Zambeef Products Plc · LSE:ZAM

Zambeef Products — FY2017 Earnings Presentation

30 slides from Zambeef Products's earnings presentation, September 2017

  1. Slide 1: Zambeef Products Plc Financial Results

    ZAMBEEF PRODUCTS PLC Financial Results for the year ended 30 September 2017

  2. Slide 2: Disclaimer

    Disclaimer THIS DOCUMENT (“DOCUMENT”) IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR GENERAL BACKROUND INFORMATION. THE DISTRIBUTION OF THIS DOCUMENT MAY BE RESTRICTED BY LAW. ACCORDINGLY, THIS DOCUMENT MAY NOT BE DISTRIBUTED IN ANY JURISDICTION EXCEPT IN ACCORDANCE WITH THE L

  3. Slide 3: Overview

    Overview Strong Continued rollout Successful Disposal of non- performance of Zambeef Macro completion of core assets from Retailing, outlets & Shoprites capacity expansion Agreement to sell 90% of CCFP & Stock & efficiency Zampalm to IDC for Feed divisions Total retail outlets up improvement USD16m

  4. Slide 4: Financial Overview

    Financial Overview Turnover Gross Profit 2017: ZMW 798.6m 2.5% 2017: ZMW 2.44bn 8.8% (ZMW) (ZMW) 2016: ZMW 875.9m 2016: ZMW 2.38bn 16.6% 2017: USD 255.8m 2017: USD 83.9m 3.7% (USD) (USD) 2016: USD 80.9m 2016: USD 219.4m Operating Profit Adjusted Profit Before Tax 2017: ZMW 86.7m 2017: ZMW 4.5m 53.8%

  5. Slide 5: Divisional Overview (ZMW)

    Divisional Overview (ZMW) Retail & CCFP Stock Feed Turnover 2017: ZMW 1.88bn Volume 2017: 155,572 M.T. 3.1% 23.8% % Turnover 2016: ZMW 1.52bn Turnover 2016: 150,280 M.T. EBITDA 2017: ZMW 130m EBITDA 2017: ZMW 117m 55.7% 20.0% EBITDA 2016: ZMW 85m EBITDA 2016: ZMW 97m Cropping Other (continuing) Gros

  6. Slide 6: Divisional Overview (USD)

    Divisional Overview (USD) Retail & CCFP Stock Feed Turnover 2017: USD 197.8m Turnover 2017: USD 69.5m 40.8% 7.9% Turnover 2016: USD 140.4m Turnover 2016: USD 64.4m EBITDA 2017: USD 13.9m EBITDA 2017: USD 12.2m 77.1% 36.5% EBITDA 2016: USD 7.8m EBITDA 2016: USD 8.9m Cropping Other (continuing) Gross

  7. Slide 7: Administration and Overheads

    Administration and Overheads 3.0% 2017: ZMW 631m (ZMW) 2016: ZMW 611m 17.3% 2017: USD 66.3m (USD) 2016: USD 56.5m As a percentage of turnover:  2017: 25.9%  2016: 25.8% Inflation started the year at 18.9% and by year-end had reduced to 6.6%. 7

  8. Slide 8: Retail Network Footprint

    Retail Network Footprint Actual Actual Actual  Total revenue growth of 27.3% in ZMW (44.9% in 2017 2016 2015 USD): Zambia • Like-for-like revenue growth of 18.2% in Zambeef Outlets 81 87 91 ZMW (34.4% in USD); Zambeef Macros 19 10 6 Novatek 17 10 5 • Revenue growth from new store openings Zamshu Ou

  9. Slide 9: Retailing Revenue Channel Analysis

    Retailing Revenue Channel Analysis (ZMW’000s) 900,000 2017 800,000 700,000 600,000 2017 500,000 2016 400,000 2016 300,000 200,000 100,000 - Outlets Macros Shoprites Novateks 22.8% 56.7% -4.3% 67.3% 9

