Zambeef

ZAMBEEF

ZAMBEEF

Retail Roll Out

Boosts Award Winning Zambeef PRODUCTION: Manelesi Dumasi

Zambeef is a forever-changing business that now sees itself moving from being just a farming operation to becoming a fully vertically integrated agri food retail organisation. With activity in Nigeria and Ghana, this listed Zambian powerhouse is showing how important and exciting African businesses can become. www.enterprise-africa.net / 3

INDUSTRY FOCUS: AGRICULTURE

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Landlocked between the DRC, Tanzania, Malawi, Mozambique, Zimbabwe, Namibia, Botswana and Angola, Zambia is an exporter but battles with transportation to get its products to market. The economy is centred around copper mining and agriculture and trades products by road with neighbouring African countries, sending some mineral assets to ports of Beira, Maputo, Durban, Dar es Salam and Luanda for global export.

Across almost all of Zambia, land is prime for agriculture. The humid subtropical climate is perfect for maize, and the crop counts as one of the country’s most important exports.

Agriculture is the dominant industry for employment and, with a population of around 17 million spanning some 750,000 km2, it makes a lot of sense.

One of the leading agricultural firms in the country is Zambeef.

Founded in 1994 by Carl Irwin, Zambeef has grown to become an integral vertically integrated supplier in Zambia’s food market. Zambeef is involved in the production, processing, distribution

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and retailing of beef, chicken, pork, milk, eggs, dairy products, fish, flour and stock feed. The Group also has large cereal row cropping operations (principally maize, soya beans and wheat), with almost 8000 hectares of row crops under irrigation, which are planted twice a year and a further 8500 hectares of rain-fed/dry-land crops available for planting each year. The company is now home to more than 7500 employees and has exposure in Ghana and Nigeria.

Today, the company is listed on stock exchanges in Lusaka and London and receives global attention for its work. An active corporate community citizen, Zambeef contributes to the regional economies in which it operates.

After listing on the stock exchange in 2003, Zambeef has been firmly fixed on the path of growth. The National Pension Scheme Authority (NAPSA) is one of the largest shareholders meaning every working Zambian indirectly holds a stake in the company’s success. In 2016, the CDC Group invested US$65 million into Zambeef, resulting in a 17.5% ownership stake. This saw the

company’s listing on the AIM in London improve dramatically, helping the company to expand its operations and roll out increased levels of service across the country.

Overall, the company’s activity on the stock exchange has been positive and senior management remain committed to growth through this medium.

“Listing on the stock exchange was one of the best business decisions we ever made at Zambeef,” said outgoingChief Executive Officer Francis Grogan.

“It enabled us to raise the capital we needed to expand, broadened our shareholder base, and ensures that we maintain the discipline of good corporate governance.”

Grogan will end his tenure as CEO at the end of this year and will be succeeded by Walter Roodt, who has served as Deputy Managing Director among other positions and has been present within the company since 2008.

He was promoted to joint-CEO, working alongside Grogan for the remainder of his time with Zambeef.

“Walter’s appointment as an

ZAMBEEF

Executive Director is in line with the Group’s well-considered succession plan and is validation of his hard work and commitment to the Group over the past 11 years. The Board looks forward to working closely with Walter in his new role,” said Group Chairman Dr Jacob Mwanza.

CORPORATE GOVERNANCE In February, the company was awarded for its excellence in corporate governance. The Lusaka Stock Exchange hosts the annual awards ceremony to highlight listed companies that demonstrate strong adherence to its code regarding corporate governance which measures transparency, accountability, responsibility and fairness. Zambeef has claimed the Corporate Governance Award in 2007, 2008 and 2019.

“Zambeef believes in positive corporate governance,” commented Mwanza. “We want our employees happy, and to operate within the law.

As a public company we are regulated by the stock exchange both in London and Lusaka. Our focus is to ensure we are compliant with all the rules and regulations. We want to make sure we don’t just make a profit but also contribute to development, food security and to Zambia’s economic growth.”

Mwanza was present to collect the award alongside outgoing CEO Francis Grogan, Head of Corporate Affairs and General Manager Retailing Felix Lupindula and other members of the senior management team.

This success was followed up in April when Zambeef announced that its new Kitwe Processing Plant had been brought online. Designed to improve efficiencies

and economies of scale in serving the Northern parts of the country, the Kitwe Processing Plant will ease pressure on the existing distribution centre at Huntley Farm in Chisamba.

“The market for Zambeef products is growing and so is the company.

