I am pleased to present to you, operational, commercial, and financial results achieved under challenging economic conditions worsened by the residual effects of the unprecedented drought experienced in the 2023/24 rainy season. These results demonstrate the business’ resilience and ability to perform under challenging conditions.

Safety

Safety continues to be a top priority at Zambia Sugar as we strive to create a safe place to work for all our employees and contractors. While we continue to make progress on our safety journey, we are saddened by the tragic loss of Mr Joseph Kunda, a Kal Tire third party contractor employee, who was fatally injured on 21 August 2025, while repairing a tyre at the Nakambala Transport Workshop. This tragic loss of a husband and father of two, is a painful reminder of how important safety is and strengthens our resolve to do everything possible to continue to improve safety in the entire supply chain. We sent our deepest condolences to his family, friends, and colleagues.

This fatality, and the eight Lost Time Injuries (LTIs) that were recorded during the period under review, highlight that we still have a lot of work to do and that we need to scale up efforts to improve safety by all our contractors. We continue to place greater focus on personal choices through our Busongo Safety Behaviour Programme which enables our people to make safe choices in their workstations every day. Rigorous focus on leading indicators including reporting of near misses and increased frequency of toolbox talks continue to be enhanced as we strive to achieve our goal of ensuring that everyone in our supply chain goes home safely every day, everywhere, without exception.

Our Safety Week, which is conducted at the start of the crushing season, was again a resounding success. It highlighted the importance of integrating safety into every aspect of our work activities and the importance of making sound personal choices. The focus on Behavioural Safety Awareness and strong leadership have been invaluable in raising awareness and ensuring that safety remains a top priority.

We also made substantial investments in safety infrastructure, including the construction of pedestrian walkways and roads to separate vehicles and people. Additionally, we continued to bolster our fire prevention and detection systems, ensuring that we are well-prepared to deal with the ever-present risk of fire. There was a focus on engineering out unsafe installations across all our operations and considerable progress has been made in this regard.

The commitment to safety continues to be reinforced through the authorization of all employees and contractors to stop doing any work deemed unsafe. This message continues to be communicated in all interactions with employees and contractors.

Health
The health and well-being of our employees and surrounding communities remains a top priority and our hospital leadership and staff, once again, led from the front on health matters. We commemorated the Satellite World Aids Day, which will now be commemorated annually at Nakambala. We made significant upgrades to the Chuula Clinic, including the installation of a solar-powered borehole to ensure clean water is available reliably. We all know that productive work is underpinned by employee health. We remain immensely proud of the work that our doctors and health teams are doing at our hospital, clinics, and communities. Our most sincere gratitude goes to them for working day and night to protect our health and that of our family members.

Financial Performance

Total revenue for the year ended 31 August 2025 increased by 18% from K7 530 million to K8 897 million. This growth was driven by a 23% increase in domestic revenue and a 9% improvement in export sales realisation, reflecting enhanced value capture and sales mix optimisation across both market segments.

Due to the effects of the drought, sugar production declined following the drop in cane supply. Coupled with escalating costs due to inflationary pressures on key inputs such as electricity, fertilisers, chemicals, packaging, fuel, and employee costs, cost of producing sugar per ton consequently increased. The significant increase in operating expenditure resulted in a 23%, decline in operating profit for the year, from K2 567 million in the prior year to K1 987 million.

The drought caused a crippling shortage of power in the country that needed a swift response to safeguard agricultural and factory operations. Through the Power Supply Agreement (PSA) with ZESCO, the business secured foreign currency denominated imported emergency power. While critical to sustaining operations, the premium on the cost of this power resulted in a 67% cost escalation which translated to a K100 million increase in cost of power that contributed to the year on year drop in profit.

Finance costs rose to K116.6 million from K38.7 million, largely due to increased interest expense associated with working capital facilities, lease arrangements, and statutory obligations. Although Interest coverage ratio remains sound at 17, it was lower than the 66.3 in the prior year. The business expanded its investment in core capital projects and secured a K700 million three-year loan to support working capital and climate resilience initiatives. This is expected to stimulate broader economic activity across the value chain. The business closed the year with a robust cash position of K1 016 million.

As a result of the adverse effects of the drought and the consequent drop in profit, the business reported a 48% reduction in income tax expense, which reduced from K451 million in the prior year to K233 million.

Similarly, Profit after Tax decreased from K2 058 million in prior year to K1 634 million resulting in Headline Earnings per share declining by 21%, from 650 Ngwee to 516.1 Ngwee.

Operations

Although power challenges continue to impact the whole country, the good relationship enjoyed with ZESCO resulted in the business securing adequate power for irrigation, guaranteeing continued production which supported the attainment of the production and commercial objectives for the financial year. However, growers who produce approximately half of the crop were negatively impacted by power shortages. Consequently, cane yield across the cane supply area was adversely impacted by the drought and attendant power shortages resulting in both quantity of cane harvested, and sugar production declining compared to the prior year. Sugar cane supply for the year was 3.191 million with 1.59 million tonnes of cane from own estate, while outgrowers supplied 1.6 million tonnes of cane, accounting for 49.9% and 50.1% of total supply, respectively. Notably, the estate exceeded its budgeted cane supply by 5.5%, reflecting strong agronomic performance and operational efficiency following investment in irrigation systems and introduction of a more sustainable farming system.

The factory recorded one of the best performances on record including the highest cane crush per week, cane crush per day, cane crushed on a stop day and refined sugar produced per day. This strong performance partly mitigated the drop in cane supply, to produce 372 328 metric tonnes of sugar and 88 935 tonnes of refined sugar for the financial year. Strong leadership, teamwork, regular engagement with employees, a commitment to operational excellence and a focus on asset reliability were key contributors to operational performance.

