Table of Contents

INTRODUCTION...........................................................................................................................2
COMPARATIVE FINANCIAL ANALYSIS.................................................................................3
Liquidity Ratios............................................................................................................................3
Solvency Ratios............................................................................................................................4
Profitability Ratios.......................................................................................................................5
Efficiency Ratios..........................................................................................................................6
Coverage Ratios...........................................................................................................................6
Market Prospect Ratios................................................................................................................7
CREDIT RISK ANALYSIS............................................................................................................7
RECOMMENDATIONS.................................................................................................................8
CONCLUSION................................................................................................................................9
APPENDIX....................................................................................................................................11
ZAMBEEF PRODUCTS PLC FOR THE YEAR 2022...............................................................11
Statement of profit or loss and other comprehensive income for the period ended 30th Sept
2022........................................................................................................................................11
Zambeef Products Plc's statement of financial position as at 30th September 2022.............13
SHOPRITE HOLDINGS FINANCIALS.....................................................................................14
Shoprite holdings Consolidated statement of comprehensive income for the year ended 3
July 2022................................................................................................................................14
Shoprite holdings Statement of financial position as at 31 December 2022..........................17

1
INTRODUCTION
This financial analysis report delves into a comparative assessment of the financial standing and
performance of Zambeef Products Plc and Shoprite Holdings. The evaluation is centered around
key financial ratios, offering a comprehensive overview of critical aspects such as liquidity,
solvency, profitability, leverage, efficiency, coverage, and market prospects. Through a
meticulous examination of these key metrics, this report aims to assist stakeholders, investors,
and financial analysts in making informed decisions by providing a nuanced understanding of the
financial health and viability of both companies. The selected financial ratios serve as essential
indicators, offering insights into various facets of each company's financial strategy and
operational efficiency. Liquidity ratios will shed light on the companies' abilities to meet short-
term obligations, providing crucial information for those concerned with immediate financial
health. Solvency ratios will uncover the companies' capital structures, showcasing their reliance
on debt and overall financial risk profiles. Profitability ratios will offer insights into how
effectively each company converts revenue into profits, a crucial aspect for investors seeking
returns. Leverage ratios will indicate the extent of financial leverage employed, influencing risk
considerations.

Furthermore, efficiency ratios will unveil the operational effectiveness of each entity, providing a
glimpse into how well resources are managed to generate revenue. Coverage ratios will offer
perspectives on the companies' capacity to meet long-term obligations, providing insights into
their financial sustainability. Lastly, market prospect ratios, such as earnings per share (EPS),
will highlight the companies' potential for growth and returns, offering valuable information for
investors anticipating future market performance. By delving into these key financial ratios, this
report aims to provide a holistic view of Zambeef and Shoprite, facilitating a comparative
analysis that goes beyond raw financial figures and enables stakeholders to make well-informed
decisions in the dynamic landscape of the financial markets.

2
COMPARATIVE FINANCIAL ANALYSIS
Liquidity Ratios
1. Current Ratio:

 Zambeef (2022)

Current Ratio=Current Assets/Current Liabilities

=2,253,485/822,442

≈ 2.74

 Shoprite (2022) Current Ratio=Current Assets/Current Liabilities

=39,673/32,488

 ≈ 1.22

 Analysis: Zambeef exhibits a higher current ratio, indicating superior short-term

liquidity and a greater capacity to cover immediate obligations.

2. Quick Ratio:

 Zambeef (2022)

Quick Ratio=(Current Assets- Inventory)/Current Liabilities

=(2,253,485−977,667)/822,442

≈ 1.32

 Shoprite (2022)

Quick Ratio=(Current Assets – Inventory)/Current Liabilities

=(39,673−21,879)/32,488

≈ 0.59

3
  Analysis: Zambeef maintains a higher quick ratio, suggesting a robust ability to
meet short-term obligations without relying on inventory.

