African Investor Relations

Many of the more established listed companies in the First World have mandatory director induction programmes. Ones designed to ensure that directors understand their fiduciary duties in the context of corporate governance. It beggars belief that a public article of the nature below can state ……

” When first appointed members had been of the view that the dismissed Board members were familiar with their fiduciary duties in terms of the law and in terms of the articles of the company (NOTE: no mention of the Zimbabwe Code on Corporate Governance), regrettably it has turned out that they were not fully conversant with the above resulting in uninformed decisions for the detriment of all shareholders”

Where is the Institute of Directors when you need it? Where’s oversight from the shareholders about the capabilities of their board. In the 21st century there is actually no excuse for this sort of failure. It seems that the authors of this notice, “the members”, have shot themselves in the foot. Members are responsible for appointing directors (or ratifying the appointment) so they should put in place measures to ensure that educated and honest members are appointed to the Board. Its always someone else’s fault isn’t it. It’s just like dealing with teenage kids.

“Comply” or “explain” Mervyn King recommends in his approach to applying corporate governance vs the alternative of legislating compliance. Corporate governance is not about “checklists” he says. Its about the integrity of directors. Well, what should one do when there is little shareholder oversight (or activism) of their Board? When legislation is not prescriptive enough? Well this is where African corporate governance is not understood. Generally the absence of critical mass in investor numbers, in regulation, in shareholder education, in all stakeholders being informed about shareholder rights etc. is a recipe for ensuring that something different needs to be done.

The difference needed is to “create lists”. Lists of clear corporate governance deliverables making it mandatory for listed company executives and the Board to sign them off in public in front of shareholders. Every year at the AGM. Hold all directors accountable for the performance of all directors, not come up with excuses like “they did not know what their fiduciary duties were”.

 

The wishy washy corporate governance codes language is NOT appropriate for governance in African markets. It’s not that Africans are more dishonest than others. Its just that the environment we find ourselves in is more conducive to no-one paying attention to corporate governance – the levels of oversight on all levels are not as high so abuse can slip in. And it does.

The solution is so simple. Create a list, tell the directors to swear on their mothers death that they carried out an appraisal of the things in the list and disclose the results. Ticking off things on a list will create the basis upon which directors can become more aware of what integrity means because they will be reminded of it. What is this “list” you may ask?  Well, one form is the Institute of Directors South Africa’s Governance Assessment Instrument – this is what their website says….

As part of our efforts the Centre for Corporate Governance has established the Governance Assessment Instrument (GAI), a web-based tool with modules catering for all business sectors, including listed companies, SMEs, state-owned entities, medical funds, pension funds, NPOs, etc.

The GAI facilitates the implementation of good governance structures and practices. It also serves as a rating mechanism of governance.

To login or to view the GAI click here

You probably find that there are not more than 12 statements that need to be read out to directors at an AGM that cover everything that shareholders need to know about how their board is responsible for their own behaviour. Jointly. If the Board fails in part, the whole Board should go. Mix “lists” with the “comply or explain” mantra and we will be one step ahead of where we are now.

 

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It’s not often that one gets to launch an online investor relations initiative and new website for a company that’s over 100 years old. Well that’s what we have done for CFI Holdings. That’s cool!

CFI is a Zimbabwean vertically integrated conglomerate predominantly involved in poultry, agro-industrial processing, irrigation, retailing, and property management and development.

CFI Holdings’ investor relations section and IR initiatives is not a world trendsetter – it does not have to be – the company offer the basics to their shareholders (and customers) as required by good corporate governance practices. Merging investor relations initiatives with being more competitive in the commercial space online just builds overall corporate reputation. It’s a fact that is lost on many corporate executives: except those at CFI of course – and a handful of others.

CFI is an interesting investment opportunity given its asset base and vertically integrated structure and the group has struggled post “dollarisation” in Zimbabwe as have all companies. For international investors looking at Zimbabwean listed companies it’s tempting to dismiss the efforts of small listed companies (as measured by market capitalisation). But when measured by the efforts these companies are making to engage shareholders directly and to showcase brand online they ARE leaders in Africa – just look at how other corporate websites fair in African markets – particularly listed companies. Now appreciate a company like CFI.

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Many well run African banks are profitable and enjoy a very strong investment story given their critical role in their respective economies. Banks are a favourite amongst investors of all types: they are easy to understand (theoretically) brand awareness is high and they are profitable. They are also highly regulated which adds confidence to the general investing populous.

Conversely commercial banks are in a particularly strong position to benefit from an online investor and stakeholder relations function for a number of reasons:-

• Brand outreach is key because of the competitive nature of the banking industry
• Customer / stakeholder communities are large and widely spread around the World
• Communications corporate governance and reporting complements prudential governance compliance
• Market confidence is critical – a good website adds to corporate reputation. For banks “Online Corporate Reputation” or OCR is a growth area enabling differentiation from peers
• The diverse nature of banking operations provides opportunity to cross sell products and services

A bank is a provider of diverse set of products and services to many, many thousands of customers and stakeholders. How can a website landing page or indeed a website in its entirety capture everything that a bank can do?

The fact is it can’t.

So management of African banks have to prioritise.

The most obvious place for them to start is the 5 year strategic plan presented to the Board. The look to the financial statements: where are the majority of revenues generated? Which aspect of the business has the most potential and which deserves to be given the most exposure or the highest quality of exposure? It is this process of prioritisation and familiarisation that takes time. It’s worth it because the creation at the end of the day that crystallises this, is a website that is going to work for the bank’s brand for 5 years or more. Return on investment will be high. Peer competitive rankings will be high. Customer ratings will be high.

Take time to view a few African bank websites and the majority of them do not know about the advice I have above. The evidence: the poor quality of their websites. This is lost opportunity.

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Investor relations practices in Zimbabwe are subject to stresses and strains not seen in other markets anywhere else in the World. It was only a few years ago that Directors were being jailed for communicating their strategies to “protect shareholder value” in a hyper-inflationary environment. For example just putting up prices was a criminal offence. I am not joking.

In order to survive companies had to break the law and not communicate this to the market. This was to “protect shareholder value”. Many executives could not handle it and left. Post-dollarisation (post the chaos of hyperinflation) the Zimbabwean economy is now strewn with under-capitalised businesses that now have to deal with the Government’s objective to “empower the people”.

It’s complex, its political. It is again challenging executives. Get it out of the way and opportunity awaits you.

One company that has overcome this threshold before others is Meikles – check out an extract of their latest interim statement below.

Access full information on this dual-listed company on www.meiklesinvestor.com and their latest statement here.

MEIKLES releases 2011 interim results

The Meikles Limited Board of Directors is pleased to announce the release of the 2011 interim results for the six months ended 30 September 2011. Below are a few extracts from the Chairman’s review.

Group review

Indigenisation
After meeting the various requirements set by the Ministry of Youth Development, Indigenisation and Empowerment, the Company was accorded its indigenous status and is now in compliance with the Empowerment Act…

Pick n Pay investment into TM Supermarkets
Save for the Competition and Tariff Commission, the regulatory authorities have now approved the Pick n Pay investment into TM Supermarkets…

Disposal of the Cape Grace
The disposal of the Cape Grace Group is expected to be completed in the second half of our financial year.

Employee Share Trust (“Trust”)
As stakeholders will remember, on 18 August 2011 the shareholders approved the allocation of 24 million Meikles shares into the Meikles Limited Employee Share Trust…

Executive share scheme
The Group executives together with an indigenous consortium have set up a special purpose vehicle to acquire shares in the Company through the Zimbabwe Stock Exchange…

Ex-Cotton Printers equipment
Following the conclusion of the liquidation of Cotton Printers, the spinning and weaving equipment remained unsold. The Company subsequently entered into an agreement to dispose of this equipment to the former workers of Cotton Printers…

Funds held at the Reserve Bank of Zimbabwe
Negotiations with the RBZ for the repayment of our deposit of US$37 million are still continuing. We remain confident that the deposit, that is accruing interest, will be repaid. Shareholders are advised that there are no further outstanding issues with the RBZ.

