(Incorporated in Malawi on 31 May 1965 under registration number 839)

EXTRACTS FROM THE UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2023

(COMPARATIVES ARE FOR THE SIX MONTHS ENDED 28 FEBRUARY 2022)

GROUP

Unaudited

Unaudited

Audited

6 month period

6 month period

Year ended

ended

ended

FINANCIAL PERFORMANCE

28-Feb-2023

28-Feb-2022

31-Aug-2022

COMPANY

Unaudited

Unaudited

Audited

6 month period

6 month period

Year ended

ended

ended

28-Feb-2023

28-Feb-2022

31-Aug-2022

GROUP

Unaudited

Unaudited

Audited

6 month period

6 month period

Year ended

ended

ended

28-Feb-2023

28-Feb-2022

31-Aug-2022

COMPANY

Unaudited

Unaudited

Audited

6 month period

6 month period

Year ended

ended

ended

28-Feb-2023

28-Feb-2022

31-Aug-2022

initiatives aimed at curbing the spread of cholera through impactful donations. All staff were also provided with appropriate health and preventative training and were encouraged to take cholera vaccines to ensure that they and their families and surrounding communities remained safe.

Condensed consolidated and separate statements of comprehensive income

Revenue

Gross Profit

Fair value change (growing cane)

Other Administrative Expenses

Operating profit

Dividend income

Net finance cost

Profit before taxation

Taxation

Net profit for the period

Other comprehensive income

Total comprehensive income

Adjusted for:

Other comprehensive (income)

Headline earnings

Number of shares in issue ('000) Weighted average number of shares on which net profit per share is based ('000)

Net profit per share (tambala)

Headline earnings per share (tambala)

Dividend per share (tambala)

Quality of earnings statement

Operating profit Adjust for:

Change in fair value of growing cane Operating profit excluding fair value changes

Business segmental analysis

Revenue

Sugar production

Cane growing

Operating profit

Sugar production

Cane growing

K'm

K'm

K'm

116,734

92,031

186,642

39,433

17,210

57,018

30,186

9,923

8,298

(20,519)

(12,956)

(25,811)

49,100

14,177

39,505

-

-

60

(463)

(816)

(1,087)

48,637

13,361

38,478

(14,909)

(4,143)

(11,848)

33,728

9,218

26,630

18

9

89

33,746

9,227

26,719

(18)

(9)

(89)

33,728

9,218

26,630

713,444

713,444

713,444

713,444

713,444

713,444

4,727

1,292

3,733

4,727

1,292

3,733

1,000

1,000

1,956

49,100

14,177

39,505

(30,186)

(9,923)

(8,298)

18,914

4,254

31,207

34,815

56,184

109,089

81,919

35,847

77,553

116,734

92,031

186,642

16,510

12,361

29,434

32,590

1,816

10,071

K'm

K'm

K'm

64,027

50,366

102,480

12,725

3,911

25,870

16,464

4,098

4,676

(11,490)

(8,102)

(14,050)

17,699

(93)

16,496

30,000

-

-

(32)

(395)

(292)

47,667

(488)

16,204

(5,300)

-

(5,079)

42,367

(488)

11,125

18

9

(23)

42,385

(479)

11,102

(18)

(9)

23

42,367

(488)

11,125

Condensed consolidated and separate statements

K'm

K'm

K'm

of cash flows

Cash generated from operations before working

capital changes

53,955

19,016

40,707

Working capital requirements

(31,414)

4,089

14,006

Finance costs and taxation

(7,893)

(14,347)

(9,261)

Net cash flows from operating activities

14,648

8,758

45,452

Net cash flows used in investing activities

(8,635)

(3,958)

(16,479)

Net cash flows before financing activities

6,013

4,800

28,973

Net cash flows used in financing activities

(2,009)

(1,169)

(14,235)

Increase in cash and cash equivalents

4,004

3,632

14,738

Condensed consolidated and separate statements of

changes in equity

Share capital and premium

Balance at beginning and end of the period

782

782

782

Retained earnings

Balance at beginning of the period

99,710

87,035

87,035

Net profit for the period

33,728

9,218

26,630

Dividends

(11,016)

(9,988)

(13,955)

Balance at end of the period

122,422

86,265

99,710

Non-distributable reserve

Balance at beginning of the period

443

354

354

Cash flow hedges

18

9

(23)

Fair value loss on revaluation of investment

-

112

Balance at end of period

461

363

443

Shareholders' equity

123,665

87,411

100,935

K'm

K'm

K'm

21,083

3,464

18,835

(31,998)

17,086

25,728

22,533

(13,932)

(4,729)

11,618

6,618

39,834

(6,204)

(2,222)

(11,754)

5,414

4,396

28,080

(1,411)

(764)

(13,343)

4,003

3,632

14,737

782

782

782

18,213

21,042

21,043

42,367

(488)

11,125

(11,016)

