ZAMBIAN BREWERIES PLC
Interim Results for the six months ended
30 September 2012
The Board of Directors of Zambian Breweries PLC, in compliance with the requirements of the
Securities Act No.38 of 1993 and the Listing Requirements of the Lusaka Stock Exchange is
pleased to announce the unaudited results of the company for the six months ended 30
SIX MONTHS ENDED 30 SEPTEMBER
Profit from ordinary activities
before exchange losses,
interest and taxation
Operating exchange losses
Profit before tax
Profit after tax
BALANCE SHEET AS AT 30 SEPTEMBER
Property, plant and equipment
EQUITY & LIABILITIES
Total equity and liabilities
Financial Review for the 6 Months to 30 September 2012
Volumes up 16.9% on prior year
Production efficiencies, distribution cost savings and overhead cost control
Operating profit growth of 31%
Excise and VAT payments grew 11% on prior year to ZMK 211 billion
Zambian Breweries Plc. recorded a strong performance for the first 6 months of the year. Profit
after tax ended at ZMK42.3 billion, up 70% on the prior year. Our revenue growth of 26% over
prior has been driven by a 13% growth in beer volumes, with both Mosi and Castle Lite sales
performing exceptionally well. Our 24% growth in soft drinks from prior year reflected the
company’s decision to reduce the cost of soft drinks to the consumer in March this year. While
our beer volume capacity remained constrained, improved production efficiencies and more
effective distribution planning and execution allowed us to deliver more product to the market.
Our gross margin performance reflects this volume growth, the benefit of continued distribution
efficiencies and positive price variances on imported commodities and products as a result of
the Kwacha appreciation in the first half of the year.
Strong focus has been placed on cost efficiency across all areas of the business which has
resulted in overhead costs only growing by 18% despite the significant volume growth and
normal inflationary pressures. The reported operating exchange losses related to the valuation
of forward contracts taken out six months in advance in line with group policy and is a result of
the appreciation of the Kwacha against major currencies in the first half of the year.
Despite this, the combined impact of strong volumes and improved cost management has
yielded a 31% growth in Operating Profit. The increased cash flow generation in the current
year has allowed us to pay down our syndicated facility to ZMK 290bn, yielding a ZMK 4.9bn
saving in interest paid in the period.
We are pleased to report that financing commitments are in place to refinance our outstanding
ZMK 290bn syndicated loan facility reflected in current liabilities, in January 2013.
Strategic Review and Prospects
Economic conditions during the first half of the year continued to be generally good. There were
a number regulatory changes via the introduction or enforcement of several statutory
instruments directly relevant to the business including packaging guidelines (SI 23), minimum
wages (SI 46), liquor trading hours (SI 96 and SI 640) and SI 33 prohibiting the use of foreign
currency as legal tender.
Much improved availability of beer drove great momentum and saw us deliver record trading
months in both August and September 2012. Our new state of the art 1,000,000 HL brewery
comes on line in Ndola in November. This increase in beer capacity from the current 300,000
HL brewery will provide the business with significant opportunity and will allow us to address the
current short supply to the market. We will support this growth by continuing to grow our Mosi
The reduction in the price of our 300ml soft drink RGB that we announced in mid-March 2012
caused huge excitement and saw us start the year in buoyant fashion. This mood in the market
continued throughout the period. We are pleased to report the government’s decision to remove
the 10% excise duty on sparkling soft drinks and water. This will provide continued support for
our decision to drop the price of soft drinks in March with the intention of making these products
more accessible to the man on the street.
With the current strong economic fundamentals and the new beer capacity coming on line, we
expect to deliver strong financial results for the full financial year.
Zambian Breweries Plc. believes that the sustainability of its business is premised on it being a
good ‘corporate citizen’, which has a well-articulated corporate social investment programme
imbedded in its strategic plan. The company has therefore continued to implement the
SABMiller Ten Priorities One Future Sustainable Development Plan that is aimed at aligning
the company’s objectives with societal aspirations for equitable wealth creation and sustainable
development by supporting programmes and activities that stimulate economic and social
development targeted at reducing poverty in the communities in which we operate.
Taking a leading role in waste management issues, Zambian Breweries Plc. and National
Breweries Plc. led the industry in incorporating The Producer Responsibility Organisation (PRO)
into a registered limited liability company that is intended to coordinate the efforts of all waste
generating industries in implementing environmentally friendly waste management initiative. The
Board of the PRO is chaired by Zambian Breweries in demonstration of the company’s resolve
to address the challenges posed by it packaging on the environment.
Zambian Breweries Plc. continues to be concerned about alcohol abuse and has consequently
put in place programmes that are focused at reducing underage drinking and harmful alcohol
consumption through initiatives aimed at self-regulation of marketing and at drink driving. We
partnered with National Breweries Plc. in conducting training for over 500 members of the
Zambia Liquor Traders Association on topics covering underage drinking, selling to visibly
intoxicated consumers and alcohol abuse. To directly engage the youths on the issue of
underage drinking, Zambian Breweries sponsored the Teen Vision Trust conference and made
presentations to encourage pupils not to drink if below the statutory legal drinking age, which is
18 years in Zambia.
Our barley program continues to be a great success. The Company is self sufficient using only
locally produced barley and has excess barley from the current crop for export. This program
has substantial benefits to the farming and agro processing industries in the region. Substantial
formal employment has been created. Zambian Breweries is committed to reducing energy and
water usage at both the Lusaka and Ndola plants so as to ensure that any development is made
on a sustainable basis. The six month period has seen steady progress in both areas at both
plants. Ongoing focus will reap further rewards in the future.
Copies of the press release are available from the registered office:
Zambian Breweries Plc.
P O Box 31293
Plot No 6438 Mungwi Rd
Corporate Affairs Director
Tel: +260 211 246553/ 244180/244158
BY ORDER OF THE BOARD
Mwansa Mulumba- Mutimushi
20 November 2012
ZAMBIAN BREWERIES PLC
At a Board Meeting held on 7 November 2012, the Board resolved not to recommend an
interim dividend payment for the half year ended 30 September 2012, to allow the company to
continue to reduce its interest bearing debt and interest charges. The significant debt is a result
of the ZMK1 210 billion capital expenditure investment over the last five years.
BY ORDER OF THE BOARD
Mwansa Mulumba- Mutimushi
7 November 2012