Group results
The Group has continued to make progress under very difficult conditions, with high borrowing costs and inadequate capitalisation. Revenues from continuing operations increased by 39% compared to the same period in 2010…

TM Supermarkets (“TM”)
Revenues increased by 36.4% to $136.6 million (2010: $100.2 million). The EBIDTA for the 6 months ended 30 September 2011 was $3.5 million (2010: $2.1 million)…

Thomas Meikle Stores
The revenues increased by 114.9% to $12.2 million (2010: $5.7 million). The gross margin was 32% (2010: 33%). The EBIDTA for the 6 months ended 30 September 2011 was $234,000 (2010: loss of $579,000)…

Tanganda Tea Company
The peak season for tea remains November to March in any given year and is heavily influenced by the rainy season. Therefore, in the 6 months ended 30 September 2011, the company’s main focus was plantation development and diversification into other crops…

Meikles Hospitality
The tourism sector in Zimbabwe continues to recover due to the relative political and economic stability. The tourist arrivals have increased by around 16% this year according to the Zimbabwe Tourism Authority…

Directorships
The Company announced the resignation of the then Group CEO Mr. B Beaumont with effect from 30 September 2011. The Group has reorganised its management structures to cover the gap left by Mr. Beaumont who will not be replaced in the short to medium term. The Meikles Limited board which is made up of 4 indigenous and 2 non indigenous members is in compliance with the empowerment laws of the country.

Outlook
The success achieved in obtaining most of the requisite approvals for the PnP investment into TM Supermarkets and of the company being accorded its indigenous recognition all augur well for the future. These recently acquired approvals have had no impact on the results for the first half of the financial year…

For and on behalf of the Board

J R T Moxon
Executive Chairman
24 November 2011

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The managers of NITL formerly the National Investment Trust, First Merchant Bank, always prepare a succinct and insightful overview of Malawi’s capital markets and more specifically the equities in which they have invested as managers. FMB has an equity interest in the fund and I replicate the Fund Manager’s report below for the benefit of investors and more importantly, listed company executives in Malawi, whose investor relations obligation is becoming increasingly more complex given the state of the decay of the economic (and dare I say political) situation in Malawi.

Here is the text of the Fund Managers Review below:-

• Download the NITL annual report here
• Visit the NITL website here

Review of the Year

The Malawi equity market remained stubbornly bearish throughout the period under review. As anticipated, foreign investment sentiment remains negative, largely on the basis of perceived macroeconomic risk. It was, however, more disappointing that the enactment of compulsory pension legislation did not see any appreciable demand for equities from the growing pool of domestic investment capital, particularly when viewed against the background of a sharp decline in money market yields.

A persistent foreign exchange shortage has led to a significant increase in domestic liquidity from an ever increasing pipeline of funds awaiting remittance. The resultant downward pressure on money market yields outweighed the pull effect of an increased Government domestic borrowing requirement. Accordingly, the benchmark 91 day treasury bill yield fell sharply from 7.14% to 5.09% over the course of the year.

Our portfolio showed marginal capital growth with an overall net fair value gain of K30million representing 1.2% of the opening portfolio valuation, broadly in line with the movement in the MSE domestic share index over the same period.

Individual portfolio company performance was mixed but portfolio diversification mitigated individual company risk with the overall outcome that the dividend income returned by the portfolio continues to grow, increasing by 19% over the prior year. Dividend yield of 6.92% when measured against the closing portfolio valuation is well above the 30 September 2011 MSE domestic weighted average yield of 5.48%.

Our financial sector investments enjoyed varying fortunes, with Standard Bank and National Bank, not achieving the remarkable 74% growth in profits reported by NBS Bank. Nevertheless National Bank maintained its level of dividend and Standard Bank dividends increased by 50% due to a higher payout ratio. Dividends received from NBS Bank doubled over the previous year. NBS Bank was also the main driver of growth in group profit of its holding company NICO which also achieved satisfactory growth in its general and life insurance businesses.

Press Corporation reported a 62% increase in net profit attributed to its ordinary shareholders with most companies in this diversified group registering significant earnings growth despite challenges posed by erratic fuel supplies and shortage of foreign exchange.

Unseasonable wet weather conditions impacted negatively on both cane sucrose content and factory operational efficiency of Illovo with a consequent 10% drop in profit after tax and dividends.

Both our property investments, MPICO and Kang’ombe saw significant capital appreciation in the value of their investment properties but the economic downturn led to a marked increase in the collection period for rental debtors and dividend payments were reduced or deferred due to cash flow constraints.

A major oversupply of Malawi tobacco and resultant drop in prices was key among the many issues affecting the tobacco industry which led to a 43% drop in profits of the Auction Holdings group. However, dividend levels were maintained and dividend cover remains healthy at above two times, though group liquidity is heavily burdened with the financing of carryover tobacco stocks.

Dairibord facing challenges of low raw milk supplies and declining consumer disposable incomes achieved modest growth but continues to struggle to turn around its loss making subsidiary Mulanje Peak Foods Limited.

Telekom Networks enjoyed a 38% growth in subscriber numbers translating into a 4% market share increase but its average revenue per subscriber declined as penetration takes place into the lower income market segment.

During the year our shareholding in Packaging Industries was acquired by its majority shareholder in a scheme of arrangement approved by shareholders and sanctioned by the courts. This company subsequently delisted from the MSE.

With interest income, despite declining yields, remaining at the same level as prior years and the overall increase in expenditure of 3.7% being contained well below the national inflation rate, the 19% increase in dividend income translated into a 22% increase in NITL’s distributable profit for the year. This is reflected in a significant increase from 45 tambala to 65 tambala in the proposed final dividend recommended by the directors.

Outlook
The future direction of the equity market will depend to a great degree on government policy responses to the country’s current macroeconomic difficulties. Acute pressure on the value of the local currency coupled with prevailing increasingly negative real interest rates should see a shift in investor focus to real assets including equities, particularly equities of companies with an inbuilt currency/inflation hedge.

However, foreign investors may well adopt a cautious approach until certain that all major macroeconomic adjustments are through. Likewise, domestic investors, having endured a three year bear market, remain extremely averse to the risks attached to equity investment in Malawi.

There are myriad permutations of possible outcomes, too numerous to elaborate. On balance, it is hoped that the coming year should see some firming in the equity market though a number of counters may be relatively more exposed to external economic shocks.

First Merchant Bank Limited
10 November 2011

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Zambeef has been on investors’ radar for some time. The company operates in Zambia (a country that is growing strongly economically) and has recently moved to West Africa. It’s agricultural assets are vast and the company recently listed on AIM in London as part of a capital raising exercise. They will shortly hold an investor conference call. I have replicated their earnings announcement below and the 2011 annual report is attached too:-

“Strong performance aided by the growth of the Zambian economy”

Zambeef (AIM: ZAM), the fully integrated agri-business with operations in Zambia, Nigeria and Ghana, is pleased to announce its results for the year ended 30 September 2011.

In June of this year, the Group raised approximately US$54.97 million by way of both a rights issue of new ordinary shares to existing investors via the Lusaka Stock Exchange (“LuSE”) (the “Rights Issue”), at K2,975 per share and a placing of new ordinary shares to institutional investors on admission to AIM (the “Placing”) at 38.06p per share.