(9,988)

(13,955)

49,564

10,566

18,213

-

23

23

18

47

(23)

-

-

-

18

70

50,364

11,418

18,995

Tropical Cyclone Freddy impacted the southern region of the country immediately after the half year closure and caused significant loss of lives and property. The damage to the Nchalo Estate was not as severe as it was when Cyclone Ana affected Malawi in January 2022. Repair and maintenance works are underway to ready the estate for the March 2023 crushing season. In keeping with its commitment to contribute to a Thriving Malawian community, Illovo Sugar Malawi donated sugar and various commodities to Cyclone affected communities in Blantyre and Chikwawa to assist them during this recovery time. It is hoped that the recovery efforts currently being pursued will ensure an early return to reasonably normal lives for those affected.

PROSPECTS

It is expected that the repair and rehabilitation efforts that have been undertaken on the EGENCO infrastructure will yield positive results in terms of generation of sufficient power to the entire country. The Group intends to leverage the same to ensure that both agricultural and factory operations achieve excellent output, coupled with preventive plant maintenance programs. It is hoped that agricultural improvement initiatives will continue to further improve agricultural performance for the benefit of the entire business and hopefully, conducive weather patterns will further support the agricultural activities.

The business commits to continue supplying its valued customers with sugar in various affordable pack sizes and formats both on the domestic and export front. Various commercial initiatives and promotions will be undertaken to support the Route to Consumer efforts and ensure revenue and profit growth into the foreseeable future.

Scarcity of foreign currency, rising inflation, high interest rates and volatile exchange rates will continue to have a notable impact on the profitability of the business. The Group intends to continue applying significant efforts to ensure that cost management and efficient

Condensed consolidated and separate statements of financial position

ASSETS

Property, plant and equipment

Investment

Non-current assets

Current assets

Total Assets

SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity

Taxation Non-current liabilities Current liabilities

Total shareholders' Equity and Liabilities

Depreciation

Capital expenditure

49,100

14,177

39,505

82,731

66,837

76,980

740

604

740

83,471

67,441

77,720

161,376

83,977

119,670

244,847

151,418

197,390

123,665

87,411

100,935

41,642

25,748

26,792

9,682

8,933

7,094

69,859

29,326

62,569

244,847

151,418

197,390

4,855

4,839

9,586

8,635

3,958

16,618

56,024

44,362

51,346

324

324

324

56,348

44,686

51,670

115,977

57,635

56,867

172,325

102,321

108,537

50,364

11,418

18,995

41,651

15,009

18,484

5,212

4,975

3,301

75,098

70,919

67,757

172,325

102,321

108,537

OVERVIEW

In the first six months of this financial year ended 28th February 2023, the Group registered turnover of K116.7 billion compared to K92 billion over the same period in prior year and a profit before tax of K48.6 billion compared to K13 billion over the same period in prior year.

Agricultural operations progressed well in the final months of the March 2023 cane crushing season at both estates producing good quality sugarcane, even though frequent power outages affected irrigation especially at Nchalo, prior to the onset of the rainy season. Deliveries of cane from growers also supported the milling operations to be within expectation. Plant mechanical challenges delayed production at certain times during the period. Fuel shortages in the country hampered agricultural, factory and sales logistical operations, resulting in additional costs for doing business. The crushing season was extended to close on 16th December 2022 for Dwangwa and 19th December 2022 for Nchalo against the backdrop of a late start of the rainy season. The country started registering significant rainfall towards the end of December 2022 and this contributed

significantly to cane growth; the Group recognized that the extended crushing season might impact cane age especially at Nchalo in the coming March 24 crushing season.

Off-crop maintenance works were embarked upon immediately after the crushing season closure to prepare the mills for the March 24 crushing season. Capital project works progressed according to plan. Adequate sugar inventory had been accumulated to avoid stock-outs and lost sales during the off-crop maintenance period. Sugar sales therefore continued normally, mostly focused on the domestic market, with additional assurances being made to all customers on sustainable supply. The Route to Consumer initiative for delivery of sugar to the last mile customer continued to deliver increased sales growth and coupled with reduced arbitrage at the borders with Mozambique and Zambia, ensured achievement of volume and revenue targets and successful pursuit of commercial imperatives.

The country experienced the spread of cholera mostly in the urban areas in January and February 2023 and this negatively impacted on livelihoods in the surrounding communities. Illovo Sugar Malawi stepped in to support government

operations remain focus areas for the benefit of the ultimate consumers and shareholders.

DIVIDENDS

Notice is hereby given that an interim dividend of 1,080 tambala (2022: 556 tambala) per share has been declared in respect of the six-month period ended 28th February 2023.

Jimmy Lipunga

Lekani Katandula

Board Chairman

Managing Director

11 May 2023

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Disclaimer

Illovo Sugar Malawi Limited published this content on 17 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 May 2023 10:10:19 UTC.