African Distillers Limited (AFDS.zw) 2022 Abridged Report
Change of financial year
The Company changed its financial year end in 2021 from June 30 to March 31 to align with Delta Group which had acquired additional shareholding, resulting in it being a subsidiary. The current financial statements cover a 12-month period from April to March, whilst the prior year period covers a 9-month period from July to March, therefore care should be exercised when making comparison between the periods.
The operating environment for the reporting period was relatively stable except at the end of the financial year when the economy experienced significant foreign exchange rate volatility. Resultantly, value chain costs increased necessitating frequent price reviews. COVID-19 restrictions impacted negatively on glass supply from South Africa thereby affecting our ability to meet demand on some brands in the final quarter. The ability of the business to continue trading in foreign currency helped in sustaining the Company’s import requirements.
Volume increased by 36% on the comparative twelve-month prior period mainly driven by Wines and Ready to drink (RTDs) segments which grew by 65% and 50% respectively. In the last quarter of the year, growth in the RTD segment was severely curtailed by the regional shortage of glass which led to supply shortages with the Hunters’ brand being the worst affected. Efforts are underway to widen the glass supply base to minimise product shortages in future. The Company continues to face price competition from counterfeit and illicit spirits. The business is investing in new capacity to improve efficiencies and reduce production costs whilst engaging the relevant authorities to address compliance issues.
In inflation adjusted terms, revenue was ZW$8.7 billion whilst operating income was at ZW$2.2 billion. In historical cost terms, revenue was ZW$6.7 billion whilst operating income was ZW$1.8 billion. Revenue growth in both inflation and historical terms was driven by firm demand which resulted in higher volumes. Net cash on hand was ZW$108.2 million.
The operating environment is set to remain challenging and the company has put in place mitigatory plans for business growth.
Management continues to focus on revenue and profitability growth opportunities through product innovation, market share protection, production efficiencies and cost containment. Capital projects to localise some imported products are at advanced stages of implementation.
The health and safety of employees and stakeholders remain of paramount importance. The Company continues to implement COVID-19 control protocols.
The board has recommended a final dividend of US$0.003 per share amounting to US$352.5 thousand. An interim dividend of ZW$0,70 per share for the year was paid in December 2021, amounting to ZW$83,6 million.
M M Valela