Financial Highlights

Profit Before Tax Earnings Per Share

Year Ended 30 September 2011	2011 US$m	2010 US$m	% Change
Revenue	206.8	161.9	28
Operating Profit	14.8	7.1	108
10.6	3.3	225
5.10 (cents)	2.62 (cents)	95
Proposed Dividend (to be approved by shareholders at AGM)	0.45(cents)	1.04 (cents)	(26)

Operational Highlights

• Growth in revenue of 28 per cent. across the business
• Gross margins improved from 31.4% (2010) to 34.1% (2011)
• Profit after tax up 125% to US$9.4 million
• Acquisition of Mpongwe farms in Zambia for US$4 6million consisting of 46,876 Ha (of which 2,994 Ha is irrigated and 7,667 Ha is rainfed land))
  • Increases capacity to produce soya beans in a soya bean deficient region for throughput to the growing and high margin edible oils division, Zamanita Ltd.
  • Zambeef now owns total hectarage of 8,000 Ha of irrigated and 9,000 Ha of rainfed arable, developed land
• Dramatic turnaround in performance of Zamanita Ltd. with gross profit increasing 73 per cent. to US$13.1million
• Expansion and upgrade of Zambian retail network; seven new retail outlets opened, eight existing retail outlets refurbished and first two wholesale stores established
• Continued expansion in West Africa in partnership with Shoprite with gross profits of West African operations increasing by 54 per cent. to US$2.4million
  • Further development of our leased land in Nigeria to supply Shoprite’s increasing footprint in the area
  • Currently 4 Zambeef own stores in Nigeria
  • Currently 3 outlets in Shoprite stores in Nigeria; 2 in Ghana
  • Commencement of stock feed exports to Zimbabwe which, during the year, totaled over 3,000 MT

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

“We are delighted to report a strong performance of our business, aided by continued growth of the Zambian economy, a higher level of disposable income among our customers, stability of the Zambian Kwacha and single digit inflation. We have a strong infrastructure in place and we believe that, combined with our vertically integrated business model, this will enable us to realise our objective of becoming the leading food provider in both Zambia and the surrounding region.”

For further information, please contact:

Zambeef Products plc
Francis Grogan, Chief Executive Officer	Tel:  +260 (0) 9 7799 9001
Yusuf Koya, Executive Director	Tel:  +260 (0) 9 7799 9100
Strand Hanson Limited	Tel: +44 (0) 20 7409 3494
Angela Peace James Spinney
Buchanan Mark Edwards Christian Goodbody	Tel: +44 (0) 20 7466 5000

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, bread, edible oils 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 approximately 8,000 Ha of irrigated land and approximately 9,000 Ha of dry land, available for planting each year. The Group has approximately 4,750 employees.

Further information can be found on www.zambeefplc.com.

Chairman’s Report

Performance Review
I am pleased to report that the financial year ended 30 September 2011 has seen the Zambeef Group report a strong operating performance aided by continued growth of the Zambian economy, higher disposable income among its customers, stability of the Zambian Kwacha, single digit inflation, stable commodity prices, and continued synergies being achieved within the Group.

Trading conditions over the financial year have continued to improve, with demand for all product lines increasing and most divisions of the Group showing higher figures both in turnover and gross profitability. This has enabled us to open seven new retail outlets and two wholesale depots, as well as refurbishing another eight retail outlets in Zambia; all of which are performing very well.

Zambia also saw a peaceful transition of power and president during the September 2011 national elections which is a proud testament to Zambia’s political stability and maturing multi-party democracy.

Turnover increased by 28 per cent. to ZMK983 billion (USD207 million) and Group profit for the year increased by 132 per cent. to ZMK45 billion (USD9.4 million).

The Group continues its cash generating trend, with EBITDA significantly up by 44 per cent. to ZMK88 billion (USD18.6 million).

Despite the above, the global economy continues to be volatile with minimal growth in the USA and European economies leading to volatility in share indices and potential volatility in commodity prices, which could present the Group with challenges in the future.

Purchase of the Mpongwe Farm Assets

During the year, we successfully completed the purchase of the Mpongwe Farms. This is an extremely exciting opportunity for us to harness Mpongwe’s vast cropping operations for cereal row crop production.

This acquisition is in line with Zambeef’s objective of growing, expanding and diversifying the business with the aim of becoming the leading food provider in Zambia and the surrounding region.

AIM IPO and Placing and LuSE Rights Issue

During the year, the Company undertook a rights issue on the LuSE and a placing and admission to the AIM Market of the London Stock Exchange. Having successfully concluded the rights issue and placing, a total of approximately USD54.97 million was raised with the issued share capital increasing from 158,706,045 ordinary shares to 247,978,195 ordinary shares and a market capitalisation of approximately ZMK772 billion (USD160.9 million) as at 30 September 2011.

The funds raised were utilised to complete the acquisition of the Mpongwe assets, to pay for costs related to the fundraising, and to commence the expansion and upgrade of the Mpongwe assets.

The dual listing will aid in facilitating future fundraises for further development and growth, assist in maintaining the high standards of transparency and corporate governance, as well as enhancing the Group’s reputation, profile and financial standing with its key partners, suppliers and potential vendors of attractive assets. I am delighted by the warm reception that our admission to AIM received and the keen investor interest in Zambeef and believe that this will complement our existing listing in Lusaka.

Human Capital
The Group continues to be a large employer in Zambia, employing an average of 4,367 employees per month with a monthly wage bill of approximately ZMK9 billion (USD1.9 million). Zambeef continues to attract and retain its workforce through good staff welfare and working conditions while maintaining strong relationships and communication with the Labour Union.

Board of Directors
As part of the continued evolution of the Group and listing on AIM, we are pleased with our current Board of Directors which is composed of six Non-Executive Directors and four Executive Directors. Rodney Clyde-Anderson and Hilary Duckworth have retired from their positions and I would like to take this opportunity to extend my appreciation and gratitude to them for their excellent contribution and support during their time with the Company.

As the Chairman, I would also like to take this opportunity to express my gratitude for the strategic support I have continued to receive from my co-directors and senior management during a year when Zambeef continued to make great progress in its mission to become a leading food provider.

Dividend and Outlook
The Board of Directors is recommending a final dividend of ZMK21.40 (0.45 cents) per ordinary share, in addition to the interim dividend paid out of ZMK15 (0.32 cents) per ordinary share, to be paid on or before 29 February 2012.

Growth in our core areas is expected to be in line with the continued growth of the Zambian economy. Following a positive turnaround in Zamanita’s performance, our edible oils division, we expect this division to continue to be one of our key growth drivers, buoyed by additional throughput of soya beans from the increased farming area of the Mpongwe Farm and proposed upgrade work thatis detailed in the Operational Report. Our West African expansion is expected to gather momentum with additional Shoprite stores due to open in Nigeria and Ghana, and we continue to expand our domestic retail network.

We believe we have a strong infrastructure and business model in place which should enable us to realise our objective of becoming the leading food provider in both Zambia and the surrounding region.

Dr. Jacob Mwanza

Chairman
November 2011

Chief Executive Officer’s Report

Introduction
On the back of an improving Zambian economy, I am pleased to report on a year that saw Zambeef make positive operational and financial progress. We produce, process, distribute and retail beef, chicken, pork, milk, dairy products, eggs, edible oils, stock feed, flour and bread. During the year we have shown increased turnover and gross profitability for the majority of our divisions, by an average of 28 per cent. and 38 per cent. respectively. Trading conditions in Zambia continue to improve, supported by growth in the economy at a steady 7 per cent., single digit inflation, stability of the Zambian Kwacha relative to the US Dollar, stable commodity prices and a higher level of disposable income among our customers.

During the year we completed a successful IPO, a placing on AIM and a successful rights issue on the LuSE, raising in aggregate ZMK263 billion (USD54.97 million). The majority of the proceeds were used to expand our primary production cropping operations through the purchase of the Mpongwe Farms. This is in line with our objective of becoming the leading protein provider in the region, which we will achieve through a vertically integrated model (“farm to fork”). This strategy significantly reduces the Group’s risk profile, by allowing it to supply its own processing divisions with the required raw materials, and to sell the finished products directly to the end consumer through its extensive retail network.

The purchase of the Mpongwe Farms, which consist of 46,876 Ha, increased our farming area by 2,994 Ha of irrigated land and 7,667 Ha of rain-fed available to plant, taking the Group’s total owned farming land to 8,000 Ha of irrigated land and 9,000 Ha of rain-fed land. The Board considers the the Mpongwe Farms to be some of the best farming lands in Zambia, ownership of which will enable us to increase our production of soya beans for throughput to Zamanita (our edible oils division), and wheat for throughput to our milling and bakery division, as well as for external sale. The entire region is currently deficient in soya beans, and this acquisition seeks to address the Group’s exposure to that deficiency. Crushing soya beans produces oil, which is sold at a higher margin than the sale of imported palm oil, whilst also producing feedcake to supply both our internal stock feed division, and external third parties. With a sufficient supply of soya beans we expect Zamanita, which increased turnover by 17 per cent. this year, to become even more important to the Group.

