SENS ANNOUNCEMENT
(the “Notice” or “Announcement”)
ISSUER
ZAMBIA SUGAR PLC [“ZSUG”]
[Incorporated in the Republic of Zambia]
Company registration number:
Share Code:
ISIN:
Authorised by:
2880
ZSUG
ZM0000000052
Mwansa Mutimushi – Company Secretary
SPONSOR
Stockbrokers Zambia Limited
[Member of the Lusaka Securities Exchange]
[Regulated and licensed by the Securities and Exchange Commission of Zambia]
Contact Number:
Website:
+260-211-232456
www.sbz.com.zm
APPROVAL
The captioned Notice or Announcement has been approved by:
i. the Lusaka Securities Exchange
ii. the Securities and Exchange Commission
iii. Stockbrokers Zambia Limited
DISCLAIMER AND RISK WARNING
The Notice or Announcement contained herein contains information that may be of a price sensitive nature.
Investors are advised to seek the advice of their investment advisor, stockbroker, or any professional duly
licensed by the Securities and Exchange Commission of Zambia to provide securities advice.
ISSUED: 16 December 2016
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
Review
The Company is now required to release its interim results on an actual basis. In previous
years, the interim results were determined on a sugar season basis, representing one half of
the latest estimate of the full year financial performance. As a result of this requirement, the
Company’s interim results will contain an inherent level of volatility associated with the
timing of sugar production and sales relative to the previous year.
The half year has been characterised by a challenging domestic market, and the strong
currency has put pressure on export proceeds and cash flow. Despite growth in revenue and
operating profit in the first six months the company’s profitability remains at relatively low
levels. Revenue in the half year increased by 34% to K1.0 billion, mainly due to a favourable
sales mix with some bulk EU exports being replaced by higher value regional sales. Total
sugar sales in the first six months were 6% lower than last year. Domestic sugar sales
decreased by 22% relative to the prior year as a result of declining disposable income levels
and challenging economic conditions. Conversely, exports to neighbouring regional markets
increased by 84% relative to the same period last year although earnings have been
unfavourably impacted by the strength of the Kwacha.
Profit from operations increased by 115% to K239 million mainly due to foreign exchange
losses incurred in the previous period attributable to the devaluation of the Zambian Kwacha
which subsequently strengthened and continued to remain strong. Net finance costs increased
by 123% to K218 million due to high local interest rates and the recent increase in
borrowings to fund a Product Alignment and Refinery Capital Project. Profit after taxation
increased by 84%, from K9 million to K17 million. Headline earnings increased by 95%,
from 1.9 ngwee to 3.7 ngwee per share.
An amendment to International Financial Reporting Standards now permits sugar cane roots
to be carried on the balance sheet at depreciated historic cost rather than fair value. The
Company has chosen to amend its accounting policy for these assets with the result that
operating profit and headline earnings now exclude any fair value adjustments related to cane
roots. This has resulted in a reduced level of profit being reported. The financial results for
the year ended March 2016 and the interim results for the period ended September 2015 have
been restated to reflect this change.
Sugar cane yields and the level of sucrose in the cane were below expectations as a result of
drought conditions experienced between November 2015 and January 2016, and associated
power interruptions which restricted irrigation. Average cane yields across the entire harvest
area declined by more than 10%, from 130 to 115 tons of cane per hectare.
On a more positive note, the new state of the art refinery was commissioned with first refined
sugar produced on 30 May 2016. The refinery was officially launched by His Excellency
President Edgar Chagwa Lungu on 6 July 2016. The factory performed in line with
expectations during the first six months of the season although reduced cane supply and low
sucrose levels limited production to 270,000 tons in the six months under review, 12% lower
than last year. Refined sugar production for the half year increased by 57%, from 31,000
tons to 49,000 tons.
Prospects
Sugar production for the full year is expected to be lower than the previous year due to sugar
cane yields and lower sucrose levels. Difficult domestic market conditions and the high
interest environment are also expected to continue through to March 2017 and export
earnings will continue to be affected by the strong currency. Management will remain
focused on cost control and productivity improvements but pressure on margins and working
capital levels are expected to increase.
Directorate
Mr GM Rolfe has been appointed Operations Director, succeeding Mr MF Pousson who has
taken up another role within the Illovo Group and has resigned from the board.
