With 2020, a year that has been ravaged by the adverse effects of Covid-19 leading to massive downsizing of the workforce by many companies and consequently cutting down on output coming to an end, most companies have also started concluding their financial calendars. The latest being Zambia Sugar Plc, which announced its financial results, in accordance with Securities Act No.41 of 2016, for the year ended 31st August, 2020.
Zambia has posted a 12.5% increase in revenue from K 2.96 Billion in the year ended August, 2019 to K3.33B in the year ended August 2020. Operating profit rose by 27.9% to K775 million from K606 million in the year ended August 2019. Further scrutiny also shows that the finance costs as a percentage of operating profit reduced by 7.02% to 42.06% from 49.48%, indicating that the net finance cost did not increase as much as the operating profit did, in the financial year 2020 as compared to the way it did in the financial year ended August 2019.
With the company paying more tax amount than the prior year, profit after tax reduced from K269M to K235M respectively. Taxes for the year ended August 2020 amounted to K214M which is a 480% increase from the tax amount of K36.9M in the previous period.
With the economy short on liquidity, it is understandable why the company’s balance sheet shows a reduction in cash and bank balances. The company’s cash and bank balance shows a reduction from K329M in the prior year to K77.2M in the year ended August 2020. In part, the reduction in cash can also be attributed to increase in inventories. Inventories increased by a whopping 36.8% to K940M in the year ended August 2020, from K687M in the year ended August 2019. The cash shortages also likely caused the company to defer more taxes in the year that has just ended as compared to the prior year. In the year ended August 2019, tax-deferred amounted to only K138M. However, that has increased to K229M representing a 65.9% increase in the year that has just ended.
Despite the shortage in liquidity and a reduction in the profit attributed to shareholders, the company did manage to pay out dividends amounting to K25 million. “I am pleased to report that a final dividend of K 0.24 per share for the year ended 31 August 2020 has been proposed”, read a statement by the new Board Chairperson, Norman Mbazima in his inaugural letter to shareholders in the 2020 annual report. “This is compared to a final dividend of K 0.08 paid last year, an increase of over 200%”.
Mr. Mbazima believes that they “are making steady progress towards our objective of delivering sustainable value to our shareholders”.