Solvency Ratios
3. Debt-to-Equity Ratio:

 Zambeef (2022)

Debt-to-Equity Ratio=Total Debt/Shareholders’ Equity

=572,222/3,268,010

≈ 0.18

 Shoprite (2022)

Debt-to-Equity Ratio=Total Debt/Shareholders’ Equity

=33,340/25,627

≈ 1.30

 Analysis: Zambeef's lower debt-to-equity ratio indicates a more conservative

capital structure compared to Shoprite.

4. Interest Coverage Ratio:

 Zambeef (2022)

Interest Coverage Ratio=Operating Income/Interest Expense

=3,534/91,009

≈ 0.04

 Shoprite (2022) Interest Coverage Ratio=Operating IncomeInterest Expense

=10,807/2,999

≈ 3.60

4
  Analysis: Shoprite boasts a higher interest coverage ratio, signifying a better
ability to meet interest obligations from operating income.

Profitability Ratios
5. Net Profit Margin:

 Zambeef (2022)

Net Profit Margin=Net Profit/Total Revenue

=63,932/3,361,428

≈ 0.019 or 1.9%

 Shoprite (2022)

Net Profit Margin=Net Profit/Total Revenue

=5,740/184,078

≈ 0.031 or 3.1%

 Analysis: Shoprite's higher net profit margin indicates better profitability on

sales.

6. Return on Equity (ROE):

 Zambeef (2022)

ROE=Net Profit/Average Shareholders’ Equity

=63,932/3,340,829

≈ 0.019 or 1.9%

 Shoprite (2022)

ROE=Net Profit/Average Shareholders’ Equity

=5,711/15,016

5
 ≈ 0.380 or 38.0%

 Analysis: Shoprite demonstrates a significantly higher return on equity,

suggesting better efficiency in generating returns for shareholders.

Efficiency Ratios
7. Inventory Turnover:

 Zambeef (2022):
Inventory Turnover=Cost of Goods SoldAverage Inventory=977,6672,795,764Inv
entory Turnover=Average InventoryCost of Goods Sold=2,795,764977,667 ≈
0.35 or 35%

 Shoprite (2022):

Inventory Turnover=Cost of Goods Sold/Average Inventory

=21,879/139,017

≈ 0.16 or 16%

 Analysis: Zambeef has a higher inventory turnover, indicating more efficient

management of inventory.

Coverage Ratios
8. Gearing Ratio:

 Zambeef (2022)

Gearing Ratio=Total Debt/Total Equity

=572,222/2,409,189

≈ 0.24 or 24%

 Shoprite (2022)

Gearing Ratio=Total Debt/Total Equity

=33,340/51,782

6
 ≈ 0.64 or 64%

 Analysis: Zambeef has a lower gearing ratio, implying a lower reliance on debt to
finance its operations.

Market Prospect Ratios

9. Earnings per Share (EPS):

 Zambeef (2022):
EPS=Net Profit/Weighted Average Number of Shares Outstanding

21.25 (basic)
15.94 (diluted)

 Shoprite (2022):
EPS=Net Profit/Weighted Average Number of Shares Outstanding

1,048.30 (basic)

1,041.50 (diluted)

 Analysis: Shoprite has a significantly higher EPS, indicating stronger earnings

available to shareholders.

CREDIT RISK ANALYSIS

Zambeef Products Plc faces credit risk stemming primarily from amounts receivable from
subsidiaries, cash and cash equivalents, and financial guarantee contracts. To manage this risk,
the company employs a comprehensive approach. It assesses credit risk through both internal and
external credit ratings, keeping a vigilant eye on economic conditions. Additionally, the
evaluation of financial support available to counterparties is a crucial aspect of their risk
management strategy. Zambeef utilizes the Expected Credit Loss (ECL) model for impairment
calculation, taking into account the probability of default (PD), exposure at default (EAD), and

7
loss given default (LGD). The company conducts a bi-annual SICR assessment to ensure the
effectiveness of their risk mitigation strategies.

