Zambeef Prod. Regulatory News (ZAM)

25 November 2015

Zambeef Products plc

("Zambeef" or the "Group")

Results for the Year Ended 30 September 2015

Zambeef (AIM: ZAM), the fully integrated agri-business with operations in Zambia, Nigeria and Ghana, announce its final results for the year ended 30 September 2015.

Key Operational Highlights

• Strong performance from our core cold chain food products division, achieved through a market-driven strategy involving retail outlet upgrades and the introduction of new macro outlets.

• Further progress in West Africa with Shoprite opening an additional three stores during the period and a further eight expected to open in the current financial year.

• Progress made with our two joint venture agreements with RCL Foods Ltd with the new hatchery coming into production before the year end and Zamchick continuing to expand.

• Disposal of our edible oils business, Zamanita Ltd, to Cargill for a cash consideration of USD27 million, which has also led to the establishment of a strategic partnership with Cargill

Key Financial Highlights

· Despite significant macro-economic challenges, the Group has had an excellent operational performance for the year with operating profits increasing by 140% in USD and 189% in ZMW.

· Profit before tax excluding exchange losses increased by 576% in USD and 712% in ZMW.

· Unfortunately these excellent operational results have been severely impacted by the rapid depreciation of the Zambian Kwacha during the year resulting in exchange losses of USD20.2m (ZMW142m).

· The Group has generated significant cash during the period with net cash inflow from operating activities increasing by 171% in USD and 223% in ZMW. 

· The Group's core cold chain food product divisions performed particularly well, with gross profits increasing by 29.1 per cent. in ZMW terms and 7.6 per cent. in USD terms.

· Exchange losses for the year of USD20.2 million have reduced a pre-tax profit of USD15.1 million into a pre-tax loss of USD5.0 million.

· The large cash inflow from operations as well as the disposal of Zamanita have resulted in the Group reducing term debt by US$21.2m and its working capital facilities by USD25.0m while the total net debt in USD terms has reduced by USD46.2 million, from USD118.5 million (2014) to USD72.3 million.

· The Group converted a significant amount of its USD denominated debt into ZMW in order to mitigate future currency exchange risks/losses.

· Post the period end, a Zambia Revenue Appeals Tribunal upheld Zambeef's appeal against the ZMW49.15 million (USD3.91 million) Zamanita tax assessment.

Commenting on the results, Zambeef Chairman Dr. Jacob Mwanza, said:

"Despite significant macro-economic challenges, the Group's performance was commendable, particularly in our core cold chain food products business, and we look forward to growing this business further, both in Zambia and the wider SADC/COMESA region, and developing the business into a regional food supplier.

"The successful sale of Zamanita resulted in net debt, in US Dollar terms, reducing by 39 per cent. (USD46 million), and we continue to actively explore strategic opportunities in relation to our non-core businesses and assets, which will allow us to unlock value and capital gains from within the Group, and thereby reduce debt further.

"We believe that the continued execution of our strategy will put Zambeef in a strong position to take advantage of the growth opportunities available.

"Therefore we look forward to making continued progress towards our aim of becoming a leading regional food supplier."

For further information, please contact:

Zambeef Products plc Tel: +260 (0) 211 369003

Carl Irwin, Joint Chief Executive Officer

Francis Grogan, Joint Chief Executive Officer

Strand Hanson Limited Tel: +44 (0) 20 7409 3494

Angela Hallett

James Spinney

Ritchie Balmer

Panmure Gordon Tel: +44 (0) 20 7886 2500

Dugald Carlean

Tom Salvesen

Peter Steel

Finncap Tel: +44 (0) 20 7220 0500

Joanna Scott

Raymond Greaves

Powerscourt Tel: +44 (0)20 7250 1446

Nick Dibden

Sophie Moate

Nick Brown

Notes to Editors

The Zambeef Group is one of the largest integrated agri-businesses in Zambia, involved in the primary production, processing, distribution and retailing of beef, chickens, pork, milk, eggs, dairy products, fish, flour and stock feed, throughout Zambia and the surrounding region, as well as Nigeria and Ghana. The Group is also one of the largest cereal row cropping operations in Zambia, with a total of 24,174 hectares planted during FY2015 comprising a mix of approximately [two growing seasons] of 8,120 Ha of irrigated land and one growing season of approximately 8,480 Ha of rain-fed/dry land, available for planting each year.

