Accra, Ghana on 1st November 2007.

With the enormous spending power

which exists in West Africa, Zambeef

looks forward to strong growth in

this part of Africa for the foreseeable

future.
 

The Zambeef Board of Directors has,

after the year end, approved the

acquisition of the assets of the largest

edible oil producer in Zambia, called

Amanita Premium Oils Ltd, together

with a large irrigation farming

operation on the Zambezi River. These

strategic acquisitions are dealt with

in more detail further in this report.

However these acquisitions are part of

Zambeef’s strategic vision of being the

leading food provider in the region.

The Zambeef Group has continued

to reinvest in all its divisions in order

to continue to grow and expand its

operations. The two major new capital

projects completed during 2007 were

the bakery which started production of

bread under the brand name Zamloaf

in May 2007 and the wheat mill which

will start producing flour in November

2007 under the brand name Zamflour.

Both of these have been large projects

which will contribute to Zambeef’s

growth for many years. This is part of

Zambeef’s policy of adding maximum

value to all its primary production by

further processing before branding

these products and retailing them

direct to the end consumer through

Zambeef’s 92 retailing outlets

throughout Zambia and West Africa.

The performance of each division is

dealt with in more detail below:

BEEF DIVISION (ZAMBEEF)

The beef division remains Zambeef’s

largest division accounting for 38%

of the Group’s operating profit.

During the year Zambeef opened

three new beef abattoirs in strategic

locations throughout Zambia,

namely Livingstone, Sinazongwe and

Mazabuka. This has helped to ensure

the continued growth of this division

with operating profits up by 16% in

Kwacha terms and 22% in US Dollar

terms.

Margins in this division have reduced

during the year from 37% to 33% as

a result of cattle prices having reached

record levels during the year and delays

in passing these price increases onto

the consumer. In addition, stock feed

prices have increased during the year.

Despite this, demand remains strong

with turnover up 30% in Kwacha terms

and 37% in US Dollar terms. With per

capita income continuing to increase,

this division is expected to continue to 
grow.

CHICKEN DIVISION (ZAMCHICK)

The chicken division is Zambeef’s

second largest division in terms of

turnover and the fourth largest in

terms of operating profits, contributing

14% of the Groups operating profits.

The chicken division has shown large

growth in both volumes and operating

profits. Turnover increased by 22% in

Kwachas and 28% in US Dollars while

operating profits increased by 29% in

Kwachas and 36% in US Dollars.

The increase in real incomes appears

to have resulted in strong growth in

the demand for chicken. The effect of

the negative publicity regarding the

risk of Avian Flu has abated and the

consumer has once again embraced

chicken as a cheap protein source.

Avian Flu (HSN1-virus) has to date

never crossed the equator. However

Zambeef has implemented strict

bio-security controls to ensure the

risk of disease, including Avian Flu, is

minimized.

With demand for chicken continuing

to grow, Zambeef will continue to

expand its chicken operations and

looks forward to continued strong

growth in its chicken division.
 

DAIRY DIVISION (ZAMMILK)

CROPPING DIVISION
(ZAMBEEF FARMING)

The cropping division remains one of

Zambeef’s most exciting and fastest

growing divisions. Zambeef is now one

of the largest row cropping operations

in Africa producing around 40 000

tons of crops per annum. Zambia

is blessed with around 40% of Sub

Saharan Africa’s water. With fertile

soils and an excellent climate Zambia

is well placed to be the bread basket

of Africa. Zambeef has continued

to invest heavily in expanding its

cropping operations and now has

2700 hectares under irrigation and

a further 1 500 hectares of dry land

crops. This division now accounts for

20% of the group’s operating profits,

making this the second largest division

in the Zambeef group.

During the year, turnover increased

by 100% in Kwachas and 110% in

US Dollars while operating profits

increased by 101% in Kwachas and

111% in US Dollars. This division

remains a high priority area for

further investment due to Zambia’s

huge advantage in the region from its

abundant water resources.