In comparison, Shoprite Holdings is exposed to credit risk primarily from cash and cash
equivalents, deposits with banks, and credit exposures to outstanding receivables. Shoprite
adopts a selective approach in granting credit, assessing the credit quality of counterparties based
on their financial position. The company also sets individual risk limits and monitors credit
utilization regularly. Notably, sales to retail customers are required to be settled in cash,
mitigating credit risk in that segment. Shoprite utilizes the IFRS 9 simplified approach for trade
receivables, grouping them based on shared credit risk characteristics and days past due.
Expected credit losses are calculated by adjusting historical loss rates for current and forward-
looking information.

Upon comparison, both companies exhibit credit risk exposure through their receivables, cash
holdings, and financial instruments. Zambeef's strategy emphasizes internal and external credit
ratings, economic condition monitoring, and financial support evaluation. In contrast, Shoprite's
approach involves selective credit granting, ongoing credit limit monitoring, and cash
settlements for retail sales. Both companies employ models for impairment calculation, with
Zambeef utilizing the ECL model and Shoprite applying a simplified approach based on
historical loss rates. Notably, Zambeef groups its receivables based on credit risk characteristics,
whereas Shoprite uses a simplified approach with adjustments based on economic factors.

RECOMMENDATIONS
In evaluating the financial performance of Zambeef Products Plc and Shoprite Holdings, several
key considerations emerge, influencing investment recommendations in the areas of liquidity,
solvency, profitability, and market prospects. Zambeef exhibits a commendable position in terms
of short-term liquidity, as evidenced by its current and quick ratios. These ratios indicate the
company's ability to meet its short-term obligations using its readily available assets. A higher
current ratio implies a better capacity to cover immediate liabilities. Investors valuing short-term
liquidity and flexibility may find Zambeef to be a favorable choice, particularly in uncertain
economic conditions where maintaining liquidity is paramount.

8
Solvency is a critical aspect of a company's financial health, and Zambeef stands out for
maintaining a more conservative capital structure. The debt-to-equity ratio and gearing ratio
suggest that Zambeef relies less on debt financing, indicating a lower financial risk profile. For
investors seeking stability and a lower risk of financial distress, Zambeef's conservative approach
to solvency may align with their preferences. Shoprite Holdings emerges as the more profitable
option, supported by higher gross profit margins, operating profit margins, and return on equity
(ROE). These metrics reflect Shoprite's efficiency in generating profits from its operations and
the effective utilization of shareholder equity to yield returns. Investors focused on maximizing
returns may be inclined towards Shoprite, appreciating the company's ability to translate revenue
into higher profits and shareholder value.

Examining the earnings per share (EPS) of both companies provides insights into their market
prospects. Shoprite, with a higher EPS, suggests better earnings potential for equity investors. A
higher EPS not only indicates the company's profitability but also implies the potential for higher
returns per share for investors. This aspect is particularly relevant for those seeking growth
opportunities and positive prospects for their investment. Shoprite's stronger market outlook, as
reflected in its EPS, positions it as an attractive option for equity investors anticipating favorable
returns. The investment recommendations are nuanced and depend on the investor's specific
priorities and risk appetite. For those valuing short-term liquidity and a conservative capital
structure, Zambeef may be a preferred choice. On the other hand, investors prioritizing
profitability, efficient capital utilization, and optimistic market prospects may find Shoprite
Holdings to be a more compelling investment option. It is crucial for investors to align these
recommendations with their individual financial goals, risk tolerance, and investment preferences
before making informed decisions in the dynamic landscape of financial markets.