  10. Slide 10: Retailing Revenue Channel Analysis

    Retailing Revenue Channel Analysis (USD’000s) 100,000 2017 2016 90,000 Outlets 58.4% 58.8% 80,000 Macros 18.4% 14.5% Shoprites 17.3% 22.3% 70,000 Novateks 5.9% 4.3% 60,000 2017 50,000 2016 40,000 30,000 20,000 10,000 - Outlets 1 Macros 2 Shoprites 3 Novateks 4 39.7% 78.3% 8.8% 90.3% 1

  11. Slide 11: Retail & Cold Chain Food Products - P&L

    Retail & Cold Chain Food Products - P&L 2017 2016 2017 2016 % Change % Change ZMW'000 ZMW'000 USD'000 USD'000  Net sales in Retail & Revenue CCFP increased by Retail 1,604,958 1,348,059 168,588 124,475 23.8% in ZMW (40.8% CCFP 1,242,477 1,134,693 130,512 104,773 in USD). Less: Intra/Inter (964,480)

  12. Slide 12: Stock Feed – Record Year

    Stock Feed – Record Year 2017 2016 % 2017 2016 % ZMW'000 ZMW'000 Change USD'000 USD'000 Change Revenue 662,068 697,563 (5.1%) 69,545 64,410 7.9% Gross Profit 166,884 143,916 16.0% 17,530 13,289 31.9% Overheads (50,300) (46,766) (7,6%) (5,284) (4,318) (22.4%) Operating Profit 113,613 94,377 20.4% 11,

  13. Slide 13: Cropping

    Cropping 2017 2016 % 2017 2016 % ZMW'000 ZMW'000 Change USD'000 USD'000 Change Revenue 505,738 413,391 (22.3%) 53,124 38,171 39% Gross Profit 134,556 251,860 (46.6%) 14,134 23,256 (39.5%) Overheads (118,152) (112,244) (5.7%) (12,411) (10,364) (19.7%) Operating Profit (14,303) 106,833 (-113.4%) (1,50

  14. Slide 14: Other Divisions

    Other Divisions 2017 2016 % 2017 2016 % ZMW'000 ZMW'000 Change USD'000 USD'000 Change Revenue 161,387 213,964 (24.6%) 16,952 19,757 (14.2%) Gross Profit 26,774 32,391 (17.3%) 2,812 2,991 (6.0%) Overheads (15,014) (13,168) (14.0%) (1,577) (1,216) (29.7%) Operating Profit 10,958 18,519 (40.8%) 1,151 1

  15. Slide 15: Abridged Balance Sheet

    Abridged Balance Sheet 2017 2016 2017 2016 ZMW'000 ZMW'000 USD'000 USD'000 Non – current assets 3,041,745 2,099,036 314,555 209,694 Current assets 787,956 922,024 81,485 92,110 TOTAL ASSETS 3,829,701 3,021,060 396,039 301,804 Capital and reserves 2,890,196 2,128,323 298,883 212,623 Non – current lia

  16. Slide 16: Abridged Cash Flow Statement

    Abridged Cash Flow Statement 30 Sep 30 Sep 30 Sep 30 Sep 2017 2016 2017 2016 ZMW'000 ZMW'000 USD’000 USD’000 9.52 10.83 EBITDA 173,629 316,555 18,238 29,229 Working Capital Movement 14,399 (185,407) 1,513 -17,120 Net cash inflow from operating activities 188,028 131,148 19,751 12,110 Capex (218,294)

  17. Slide 17: Capex (2017)

    Capex (2017) Total capital expenditure during 2017 of USD 22.9m (ZMW209m), including:  USD4.2m on the rollout of 10 new Zambeef Macro outlets plus the acquisition of seven new sites;  USD2.3m on the new Kalundu Dairy rotary milking parlour and upgrades to milk processing plant;  USD1.0m on the ne

