First Day of Dealings on AIM and Placing

RNS Number : 9466I

Zambeef Products PLC

23 June 2011

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.

 23 June 2011

Zambeef Products plc

("Zambeef" or the "Group" or the "Company")

First Day of Dealings on AIM and Placing

Zambeef, the fully integrated African agri-business with operations in Zambia, Nigeria and Ghana, is pleased to announce its admission to the AIM market of the London Stock Exchange ("AIM") ("Admission") and the commencement of dealings in its ordinary shares under the TIDM Code ZAM.L.

The Group has raised US$54.97 million (approximately £33.95 million) in aggregate by way of both a rights issue of 35,558,580 new ordinary shares to existing investors via the Lusaka Stock Exchange ("LuSE") (the "Rights Issue"), and a placing of 53,713,570 new ordinary shares to institutional investors via AIM (the "Placing") at 38.06p, in aggregate representing 21.66 per cent. of the enlarged ordinary share capital of the Group. The approximate market capitalisation of the Group following Admission is £94.38 million.

Strand Hanson Limited is acting as financial and nominated adviser in relation to the Admission, and Renaissance Capital Limited is acting as the bookrunner and sole broker.

Overview

Zambeef is one of the largest agri-businesses in Zambia.

The Group is principally involved in the production, processing, distribution and retailing of beef, chicken, pork, milk, dairy products, eggs, edible oils, stock feed, flour and bread. The Group also has large row cropping operations (principally maize, soya beans and wheat), with approximately 5,000 Hectares ("Ha") of row crops under irrigation and 1,500 Ha of rain-fed/dry-land crops available for planting each year. The Group is also in the process of rolling out its West Africa expansion in Nigeria and Ghana, in addition to a palm plantation project within Zambia.

The Company was incorporated in June 1994, and listed on the LuSE in February 2003. Since its incorporation as a small scale start-up business, the Company has, through organic growth and acquisitions, become one of Zambia's largest agri-businesses with annual revenues of ZMK770.5 billion (approximately US$162 million) for the financial year ended 30 September 2010.

Zambeef has one of the leading distribution and retail footprints in Zambia. The Group currently operates 87 stores under the "Zambeef" banner and 20 in-house butcheries in Shoprite outlets in Zambia, under a concessionary agreement. In addition, the Group has seven of its own fast food outlets under the brand "Zamchick Inn". The Group also operates two in-house butcheries in Shoprite outlets and three of its own stores in Nigeria and a further two in-house butcheries in Shoprite outlets in Ghana.

On 8 February 2011, the Group announced that it had entered into an acquisition agreement to acquire the ETC assets (the "Acquisition"), subject to shareholder approval. Together, the ETC assets extend to approximately 46,876 Ha, of which 2,994 Ha is irrigated and 7,667 Ha is dry-land farming (excluding a 2,137 Ha jatropha plantation), and will significantly expand the Group's cropping operations in Zambia. These assets will provide the Group with the agricultural throughput for its processing operations which the Board believes should generate additional value and higher margins whilst reducing the impact of the volatility of commodity price fluctuations and an erratic supply chain on the Group. Shareholder approval for the Acquisition was obtained at an extraordinary general meeting of the Group on 19 May 2011. The Company intends to fund this acquisition using the funds raised through the Rights Issue and Placing in addition to various existing and newly agreed debt facilities.

Key investment proposition

The Directors believe that an investment in the Company should be attractive to investors for the following reasons:

·      the Company has an established and proven management team with the requisite experience and a broad range of technical, operational and financial skills. Management has the expertise and an established track-record in identifying and exploiting commercial agri-businesses in Zambia;

·      there are limited opportunities for investors to gain exposure to African agriculture, particularly via the AIM market, as there are currently few AIM listed African agricultural companies with similar operations to the Company;

·      in addition to agricultural production, the Group has diversified its operations to ensure margin capture throughout the value chain and to reduce revenue and earnings volatility. Additionally, the Group's "farm-to-fork" strategy significantly reduces the Group's risk profile by allowing it to supply its own processing divisions with raw materials, and to sell the finished products directly to the end consumer through its extensive retail network therefore reducing its exposure to sudden price fluctuations;

·      Sub-Saharan Africa provides a compelling macro-economic backdrop, where the IMF projects economic growth of 5.5 per cent. in 2011 and 5.9 per cent. in 2012;

·      rapid urbanisation in many African countries is a key driver to growth. The McKinsey Global

Institute estimates that 50 per cent. of Africans will be living in cities by 2030, in comparison to 28 per cent. in 1980, and 40 per cent. today. In addition to this, consumer spending is predicted to increase to US$1.4 trillion by 2020 in comparison with US$860 million today; and

·      the global outlook for the food and agriculture sector is positive with meat consumption per capita in OECD countries expected to increase from an average of 66.3kg retail weight (rwt) in 2009/2011 to 68.7kg in 2018. Per capita consumption in non-OECD countries is expected to increase from an average of 25.6kg rwt in 2009/2011 to 28.0kg rwt in 2018.

Capitalised terms used in this announcement carry the same meaning as those defined in the Admission Document, dated 20 June 2011, unless the context requires otherwise.

Francis Grogan, Chief Executive Officer of Zambeef, said:

"We are delighted that the AIM flotation of the Company has been completed successfully and with such high investor demand for Zambeef shares. We now look forward to working with our new and existing shareholders whom we would like to thank for their ongoing support as we continue to grow and expand.