The additional irrigation will allow us to obtain higher yields of soya and additional wheat crop. All of our livestock divisions have increased their revenues over the year, and the quality of our livestock is improving with the quality of our stock feed. The new stock feed plant, commissioned during 2010, has allowed us to become one of the leading stock feed suppliers in Zambia, and also to commence exports to Zimbabwe.

Our protein divisions have performed well, as the national average of disposable income has grown together with demand for protein. Despite supply issues in the beef sector (due to a scarcity of standard cattle), with eight beef abattoirs strategically located around the country, we are in a unique position to gain access to cattle suppliers. As a result of this shortage, we expect consumer demand for chicken to continue growing, and have constructed additional poultry houses in anticipation of this. Demand for cheaper sources of protein, such as eggs and fish, continues to increase, and we have improved revenues in both areas. Demand for pork has also increased significantly, and improvements to our piggery during the year resulted in an increased number of births as well as fewer premature mortalities. This division has reported excellent growth. In the current economic climate there is low demand for leather products, nevertheless our tannery and shoe plant division has increased its contribution to Group profitability.

Our retailing operations continue to expand, and we started 2011 with a strong commitment to increasing our distribution and retail network, in order to gain further market penetration. We are delighted to have opened seven new retail outlets, refurbished a further eight self-operated outlets and established our first wholesale stores in Lusaka and Kitwe (taking our total number of outlets to 117). We continue to partner with Shoprite, Africa’s largest food retailer, and we are operating in 20 Shoprite stores across Zambia.

West Africa continues to be an exciting growth prospect, and we have grown our presence in West Africa during the year in partnership with Shoprite, operating additional butcheries in Enugu, (Nigeria), and through increasing our self-operated stores. In Ghana we operate two Shoprite stores. In Nigeria we operate four self-operated stores, and three Shoprite stores and supply Shoprite and our outlets from our feedlot operations in Abeokuta and our processing operations in Lagos. Shoprite is planning to increase its footprint in Nigeria and Ghana with a planned opening of five new additional stores over the next twenty four months.

Our People
Zambeef is one of the most vertically integrated operations in Zambia. With this comes the requirement to ensure that we have appropriate staffing in all divisions and to achieve seamless movement of primary commodity to processing, distribution and retail of edible food. Our staff add exceptional value and are a proud testament to Zambeef being one of the leading enterprises in Zambia.

As such, I would like to take this opportunity to sincerely thank all staff working for the Zambeef Group in Zambia, Nigeria and Ghana, for their continued dedication to the business and for their contribution to Zambeef’s success during the year. The Board of Directors and I will strive to ensure that all employees enjoy continuing staff welfare and that we become one of the leading employers in the region.

Outlook
New projects approved by the Board, which are to be undertaken over the next two to three years, include the upgrade and expansion of the Mpongwe Farms, the renewal of some of the farming infrastructure, the continued upgrade and expansion of Zamanita’s processing facilities, the upgrade of Master Pork’s processing facilities, the expansion of our stock feed capacity and product lines, the upgrade and expansion of our dairy plant and additional layer and broiler operations, the upgrade and expansion of the chicken abattoir, the establishment of a new pig abattoir in the Copperbelt province, and the continued expansion of our retail infrastructure across Zambia and West Africa and the provision of capital to Zampalm to complete the pilot phase of 4,000 Ha of palm plantation.

I am excited about Zambeef’s future. We have achieved a number of milestones this year which include the successful domestic rights issue, the dual listing on AIM, and the acquisition of the Mpongwe Farms. We have made great improvements to the majority of our core activities. We have expanded our retail network and further extended our activities in West Africa. Shoprite’s anticipated rollout of stores in West Africa over the coming 18-24 months is an exciting prospect and we look forward to harnessing further growth in this region.

It is expected that Africa will continue to contribute more to global agricultural output. I believe Zambeef has a bright future and it is a privilege to be Zambeef’s Chief Executive. I believe we have a balanced business with a strong asset portfolio, high quality employees, and a sound balance sheet. Our integrated business model and strategy puts us in a unique position to take advantage of the growing demand for food in Zambia and the surrounding region.

Francis Grogan
Chief Executive Officer
November 2011

Operating Review

This year has seen most segments within the Zambeef Group exhibiting good growth and improved margins. These segments are discussed in more detail below:

ZAMBEEF

Beef
The beef division is one of the largest divisions in Zambeef contributing 23 per cent. of Group turnover and 24 per cent. of gross profitability.

Turnover of this division increased by 38 per cent. and gross profitability increased by 26 per cent., while gross margins declined from 31 per cent. in 2010 to 29 per cent. in 2011.

The beef division has had supply problems due to a scarcity of standard cattle in the market. Due to the continued bumper harvests of maize, small scale farmers, whom are the main source of standard cattle, have been reluctant sellers. As a result, the total amount of standard cattle sourced during the year has reduced by over 7,000 head of cattle.

The demand for choice cattle (premium beef) continues to grow. As such, the Group purchased over 17,000 animals from commercial farmers (2010:15,500). We will continue sourcing more choice cattle for supply to the market. During the year, we improved our feedlotting operations by opening a third feedlot in Mongu allowing us to source additional animals. We also opened a new abattoir in Mumbwa, allowing us to obtain a new avenue for animals.

Due to the lack of supply in the market, and the continuing increase in demand for beef products, the price of beef has increased by 22 per cent. In spite of the volume reduction of locally sourced cattle, the Group has sustained market growth in demand, aiding turnover growth through importations of key value items such as liver and kidney.

Although we expect the beef sector to continue to have supply issues in the short to medium term, Zambeef remains in a unique position within the beef industry with eight abattoirs and three feedlots strategically located around the country in order to gain access to cattle.

ZAMCHICK and ZAMCHICK EGG

Chicken
This division contributed nine per cent. of Group turnover and eight per cent. of gross profitability.

Both turnover and gross profitability have increased by 27 per cent. while maintaining margins at 25 per cent.
Margins in the chicken segment have been affected by increased feed prices and higher costs of purchase from an increased external supply of chickens due to demand from consumers increasing and insufficient supply from within Zambeef broiler houses. Additional poultry houses have been set up which will provide us with 360,000 additional broilers.

The total volume of chickens produced for sale increased by 21 per cent., internal chicken production increased by 46 per cent., and external supply of chickens increased by 11 per cent. In line with increased demand, the Group increased prices by six per cent.

With standard beef supply remaining an issue nationally, it is expected that chickens will be in high demand as a substitute protein. As a result the Group will be increasing its broiler houses in anticipation of this increase in demand.

Eggs

This division contributed two per cent. of Group turnover and three per cent. of gross profitability.
Turnover of this division increased by 58 per cent. and gross profitability has remained constant. Gross margins have declined from 49 per cent. in 2010 to 47 per cent. in 2011.

The volume of eggs produced increased by six per cent., in line with recent year on year trends. This has been achieved by increasing the production per layer bird, through an improved variety of birds, which have resulted in a lower requirement for birds to meet production demands. In 2011, the Group had an average number of 131,244 layer birds (2010: 145,169).

However, egg prices declined during the year. Zambia’s total production of eggs is thought to generate a surplus versus domestic demand, which leads to a large volume of exports to neighbouring countries such as the Democratic Republic of the Congo and Tanzania. This year Zambia experienced lower exports to these markets which led to an increased supply of eggs in the local market resulting in reduced prices.

Supply issues have now been normalised with export markets reopening and there is currently a shortage of egg supply within Zambia. As a result, the Group will be increasing its layer houses to cater for this demand growth.

MASTER PORK

Pork
This division contributes seven per cent. of Group turnover and eight per cent. of gross profitability.

Turnover of this division increased by 31 per cent. and gross profitability has increased by 29 per cent. while gross margins have remained consistent at 31 per cent.

Demand for pork has risen dramatically during the year and the pork division has had another excellent year.