CONCLUSION
In conclusion, a meticulous examination of the financial ratios for Zambeef Products Plc and
Shoprite Holdings reveals that Shoprite stands out as a more compelling investment option for
equity investors. Shoprite's financial performance demonstrates a superior level of profitability
when compared to Zambeef. This is notably evident in Shoprite's higher gross profit margin and
operating profit margin, indicating the company's efficiency in managing costs and generating
profits. The return on equity (ROE) for Shoprite is particularly noteworthy, signifying the

9
company's adept utilization of shareholder funds to yield impressive returns. Shoprite's robust
market prospects further enhance its attractiveness as an investment. The company's strong
financial position, as reflected in its liquidity and solvency ratios, positions it well for sustained
growth and resilience amid economic uncertainties. The efficient management of capital,
evidenced by the lower gearing ratio, demonstrates Shoprite's prudent approach to maintaining
an optimal capital structure, reducing reliance on debt to finance operations.

While both companies exhibit sound credit risk management practices, Shoprite's strategies
provide an additional layer of risk mitigation. The emphasis on selective credit granting,
continuous monitoring, and a cash settlement policy for retail sales reflects Shoprite's proactive
approach to managing credit risk. This approach contributes to the overall stability of the
company and minimizes the potential impact of credit-related challenges. In the dynamic
landscape of equity investments, the conclusion drawn is not solely based on financial ratios but
also considers Shoprite's strategic practices. The company's emphasis on maintaining
profitability, efficient use of resources, and a focus on risk management align with the
expectations of discerning investors. It is crucial for investors to recognize the importance of
these factors in the context of their own risk tolerance, investment objectives, and the prevailing
market conditions.

However, it is essential to acknowledge that investment decisions are multifaceted and should be
made after considering a range of factors. Investors should assess their risk tolerance, investment
horizon, and the broader economic landscape before making investment decisions. Market
conditions and industry-specific factors can influence the performance of companies, and
investors should remain vigilant to adapt their strategies accordingly. While Shoprite emerges as
a more attractive option based on the financial ratios and strategic practices examined, investors
are encouraged to conduct thorough due diligence. The decision-making process should be
informed by a comprehensive understanding of the financial landscape, market dynamics, and
the specific goals and risk appetite of the investor. By doing so, investors can make well-
informed decisions that align with their financial objectives and contribute to long-term success
in the dynamic realm of equity investments.

10
APPENDIX
ZAMBEEF PRODUCTS PLC FOR THE YEAR 2022
Zambeef Products Plc's
Statement of profit or loss and other comprehensive income for the period ended 30th Sept 2022
2022 (K'000) 2021 (K'000)
3,361,42 2,880,06
Revenue from contracts with customers 8.00 2.00
307,57 545,34
Change in fair value of biological assets 4.00 3.00
- -
Cost of sales 2,795,764.00 2,630,914.00
873,23 794,49
Gross profit 8.00 1.00

17,32 -
Other income/expenses 5.00 10,410.00
- -
Net impairment losses on financial assets 7,876.00 1,188.00
-
impairment of goodwill 141,786.00
-
Distribution expenses 67,118.00
Administrative expenses - -

11
 658,635.00 636,152.00

15,14 146,74
Operating profit 8.00 1.00

- -
Share of loss from equity investment 3,503.00 3,358.00
3,5 56,7
Finance income 34.00 92.00
- -
Finance costs 91,009.00 84,980.00
- 115,19
Profit/loss before income tax 75,830.00 5.00

- -
Income tax expense -continuing operations 27,799.00 12,600.00

- 102,59
Loss/profit from continuing operations 103,629.00 5.00
39,69 28,7
Profit from discontinued operations after tax 7.00 54.00

- 131,34
Profit/loss for the year 63,932.00 9.00
Profit/loss attributable to:
- 131,34
Owners of Zambeef products Plc 63,932.00 9.00
Non-controlling interests
- 131,34
63,932.00 9.00
Other comprehensive income
Items that may be reclassified to profit or loss
Translation differences - foreign operations
- -
Translation differences - Mpongwe farms 10,847.00 271,935.00
Items not reclassified to profit or loss
40,1
Revaluation surplus 25.00
- -
Actuarial remeasurment losses 1,058.00 1,408.00
3,0 8
Deferred income tax 18.00 26.00
- -
Other comprehensive income for the year 8,887.00 232,392.00
- -
Total comprehensive income for the year 72,819.00 101,043.00
12
Basic earnings per share Ngwee Ngwee
-
Continued operations 34.46 34.13