The Group employed an average of 6,251 employees in the period.

Further information can be found on www.zambeefplc.com

This publication is in line with standard practice for London Stock Exchange.

Chairman's Statement

Macro-economic background

The Group's financial and trading performance must be seen within the context of the Zambian economy, which is currently facing significant challenges.

The slowdown in the Chinese economy, as well as the general strengthening of the US Dollar has put an enormous strain on the Zambian Kwacha (ZMW), compounded by power rationing, adverse developments in the mining sector (prospects of job losses and scaling down of operations), fiscal and current account deficits; and weak general performance of the economy and therefore slowed GDP growth.

The Zambian economy remains heavily dependent on copper mining and therefore the rapid drop in the copper price and the resulting decrease in production have resulted in a rapid depreciation of the Zambian Kwacha against the US Dollar, from ZMW6.27/USD to ZMW12.02/USD over the year.

Extensive power rationing since June 2015 (8-10 hours per day) has necessitated the use of more expensive power from diesel generators, resulting in higher costs of production and lower production volumes.

Inflation has increased significantly from around 7.8 per cent. in September 2014 to 14.3 per cent. in October 2015, largely attributed to the pass-through from the sharp depreciation of the ZMW/USD exchange rate, increase in pump prices of refined petroleum products and the high production costs induced by increased power rationing.

Zambeef performance

Despite the above macro-economic challenges, Zambeef has had a commendable year.

Adjusted profit before tax was ZMW11.3 million (USD1.6 million), up from the adjusted profit of ZMW9.6 million (USD1.6 million) in 2014, while cash generated from operations increased from ZMW81.6 million to ZMW263.8 million (USD13.8 million to USD37.4 million).

Our immediate strategic priorities continue to include:

1) A focus on the retailing of core cold chain food products business

2) Realising cash from the disposal of non-core assets

3) Reducing debt/gearing in the business

4) Forging strategic alliances and partnerships with acknowledged industry players.

1) Retailing of core cold chain food products

It is pleasing to report that the core cold chain food products divisions (beef, chickens, pork, milk and dairy, eggs, and fish) performed well, with gross profits increasing by 29.1 per cent. (ZMW) and 7.6 per cent. (USD).

2) Realising cash from the disposal of non-core assets

The successful completion of the sale of Zamanita Limited to Cargill Holdings BV for a cash consideration of USD27.0 million on 1 June 2015 has reduced the working capital requirements of the Group and allowed us to start meeting our short-to-medium term goal of realising cash from the disposal of our non-core assets and thereby reducing our debt exposure.

We continue to explore further opportunities to dispose of other non-core assets. The intention is to reduce debt further during the year with more corporate actions. We are actively exploring other opportunities, which could include additional joint ventures and/or the outright disposal of further businesses.

3) Debt reduction and re-structuring

The disposal of Zamanita contributed to the reduction of Zambeef's total debt, in US Dollar terms, by 39 per cent (USD46.2 million), from USD118.5 million as at 30 September 2014 to USD72.3 million as at 30 September 2015.

During the year, the Group recorded exchange losses of USD20.2 million. In order to mitigate future earnings volatility arising from exchange rate fluctuations, and to preserve the most efficient capital structure, Zambeef converted and re-structured a large amount of its US Dollar debt to Kwacha.

As at 30 September 2014, US Dollar debt was 71 per cent.of total debt; this reduced to 65 per cent. at 30 September 2015; and to 56 per cent. after the year end. The intention is to continue converting further debt from US Dollars to Kwacha during the current year.