The piggery continues to improve its performance with increased number of births and fewer mortalities, due to improved animal husbandry and increased number of pigs supplied. This has led to the total number of animals increasing during the year to 4,302 (2010: 3,691).

We have expanded production space at Master Pork in order to house additional processing machinery (purchased during the year for a cost of ZMK 5 billion (USD 1.1 million)) enabling us to increase production volumes and efficiency.

With pork becoming an increasingly important protein product in Zambia, and demand for processed meat products increasing, it is vital to continue the expansion of our facilities. We are introducing the Hirschpro 400 plant, a unique automated processed meat manufacturing unit capable of increasing production capacity and efficiency significantly, the first of its kind in Africa outside South Africa.

ZAMMILK

Dairy
This division contributes four per cent. of Group turnover and 10 per cent. of gross profitability.
Turnover of this division increased by 22 per cent. and gross profitability has increased by 19 per cent. while gross margins have marginally declined from 65 per cent. in 2010 to 64 per cent. in 2011.

One of the leading contributors to increased turnover and contribution was the sales mix of milk (47 per cent.) to non-milk, (53 per cent.) (2010: 54 per cent. to 46 per cent.) products, a such as yogurt and milk based juices, the latter being high value products. However, the margins have declined during the year due to increased external party purchases at a higher cost than internally produced milk, which has been necessary to meet demand.

Total milk processed during the year increased by nine per cent. as a result of increased output from the Group’s dairy farm and increase in external purchases.

This division continues to be the highest gross margin earner. With increased demand from the consumers, there are approved plans to upgrade and expand the production capacity at the milk processing plant.

ZAMBEEF FARMING

Cropping
This division contributes nine per cent. of Group turnover and 12 per cent. of gross profitability.
Zambeef’s row cropping operations (maize, soya beans and wheat) have had a satisfactory year with turnover up 79 per cent. and gross profits up 28 per cent., but with gross margins declining from 39 per cent. in 2010 to 28 per cent. in 2011. This excludes the performance of the recently acquired Mpongwe Farm in June 2011.

With Mpongwe Farm included, this division recorded an increase in turnover of 94 per cent., an increase in gross profitability of 86 per cent., and a gross margin of 37 per cent.

Zambeef’s 2011 summer crop was soya bean intensive in order to provide Zamanita, the Group’s edible oils division, with increased throughput. However, soya bean yields were affected due to poor germination of seed and adverse weather conditions. As a result gross profit margin was affected, although the high market price of soya in 2011 led to increased turnover.

Summer maize was only planted at Huntley Farm as, at current prices, this crop is not profitable. As such, maize was only planted for crop rotation purposes.

The winter crop was made up of predominantly wheatgerm. Improved management and better farming practices have led to improved wheat yields. With current wheat prices we expect winter cropping to be the most profitable segment of our farming division going forward. Wheat production is forecast to generate a surplus to the Group’s internal requirements and approximately 25,000 MT should be available for sale to third parties.

Mpongwe Farm
During the year, Zambeef acquired Mpongwe Farm. The Directors believe that with the well drained soils, abundant water supply in the area, and consistent climatic conditions, which has resulted in the farm achieving historically high yields, there is opportunity to significantly increase Zambeef’s production of row crops.

Critical to Zamanita, our edible oils and animal feedcake division, is the availability of soya beans, which are crushed to produce edible oil and the by-product, feedcake, is used to produce animal feedstock. Prior to the acquisition of Mpongwe, the Group only had capacity to produce up to 10,000 MT of soya beans and relied on the open market for the supply of the balance of 40,000 MT.

This has been challenging as the region is soya bean deficient. With the Mpongwe Farm included within Zambeef’s portfolio, the Group will now have capacity to internally produce up to 40,000 MT of soya beans and will be less reliant on external supply. It is expected that this will make the Group significantly less exposed to commodity price fluctuations with regard to inputs, whilst allowing the Group to benefit from any price increases when it comes to sell its finished products.

2012 will see the full benefit of the acquisition of Mpongwe Farm with soya beans and maize production during the summer cropping season, and wheat production during the winter cropping season.

Palm
Zambeef has title to 20,000 Ha of land for development of its palm plantation. The pilot phase of 4,000 Ha is underway with ZMK12.3 billion (USD2.6 million) spent in the financial year.

Zambia and the region remain a major importer of vegetable oils and the Group is currently a large importer of palm oil from the Far East for its edible oils division. Once yields of palm fruit commence, it will allow us to substitute imported palm oil, thereby improving margins through an extension of primary commodity production and processing.

NOVATEK

Stock Feed
This division contributes 11 per cent. of Group turnover and eight per cent. of gross profitability. Turnover of this division increased by 65 per cent. and gross profitability has increased by 67 per cent. while gross margins have marginally increased from 21 per cent. in 2010 to 22 per cent. in 2011.

Zambeef’s new stock feed plant commenced operations in 2010. The stock feed plant was commissioned not only to supply Zambeef’s internal animal feed requirements but also to generate third party sales both in Zambia as well as providing expert opportunities to markets such as Zimbabwe. On an average monthly basis, Zambeef’s internal requirements have risen by over 14 per cent. versus 2010, external sales excluding exports have increased by over 76 per cent., while exports have risen by over 120 per cent. over the same period. The latter includes exports to Zimbabwe, which have increased to over 3,000 MT (2010: 60 MT). Zambeef’s internal consumption of total stock feed produced was 38 per cent. during the year.

The stock feed plant is currently running at close to full capacity and with increased third party sales, Zambeef has become one of the leading stock feed suppliers in Zambia. Management is reviewing the upgrade and expansion of the stock feed operations in order to increase capacity and profitability of this division going forward.

ZAMFLOUR & ZAMLOAF

Milling & Bakery
This division contributed six per cent. of Group turnover and three per cent. of gross profitability.

This division has had a challenging year. Whilst turnover increased by 48 per cent., gross profit decreased by 16 per cent. and gross margin has declined from 23 per cent. in 2010 to 13 per cent. in 2011. This has been as a direct result of increased wheat prices. Therefore, despite increasing volumes of flour production by 49 per cent. and price increases of eight per cent., the increased price of wheat by 31 per cent. has reduced the total gross margin and gross profitability of the division. With a growing middle class, the domestic demand for flour and bread continues to rise, and we anticipate benefiting from this consumer demand.

ZAMLEATHER & ZAMSHU

Tannery and Shoe Manufacturing
This division contributed one per cent. of Group turnover and one per cent. of gross profitability. Turnover of this division increased by 12 per cent. and gross profitability has decreased by eight per cent. while gross margins have decreased from 35 per cent. in 2010 to 29 per cent. in 2011.

In spite of a five per cent. reduction in the total number of hides processed during 2011 versus 2010, turnover has increased during the year. This was achieved through an increase in the sales price per square foot.

The global leather industry continues to suffer from low demand with leather being a luxury item. There has been limited recovery in wet blue exports. As a result the Group refocused its efforts more on finished leather and shoe production for sale in the domestic and regional markets. This resulted in an increase in the volume of finished leather sales by 12 per cent. However, due to competitiveness in the region, prices were reduced by five per cent. in order to gain a larger market share. Similarly shoe sales increased by 23 per cent. in volume, but prices were reduced by nine per cent.

Fish is a small part of Zambeef’s operations, but this division presents an exciting opportunity to increase the Group’s protein footprint as fish continues to be one of the cheaper sources of protein.
It is expected that the demand for leather products will continue to remain stagnant as global economic issues persist.

ZAMANITA

Edible Oils and Animal Feed Cake
This division contributed 23 per cent. of Group turnover and 19 per cent. of gross profitability. Zamanita, our edible oils and animal feed cake division, has achieved greatly improved performance. Turnover has increased by 17 per cent. and gross profitability has increased by 73 per cent. while gross margins have significantly improved from 15 per cent. in 2010 to 22 per cent. in 2011.