The Zambeef Board is pleased to

confirm that in October 2007 it has

concluded the acquisition of a new farm

in the Zambezi Valley which currently

has 960 hectares under irrigation but

with the land and water to develop a

further 1 500 hectares of irrigation.

This will almost double Zambeef’s

cropping operations over the next two

years and make Zambeef by far the

largest row cropping operation on the

African continent. This will ensure very

strong growth from this division for

the next few years.

MILLING DIVISION (ZAMFLOUR)

Zambeef commenced milling its

own wheat on 1st November 2006,

through a toll milling agreement with

Amanita Milling Ltd, using the brand

name Zamflour. Zambeef expects

to commission its own new wheat

mill during November 2007. This is

a modern automated 3 000 tons per

month mill and will be one of the most

efficient mills in the region. During

the last financial year the milling

operations had a turnover of K10.6bn

(US$2.8m) and an operating profit

16 Zambeef Products PLC 2007 Annual Report of K438m. This has been an excellent

performance for the first year of wheat

milling particularly with the difficulties

of milling in a third party mill.

The total capital expenditure on the

mill project is around US$1.9m. With

the regional shortage of flour and world wheat prices souring the Zambeef mill can look forward to strong demand both from within Zambia and the region. As a result Zambeef can look forward to good growth in this division with its new mill operational.

BAKERY DIVISION (ZAMLOAF)

Zambeef commenced baking bread,

under the brand name Zamloaf, in

May 2007. The bakery is a modern

30 000 loaves per day travel oven

bakery which is situated on Zambeef’s

Huntley Farm next to the new mill

referred to above. Both the mill and

the bakery are part of Zambeef’s

strategy of adding maximum value to

all its primary production. Zambeef

can now sell its wheat as flour or

bread. The bread sales are going well

and are up to around 20,000 loaves

per day. Zambeef is in the unique

position where it grows wheat, mills

the wheat and finally bakes the bread

all on one farm.

This exciting project has started well

and in its first 5 months of operations

had a turnover of K3.0bn (US$0.8m)

and an operating profit of K758m

(US$0.2m). The capital expenditure to

set the bakery up was US$1.6m. This

division should show strong growth

for the foreseeable future and we are

confident of developing Zambia’s first

national bread brand.

TANNERY (ZAMLEATHER)

Zambeef’s leather operation has been

one of the top performing divisions in

the last year with turnover up by 38%

in Kwachas and 45% in US Dollars

while operating profit increased by

48% in Kwachas and 55% in US

Dollars. These outstanding results

are largely due to Zamleather being

approved at the start of the year, to

supply leather to two of the world’s

major motor vehicle upholstery

leather manufacturers.

Zamleather is the only tannery in Africa, outside of South Africa, to be approved by either of these companies. Motor vehicle upholstery leather is one of the highest value leathers and hence it has been an exciting development breaking into this market.
 

The tannery has been further helped

by worldwide leather prices increasing

during the year and Zamleather

increasing its finished leather sales

both within Zambia and in the region.

Finished leather sales into Tanzania

have continued to grow during the

year.

With margins having improved,

Zambeef has invested in expanding

its capacity at the tannery from

processing 70 000 hides per annum

to 120 000 hides. Instead of only

processing Zambeef’s own hides, the

tannery is now actively buying hides in

the open market and hopes to continue

to expand and grow this division.

SHOE PLANT (ZAMSHU)

Zambeef has continued to expand

and upgrade its retailing network

throughout Zambia and now has 94

retail outlets strategically located

throughout Zambia. This is the largest

distribution and retailing network

in Zambia and provides the market

for Zambeef to retail its products

direct to the end consumer. With

real incomes increasing resulting in

strong growth in the retailing sector,

Zambeef expects its retail network to

drive strong growth in all its divisions.