Discontinued operations 13.21 9.57

-
Total basic earnings per share 21.25 43.70
Diluted earnings per share
-
Continued operations 25.85 25.61

Discontinued operations 9.91 7.18

-
Total diluted earnings per share 15.94 32.79

Zambeef Products Plc's statement of financial position as at 30th September 2022

2022 (K'000) 2021 (K'000)
ASSETS
Non current assets
Property, plant and equipment 2,158,021.00 2,143,680.00
Right of use assets 23,591.00 22,803.00
Investment in subsidiaries 104,020.00 245,807.00
Investment in associates 36,965.00 40,468.00
Biological assets 86,592.00 71,365.00
2,409,189.00 2,524,123.00
Current assets
Biological assets 183,061.00 236,583.00
Inventories 977,667.00 772,972.00
Trade and other receivables 786,517.00 872,256.00
Cash and cash equivalents 136,149.00 113,193.00
Assets classified as held for sale 170,091.00 170,550.00
current income tax asset - 2,520.00
2,253,485.00 2,168,074.00
Total assets 4,662,674.00 4,692,197.00

EQUITY
Share capital 3,006.00 3,006.00
Share premium 1,125,012.00 1,125,012.00
Preference share capital 1,000.00 1,000.00
Foreign currency translation reserve 687,048.00 697,895.00
Revaluation reserve 712,279.00 739,522.00
Retained earnings 739,665.00 774,394.00

13
 3,268,010.00 3,340,829.00
LIABILITIES
Lease liabilities 5,354.00 1,873.00
Borrowings 426,222.00 195,555.00
Deferred income tax 140,280.00 138,117.00
Defined benefit obligations 366.00 2,124.00
572,222.00 337,669.00
Current liabilities
Lease liabilities 4,878.00 6,597.00
Borrowings 337,669.00 517,126.00
Trade and other payables 367,814.00 395,491.00
Contract liabilities 97,400.00 94,485.00
Current income tax 14,681.00 -
822,442.00 1,013,699.00
Total equity and liabilities 4,662,674.00 4,692,197.00

SHOPRITE HOLDINGS FINANCIALS

Shoprite holdings Consolidated statement of comprehensive income for the year ended 3
July 2022
2022 2022
(K'Million) (K'Million)

Revenue
184,0 168,0
Sale of merchandise 78.00 30.00
- -
Cost of sales 139,017.00 126,817.00
45, 41,
Gross profit 061.00 213.00
3, 2,
Other operating income 118.00 616.00

Interest revenue 544.00 542.00

- -
Depreciation and amortisation 5,406.00 5,336.00
- -
Employee benefits 14,788.00 13,553.00

Credit impairment losses - -

14
 173.00 222.00
- -
Other operating expenses 17,326.00 14,928.00
11, 10,
Trading profit 030.00 332.00
- -
Exchange rate losses 260.00 27.00

Profit on lease modifications and terminations 66.00 197.00

- -
Items of a capital nature 29.00 828.00
10, 9,
Operating profit 807.00 674.00

Interest received from bank account balances 270.00 268.00

- -
Finance costs 2,999.00 3,095.00

Share of profit of equity accounted investments 208.00 120.00

8, 6,
Profit before income tax 286.00 967.00
- -
Income tax expense 2,556.00 2,241.00
5, 4,
Profit from continuing operations 730.00 716.00
Profit from discontinued operations (attributable to owners of the
parent) 10.00 143.00
5, 4,
Profit for the year 740.00 859.00
Other comprehensive income/loss, net of income tax
Items that will not be reclassified to profit or loss
Re-measurements of post employment medical benefit
obligations 2.00 6.00

