Innscor, CTC shares dispute rages on
Innscor Africa’s acquisition of a significant stake in Profeeds remains disputed after the Competition and Tariff Commission (CTC) took the matter to the Supreme Court.
In May 2020, CTC reversed the acquisition of Profeeds’ 49 percent shareholding by Innscor and fined the conglomerate an amount equating to US$1,6 million for failing to notify the commission of the transaction in terms of the Competition Act.
The matter has previously been heard at various levels of the lower judicial system as each part sought to prove it was correct.
Addington Chinake, Innscor’s chairman said in January 2022, the Administrative Court had overturned the CTC’s directive for the Innscor to disinvest from Profeeds and further directed that the fine be withdrawn and replaced with a caution.
“The CTC has since appealed the judgement to the Supreme Court,” he said in a statement of the group’s financials for the interim period to 31 December 2021.
As previously reported, in May 2020, the Competitions and Tariff Commission (“CTC”) directed that the group’s non-controlling investment in Profeeds be disallowed.
It also directed the group to disinvest from the business while it also slapped a fine against the group in the amount of $40,59 million for late notification of the investment.
Innscor then appealed to the Administrative Court against the CTC’s directives.
During the half year to December 2021 Profeeds recorded volume growth of 15 percent ahead of the comparative period, including an encouraging increase of 62 percent in the relatively new “aquafeeds” fish feed category.
Mr Chinake said recovery of the small scale poultry market continued to positively impact both poultry stockfeed and day-old chick demand.
“The “Nutrimaster” fertiliser category experienced its first summer cropping trading cycle during the latter part of the period under review, operating at full capacity.
“The “Profarmer” retail operation continues to expand its offering countrywide, with a total of 47 stores offering an all-encompassing retail experience, combined with agricultural support services and workshops, for the farming sector,” he said.
During the period under review, group revenue increased by 112 percent to $53,7 billion against the comparative period on the back of strong volume performance, enabled by competitive pricing and supported by ongoing investments into increased capacity and improved production efficiency.
“As anticipated, gross margin growth converged with revenue growth, a consequence of the lower inflation levels experienced during the period under review,” Mr Chinake said.
He added that operating expenditure as a percentage of revenue remained reasonably consistent with the comparative period, notwithstanding the cost corrections experienced across much of the overhead profile of the business.
Mr Chinake noted that the group’s associate companies continued to contribute positively to the overall group result, with equity accounted earnings 46 percent up on the comparative period.
Net interest for the period under review came in at $1,3 billion on account of higher Zimbabwe dollar denominated loan levels supporting expansion capital expenditure, combined with higher interest rates.
In terms of other segmental performance, the bakery division, loaf volumes closed 23 percent ahead of the comparative period, underpinned by firm demand.
Mr Chinake said bread pricing remained a critical aspect of the business to manage, and the company continues to work with the authorities to ensure a balance is maintained between manufacturing viability and relevant pricing for the consumer.
“As previously reported, the group has undertaken to develop a new state of the art bakery in Bulawayo with a build-out over the next twelve months, coupled with further plant automation initiatives within the Harare operations.
“In addition, the operation’s logistics arm has commenced with a re-fleeting programme which will result in improved distribution efficiencies and effectiveness,” he said.
At National Foods, volume performance improved as new categories were introduced into he portfolio, coupled with more efficient operating structures and increased capacity utilisation.
Mr Chinake said despite inflationary pressures contributing to slower consumer demand in the latter part of the period, overall volumes closed 15 percent ahead of the comparative period.
“The flour milling division recorded a three percent volume improvement over the comparative period. The new mill installation in Bulawayo will commence in April, and remains on track for commissioning towards the end of 2022,” he said.
The maize milling division’s volumes were seven percent behind the comparative period as maize meal demand remained subdued.
Mr Chinake said the group will continue to execute on its US$70 million expansion programme with new investments spanning the beverage, milling, baking, protein, and packaging segments, all scheduled for completion within the next financial year.
Last year, the group said it had approved the US$70 million investment aimed at expanding operations and building a new flour milling plant in Bulawayo that it expects to commission in 2022.-The Herald
