The Zambia Forestry and Forest Industries Corporation (ZAFFICO) plc has made a profit after tax of K229 million in the financial year ended December 31, 2020, up 67% when compared to K137 million recorded in 2019.
The recognition of compensation of K134.35 million payable by the Government included in other income significantly contributed to the recorded profit uptick of 67%.
ZAFFICO Company secretary Chanza Sikazwe in a statement made available to the Zambian Business Times – ZBT said the compensation is due from the Government and represents the value of the felled trees from a section of the plantation on which the new international airport in Ndola has been constructed.
According to information made available to ZBT, Sikazwe said the Corporation reduced the annual harvest of Pine roundwood from 448,621m3 in 2019 to 299,219 m3 in 2020, representing a reduction of 33% as part of the it’s efforts towards the attainment of sustainable forestry management.
However, the forestry company has indicated that it intends to expand its plantations in Luapula, Northern, Muchinga and North-Western provinces to support its sustainable forestry products agenda. Historically, its main plantations have been on the copperbelt but a strategic decision was made to expand to all the provinces with suitable climatic and weather conditions.
Additionally, “despite the Company having issued additional shares via a combined initial public offering (IPO) and third-party sales of shares during the reporting period under review, the EPS is still expected to increase primarily due to the recognition of K134 million compensation payable by the Government,” he said.
Sikazwe said during the year, the Corporation continued executing its revenue diversification strategy which included the promotion of the use of Eucalyptus as an alternative to Pine and optimizing the operations of the Pole Treatment Plant.
He said total operating expenses, after the capitalization of qualifying expenditure to the Plantations in Formation (PIF), amounted to K92.73 million during the year under review compared to K 73.45 million in the prior year.
Sikazwe said the increase is largely driven by the general inflationary pressures as well as additional costs inspired by the Covid-19 pandemic.
“Total assets increased to K1, 228 million as at 31 December 2020 compared to K 880 million as at the close of 2019. The increase in assets is mainly attributed to the investment in the Plantations in Formation.
“The increase in shareholders’ funds to K1, 024 million as at 31 December 2020 from K 690 million in 2019, is attributed to the issuance of new shares at a premium and higher retained earnings,” he said.
Sikazwe said the generation of cash from operating activities remains very strong, having generated K162 million during the year under review.