We aim to give added value to our customers with the one-stop shop concept in the form of our macro outlets – which have been well received. But beyond the shopfront we are investing heavily in the processes, the machinery and the facilities that will ultimately enhance the customer experience and value offered by Zambeef,” said Felix Lupindula.

“Our goal is to continue providing our customers with affordable, accessible, available and quality products that can rival any other product on the market locally or

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INDUSTRY FOCUS: AGRICULTURE

// OUR GOAL IS TO CONTINUE PROVIDING OUR CUSTOMERS WITH AFFORDABLE, ACCESSIBLE, AVAILABLE AND QUALITY PRODUCTS THAT CAN RIVAL ANY OTHER PRODUCT ON THE MARKET LOCALLY OR OTHERWISE // otherwise. The plant employs a first in, first out (FIFO) method together with other quality management practices to ensure consistent and efficient product and service delivery,” added Lupindula.

The plant is an exciting development for the company and is home to a number of new facilities including a weighbridge, high-capacity cold-rooms, increased storage and a

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new employee canteen.

Following the expansion of the company’s retail activity in the region, the new centre became clearly necessary as Zambeef looks to further cement its foothold in the country’s food retail market. New outlets in Kasumbalesa, Solwezi, Kasama, Wusakile, Ndola City Centre (NCC), Nkana East and Mansa have all opened recently and are designed around Zambeef’s macro store blueprint, consisting of butchery, Novatek Animal Feed and Zamhatch sales outlets as well as outlets for industrial footwear and protective clothing.

Huntley Farm will remain the company’s core distribution centre but the Kitwe Processing Plant – the first on the Copperbelt – will act as a decentralised hub for the towns in the northern regions.

TASTY RESULTS In 2016, Zambeef continued to act as one of the country’s largest employers, largest contributors of tax, and fuelled as much as 1% of the country’s GDP.

With the ongoing growth of the business, and a continued roll out of the company’s network, 2018’s financial results were welcomed as robust.

For the year ending September 2018 (in US$), revenue improved by 9.6% and gross profit was up 15.3%.

Operating profit jumped by 31%.

“Zambia’s economy remained relatively stable for the majority of the financial year to September 30, 2018.

However, September saw the Kwacha suffer significant depreciation as economic conditions weakened amid wide concerns for emerging markets.

Notwithstanding this downturn the Group’s results were encouraging, with revenue in Zambian Kwacha increasing by 14.2% year-on-year. The Group experienced robust volume and margin growth in the Retail and Cold Chain Food Products division and Stockfeed division, which together underpinned revenue growth,” detailed Dr Mwanza.

“Despite these temporary macro concerns, which are now abating, the new financial year has started well for Zambeef with continued revenue,

ZAMBEEF

margin and volume growth. The Group expects to continue to grow US$ earnings in 2019, and generate positive free cash in the financial year.

It remains committed to employing EBITDA to fund working capital, capital expenditure for financially viable projects, and to service debt and, as a result, the Group does not intend to raise further debt in the near future. In line with its stated strategic objectives, it plans to continue to reduce its debt levels in the medium term, which will help to mitigate foreign exchange and interest rate risk exposures.”

// WE WANT TO MAKE SURE WE DON’T JUST MAKE A PROFIT BUT ALSO CONTRIBUTE TO DEVELOPMENT, FOOD SECURITY AND TO ZAMBIA’S ECONOMIC GROWTH //

Grogan agreed, saying: “The Group has ended the financial year with a renewed sense of optimism.

The continued dedication of our management and staff, supported by a strong Board, remain key to this as we progress into an exciting new phase of growth.”

At the end of March, Zambeef’s Half Year Trading Update highlighted that macro-economic concerns remained prominent for the company. The Retailing and Cold Chain Food Products Division saw revenue grow but margins come under pressure.

“Whilst it is pleasing to report that the Group continues to grow revenue in the Retailing and Cold Chain Food Products, it is disappointing to report that volumes are expected to be similar to the prior period, and margins have come under pressure in difficult market conditions as mentioned above. The depreciation of the Kwacha has driven up input costs which we were unable to fully pass on to the consumer in the first six months. Management have noted that Zambeef has started to see

margin improvements towards the end of Q2, and expects margins to gradually improve in the second half of the year,” the company stated.

But, with more capital expenditure and investment planned for 2019, now is the time for all at Zambeef to be excited. The company is further engraining itself into Zambian society with the roll out of its retail network and, as its non-core business assets are divested, the company will remain a preeminent vertical food and agri business.

“Proudly Zambian coupled with Feeding the Nation are two very important mottos for us,” says Lupindula, as Zambeef makes the most of a growing local market and unrivalled local agricultural knowledge.

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