Zamanita, the largest edible oil producer in Zambia, sells palm, soya and cottonseed oils, as well as animal feed cake (a by-product of oil seed crushing that is a key ingredient in animal stock feed). Zamanita currently imports palm oil, processes it, packages it and distributes it through Zambeef’s retail network and other retailers and wholesalers, including Shoprite. The crushing of soya beans and cotton seeds attract significantly higher margins than the importation and distribution of palm oil.

Zamanita’s performance has been erratic since its purchase in 2008. Performance has been affected by expensive stock, forward contracts, volatile commodity prices, inefficiencies in production, and tax legislation. These issues have now been addressed and new management installed to ensure operating efficiency, and to oversee a refocus of the business which includes a redevelopment of the plant.

On acquiring Zamanita, the product mix was 75 per cent. palm oil and 25 per cent. seed crushing. We have since changed the business model with less emphasis on the importation of low margin palm oil and to increased focus on the high margin oil seed crushing. This decision, combined with an increase in pricing of edible oil and feed cake in line with increasing commodity prices, increased blending of soya oil with palm oil and increased crushing efficiencies, have resulted in the gross margin increasing.

During the year Zamanita crushed 23 per cent. more soya beans and 152 per cent. more cotton seed, leading to an increase in cake production of 27 per cent.

Critical to Zamanita is the availability of soya beans. However, domestic and regional demand for soya beans far outweighs supply and Zamanita has not been able to capitalise on its potential for soya bean crushing due to insufficient supply. Following the acquisition of Mpongwe Farm the Group will now have capacity to internally produce up to 40,000 MT of soya beans and will be less reliant on external supply.

Once Zampalm commences production of crude palm oil, Zamanita will also stand to benefit through the refining and selling of palm oil at a lower cost than current importation.

Through an investment of over USD6 million to upgrade and expand the plant, Zamanita will increase its crushing capacity and production efficiencies. This investment should increase the crushing capacity to 100,000 MT per annum, increase the percentage extraction of crude oil from the crushing by one per cent., and reduce the cost of production through reduced quantities of hexane and coal consumption. The investment will also provide for improvements in the crude oil refinery.

Zamanita’s plant will close between December 2011 and June 2012 in order to carry out this significant upgrade. However, it is expected that with the plant’s increased capacity and production efficiencies, Zamanita will achieve similar crushing tonnage in 2012 as in 2011, with the full benefit of the upgrade and expansion being seen in 2013.

The anticipated increase in the Group’s soya beans output is the key driver for margin improvement at Zamanita. With sufficient internal and external supply of soya beans we anticipate Zamanita becoming even more important to the Group.

Fish
This division contributed one per cent. of Group turnover and one per cent. of gross profitability.
Turnover of this division increased by 68 per cent. and gross profitability has increased by 45 per cent while gross margins have decreased from 26 per cent. in 2010 to 22 per cent. in 2011.

RETAILING NETWORK

Zambeef Stores
The vast majority of Zambeef’s food products as well as 45 per cent. of Zamanita’s edible oil output is sold through Zambeef’s extensive retail networks.

Zambeef currently operates 31 retail outlets in Lusaka, 33 retail outlets in Copperbelt, and 22 retail outlets across the rest of Zambia, all operating under the Zambeef banner, along with one new wholesale centre in Lusaka and one in Copperbelt.

During 2011, we have opened seven new retail outlets, and refurbished a further eight outlets; all of which are performing well. We have also established Zambeef’s first wholesaling stores in Lusaka and Kitwe. Wholesale provides the Group with access to the large and untapped informal sector, commercial customers and large scale consumers such as hotels, lodges, restaurant and other similar operations. Our strategy is to ensure that all of our stores are segmented with a perishable goods area (meat, poultry, eggs, dairy, etc.), a dry goods area (flour, maize meal, packed oil) and bulk edible oil at the point of sale.

Average monthly turnover growth from new outlets has been ZMK500 million (USD0.1 million). Average monthly turnover from the two wholesale centres has been ZMK2, 600 million (USD0.5 million) and average increase in turnover from refurbished stores has been 29 per cent.

Turnover from existing outlets has increased by nine per cent. in Lusaka, 25 per cent. in Copperbelt, and 18 per cent in the other areas of Zambia. Overall, including new outlets, turnover generated from retail operations has increased by 32 per cent. to ZMK392 billion (USD82.5 million) (2010: ZMK297billion (USD62.4 million)).

Shoprite
Zambeef continues to partner with Shoprite. Shoprite is Africa’s largest food retailer with 1,246 stores and 274 franchise outlets in 16 countries across Africa and the Indian Ocean Islands. Zambeef currently operates all of Shoprite’s 20 in-house butcheries in Zambia, as well as being one of the key suppliers of other perishable and nonperishable merchandise to Shoprite.

Fast Food Outlets
Zambeef operates seven fast food outlets which trade under the brand ‘Zamchick Inn’. In 2011 Zambeef will also launch ‘Zambeef Express’, installing freezer and display units in convenience stores across the country. A pilot phase will initiate ‘Zambeef Express’ in ten stores, with the opportunity to expand depending on market uptake.

Our large retail network is key to the Zambeef model. It allows the Group to be close to, and understand its end user, the customer. The Group is able to add maximum value to its primary and secondary production facilities while engaging its brand power to drive customer loyalty and the average spend per customer. Management will continue to focus on the retail operations. This will benefit all Zambeef divisions and contribute to volume and margin increases across Zambeef’s product range.

WEST AFRICA

Nigeria & Ghana
In 2011, this division contributed three per cent. of Group turnover and three per cent. of gross profitability.

Turnover has increased by 26 per cent. and gross profits have increased by 54 per cent. while gross margins have increased from 24 per cent. in 2010 to 30 per cent. in 2011.

West Africa is an exciting growth division within the Group. Shoprite, Africa’s largest food retailer, currently owns and operates three stores in Nigeria and two stores in Ghana. We continue to expand our presence in West Africa by partnering with Shoprite and currently operate all of their in-house butcheries. 2011 saw the roll out of one additional Shoprite store in Enugu (Nigeria). Shoprite are committed to increasing their footprint in West Africa and expect to increase their infrastructure in Nigeria and Ghana over the next twenty four with an additional five stores lined to open.

The increased supply to external parties, other than Shoprite, at higher prices have led to gross margins increasing during the year. Margins have also increased from the commencement of feedlotting operations.

In Ghana we have opened a processing plant in Accra, which allows for higher value and higher margin product supply.

We are confident that West Africa will play a key part in the Group’s future strategy.

Consolidated Statement of Comprehensive Income

FOR THE YEAR ENDED 30 SEPTEMBER 2011

Group	Notes	2011 ZMK’Ms	2011 USD’000s	2010 ZMK’Ms	2010 USD’000s
Revenue	5	983,138	206,802	770,528	161,910
Net gain arising from price changes in fair value of biological assets	16	17,057	3,587	2,565	534
Cost of sales		(665,248)	(139,934)	(530,949)	(111,562)
Gross profit		334,947	70,455	242,144	50,882
Administrative expenses		(265,857)	(55,922)	(208,673)	(43,849)
Other income		1,147	241	290	61
Operating profit	6	70,237	14,774	33,761	7,094
Exchange losses on translating foreign currency transactions and balances		(1,562)	(328)	(7,991)	(1,679)
Finance costs	8	(18,319)	(3,854)	(10,236)	(2,151)
Profit before taxation		50,356	10,592	15,534	3,264
Taxation (charge)/credit	9	(5,816)	(1,223)	4,286	901
Group profit for the year		44,540	9,369	19,820	4,165
Group profit attributable to:
Equity holders of the parent		44,436	9,347	19,789	4,158
Non-controlling interest		104	22	31	7
		44,540	9,369	19,820	4,165
Other comprehensive income:
Exchange losses on translating presentational currency		(390)	(275)	(707)	(1,755)
Total comprehensive income for the year		44,150	9,094	19,113	2,410
Total comprehensive income for the year attributable to:
Equity holders of the parent		44,089	9,082	19,185	2,426
Non-controlling interest		61	12	(72)	(16)
		44,150	9,094	19,113	2,410
		Kwacha	Cents	Kwacha	Cents
Earnings per share
Basic and diluted earnings per share	11	242.60	5.10	124.69	2.62

The accompanying notes form part of the financial statements.