Dividends
Although half-year headline earnings have increased, the board is mindful of the continuing
commercial uncertainty and the company’s funding requirements for major capital
investment and the higher level of working capital. Accordingly, an interim dividend has not
been declared.
By order of the Board
Mwansa Mutimushi
Company Secretary
05th December 2016
I NTERI M RESULTS
ZAM BI A SUGAR PLC
(I NCORPORATED I N THE REPUBLI C OF ZAM BI A)
COM PANY REGI STRATI ON NUM BER: 2880
SHARE CODE: ZSUG
I SI N:-ZM 0000000052
I n accordance with the requirements of the Securities Act Cap 354, Zambia Sugar Plc announces its results for the year ended 30 September 2016
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Actual
Unaudited
Six months ended
30 September
2016
2015
Restated *
K '000
K '000
Revenue
Operating profit
Net financing costs
Profit before taxation
Taxation
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Profit for the period attributable to:
Shareholders of Zambia Sugar Plc
Non-controlling interest
1 009 702
238 690
(218 342)
20 348
(3 071)
17 277
25 001
42 278
11 733
5 544
17 277
753 119
110 999
(98 085)
12 914
(3 523)
9 391
(41 948)
(32 557)
6 108
3 283
9 391
Sugar Season Basis
Unaudited
Six months ended
30 September
2016
2015
Restated *
K '000
K '000
1 312 895
1 067 257
INTERIM CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
Actual
Audited
Year ended
31 March
2016
Restated *
K '000
2 015 435
247 478
(218 342)
29 136
(7 889)
21 247
25 001
46 248
161 021
(98 085)
62 936
(7 348)
55 588
(41 948)
13 640
327 416
(221 915)
105 501
(19 905)
85 596
19 938
105 534
17 733
3 514
21 247
52 349
3 239
55 588
80 135
5 461
85 596
Actual
Unaudited
Six months ended
30 September
2016
2015
Restated *
K '000
K '000
Revenue
Sugar production
Cane growing
Operating profit
Sugar production
Cane growing
Actual
Audited
Year ended
31 March
2016
Restated *
K '000
475 208
534 494
1 009 702
380 870
372 249
753 119
1 517 363
498 072
2 015 435
126 666
112 024
238 690
62 623
48 376
110 999
226 564
100 852
327 416
Unaudited
2015
Restated *
K '000
Audited
2016
Restated *
K '000
INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited
2016
K '000
Assets
Total comprehensive income for the period
attributable to:
Shareholders of Zambia Sugar Plc
Non-controlling interest
36 734
5 544
42 278
(35 840)
3 283
(32 557)
42 734
3 514
46 248
10 401
3 239
13 640
100 073
5 461
105 534
Profit for the period attributable to shareholders of
11 733
6 108
17 733
52 349
80 135
Headline earnings for the period
11 733
6 108
17 733
52 349
80 135
Determination of headline earnings
Number of shares in issue ('000)
Weighted average number of shares in issue ('000)
Basic and diluted earnings per share (ngwee)
Headline earnings per share (ngwee)
Dividend per share (ngwee)
316 571
316 571
3.7
3.7
-
316 571
316 571
1.9
1.9
-
316 571
316 571
5.6
5.6
-
316 571
316 571
16.5
16.5
-
316 571
316 571
25.3
25.3
-
Property, plant and equipment
Intangible asset
Cane roots
Growing cane
Inventories
Trade and other receivables
Other current assets
Cash and bank balances
Total assets
1 865 317
67 902
199 411
366 379
778 611
550 109
37 661
132
3 865 522
1 396 599
67 902
201 105
271 716
681 002
294 731
65 773
35 897
3 014 725
1 732 341
67 902
191 589
496 728
164 331
585 442
62 141
77 694
3 378 168
Equity and liabilities
Capital and reserves
Non-controlling interest
Deferred tax liability
Borrowings
Current liabilities
Total equity and liabilities
1 053 936
39 587
142 279
1 828 457
801 264
3 865 522
881 289
36 347
109 357
1 352 969
634 763
3 014 725
1017 202
38 525
138 832
1 686 289
497 320
3 378 168
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
2016
Cash operating profit
Working capital requirements
Finance costs, taxation and dividends paid
Net cash (outflow)/inflow from operating activities