15
Items that may subsequently be reclassified to profit or loss
Foreign currency translation differences from continuing 2, -
operations 805.00 1,214.00
Foreign currency translation differences from discontinued -
operations 8.00 154.00
Release of foreign currency translation reserve on disposal of
discontinued operations 18.00 447.00
-
Profit /loss on effective net investment hedge, net of income tax 62.00 159.00
8, 4,
Total comprehensive income for the year 619.00 093.00
Profit attributable to:
5, 4,
Owners of the parents 711.00 841.00

Non controlling interest 29.00 18.00

5, 4,
740.00 859.00
Total comprehensive income attributable to:
8, 4,
Owners of the parents 590.00 075.00

Non-controlling interest 29.00 18.00

8, 4,
619.00 093.00
Total comprehensive income attributable to owners of the
parent arises from:
8, 3,
Controlling operations 570.00 331.00

Discountinued operations 20.00 744.00

8, 4,
590.00 075.00

16
Earnings per share for profit from continuing operations
attributable to owners of the parent:
1,
Basic earnings per share from continuing operations (cents) 046.50 851.60
1,
Diluted earnings per share from contiunuing operations (cents) 039.70 848.20

Earnings per share for profit attributable to owners of the

parent:
1,
Basic earnings per share (cents) 048.30 877.50
1,
Diluted earnings per share (cents) 041.50 874.00

Shoprite holdings Statement of financial position as at 31

December 2022
2022 2021
(K'million) (K'million)

Assets
Non current assets
16, 14,
Property, plant and equipment 816.00 374.00
23, 20,
Right of use assets 725.00 520.00
3, 3,
Intangible assets 561.00 010.00
2, 2,
Equity accounted investments 240.00 025.00

Investment in insurance cell captive arrangements 131.00 69.00

Government bonds and bills 1,

17
 051.00 972.00
1, 1,
Loans receivables 510.00 619.00
2, 2,
Deferred income tax assets 520.00 214.00

Trade and other receivables 228.00 206.00

51, 45,
782.00 009.00
Current assets
21, 18,
Inventories 879.00 396.00
4, 3,
Trade and other receivables 988.00 921.00

Current income tax assets 769.00 358.00

Inestment in insurance cell captive arrangements 157.00 95.00

Government bonds and bills 286.00 522.00

Loans receivable 509.00 283.00

Restricted cash 300.00 -

10, 7,
Cash and cash equivalents 665.00 950.00
39, 31,
553.00 525.00

Assets classified as held for sale 120.00 532.00

39, 32,
673.00 057.00
91, 77,
Total assets 455.00 066.00

18
Equity
Capital and reserves attributable to owners of the parent
7, 7,
Stated capital Treasury shares 516.00 516.00
- -
Reserves 2,583.00 1,455.00
20, 15,
551.00 016.00

Non controlling interest 143.00 127.00

25, 21,
Total equity 627.00 204.00

Liabilities
Non current liabilities
28, 24,
Lease liabilities 458.00 801.00
4, 2,
Borrowings 500.00 280.00

Deferred income tax liabilities 8.00 8.00

Provisions 374.00 488.00

33, 27,
340.00 577.00
Current liabilities
21, 19,
Trade and other payables 477.00 649.00

Contract liabilities 991.00 873.00

3, 2,
Lease liabilities 165.00 921.00

19
 1, 2,
Borrowings 012.00 999.00

Current income tax liabilities 661.00 416.00

Provisions 184.00 78.00

4, 1,
Bank overdrafts 998.00 221.00
32, 28,
488.00 157.00
Liabilities directly associated with assets classified as held for
sale - 128.00

65, 55,
Total liabilities 828.00 862.00

91, 77,
Total equity and liabilities 455.00 066.00

20