Consolidated Statement of Financial Position – 30 September 2011

ASSETS	Notes	2011 ZMK’Ms	2011 USD’000s	2010 ZMK’Ms	2010 USD’000s
Non-current assets
Goodwill	13	15,699	3,270	15,699	3,270
Property, plant and equipment	14	756,013	157,503	477,622	99,505
Plantationdevelopment expenditure	14	43,126	8,985	30,808	6,418
Biological a ssets	16	2,573	536	3,666	764
Deferred tax asset	9(e)	291	61	2,567	535
		817,702	170,355	530,362	110,492
Current assets
Biological assets	16	116,760	24,325	59,793	12,457
Inventories	17	167,522	34,900	132,690	27,644
Trade and other receivables	18	72,746	15,155	55,195	11,499
Amounts due from related companies	19	2,091	436	984	205
Income tax recoverable	9(c)	246	51	246	51
		359,365	74,867	248,908	51,856
Total assets		1,177,067	245,222	779,270	162,348
EQUITY AND LIABILITIES
Capital and reserves
Share capital	21	248	61	159	42
Share premium	22	506,277	123,283	259,967	71,861
Reserves		237,629	31,688	195,921	23,107
		744,154	155,032	456,047	95,010
Non-controlling interest		439	91	378	79
		744,593	155,123	456,425	95,089
Non-current liabilities
Interest bearing liabilities	23	172,627	35,964	136,912	28,523
Obligations under finance leases	24	7,316	1,524	1,294	270
Deferred liability	25	5,107	1,064	5,168	1,077
Deferred tax liability	9(e)	3,444	718	1,420	296
		188,494	39,270	144,794	30,166
Current liabilities
Interest bearing liabilities	23	25,925	5,401	29,258	6,095
Obligations under finance leases	24	3,369	702	1,083	226
Trade and other payables	26	116,117	24,191	86,549	18,030
Amounts due to related companies	27	331	69	763	159
Taxation payable	9(c)	962	200	608	127
Dividends payable	10	18	4	7,916	1,649
Cash and cash equivalents	20	97,258	20,262	51,874	10,807
		243,980	50,829	178,051	37,093
Total equity and liabilities		1,177,067	245,222	779,270	162,348

The accompanying notes form part of the financial statements. The financial statements on pages 66 to 127 were approved by the Board of Directors on 23 November 2011 and were signed on its behalf by:

Company Statement of Financial Position – 30 September 2011

ASSETS	Notes	2011 ZMK’Ms	2011 USD’000s	2010 ZMK’Ms	2010 USD’000s
Non-current assets
Property, plant and equipment	14	552,424	115,088	299,565	62,409
Investment in subsidiaries	15	94,112	19,607	94,112	19,607
		646,536	134,695	393,677	82,016
Current assets
Biological assets	16	114,506	23,855	57,812	12,044
Inventories	17	80,898	16,854	51,293	10,686
Trade and other receivables	18	12,976	2,704	9,362	1,950
Amounts due from related companies	19	148,320	30,900	159,813	33,295
Income tax recoverable	9(c)	26	5	26	5
		356,726	74,318	278,306	57,980
Total assets		1,003,262	209,013	671,983	139,996
EQUITY AND LIABILITIES
Capital and reserves
Share capital	21	248	61	159	42
Share premium	22	506,277	123,283	259,967	71,861
Reserves		186,358	21,008	179,424	19,670
		692,883	144,352	439,550	91,573
Non-current liabilities
Interest bearing liabilities	23	158,081	32,934	136,912	28,523
Obligations under finance leases	24	5,811	1,211	696	145
Deferred liability	25	523	109	634	132
Deferred tax liability	9(e)	1,761	367	288	60
		166,176	34,621	138,530	28,860
Current liabilities
Interest bearing liabilities	23	24,184	5,038	29,258	6,095
Obligations under finance leases	24	1,734	361	252	52
Trade and other payables	26	55,073	11,472	20,671	4,307
Amounts due to related companies	27	288	60	751	157
Dividends payable	10	18	4	7,916	1,649
Cash and cash equivalents	20	62,906	13,105	35,055	7,303
		144,203	30,040	93,903	19,563
Total equity and liabilities		1,003,262	209,013	671,983	139,996

The accompanying notes form part of the financial statements. The financial statements on pages 66 to 127 were approved by the Board of Directors on 23 November 2011 and were signed on its behalf by:

Consolidated Cash Flow Statement

FOR THE YEAR ENDED 30 SEPTEMBER 2011

	2011 ZMK’Ms	2011 USD’000s	2010 ZMK’Ms	2010 USD’000s
Cash inflow from operating activities
Profit before taxation	50,356	10,592	15,534	3,264
Finance costs	18,319	3,854	10,236	2,151
Depreciation	31,296	6,583	28,683	6,028
Impairment of biological assets	1,452	302	1,822	380
Fair value price adjustment	(17,057)	(3,587)	(2,565)	(534)
Net unrealised foreign exchange losses	4,054	887	7,619	1,633
Earnings before interest, tax, depreciation and amortisation	88,420	18,631	61,329	12,922
Increase in biological assets	(40,265)	(8,389)	(15,179)	(2,615)
(Increase)/decrease in inventory	(34,832)	(7,256)	9,156	2,408
Increase in trade and other receivables	(17,551)	(3,656)	(6,114)	(1,100)
(Increase)/decrease in amounts due from related companies	(1,107)	(231)	1,143	246
Increase in trade and other payables	29,568	6,161	16,810	3,256
Decrease in amounts due to related companies	(432)	(90)	(964)	(207)
(Decrease)/increase in deferred liability	(61)	(13)	416	70
Income tax (paid)/recovered	(1,160)	(244)	1,908	401
Net cash inflow from operating activities	22,580	4,913	68,505	15,381
Investing activities
Purchase of property, plant and equipment	(76,370)	(16,064)	(77,251)	(16,232)
Purchase of Mpongwe Farm assets	(234,774)	(49,384)	–	–
Expenditure on plantation development	(12,318)	(2,591)	(12,414)	(2,592)
Proceeds from sale of assets	1,559	328	1,016	214
Net cash outflow on investing activities	(321,903)	(67,711)	(88,649)	(18,610)
Net cash outflow before financing	(299,323)	(62,798)	(20,144)	(3,229)
Financing
Proceeds from issue of shares	246,399	51,441	–	–
Long term loans repaid	(49,290)	(10,269)	(10,291)	(2,873)
Receipt from long term loans	81,672	17,015	117,500	25,000
Lease finance received	11,900	2,479	2,243	452
Lease finance paid	(3,592)	(748)	(1,410)	(284)
Finance costs	(18,319)	(3,854)	(10,236)	(2,151)
Dividends paid	(9,965)	(2,096)	–	–
Net cash inflow from financing	258,805	53,968	97,806	20,144
(Decrease)/Increase in cash and cash equivalents	(40,518)	(8,830)	77,662	16,915
Cash and cash equivalents at beginning of year	(51,874)	(10,807)	(121,184)	(25,675)
Effects of exchange rate changes on the balance of cash held in foreign currencies	(4,866)	(625)	(8,352)	(2,047)
Cash and cash equivalents at end of year	(97,258)	(20,262)	(51,874)	(10,807)
Represented by:
Cash in hand and at bank	30,844	6,426	33,949	7,073
Bank overdrafts	(102,625)	(21,380)	(64,576)	(13,454)
Structured agricultural finance	(25,477)	(5,308)	(21,247)	(4,426)
	(97,258)	(20,262)	(51,874)	(10,807)