4) Strategic alliances and partnerships

Zambeef continues to explore opportunities to work closely with companies which are world leaders in their fields. Zambeef is proud to have established solid relationships with Shoprite Holdings Limited (Africa's largest food retailer), RCL Foods Limited (Africa's largest processor and marketer of chickens); and Cargill Holdings BV (one of the world's largest privately owned companies providing food, agricultural and industrial products and services throughout the world).

Zamanita Zambia Revenue Authority tax liability

As reported on 4 November 2015, the Zambia Revenue Appeals Tribunal upheld Zambeef's appeal against the ZMW49.15 million (approximately USD3.91 million) tax assessment which was received by the Company on 31 January 2012, as announced on 3 February 2012.

Following the success of the appeal, the provision which has been held in the Group's accounts since the assessment, of ZMW 49.15 million was made, will now be released in FYE 2016.

Dividend

The Board of Directors does not anticipate paying a dividend in respect of 2015. We intend to keep the dividend policy under review with the aim of achieving a balance between providing returns to shareholders and maintaining suitable levels of investment in the business.

Conclusion and outlook

Despite significant macro-economic challenges, we remain confident that the opportunities in the region will enable the Group to continue to grow in the year ahead. The continued execution of our strategy priorities will position us strongly to take advantage of this.

The operational side of the business has performed very well during the year with profit before tax, after excluding exchange losses, increasing in ZMW by 728% and in USD by 590%. Zambeef will look to build further on this strong operational performance in the next year.

Therefore, we expect to continue our progress towards becoming a leading regional food supplier and look forward to the future with confidence.

Dr. Jacob Mwanza

Chairman

25 November 2015

JOINT CHIEF EXECUTIVE OFFICERS' REVIEW

Zambeef overview

Despite significant challenges in the Zambian economy during 2015, Zambeef has had a successful year operationally.

For the year ended 30 September 2015, operating profit increased 189 per cent. from ZMW56.2 million to ZMW162.1 million (USD9.6 million to USD23.0 million), while cash generated from operations increased 223 per cent. from ZMW81.6 million to ZMW263.8 million (USD13.8 million to USD37.4million). In addition profit before tax excluding, exchange losses, increased by 728% to ZMW106,783 (in USD terms, it increased 590% to USD15,126) giving confidence that the operational side of the business is performing well.

In the 2014 annual report, Zambeef set out its immediate priorities which included:

• A focus on the core cold chain food products business

• Realising cash from the disposal of non-core assets

• Reduced gearing in the business.

It is pleasing to report that good progress has been made in pursuit of these priorities. With the increased focus, the cold chain food products divisions have performed well, with gross profits increasing by 29.1 per cent in ZMW terms (7.6 per cent in USD).

On the 1 June 2015, Zambeef completed the sale of Zamanita Limited to Cargill Holdings BV for a cash consideration of US$27.0 million. Zamanita was a non-core asset and its disposal has also considerably reduced the working capital requirements of the Zambeef Group. The disposal of Zamanita contributed to the reduction of Zambeef's total debt in US Dollar terms from USD118.5million at 30 September 2014 to USD72.3 million at 30 September 2015.

The volatility in the USD/ZMW exchange rate has led to a Board decision to restructure the Group's debt profile. As a result, in addition to reducing the total debt in USD terms by USD46.2 million a further large amount of US Dollar debt has been converted to Zambian Kwacha.

At the 30 September 2014, the US Dollar debt was 71 per cent. of total debt. This reduced to 65 per cent. at 30 September 2015 and to 56 per cent. since the year end. The intention is to convert further debt from US Dollars to Zambian Kwacha.

Dollar income

In order to address the volatility in the Zambian Kwacha, Zambeef is actively pursuing an export strategy aimed at increasing the Group's US Dollar income. Real progress has been made by putting the full range of cold chain food products into the Democratic Republic of Congo. Exports have also taken place into Malawi, Zimbabwe, Angola and Botswana. Zambeef also sees Tete Province in Mozambique as a market with significant potential.

Exports during the year totalled USD17 million while wheat and soya sales in US dollars during the year totalled USD21 million, making US Dollar income for the year USD38 million. This represents 17.5 per cent. of Zambeef Group turnover.