Cash outflow from investing activities
Net cash (outflow)/inflow before financing activities
Cash inflow from financing activities
(Decrease)/increase in cash and bank balances
K '000
Unaudited
2015
Restated *
K '000
Audited
2016
Restated *
K '000
400 590
(218 208)
(223 546)
(41 164)
(150 156)
(191 320)
162 611
(28 708)
194 688
(151 297)
(152 238)
(108 848)
(182 437)
(291 285)
252 961
(38 324)
207 524
(44 292)
(282 941)
(119 709)
(562 331)
(682 040)
681 850
( 190)
I NTERI M RESULTS
ZAM BI A SUGAR PLC
(I NCORPORATED I N THE REPUBLI C OF ZAM BI A)
COM PANY REGI STRATI ON NUM BER: 2880
SHARE CODE: ZSUG
I SI N:-ZM 0000000052
I n accordance with the requirements of the Securities Act Cap 354, Zambia Sugar Plc announces its results for the year ended 30 September 2016
I NTERI M CONDENSED STATEM ENT OF CHANGES I N EQUI TY
Actual
Unaudited
Six months ended
30 September
2016
2015
Restated *
K '000
K '000
Actual
Audited
Year ended
31 March
2016
Restated *
K '000
Share capital and share premium
Balance at beginning of the year
Balance at end of the year
247 338
247 338
247 338
247 338
247 338
247 338
Non-Distributable Reserves
Balance at beginning of the year
Cash flow hedges
Balance at end of the year
(17 077)
25 001
7 924
(37 015)
(41 948)
(78 963)
(37 015)
19 938
(17 077)
Dividend Reserve
Balance at beginning of the year
Transfer from retained earnings
Dividends paid
Balance at end of the year
-
47 486
(47 486)
-
47 486
(47 486)
-
Retained Earnings
Balance at beginning of the year
Profit for the year
Balance at end of the year
786 941
11 733
798 674
706 806
6 108
712 914
706 806
80 135
786 941
Non-controlling I nterest
Balance at beginning of the year
Profit for the year
Transfer to dividend reserve
Balance at end of the year
38 525
5 544
(4 482)
39 587
36 360
3 283
(3 296)
36 347
36 360
5 461
(3 296)
38 525
Total Equity
LUSAKA STOCK EXCHANGE SPONSORING BROKER
STOCKBROKERS ZAMBIA LIMITED
1 093 523
917 636
1 055 727
[MEMBER OF THE LuSE and REGULATED BY THE SECURITIES
AND EXCHANGE COMMISSION OF ZAMBIA]
T: +260-211-232456
W: www.sbz.com.zm
* Restatement of cane roots
IAS 41 Agriculture distinguishes between bearer plants and other biological assets. A bearer plant is defined as a living
plant that: is used in production or supply of agricultural produce; is expected to bear produce for more than one
period; and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.
Bearer plants no longer form part of the scope of IAS 41 Agriculture and are therefore not measured at fair value. Bearer
plants must be accounted for in terms of IAS 16 Property, Plant and Equipment and measured at cost less accumulated
depreciation and any accumulated impairment losses.
The group’s cane root assets meet the definition of a bearer plant and therefore cane roots will no longer be measured
at fair value meaning the cost of replanting fields in previous years will no longer be escalated by the annual inflation
rates. The financial statements have been restated accordingly.
The impact on the condensed consolidated financial statements is as follows:
Operating profit - as previously reported
Adjustments related to the restatement of cane roots
Operating profit - restated
Headline earnings - as previously reported
Adjustments related to the restatement of cane roots
Headline earnings - restated
Headline earnings per share (ngwee) - as previously reported
Adjustments related to the restatement of cane roots
Headline earnings per share (ngwee) - restated
Actuals
Sugar season
basis
Actuals
6 months
6 months
12 months
30 Sep 2015
30 Sep 2015
31 Mar 2016
K'000
K'000
K'000
111 099
(100)
180 423
366 219
(19 402)
(38 803)
110 999
161 021
327 416
6 322
69 458
114 354
(17 110)
(34 219)
6 108
(214)
52 348
80 135
2.0
21.9
(0.1)
1.9
(5.4)
16.5
36.1
(10.8)
25.3