Chairperson’s Statement

It is with great pleasure that I present to you outstanding results in a year that marks both the 60th anniversary of Zambia’s political independence and the 60th anniversary of Zambia Sugar PLC.

We were privileged to celebrate Zambia Sugar’s 60th anniversary at Nakambala Estate, graced by the President of the Republic of Zambia, Mr Hakainde Hichilema. The President took time to engage with various stakeholders including traditional leaders and the community before touring the operations where he commissioned the agricultural expansion programme designed to add another 3 500 hectares using the outgrower model. The President committed his support to the outgrower programme and implored the Company to share its successes with other economic sectors.

The Managing Director’s Statement provides a detailed overview of the Company’s operational, commercial, and financial performance during the period
under review. I invite you to join me in commending the Management team, employees, and staff for the exceptional performance, achieved despite the challenging economic environment and the devastating weather conditions that have affected the region.

Let me from the onset address the resignation of Mr. Norman Mbazima as Chairman of the Board effective 28 February 2024. Mr. Mbazima shared that he was scaling down his post- retirement activities to focus on a limited number of challenging assignments and spend more time with his family. We thank him for his immense contribution during the time he was Chairman of the Board. I am honoured to have been given the opportunity to replace him as Chairperson and I look forward to your continued support as we build upon the solid foundation Mr. Mbazima helped to build over the years.

Safety remains a top priority and a core value, encompassing the well being of all employees, contractors, visitors, and local communities. Whilst the business is encouraged by the significant strides made in embedding a safety culture, I am saddened to report that on 4 June 2024, Mr Morris Muchimba, an electrical contractor, suffered a fatal electrocution while working on a 33 kV high voltage line at Nakambala estate. Mr Muchimba was married with two children and had previously been an employee of Zambia Sugar. We sent our deepest condolences to his family.

While this devastating event adversely impacted our improving safety record, we remain committed to the goal of zero harm to employees and contractors. Following this tragic incident, the business has subsequently strengthened its safety protocols and processes through enhanced leadership visibility, increased supervisory oversight, comprehensive near-miss reporting, and implementation of expanded behavioural safety training.

The Board is satisfied that these measures, combined with individual safety accountability, will help to prevent similar incidents happening in the future. Sustainability remains a key area of focus, exemplified through various activities that align with Environmental, Social and Governance (ESG) principles. The business has maintained its unwavering commitment to sustainable practices across both agricultural and manufacturing operations.

ECONOMIC REVIEW

The devastating effects of the drought have significantly impacted the social and economic performance of the country. This has prompted the downward revision of Zambia’s Gross Domestic Product (GDP) growth rate for 2024 from 4.8% to 2.3%, with current estimates indicating that it will be lower. The drought has adversely impacted agricultural production as well as power generation leading to cost pressures that have driven inflation up from 12% in September 2023 to 15.5% in August 2024.
The continued depreciation of the Kwacha exerted pressure on the agriculture and manufacturing sectors, among others, due to the reliance on imported raw materials and inputs, including, power, diesel, fertilisers, and various chemicals used in the production process. This resulted in significant increases in cost of electricity, fuel, fertiliser, and maintenance.

SHARE PRICE

In 2023, the Company’s share price was K20 per share, reflecting a market capitalisation of K6.3 billion. I am pleased to report that the share price has since risen to K35, increasing the market capitalisation to over K11 billion. This rise in the Company’s share price continues to generate confidence in the market, with many shareholders choosing to hold their positions rather than cashing out for short-term profits. The Board appreciates the market’s confidence in the value of the Company’s stock and remains committed to pursue opportunities for growth and further value creation.

DIVIDEND

The dividend policy is based on paying up to 50% of free cash flow generated by the Company after meeting all obligations and capital requirements. Last year, the Company paid a record dividend in the history of the Lusaka Stock Exchange, totalling K1.1 billion. This included a special dividend of 158 ngwee per share, in addition to the base dividend of 191 ngwee per share. I am pleased to report that during a meeting held on 31 October 2024, the Board recommended a final
dividend for the year of 161 ngwee per share for FY24. This decision to pay a dividend reflects the Board’s confidence in the ability of the Company to continue creating value for shareholders.

DIRECTORATE

Mr. Norman Mbazima resigned from the Board effective 28 February 2024. Mr. Gavin Dalgleish resigned from the Board following his departure as Chief Executive Officer of Illovo Sugar Africa in August 2024. We thank him for his immense contribution to Zambia Sugar’s success and, in particular, for overseeing the factory expansions in 2009 and 2016 which made the Nakambala factory the biggest single site cane sugar factory on the African continent.

Ms. Amanda Venters was appointed to the Board as a Non-Executive Director on 28 February 2024. She is currently ABF Sugar Group Interim Chief Financial Officer, a role she has held since 20 September 2023. Mr. Hezron Musonda joined the Nakambala Leadership Team on 25 January 2024 following his appointment as Finance Director and was appointed to the Board as an Executive Director on 28 February 2024. Please join me in welcoming Ms. Venters and Mr. Musonda to the Board and wish them every success in their roles. Similarly, we wish Mr. Mbazima and Mr. Dalgleish success in their future endeavours.

OUTLOOK

The weather forecast continues to provide renewed hope, with indications that the country will experience a normal rainy season. Water security and power reliability have become major areas of focus for the Company, and initiatives are in place to address the risks associated with these critical resources.

I am particularly pleased with the innovations implemented in Agriculture, including efficient irrigation systems, new farming methods, and greater collaboration between water users and regulators. These initiatives are aimed at providing practical solutions that benefit the Company now and in the future. In the factory the focus on improving plant reliability, throughput, sugar quality and recoveries has continued with the outstanding results achieved during the period under review expected to continue in FY25. Consistent factory performance is critical to meeting customer demand in both the domestic and regional markets.

As a customer led business, I am pleased with the progress we have made in our Route to Consumer with the launch of the Last Mile Reseller initiative and the continued expansion of our product portfolio to meet the needs of all categories of customers. Consequently, the Company is well positioned to continue being the supplier of choice for our customers and consumers.

CONCLUSION

In closing, I would like to extend my sincere gratitude to my fellow Directors for their diligence and unwavering support throughout the year. I offer my heartfelt congratulations to the Managing Director, Mr Oswald Magwenzi, the Leadership Team and our dedicated employees. Their resilience and commitment have been instrumental in enabling the Company to deliver yet another stellar performance, despite the challenging economic environment and adverse weather conditions.

I would also like to express the Company’s deep appreciation to our valued customers and consumers for their continued loyalty and support. This is what drives
the Company’s success. On behalf of the Board, I want to thank you all for the confidence you have placed in our stewardship. We pledge our steadfast support and guidance to the Management team, to ensure we fulfil the Company’s mission of feeding the nation and the region.

Roseta Chabala
Chairperson