  18. Slide 18: E&S – Progress

    E&S – Progress  Environmental projects completed: • Hazardous materials removed from Masterpork; • EU compliant waste incinerators installed at Masterpork; • New dewatering unit installed at Zamleather.  Food Safety: • GAP analysis of all CCFP plants undertaken by external consultant; • CCFP manag

  19. Slide 19: Summary

    Summary  Strong growth in operating profits from our Retailing, Cold Chain Food Products (CCFP) and Stock Feed divisions.  Offset by a major drop in soft commodity prices and lower than expected wheat yields due to Septoria, which has significantly impacted the Group’s financial performance.  Sig

  20. Slide 20: Outlook for the 2018 Financial Year

    Outlook for the 2018 Financial Year

  21. Slide 21: Leadership Transition

    Leadership Transition  Founder & Joint Chief Executive Officer Carl Irwin is to retire for personal reasons on 31st March 2018 after 23 years with Zambeef.  Leadership succession planning process initiated in March 2017 under a special board committee, including Carl Irwin and joint CEO and co-fou

  22. Slide 22: Operational & Strategic Focus for 2018

    Operational & Strategic Focus for 2018  Improving shareholder returns • Improving return on capital from our existing assets; • Focus capital expenditure on highest return divisions; • Disposal of non-core assets.  Optimisation of operating margins • Focus on volume/price mix and added value categ

  23. Slide 23: Capex (2018)

    Capex (2018) The capex budget for FY2018 is approximately USD14.5m (ZMW143m), with the main focus being on investments which are expected to be cash generative. Key projects for FY2018 include:  USD2.5m on the construction of 10 new Macro stores & investment in refrigerated distribution capacity; 

  24. Slide 24: Thank You

    Thank You

  25. Slide 25: Appendices

    Appendices

  26. Slide 26: Appendix 1: Abridged Income Statement

    Appendix 1: Abridged Income Statement FY2017 2017 2016 FY2017 2017 2016 versus Actual Actual versus ZMW'000 ZMW'000 FY2016 USD'000 USD'000 FY2016 Revenue 2,435,182 2,376,148 2.5% 255,796 219,404 16.6% Gross Profit 798,631 875,946 -8.8% 83,890 80,881 3.7% GP % 32.8% 36.9% 32.8% 36.9% Overheads (628,6

  27. Slide 27: Appendix 2: Segmental Revenue and Gross Profit

    Appendix 2: Segmental Revenue and Gross Profit Revenue Revenue Gross Profit Gross Profit Overheads Overheads Depreciation Depreciation Operating Operating ZMW’000 2017 2016 2017 2016 2017 2016 2017 2016 Profit 2017 Profit 2016 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 ZMW'000 Z

  28. Slide 28: Appendix 3: Share of Operating Profit (%)

    Appendix 3: Share of Operating Profit (%) 2017 2016 Other 5.6% Other 6.9% Combined Retail & CCFP 18.2% Combined Stock Feed Retail & CCFP Cropping 57.6% 44.1% 39.7% Stock Feed 35.1% 28

  29. Slide 29: Appendix 4: CCFP Sales & GP by Category

    Appendix 4: CCFP Sales & GP by Category ZAMBEEF PRODUCTS PLC Actual 2016 Actual 2017 Actual 2016 Actual 2017 ZMW'000 ZMW'000 US#039;000 US#039;000 TURNOVER Change 10.83 9.52 Change Beef 476,102 473,307 -0.6% 43,961 49,717 13.1% Chicken 245,101 255,476 4.2% 22,632 26,836 18.6% Zamhatch 54,464 65,874 20.9%

  30. Slide 30: Appendix 5: CCFP Volumes

    Appendix 5: CCFP Volumes  Strong performance from the CCFP division.  Volumes increased by 15.8%. Volume growth seen across all CCFP categories: • Beef 2.2% • Chicken 9.2% • Pork 8.2% • Dairy 35.5% • Fish 57.5% • Egg 73.4%  CCFP turnover increased by 9.5% in ZMW (24.6% in USD).  However, a slowd

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