The Sunday News
Judith Phiri, Business Reporter
THE Hippo Valley Estates Limited has recorded revenue increase of 76 percent to ZWL$452.2 billion for the six months ended 30 September 2023, against ZWL$256.7 billion recorded for the same period in 2022.
In a statement, accompanying the financial results for the six months ended 30 September 2023, the company said the revenue increase was in line in line with local inflation and higher net realisations from exports.
“Despite a 4 percent decrease in industry sales volumes, the company’s revenue increased in ZWL terms by 76 percent to ZWL$452.2 billion (2022: ZWL$256.7 billion) in line with local inflation and higher net realisations from exports. Operating profit increased by 244 percent to ZWL$170.0 billion (2022: ZWL$49.5 billion) as a result of higher revenue and a favourable movement in the fair value of biological assets,” said Hippo Valley Estates.
It said adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which excludes the distortion from non-cash movements in the fair value of biological assets, increased by 51 percent to ZWL$135.7 billion.
Hippo Valley Estates said overall, profit for the period increased to ZWL$140.0 billion against ZWL$19.9 billion in 2022.
However, during the period under review, operating cash flows after interest, tax and working capital changes decreased by ZWL$83.6 billion to a negative ZWL$67.8 billion.
“The major reason for the operating cash outflow was the high levels of sugar stocks brought about by competition from imported sugar, which was worsened by the early payment for the cane component of the sugar. A total of ZWL$14.2 billion (2022: ZWL$4.9 billion) was spent on capital expenditure of which ZWL$9.2 billion (2022: ZWL$2.8 billion) was spent on replanting cane roots,” added the company.
“At 30 September 2023, the company had net borrowings of ZWL$51.5 billion compared to ZWL$5.7 billion at 30 September 2022. The company has established borrowing facilities in both local and foreign currency to finance its operating and capital expenditure requirements, but with the reintroduction of the cane purchase agreements, these facilities have been stretched over the current season’s peak working capital requirements.”
Hippo Valley Estates said consequently, in addition to utilising the available borrowing facilities, the company has had to defer payments to suppliers in order to manage liquidity.
Meanwhile, in terms of the dividend, the company said the competition from imported sugar persisted after 30 September 2023 and it continued to lose domestic market sales, which has resulted in a higher sugar stockholding despite promotional activity to incentivise sales.
“This, together with the working capital requirements of the cane purchase arrangements and the inability to recover cost pressures through higher selling prices, has placed a strain on the Company’s liquidity and resulted in increased borrowing levels and the delayed settlement of amounts owed to suppliers,” it said.
“For these reasons and the uplift of Statutory Instrument 80 of 2023 only taking effect on the 31st of January 2024, the Directors have resolved not to declare an interim dividend for the six month period ended 30 September 2023.”