Master Meats and Agro Production

Company of Nigeria Ltd. This company

is currently in the process of setting

up a meat processing plant in Lagos in

order to produce high value processed

products. This processing plant will

focus on supplying the Shoprite Stores

quality processed products. The next

store in Nigeria is scheduled to open

in Kalabah in February 2008. Shoprite

has a further ambitious rollout plan in

Nigeria. As a result Zambeef can look

forward to continued strong growth in

Nigeria for a long time to come.

AMANITA PREMIUM OILS LTD

After the year end, the Zambeef Board

of Directors approved, subject to

shareholder ratification, the acquisition

of the fixed assets and certain current

assets and liabilities of the largest

edible oil producer in Zambia, namely

Amanita Premium Oils Ltd. The

rational behind this acquisition is that

edible oils compliments Zambeef’s

range of basic food products retailed

through its retailing network. Of

equal importance is that the by

product from the edible oils crushing

plant is the main form of protein in

the livestock sector and hence is an

important component of Zambeef’s

strategic vision of being the leading

food provider in the region.

The edible oils operation will be

branded Zamanita and will provide

enormous growth for the Zambeef

Group. Zambeef will be investing

in upgrading the oil crushing plant

and refinery in order to increase

volumes and improve efficiencies

in this plant. Currently, a large part

of Zambia’s oil seeds are exported

to South Africa for processing. With

edible oil prices, like other oils, having

increased dramatically in the last year,

the ability to crush all the oil seeds

produced in Zambia in the country is

extremely exciting and the knock on

effect to the livestock sector through

the availability of additional protein is

equally exciting.

CHIAWA ESTATES

The Zambeef Board of Directors has

approved, after the year end, the

acquisition of a large farming block

of 8 357 hectares bordering on two

of Zambia’s largest rivers, namely the

Zambezi River and the Kafue River.

Currently, 960 hectares of this land is

developed under irrigation. Zambeef

is budgeting to develop another 1,500

hectare under irrigation over the

next two years. The real attraction of

this farming block is the abundant

availability of water which ties in

with Zambeef’s strategy of expanding

its cropping operations only under

irrigation. Zambeef is already the

single largest row cropping operation

in Africa and this expansion will allow

Zambeef to almost double its cropping

operation in the next two years.

Zambeef believes its competitive

advantage in the region is the efficient

production of crops due to Zambia’s

excellent cropping climate, fertile

soils and most importantly the

abundance of water. It is clear that

water is becoming a scarce resource

throughout the world. Zambeef’s world

class irrigated cropping operations will

give it a strategic advantage in the

region in its production of all basic

food products, particularly with the

large increase in maize, soya and wheat

prices in the last year. This acquisition

will thus further strengthen Zambeef’s

position as the leading food provider

in the region.

MASTER MEATS - GHANA

On 1st November 2007, Zambeef

started trading in Ghana through its

90% subsidiary called Master Meats of

Ghana Ltd. As in Nigeria, Zambeef has

the franchise on the Shoprite Checkers

butcheries in Ghana. Shoprite has

a rollout plan for further stores in

Ghana and hence this subsidiary can

look forward to strong growth.

Staff and Board of Directors

Any company can only be as good as

the people it comprises of. Zambeef

works hard to attract, retain and

develop staff who are the best in

their field and passionate about their

jobs. As Joint Managing Directors we

would like to thank all our employees

throughout Zambia and in West Africa

for the hard work and contribution to

the continued success of the Zambeef

Group of Companies.

Zambeef is fortunate in the high calibre

of its directors and we would like to

thank all our board colleagues for

their wise counsel and strategic advice

during the year. In particular we would

like to thank our Board Chairman, Dr

Jacob Mwanza for his wise guidance in

expanding and growing our business.

Conclusion

Zambeef can look back proudly

on another very successful year in

which the Group has continued with

its strong growth record. The Group

has an exciting and well planned

expansion program for the next year

which will see a further diversification

of the business without losing the

strategic vision of being the regions

leading food provider. This, coupled

with Zambia’s strong expected growth

for the next few years, allows Zambeef

to look to the future with a great deal

of excitement and confidence.