. Gross margins decreased from 59.6% to 44.6%. Milk processing plant had a good performance but the dairy farm had a difficult year due to high feed costs. Margins should improve in 2010 as feed costs are coming down.
West Africa Slide: Accounts for 5% of Group turnover and 3% of operating profits. Turnover increased by 45.5% to from K22.1bn to K32.2bn. Gross profit increased by 156% from K2.7bn to K7bn. Gross margins increased from 12.2% to 21.7%. Significant expansion plans for the West Africa operations, which I will talk about later.
1. ZAMBEEF PRODUCTS PLC FINANCIAL REVIEW FYE SEPTEMBER 2009
2. Economic Background <ul><li>Global recession </li></ul><ul><li>Worldwide financial crisis </li></ul><ul><li>Collapse of copper prices </li></ul><ul><li>Significant depreciation of the Zambian Kwacha </li></ul><ul><li>Collapse of commodity prices </li></ul><ul><li>High fertilizer and stockfeed prices </li></ul>
4. Abridged Income Statement K Millions YE 2009 YE 2008 % Turnover 697 317 492 698 41.5% Gross Profit 219 176 190 881 14.8% Profit on Disposal of Subsidiary 65 790 - Administrative expense (202 740) (142 938) 41.8% Foreign exchange gains/(losses) (66 519) 3 533 Profit before Taxation 3 853 44 195 (91.3%) Income Tax credit/ (expense) 12 164 (5 919) Profit after Taxation 16 017 38 276 (58.2%) Weighted Average EPS (Kwacha) 98.73 270.92 (63.6%) EBITDA 22 415 65 039 Gross Profit Margin 31.4% 38.7%
5. Financial Summary <ul><li>Profit after tax decreasing from K37.5bn in 2008 to K16.0bn in 2009 </li></ul><ul><li>EBITDA decreasing from K65.0bn to K22.4bn </li></ul><ul><li>Zambeef generated K15.7bn from operating activities for the year. </li></ul><ul><li>Margins decreased from 38.7% to 31.4% due to </li></ul><ul><ul><li>(1) Substantial depreciation of the Zambian Kwacha, resulting in an exchange loss of K67bn for the year, most of which is unrealized. </li></ul></ul><ul><ul><li>(2) Crops planted at a time of high input costs but grain prices crashed subsequently. </li></ul></ul><ul><ul><li>(3) Significant losses on forward crude oil and soya contracts entered into a time of high commodity prices which subsequently collapsed. </li></ul></ul><ul><ul><li>(4) Lifting of the ban on the movement of cattle out of Southern Province resulted in the market being flooded with traditional cattle and beef prices reducing significantly. </li></ul></ul>
6. Abridged Cash Flow K Millions YE 2009 YE 2008 Profit Before Taxation 3 852 44 195 EBITDA 22 415 65 039 Movement in Working Capital (6 691) (92 413) Cash inflow/(outflow) from Operating activities 15 724 (27 374) Cash outflow on return on investments and servicing of finance (25 995) (18 118) Purchase of PPE (139 008) (220 509) Purchase of goodwill (76 137) Proceeds from disposal of subsidiary 163 056 - Cash inflow/(outflow) from/(on) investment activities 27 620 (296 459) Cash inflow/(outflow) from financing (11 340) (276 722) Cash at beginning of year (85 192) (16 683) Effects of exchange rate changes (41 062) 433 Cash at end of year (121 184) (85 192)
7. Abridged Balance Sheet 2009* : Assuming $18 million dollars from DEG K Millions 2009 * YE 2009 YE 2008 Non Current Assets 472 351 472 351 455 491 Current Assets 239 215 239 215 263 449 TOTAL ASSETS 711 567 711 567 718 940 Capital and Reserves 445 227 445 227 439 444 Non-Current Liabilities 141 560 56 600 74 721 Current Liabilities 124 780 209 740 204 775 TOTAL EQUITY AND LIABILITIES 711 567 711 567 718 940 Ratios Current Ratio 1.92 1.14 1.3 Total Debt / Equity Ratio 41% 41% 35.4%
16. West Africa Division Billions Turnover Gross Profit
17. Other Division Billions Turnover Gross Profit
19. Capital Expenditure <ul><li>Expansion of Nigeria operations. </li></ul><ul><li>Commissioning of new stock feed plant. </li></ul><ul><li>Expansion & upgrading of retail outlets. </li></ul><ul><li>Expansion of Masterpork piggery. </li></ul><ul><li>Roll out of Palm plantation. </li></ul>