The Group’s external auditors, Ernst & Young, have issued an unmodified review conclusion on the financial statements of the Group for the year ended 30 June 2013. The audit of the Group financial statements is complete pending the finalisation of the annual report; no changes are expected on the reviewed numbers. The unmodified review report is available for inspection at the Company’s registered office.


During the year under review, the Group recorded revenue of USD 656.33 million, an operating profit of USD 67.40 million and a profit before tax of USD 59.40 million.

Consolidated operating profit was marginally lower than that recorded in the prior year and was affected by a combination of lower gross margins in certain businesses, as well as a number of cost provisions and re-structure charges emanating mainly from Colcom as advised in the interim report. These charges were somewhat negated by a profit on disposal of USD 5.25 million which resulted from the disposal of unquoted investments. A fixed asset impairment and de-recognition charge of USD 2.23 million was also processed within the Group’s Statement of Comprehensive Income, again the main portion arising from the business re-engineering processes being undertaken at Colcom. Both the profit on disposal of investment and the impairment charges have been excluded from Headline earnings. Basic earnings per share totalled 7.19 US cents, whilst Headline earnings per share amounted to 6.36 US cents.

The Group continued to show strong cash generating ability, with cash generated from operating activities amounting to USD 54.16 million for the year under review, and this was after accounting for an increase of USD 3.924 million in the instalment debtors’ book at TV Sales & Home. This cash profit, together with the increased borrowing position, was utilised to fund the numerous capital expansion and maintenance projects undertaken across the Group during the course of the year, which totalled more than USD 50 million.


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Bakeries & Fast Foods

This reporting division comprises the Group’s Bakery operations which are based in Zimbabwe as well as all the Fast Food operations across the African continent.

Bread volumes recorded in the Bakery operations increased by 12% as compared to the prior year. During February 2013, two additional bread lines, each with a capacity of 80,000 loaves per day were commissioned at the new, state of the art facility in Graniteside, and installed national capacity amounted to 450,000 loaves per day by June 2013. A new bread roll line and small confectionery line were also commissioned at Graniteside towards the latter part of the current financial year. A further two new bread lines, again each with a capacity of 80,000 loaves per day, are due to be installed towards the end of the first half of the 2014 financial year at the Graniteside site, whilst the Simon Mazorodze Road site will shortly see the commissioning of a new pie plant.

In the Zimbabwe Fast Foods operations, revised product and pricing strategies implemented within the Chicken Inn and Pizza Inn brands yielded improved customer counts of 31% and 13% respectively over the prior year. These strategies are being cascaded to the other brands within the business and management is confident that the overall operations will achieve an improved trading performance in the new financial year. A total of 21 counters were added to the Zimbabwe network during the financial year under review, with 10 in Harare, 4 in Zvishavane, 3 in each of Mutare and Chivhu, and 1 in Kwekwe; whilst a further 6 counters were closed. The new Fish Inn brand was launched in Harare during the fourth quarter, and results to date have been well above target. The refurbishment program also continued during the year and this saw a total of 10 counters being upgraded to the latest brand specifications. Both the expansion and refurbishment programs will continue into the new financial year, with a number of sites in Harare, Chegutu and Mutare already at varying stages of completion. With effect from 1 April 2013, the Group acquired the minority shareholding in the Fast Foods Northern Region operations.

Regionally, the Fast Foods operations recorded pleasing revenue growth of 10% over the prior year. The expansion programme saw 16 additional counters being opened during the year under review; with 14 counters in Kenya and 2 in Zambia. Inclusive of the franchised territories, a total of 210 regional counters were in operation at year-end. An additional 31 counters are planned for the store network in the 2014 financial year, including 7 counters in the Democratic Republic of Congo. The franchise arrangement in Nigeria is currently under review and management is considering various options for improving the performance in this market.

Distribution Group Africa

This reporting division consists of the Distribution Group Africa operations which operate in Zimbabwe, Zambia and Malawi.

The Distribution Group Africa Zimbabwe operations house a number of leading brands such as Colgate, Kellogg’s, Johnson & Johnson, Tiger Brands and Pepsi. The business reported a 17% growth in volumes over prior year, although a changing product mix, with a lower average selling price per unit, resulted in lower revenue growth. Improved gross margins continued to be achieved and this together with good cost control enhanced profitability levels.

Volumes in the Distribution business operating in Zambia grew by 10% over the prior year, as formal retail and wholesale trade continued to grow. In Malawi, volumes showed a decline of 7% over the prior year, although trading was much improved in the second half of the financial year, and accessibility to foreign currency eased slightly.


This reporting division consists of the SPAR Corporate Store retail operations in Zimbabwe, the SPAR Distribution Centre in Harare and the SPAR Corporate Store retail operations in Zambia.

Whilst the SPAR Corporate Store retail operations were still in a loss position, significant improvements were made at store-level during the year under review in order to return the business to profitability. A programme is now also underway to amalgamate the head office function of the retail operations with that of the SPAR Distribution Centre, and this will further enhance the overall operations’ profit-generating ability. Towards the end of March 2013, the SPAR Letombo outlet was successfully re-launched under the Megasave SPAR brand and initial results for this new low-cost offering have been very encouraging. The Group continues to see growth potential in this sector of the market and is currently investigating the addition of a number of Corporate Stores in this regard.