Retail network

Zambeef is a market-driven food company with its retail network at the heart of its business.

During the year the Group grew its retail network from 139 to 150 outlets. This included four new butchery stores within Shoprite stores in Zambia and three in Nigeria.

The retail network currently comprises the following:

Zambia:

• 84 Zambeef Outlets

• 4 Zambeef Macro Outlets

• 2 Zambeef Excellent Meat Outlets

• 6 Zamchick Inns

• 3 Wholesale Outlets

• 26 Shoprite Butcheries

Nigeria:

• 6 Master Meats Nigeria Outlets

• 14 Shoprite Butcheries

Ghana:

• 5 Shoprite Butcheries

The retail network remains a key focus area of Zambeef for the future and is the engine room that drives the business. In the next financial year:

• Shoprite plan to open an additional four stores in Zambia and a further seven stores in Nigeria

• Zambeef has secured a number of key sites around Zambia and will be looking to rollout more of its large stores (Macro Outlets), which have proved very successful.

Debt reduction

Zambeef's total debt in US Dollar terms reduced from USD118.5 million to USD72.3 million during the year. With the volatility in the Zambian Kwacha, the intention is to reduce debt further in the coming year. To this end, Zambeef is exploring opportunities which include joint ventures (similar to the Zam Chick Ltd joint venture) or the disposal of further non-core assets (like the Zamanita disposal).

Partnerships

Zambeef will continue to explore opportunities to work closely with companies that are world leaders in their field. We are proud to have established the following relationships:

• Shoprite Holdings Ltd - Since 1995 Zambeef has had a concession agreement with Shoprite for their in-store Zambian butcheries. This was extended to Nigeria in 2004 and Ghana in 2007. Shoprite is Africa's largest food retailer.

• RCL Foods Ltd - Zambeef entered into two joint venture agreements with RCL Foods Ltd in 2013 including broiler, hatchery and stockfeed operations in Zambia. Through its subsidiary Rainbow, RCL Foods is the largest processor and marketer of chickens in Africa.

• Cargill Holdings BV - During 2015, Zambeef disposed of its edible oil business, Zamanita Ltd, to Cargill and hopes to work closely with Cargill in the future as a supplier and customer of Zamanita, and a distributor of certain of its products. Cargill is one of the world's largest privately owned companies providing food, agricultural and industrial products and services to the world.

Conclusion and outlook

The year has seen a renewed focus by Zambeef on its cold chain food product operations. This includes the production, processing, distribution and retailing of beef, chicken, pork, fish, dairy products and eggs. These are cash generating operations that will form the cornerstone of its future success. The Group can be pleased with the excellent operational performance during the year as evident by the increase in profit before tax, after removing exchange losses, by 590% in ZMW and 728% in USD

Considerable attention has been paid to the distribution of these products through Zambeef's retail network in Zambia but also in marketing these products into the wider SADC/COMESA region. While Zambia remains the foundation of the business, a real effort will continue to be exerted in making Zambia the hub servicing the wider SADC/COMESA region. Zambeef retains a positive outlook towards the regions in which it operates and has set its sights on continuing to grow this business in the next financial year.

Zambeef is pleased to have successfully negotiated the disposal of Zamanita Ltd during the year. The proceeds from this disposal together with the shortening of the working capital cycle has resulted in Group debt in US Dollar terms reducing by 39.0 per cent . It remains a priority to reduce debt further during the coming year.

The Nigerian operations continue to grow with Shoprite due to open a further seven stores during the coming financial year.

In Ghana, a further Shoprite store was opened after the year end, which will generate growth in the year ahead.

With the expansion of its own retailing network as well as the Shoprite retailing network, Zambeef expects to continue to grow in ZMK in the year ahead.

Finally, we would like to thank our Board of Directors and all staff of Zambeef for their contribution to the continued success of the Group. We look forward to the future with confidence.

