ZAMBEEF PRODUCTS PLC

(“Zambeef” or the “Company”)

Operational Update

Zambeef, the fully integrated agri-business with operations in Zambia, Nigeria and Ghana, updates the market on two current operational issues.

Food security

Zambeef notes reports in some Zambian newspapers that certain of its imported beef products (“Imported Beef Products”) contained aromatic aldehydes or formaldehyde. Whilst aromatic aldehydes and formaldehyde are found naturally in most food products, excessive levels can be harmful to humans. Accordingly, on learning of these reports, the board of directors of Zambeef (the “Board”), in conjunction with the Ministry of Health, immediately removed all Imported Beef Products from Zambeef’s retail outlets as a precautionary measure and no Imported Beef Products are now being offered for sale by the Company. In addition, the Company has cooperated fully with the Ministry of Health and other regulatory authorities to bring a swift conclusion to this matter.

Following receipt of tests commissioned by the government, the Minister of Health, the Hon. Dr Joseph Kasonde, MP (the “Minister”), yesterday stated that the tests indicated the presence of formaldehyde in samples of Zambeef’s Imported Beef Products and that the Ministry of Health is working on establishing the point of contamination.

As yet, these results have not been made available to the Company, therefore Zambeef’s internal food safety specialists have not had an opportunity to review the results.

The Board takes food safety issues extremely seriously and Zambeef will never knowingly offer for sale any products which could be hazardous to the health of its customers. As a consequence, the Company will be undertaking a comprehensive review of internal food transport, handling and storage procedures as well as conducting extensive investigative dialogue with officials from the importing countries. It will also continue to cooperate with the government and relevant authorities to identify the level and potential source of any contamination.

The Company has made clear to consumers, via local media sources, that Zambeef only imports meat products from internationally recognised meat companies in countries with globally recognised traceability protocols in place, namely the United Kingdom, Republic of Ireland or the United States of America and that its Imported Beef Products are accompanied by certification from all of the required regulatory authorities in these countries, as applicable. The embargo on Imported Beef Products remains in place until further notice.

The sale of Imported Beef Products accounted for approx. four per cent. of the Company’s annual turnover in 2012. Nevertheless the Company recognises that the negative publicity created by this matter could impact other product lines and, in doing so, Zambeef’s profitability for the current financial year. These effects are difficult to quantify in the short term, but the Board will provide a further update in its pre-close statement in late September.

Wheat prices

The Board notes that the global and Zambian wheat price is currently lower than had previously been forecast. The Company normally harvests circa 45,000 tonnes of wheat per annum, of which it retains circa 30,000 tonnes, which is used to supply its milling and bakery division, and typically sells the surplus into the open market. Whilst the Company has yet to enter into any fixed price sales contracts, it is considered likely that any such contracts will be at lower prices than had previously been forecast and that valuation of its year end stocks will be correspondingly lower.

The effect of the lower valuation placed on wheat stocks will, in all likelihood, reduce the Company’s annual profitability below market consensus. A further update on the anticipated impact of this will be made in the pre-close statement expected to be published in late September.

Commenting, Francis Grogan, Zambeef’s CEO, said, “Clearly it has been a difficult period in light of the reports concerning the Company’s Imported Beef Products and we are cooperating fully with the government to draw a line under the matter. We are committed to ensuring all products sold by Zambeef are of the highest quality and safe for our consumers, which is why we will continue to suspend the sale of Imported Beef Products until the Ministry of Health and Zambeef have fully resolved the matter.

Zambeef is focused on building a well-diversified business model which helps us to mitigate the impact of volatility in commodity markets caused by the effect of variable climatic conditions on world agricultural production. Therefore, whilst the global wheat price will depress the valuation of our wheat stocks, we believe that Zambeef remains well placed to build on its position as one of the leading food producers in Sub-Saharan Africa.”

**ENDS**

For further information, please contact:

Notes to Editors

Aromatic Aldehydes

Aromatic aldehydes are organic chemical compounds, many obtained from natural derivatives as well as commercial preparations. They are commonly used in the pharmaceutical, agriculture and plastics industries as well as in certain consumer applications, for example they are frequently used as fragrance agents in perfume. Aromatic aldehydes are also extensively used by the food industry as perfumes, flavouring agents and preservatives. The use of aldehydes in this way is completely safe and harmless for consumers, for instance, they occur naturally in vanilla beans, which are used in many deserts products, such as ice cream. Aromatic aldehydes are also used to synthesise other chemicals for use in agriculture and pharmaceuticals.

Aromatic aldehydes also have chemical components and properties that make them important in human biological functions. Carbohydrates, such as sugars and starches, are commonly found in the form of aromatic aldehydes, and are essential fuel for supply of energy to the human body.

Formaldehyde

As indicated by the World Health Organisation, formaldehyde occurs naturally in the environment as a metabolic intermediate and is present at low levels in most living organisms. Formaldehyde can be found naturally in food up to the levels of 300 to 400 mg/kg, including fruits and vegetables, meats (including beef), fish, crustacea and dried mushrooms. It is also employed in higher concentrations in non-food uses.

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

Download

2012 Annual Report

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