The SPAR Distribution Centre recorded marginal volume growth over the prior year. This, together with a number of restructuring cost provisions which were required to allow for the amalgamation of the head office function with that of the Corporate Store retail operations, resulted in reduced profitability over the prior year. Towards the end of the financial year, the operation was able to consolidate the SPAR franchise rights for the entire country by acquiring the rights for the Western region which currently consists of 23 franchised stores. The ability to service these additional stores from the existing infrastructure should allow for improved efficiency levels to be extracted from the business. Including the Western region stores, the SPAR Distribution Centre was servicing a total of 72 SPAR Stores, KwikSPAR Stores, SPAR Express Stores, Savemor Stores and TOPS Bottle Stores as at June 2013.

The SPAR Corporate Store retail operations in Zambia produced revenue growth of 6% over the prior year, and this together with an improved control environment resulted in a pleasing profit being posted for the year. In addition to the 6 Corporate stores, the network also included 7 franchised stores at 30 June 2013.


Colcom recorded a disappointing result for the year. As advised in the interim report, a number of processes were embarked upon during the year in response to both a compromised control and governance environment as well as a number of equipment failures that occurred within the core pork operation. In addition to the provisions of USD 1.3 million reported at the half-year, the Company processed further cost provisions of USD 1.1 million in the second half of the year, emanating mainly from stock and retrenchment charges; whilst a critical review of the Company’s fixed assets resulted in an impairment and de-recognition charge of USD 1.6 million.

The Company’s down-packing unit, Associated Meat Packers, continued to perform exceptionally well with strong volume and profit growth being recorded. The development and expansion of the Texas low-cost protein retail outlets under this unit continued, and 8 of these outlets were operational by year-end, with a further 4 units currently being developed.

Management is confident that having now completed a critical business analysis, as well as a number of restructuring and product re-engineering processes, that a considerable improvement in overall performance will be achieved in the 2014 financial year. Investment in the coming year will be focused on providing adequate capacity and improved quality in emulsification, cooking, cooling and packaging.

Household Goods

This reporting division consists of TV Sales & Home and Capri.
After a slow start to the current year, TV Sales & Home recorded an overall volume growth of 11% against the prior year translating to improved profitability. The store network continued to be expanded with an additional 9 outlets opening across Harare, Karoi, Kadoma, Marondera, Chinhoyi and Hwange. During the second half of the financial year a new revolving-credit scheme was introduced to augment the existing core credit scheme and was well received by the market. The quality of the instalment debtors’ book remained good throughout the year.

Capri produced another positive set of results recording a 19% volume growth for the financial year under review and work continued on improving product aesthetics as well as achieving cost and production efficiencies. The new refrigeration plant is scheduled for commissioning towards the end of the first half of the new financial year and will provide further ability to lower product cost, resulting in the ability to provide extremely competitive pricing for consumers in both the local and regional markets.

Associate and Other Businesses

National Foods produced a strong set of results, recording volume growth of 21% over the prior year to 489,000 metric tonnes. The increase in profitability of this business was largely achieved through volume-related efficiencies, throughput and the effective strategic sourcing of raw materials in a rising world market environment. Profits were also enhanced through the disposal of non-core property and plant. Throughout the year, the business was well positioned in its strategic raw material procurement that led to the offering of well-established branded products at competitive prices in the market. Operating cash profit and increased borrowings were utilised in funding increased stock positions of key raw materials at year-end.

Irvine’s continued to contribute strongly to the Group’s results with good growth being recorded in both revenue and profitability. The results were driven largely by an 11% volume growth in processed chicken sales whilst day-old chick sales grew 16% over the prior year. Production efficiencies at both farm and factory levels continued to improve, resulting from further investment in new technology.

As advised in the interim report, the Group consolidated NatPak into its results with effect from 1 July 2012. The business recorded a significant improvement in its overall performance as compared to the prior year, with strong demand for its core polypropylene woven packaging products. Investment into new plant that will allow for the production of bread bags for the baking industry has recently been made, with commissioning and production set to commence in the second quarter of the new financial year; this will provide further growth potential to the business.


Management will continue to analyse critically its various business models and processes in order to improve business performance. Where necessary, organisational restructures which allow for improved cost efficiency and the eradication of duplication of function will be implemented. Other ongoing focus areas include utilising the numerous synergies in the Group, both from a trade and cost perspective.

With the Group’s exposure to strong sectors of the economy, it has continued to be a powerful generator of free cash, and this has allowed for extensive capital investment into new and more efficient technology to be made over the past year across many of the businesses. Management will continue to ensure that the appropriate returns are extracted from these investments in the coming year, as well as examine investment into additional synergistic or complimentary businesses which can create further value addition for the Group.

The Board has declared a final dividend of 1.00 US cent per share (bringing the total dividend for the year to 1.80 US cents per share) payable on or about 4th October 2013 to shareholders registered in the books of the Company by noon on 20th September 2013. The transfer books and register of members will be closed on 21st and 22nd September 2013.

I record my appreciation to the executive directors, management and staff for their considerable endeavours on behalf of the Group, to which I add also my appreciation for the contribution of the Group’s non-executive directors and for the loyalty and support of the Group’s customers, suppliers and other stakeholders.