Carl Irwin/Francis Grogan

Joint CEOs

25 November 2015

FINANCIAL AND OPERATIONAL REVIEW

Overview

It is pleasing to report that the year has seen an increase, in both Zambian Kwacha and US Dollar terms, in operating profits, EBITDA, adjusted profits and cash generated from operations. These increases are summarised below:

The adjusted profits increased from a profit of ZMW9.6 million (USD1.6 million) in 2014 to a profit of ZMW11.3 million (USD1.6 million). This result was particularly encouraging in the context of realised exchange losses during the period of ZMW95.5 million (USD13.5 million) resulting from a reduction in the Group's dollar debt through repayment of loans and the restructuring of US Dollar debt into Zambian Kwacha debt during the year.

In this context, it is particularly disappointing to report a loss after tax for the year of ZMW54.6million (USD7.7 million). This loss is entirely attributable to the exchange loss adjustments necessary as a result of the Group's dollar-denominated debt, as can be seen from the table below.

The following table illustrates the impact of the Group's US dollar gearing on loss before tax:

In summary, the realised and unrealised exchange losses have reduced a pre-tax profit of ZMW106.8 million (USD 15.1 million) to a pre-tax loss of ZMW35.6 million (USD5.0 million). This outcome gives support to the Board decision to reduce debt and mitigate currency risk within the Group.

Zambeef has during the year reduced its debt in dollar terms by USD46.2 million in the year, and of the remaining debt a large amount has been converted to Zambian Kwacha. As a result Zambeef will be less susceptible to exchange losses in the future.

A clear strategy of the Board is to reduce the debt further through the realising of cash from the sale of non-core assets. In addition, efforts are being made to convert US dollar debt into Zambian Kwacha.

Segmental revenue and gross profit summary - ZMW

Segmental revenue and gross profit summary - USD

Despite the difficult trading conditions with the rapid devaluation of the Zambian Kwacha and electricity load-shedding, Zambeef is pleased with the performance of the Group and expects to make further progress in the current year.

Exchange rate volatility

During the year, the Zambian Kwacha devalued against the US Dollar from ZMW6.27/USD to ZMW12.02/USD. This rapid devaluation resulted in Zambeef incurring large realised and unrealised exchange losses, which impacted the results of the Group for the year. It is hoped that the Zambian Kwacha will stabilise as the devaluation is affecting spending power in the economy.

In order to reduce the negative impact of the devaluation of the Zambian Kwacha, Zambeef has converted some US Dollar-denominated debt to Zambian Kwacha. At 30 September 2014, approximately 71 per cent. of the Group's debt was in US Dollars. By 30 September 2015, this had reduced to 65 per cent. and after the year end, it reduced further to 56 per cent. In addition, debt has reduced by USD46 million over the year. As a result, the impact from the devaluation of the Zambian Kwacha in future years is expected to be reduced.

Management has continued to tightly control administration costs during the year. It is pleasing to report that administration costs, excluding depreciation, have increased slightly in ZMW while reducing in USD terms, as follows:

The tight control of administration costs is pleasing and this will remain a key focus of management.

Finance costs

The period saw an increase in finance costs in ZMW terms (27.8 per cent.) and in USD terms (6.4 per cent.). During the year, the level of debt reduced, while at the same time, the average interest rate increased, as US Dollar debt was converted to Zambian Kwacha at a higher interest rate. The average cost of debt has increased from around 8.2 per cent. at the start of the year to around 11.7 per cent. currently.

Capital expenditure

The total capital expenditure during the year was ZMW222.9 million (USD31.6 million). The largest element of this relates to the joint venture hatchery, breeder farm and stockfeed plant being developed in conjunction with RCL Foods Ltd. This amounted to USD18.9 million during the year. The total project cost is around USD25 million, which is financed as follows:

• 66.7 per cent. by shareholders (51 per cent. by RCL Foods and 49 per cent. by Zambeef)

• 33.3 per cent. bank financing.

The remaining cost of completion of the project at the year-end was around USD6 million. The first chicks were produced in September 2015 and Zamhatch is now supplying the Zam Chick chicken operations, with the surplus chicks being sold on the open market.