Commercial

Commercial performance in the 2025 financial year was exceptional taking into account challenging weather as well as macroeconomic and business headwinds faced during the year. Although performance declined marginally compared to the prior year, the Commercial and Logistics teams delivered an exceptional performance in meeting customer and consumer needs, ensuring that domestic demand was fully satisfied.

Due to limited stocks, export sales were moderate due to prioritising the domestic market. Additionally, the appreciation of the Kwacha in the third quarter of the calendar year, created pressure on the competitiveness of Zambian exports. This resulted in a decline in export volumes of Non-Traditional Exports (NTEs) including sugar while at the same time stimulating illicit imports of sugar into the domestic market further reducing the business’ sales. The effective management of logistics ensured availability of Whitespoon products to fully meet demand across the country.

As we continue to broaden our product portfolio to meet the needs of all consumer segments, we successfully launched the 70g minipack which the business will leverage to penetrate new domestic market segments. The Last Mile Resellers (LMRs) initiative which is aimed at improving service delivery resulted in significant growth in secondary distribution and played an instrumental role in the achievement of domestic sales volume of 315 120 tonnes, an incredible performance by all the teams despite the challenges experienced throughout the year.

Stakeholder Engagement

As part of our continued engagements with stakeholders within the area of operations and across the country, we constructively resolved several issues and formed new relationships aimed at driving the business forward. Productive engagements continued to be held with the Water Resource Management Authority (WARMA), Zambia National Farmers Union (ZNFU), growers and ZESCO as we continued to collaborate to minimize the impact of the drought on the sugar industry and supply of sugar in the country.

We continued to provide support to local communities through the refurbishment of roads, clinics, schools, sponsorship of sports and material support to traditional ceremonies across the country. I am particularly pleased with the Walk a Mile in My Shoes school initiative done jointly with ZAMBEEF Products Plc which is focused on providing needy school children with shoes. The smiles this initiative put on the children’s faces at the beneficiary schools in Mazabuka renewed our commitment to continue with this project into the new year.

Our commitment to environmental sustainability continued unabated throughout the year. We focused on efficient water management, including the reuse of factory wastewater for irrigation, which helped to reduce volume of water abstracted from the Kafue River. A major highlight among the initiatives during the year was the tree planting campaign which continues to support efforts aimed at greening the estate and contributing to tackling climate change countrywide. We planted 7 000 indigenous trees during the financial year to support ecosystem preservation. We remain confident that the target of 12 000 trees by the end of the calendar year will be achieved as we continue to focus on environmental stewardship and sustainability.

New Enterprise Resource Planning System – SAP S/4HANA

One year after introducing the Enterprise Resource Planning (ERP) system, S4HANA (SAP), we are now using it successfully throughout the organisation. As can be expected with a project of this magnitude, we experienced some challenges which we are working to resolve to ensure that we realize the full benefits of our investment in SAP. We have put together a dedicated team working closely with the ABF Sugar Group to support this process.

As part of creating an excellent operation, we remain committed to ensuring that SAP is used effectively in all our operations to achieve the efficiencies that it is designed to enable in our business operations.

Leadership Team

To strengthen leadership capacity for safety and reaffirm its strategic importance to the organisation, Safety became a stand-alone function with a direct reporting line to the Managing Director. I am happy to announce that Mrs. Priscilla Msiska joined the Leadership Team as Safety Director in September 2025. I wish her every success in her role.

Outlook

We anticipate an increase in economic activity in the rural areas due to the bumper 2025 maize harvest in the country which should spur strong demand for our direct consumption products. Due to inflation continuing to show a downward trend and the improvement in mining activity, Gross Domestic Product (GDP) is forecast to grow by 6% this year which bodes well for our business.

Although the power situation continues to be a challenge, the business has secured power for irrigation and has introduced effective electricity load management initiatives which will drive higher cane production while helping to mitigate the cost of power in the short term.

Our improved farming systems, including the installation of drip irrigation systems, have started bearing fruit and we have recorded cane yields above 200 tonnes per hectare in some fields which shows the potential that exists to improve overall yields on the estate. We are confident that this trend will continue as these systems are rolled out across the estate in the future.

The approval of the long-awaited K2 billion Twazabuka Project was a significant milestone, and we should see significant progress in implementation and execution in 2026. Having successfully completed the Falling Film Evaporator (FFE) project on time, we are excited that commissioning is progressing well, and that the equipment will be ready for the 2026 crushing season ensuring that we realize the benefits of this investment as planned.

The continued appreciation of the Kwacha is a double-edged sword. On the positive side, it reduces costs denominated in foreign currencies while at the same time it adversely impacts exports in terms of both volume and price realization. In addition, a strong Kwacha increases illegal imports through the border towns as well as legally imported products which reduce industrial sugar demand by the beverage and confectionary products manufacturers. Concerted efforts are in place to help address these challenges in the new financial year.

Our local and regional market demand for sugar remains strong and the business is well positioned to serve customers and consumers with a strengthened Route to Consumer and expanded product portfolio following the introduction of the 70g mini pack for low-income consumers.

Acknowledgment

Our Whitespoon brand remains a household name and the preferred choice among consumers. We are grateful to our customers and consumers for their continued support, trust, and loyalty, and we appreciate the efforts of our employees in serving them. I would like to express my sincere gratitude to the Board for their ongoing support, guidance, and commitment, which enables us to effectively serve customers and consumers.

Our Management and employees are dedicated, and committed to continue creating value for our shareholders and stakeholders in the years ahead as we fulfill our mission to feed the nation and the region.

Oswald Magwenzi
Managing Director