The growing demand for agricultural products and consumer goods in Sub-Saharan Africa together with the increasingly stable political climate in the countries in which we operate creates an exciting platform on which Zambeef can thrive."

- ENDS -

For further information, please contact:

Zambeef Products PLC 

Francis Grogan, Chief Executive Officer                                      + 44 (0) 20 7466 5000 (today only)

Carl Irwin, Director of Strategy & Development

Yusuf Koya, Executive Director

Strand Hanson Limited                                                                        

Angela Peace                                                                             [phone]

James Spinney

Renaissance Capital                                                                                         

Mesh Pillay                                                                                [phone]

Buchanan                                                                                            

Mark Edwards                                                                            + 44 (0) 20 7466 5000

Christian Goodbody

Directors

The current composition of the Board is as follows:

Dr. Jacob Mwanza (age 74) Non-Executive Chairman

Nationality: Zambian

Qualifications: Phd (Cornell University, USA); MA Economics (W. Germany)

Experience: Over 30 years' business management experience, both in the public and private sectors.  Previously Governor of the Central Bank of Zambia; currently Chancellor of the University of Zambia. Has served and is currently serving on several boards, including LuSE and Konkola Resources Ltd.

Francis Grogan (age 48) Chief Executive Officer

Nationality: Irish

Qualifications: BSc Agriculture (Ireland)

Experience: Over 22 years' experience in agriculture and meat, both in Ireland and Zambia. Co-founder of Zambeef. Other directorships include Zambezi Ranching & Cropping Ltd and Tractorzam Ltd.

Carl Irwin (age 45) Director of Strategy and Development

Nationality: Zambian

Qualifications: B. Com; ACA (UK); FZICA

Experience: Over 20 years' accounting and finance experience with a number of companies, including Coopers & Lybrand UK. Co-founder of Zambeef. Other directorships include Proflight Commuter Services Ltd, Zambezi Ranching & Cropping Ltd, Kanyanja Development Company Ltd, Leopard Investment Company Ltd and Tractorzam Ltd.

Yusuf Koya (age 46) Executive Director

Nationality: British

Qualifications: BSc in Geology & Economics (Keele University, UK); MSc in Economics (Keele University, UK); AIFS (UK)

Experience: Over 20 years' business management experience in corporate finance and credit risk management, both in the UK and Zambia. Previously Country Credit Director with Barclays Bank Zambia PLC.

Sushmit Maitra (age 33) Finance Director

Nationality: Indian

Qualifications: BA (Hons) in Accounting & Finance (South Bank University, UK); MSc in International

Accounting & Finance (LSE, UK); ACCA.

Experience: Over 10 years' experience in auditing, corporate finance, and management consultancy with a number of companies in Zambia including Barclays Bank Zambia PLC and Grant Thornton.

Lawrence Sikutwa (age 56) Non-executive Director

Nationality: Zambian

Qualifications: MBA; FCII; Post Grad Diploma in Insurance (UK)

Experience: Over 30 years' experience in business management. Previously General Manager of Zambia State Insurance Corporation Limited; currently Chairman of Lawrence Sikutwa Associates Ltd Group of Companies.

John Rabb (age 68) Non-executive Director

Nationality: South African

Qualifications: BSc (Agriculture); MBA (RSA)

Experience: Over 30 years' business management experience. Formerly Managing Director of the Wooltru Group in South Africa, which was listed on the Johannesburg Stock Exchange. Has served and is currently on several boards, including Wellspring Ltd and Forsythe Estates Ltd.

Irene Muyenga (age 52) Non-executive Director

Nationality: Zambian

Qualifications: BA (ed); DIS; LIII

Experience: Over 20 years' business management experience. Currently CEO and Group Managing Director of Zambia State Insurance Corporation Limited. Has served and is currently on several boards, including Barclays Bank Zambia plc, Organisation of Eastern & Southern Africa Insurers and the National Pension Scheme Authority of Zambia.

Adam Fleming (age 63) Non-executive Director

Nationality: British

Experience: Over 30 years' business management and banking experience. Previously Chairman of

Harmony Gold (listed on Johannesburg Stock Exchange and one of the largest gold mining companies in the world); currently Chairman of Witwatersrand Consolidated Gold Resources Ltd. Has served and is currently on several boards, including Zambezi Ranching & Cropping Ltd.

Stanley Phiri (age 51) Non-executive Director

Nationality: Zambian

Qualifications: Bacc; FCCA; FZICA

Experience: Over 22 years' in business management and finance experience; currently Director General of National Pension Scheme Authority of Zambia. Previously Director of Finance and Investment for Zambia State Insurance Corporation Ltd.

Important Notice

The material set forth herein is for informational purposes only and does not constitute an offer of securities for sale in the United States or any other jurisdictionin which such an offer or solicitation is unlawful.  The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or the laws of any state, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state laws.  No public offering of securities will be made in the United States.

This announcement is intended for distribution in the United Kingdom only, and is only directed in the United Kingdom at (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) persons falling within Article 49(2)(a) to (d) of the Order or (iii) to those persons to whom it can otherwise lawfully be distributed (together, "relevant persons").  The securities offered are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons.  Any person who is not a relevant person should not act or rely on this document or any of its contents.

 

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