Other material capital expenditure during the year included:

• Masterpork: ZMW8.9 million (USD1.3 million) on increasing production and refrigeration capacity at Masterpork

• Zam Chick: ZMW12.5 million (USD1.8 million), which included the upgrade of the chicken abattoir and the expansion of broiler production capacity through the conversion of broiler houses to semi-controlled houses

• Zammilk: ZMW14.3 million (USD2.0 million), which included the construction of new all-weather sheds for dairy cows at Kalundu Dairy, resulting in an increase in milk production, and expansion of milk processing plant capacity

• Farming operations: ZMW10.4 million (USD1.5 million) consisting mainly of replacement equipment

• Novatek stock feed: ZMW7.3 million (USD1.0 million) to double the fish feed plant and for general expansion of the stockfeed plant

• Zampalm: ZMW11.6 million (USD1.7 million) for the continued roll out of the palm project

• Retailing and distribution: ZMW9.1 million (USD1.3 million) for expansion and upgrade of the retail network and replacement and expansion of the distribution fleet.

The capital expenditure for the current year is budgeted at USD19.3 million, including USD6 million for completion of the Zamhatch project. The main capital expenditure will be concentrated on retailing and production of cold chain food products.

Operational review

Below we provide a more detailed overview of the Group's operational performance.

The Group's top performing divisions were fish followed by pork and then cropping. The cold chain food product divisions overall performed well, with gross profits increasing by 29.1 per cent. In ZMW terms (7.6 per cent. in USD). The top performing divisions were:

Cropping

Zambeef's cropping division has again been the most profitable division within the Group, with gross profits up 63 per cent. in ZMW terms and 36 per cent. in US Dollars. The division performed well despite the summer crop being affected by heavy late rains that impacted the soya yield, and the winter crops being affected by electricity load-shedding. Despite this, the yields were only slightly down on budget. This division has sold and been paid for its wheat and soya beans in US Dollars, mitigating exposure to depreciation of the Zambian Kwacha.

A total of 24,174 hectares were planted during the year and 112,277 tonnes of maize, wheat and soya bean were harvested, as well as 29,700 tonnes of silage. This is a very well managed division and the operations are world class. This division is expected to continue to perform well.

Beef

The beef operations were the second best performing division in the Group, accounting for 19 per cent. of gross profit. During the year beef sales increased by 410 tonnes, representing a 3 per cent. volume increase. A total of 57,945 cattle were slaughtered and 22,221 cattle went through the Zambeef feedlot. Gross profits increased by 28 per cent. in Kwacha terms and by 7 per cent. In US Dollars.

The beef division has benefited from the focus on the cold chain food product divisions and from the expansion of the Zambeef Macro Outlets, which have increased demand for our beef. This division is expected to continue to perform well and consolidate its position as the market leader.

Chicken and egg

Zam Chick has had a good year, with volumes increasing by 12.45 per cent. to 10.6 million kgs for the year. Gross profit increased in Kwacha by 27 per cent. and in US Dollars by 6 per cent . The joint venture with RCL Foods Ltd has progressed well and we look forward to benefitting further from RCL Foods Ltd's expertise in developing new product lines in Zambia.

Demand for eggs remained strong during the year, highlighting the division's under-capacity in this area. As a result, we will be increasing capacity from 165,000 layers to 285,000 layers by the middle of the next financial year.

Demand for our full range of poultry products from our retail network has been strong and, with exports starting into the region, the poultry division is well placed for further growth in the current year.

Our new hatchery, which is a joint venture with RCL Foods Ltd, began production in September 2015, and is expected to be an important new business for the Group in the next financial year.

Pork

This division has had an outstanding year and has been the second fastest growing division after fish. Volumes increased by 38 per cent. from 6.6 million kgs to 9.1 million kgs, while gross profit increased by 67 per cent. in Kwacha and 39 per cent in US Dollars.

Masterpork has firmly established itself as the market leader in Zambia and is increasing its exports into the region. The plant is undergoing expansion at the moment to increase capacity and this division is expected to continue to grow in the coming year.

Milk and dairy

Our milk and dairy division continues to perform well. Volumes increased by 16 per cent. while gross profits increased by 26 per cent. in Kwacha terms and 5 per cent in US Dollars. This division accounted for 7 per cent. of the Group's gross profits.

The Zambeef Kalundu Dairy farm is now a world-class facility operating at international efficiency levels. The processing plant is nearing completion of an upgrade that has doubled its capacity.

In line with our other cold chain food product divisions, this division benefits from the renewed focus on Zambeef as a market driven food business, and by the expansion of its retail network. This division is now exporting into the region and continues to expand its range of products. The division expects to continue to grow in line with the other cold chain food product divisions.

Fish

Our fish business has been the fastest growing part of the Zambeef business during the year with volumes increasing by 92 per cent. from 1.1 million kgs to 2.2 million kgs, and gross profit in ZMW terms by 84 per cent and in USD by 53 per cent.

Although this is still a relatively small division within Zambeef, we see this sector continuing to grow quickly. Zambeef has been working with a number of fish farms in both Zambia and Zimbabwe with the view to supplying the stockfeed to the fish farms and then buying the finished product. This strategy has worked well and we expect continued strong growth from this division.

Stockfeed

The stockfeed operations, under the brand name Novatek, have continued to grow and increase market share during the year. Stockfeed sales increased in volume by 10 per cent. from 118,885 tonnes to 130,279 tonnes, with gross profits increasing by 39 per cent. In Kwacha terms and 16 per cent. In US Dollars.

Novatek has consolidated its position as the best-selling stockfeed in Zambia and has also benefited from its stockfeed outlets being included in the Zambeef Macro Outlets. Novatek now has 90 Novatek agency outlets and a further three outlets in Zambeef Macro Outlets. The slowdown in the small-scale chicken production sector towards the end of the financial year will slow down Novatek's growth. However, this division is expanding its product range, increasing its exports and looks forward to the future with confidence.

Edible oils

Zamanita was disposed of on 1 June 2015 for a cash consideration of USD26 million. Zambeef continues to market Zamanita's edible oils through its retail network and will remain involved in the edible oil industry, although it will not be a material part of the business going forward.

Mill

The flour produced and sold during the year decreased form 20,000 tonnes to 13,000 tonnes as Zambeef made the decision to sell more of its wheat and reduce its flour operations. Margins in the milling operations remain tight and hence the option to sell wheat has been attractive.

Leather and shoe

FY15 was a slower year for the tannery business, with world leather prices softening. The tannery continued to process around 100,000 hides per year but the reduction in international leather prices resulted in gross profits increasing in ZMW terms by 10 per cent. and reducing in USD terms by 8 per cent.. The shoe plant continues to operate close to capacity at around 80,000 pairs per year.

West Africa

The West African operations have continued to grow in line with the Shoprite expansion in Nigeria and Ghana. Shoprite opened an additional three stores in Nigeria and one store in Ghana during the year, with a further seven due to open in Nigeria during the 2016 financial year.

Gross profits increased in ZMW by 8 per cent. and decreased in USD by 10 per cent. The Nigerian economy has had a difficult year, with the currency depreciating by 22 per cent, and the drop in the oil price and security worries having a negative impact. Despite the short-term difficulties in the economy, Nigeria remains Africa's biggest economy with a population of more than 160 million. This remains an exciting economy and with Shoprite's aggressive rollout plan we see our West African operations becoming an increasingly important part of our business.

ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 SEPTEMBER 2015

ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 SEPTEMBER 2015 (CONTINUED)

ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2015

ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2015 (CONTINUED)

ZAMBEEF PRODUCTS PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2015

ZAMBEEF PRODUCTS PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2015 (CONTINUED)

ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION ‑ 30 SEPTEMBER 2015

ZAMBEEF PRODUCTS PLC AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION ‑ 30 SEPTEMBER 2015 (CONTINUED)