Company Cash Flow Statement

FOR THE YEAR ENDED 30 SEPTEMBER 2011

	2011 ZMK’Ms	2011 USD’000s	2010 ZMK’Ms	2010 USD’000s
Cash inflow from operating activities
Profit before taxation	10,810	2,274	5,121	1,076
Finance costs	13,053	2,746	5,950	1,250
Depreciation	14,679	3,088	14,210	2,986
Fair value price adjustment	(16,966)	(3,569)	(2,474)	(515)
Net unrealised foreign exchange differences	(13)	31	3,948	830
Earnings before interest, tax, depreciation and amortisation	21,563	4,570	26,755	5,627
Increase in biological assets	(39,728)	(8,277)	(13,720)	(2,711)
Increase in inventory	(29,605)	(6,168)	(1,737)	(187)
(Increase)/decrease in trade and other receivables	(3,614)	(752)	492	137
Decrease/(increase) in amounts due from related companies	11,494	2,394	(74,311)	(15,179)
Increase in trade and other payables	34,402	7,167	2,141	380
(Decrease)/increase in amounts due to related companies	(463)	(96)	509	105
Decrease in deferred liability	(111)	(23)	(711)	(153)
Income tax (paid)/recovered	(22)	(5)	1,916	403
Net cash outflow from operating activities	(6,084)	(1,190)	(58,666)	(11,578)
Investing activities
Purchase of property, plant and equipment	(32,763)	(6,892)	(48,020)	(10,090)
Purchase of Mpongwe Farm assets	(234,774)	(49,385)	–	–
Proceeds from sale of assets	–	–	–	–
Net cash outflow from investing activities	(267,537)	(56,277)	(48,020)	(10,090)
Net cash outflow before financing	(273,621)	(57,467)	(106,686)	(21,668)
Financing activities
Proceeds from issue of shares	246,399	51,440	–	–
Long term loans repaid	(49,290)	(10,269)	(7,777)	(1,634)
Receipt from long term loans	65,385	13,622	117,500	25,000
Lease finance received	8,923	1,861	948	199
Lease finance paid	(2,326)	(485)	–	–
Interest paid	(13,053)	(2,746)	(5,950)	(1,250)
Dividends paid	(9,965)	(2,096)	–	–
Net cash inflow from financing activities	246,073	51,327	104,721	22,315
(Decrease)/Increase in cash and cash equivalents	(27,548)	(6,140)	(1,965)	647
Cash and cash equivalents at beginning of year	(35,055)	(7,303)	(29,142)	(6,174)
Effects of exchange rate changes on the balance of cash held in foreign currencies	(303)	338	(3,948)	(1,776)
Cash and cash equivalents at end of year	(62,906)	(13,105)	(35,055)	(7,303)
Represented by:
Cash in hand and at bank	8,904	1,855	13,359	2,783
Bank overdrafts	(65,529)	(13,652)	(43,276)	(9,016)
Structured agricultural finance	(6,281)	(1,308)	(5,138)	(1,070)
	(62,906)	(13,105)	(35,055)	(7,303)

The notes can be read via the following link which is the full annual report.

• Download Zambeef Products PLC 2011 annual report

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I follow Q4 closely because they are world leaders in what they do. I have no financial interest in Q4. Unfortunately. But what they say rings so true with my mission in life. There are good reasons for this.

With regulators, directors and investors in Africa lagging their first world peers, but with listed companies seeking capital and investment in the “last frontier”, the prospect of enabling African listed companies to empower themselves (rather than relying on brokers and regulators) in reaching out to investors is very compelling. For me at least – because the absence of progressive capital markets regulators (in the adoption of the internet as a communications and investment promotion tool) means that listed companies should be given the reins to determine their own future. The reasons are : there’s an absence of information, its good corporate governance, it builds brand and corporate reputation and the upside is great.

Anyway I take the liberty of replicating Q4′s blog below because I want to send their message to listed companies in Africa. Bizarrely, what Q4 is saying in first world markets has even more relevance in African markets. For me at least.

A few notes about IR in African markets:-

- newswires are not used (with a few exceptions)

- conference calls are not used (with a few exceptions)

- podcasts are not used (with a few exceptions)

Here goes the message from Q4

“Late last week the SEC issued guidance on how companies can use corporate web sites and blogs for the release of material information under regulation Fair Disclosure. This timely announcement has the potential to dramatically impact the corporate disclosure industry.

Rather than outlining the content of the guidance I thought I would provide some initial thoughts on what I see as being the key messages of the interpretive release. If you are not familar with the guidance please see the following links for more information.

SEC Docs

• The full SEC interpretive release (47 page PDF)
• SEC Press Release

Some Initial Blog Posts

• SEC OKs websites and blogs for Reg. FD
• SEC To Recognize Corporate Blogs as Public Disclosure, What This Means for Wires and Press Releases
• SEC To Recognize Corporate Blogs as Public Disclosure. Can We Now Kill the Press Release?
• The emerging self-distribution news model

Here are a few initial take aways from the announcement:

The playing field of disclosure has been leveled. Newswires no longer have the built in demand for their services that they did before. (NYSE still mandates the use of wires but the assumption is that they will follow suit). This does not mean that the Newswire’s are going out of business, but it certainly means they are going to have to compete with more than just each other moving forward. Newswires will need to look closely at their business model and determine how they are going to compete in a world where the distribution of information is free (welcome to the Internet).

The press release is not dead. There is nothing in any of the SEC announcement that speaks to companies not using a press release. The press release is a document type, not a distribution method. It can be posted to a corporate web site, company blog or sent out over a newswire. IROs and public companies have well defined controls and procedures around the creation of press releases and other disclosure documents. This recent announcement does not impact the importance of using a press release to disclose information to the market, just how the press release gets from the company to the investor.

In order for information to be “Public” (and applicable to RegFD) the corporate web site needs to meet 3 criteria.

1. a company web site is a recognized channel of distribution
2. posting of information on a company web site disseminates the information in a manner making it available to the securities marketplace in general, and
3. there has been a reasonable waiting period for investors and the market to react to the posted information.

As you can see, these are quite general and not prescriptive, this means that companies will need to be committed to meeting these guidelines and likely it also means that new vendors will step up to help. This criteria warrants a post on its own, so I won’t go into detail on each aspect here.

The guidance is principle based and future proof. If the SEC had come out and said “you must use RSS and email alerts” it would be creating the same problem it is now getting out of. By using a principle based approach it allows the market to determine what is acceptable and ensures that certain technologies and/or companies are not able to create protected industries (like the newswires did). Having said that, a principle based approach also creates a grey zone that lawyers do not like, which means that the mass market of issuers will likely not change anything, until the market adopts a new standard. This will require forward-thinking issuers and vendors to innovate and create this new standard.

The corporate web site is the podium for all disclosure. We’ve been saying this for some time (as have many others) but it is now official. The corporate web site is the hub of corporate disclosure. With this new guidance and the combined innovated efforts of issuers and vendors, we will continue to see the corporate site dominate the world of disclosure for the foreseeable future.

I would certainly advise all those in the corporate disclosure space to read the full 47 page report. It’s long but there are some great comments in there.”

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NOTE: This blog entry is sourced from the company blog for Q4 Web Systems a leading provider of on-demand software for corporate and investor websites. The text above is a direct extract from Q4 Web Systems Blog, an excellent resource for IR best practices.

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There are a few grey haired individuals in the Imara Group that have been trudging around African markets for many many years. So many years in fact that they have been responsible for the establishment of many of them. It’s no wonder then that Imara excels on a number of fronts not least of which is their asset management.

Imara’s asset management side, headed by John Legat, excelled recently at the inaugural asset managers awards. To celebrate their success, which is long overdue I replicate their press release below:-

Imara, the pan-Africa financial services group, has taken two of the top investment accolades in the first annual Africa Fund Manager Performance Awards.

Its Imara African Opportunities Fund won recognition as the year’s best Africa equity fund with a fund size of more than USD50 million while the Imara African Resources Fund claimed honours as the top Africa Equity Fund with a fund value of less than USD50 million. The Imara Zimbabwe Fund was also nominated for the same award.

The awards were presented at a gala dinner on October 11 in Cape Town.

Imara Group CEO Mark Tunmer commented: “It is an honour to feature so prominently in this inaugural awards programme for Africa fund managers.

“We’re delighted a well-established favourite like our African Opportunities Fund, with positions across numerous sub-Saharan jurisdictions, and a more focused specialist Resources Fund, a relative newcomer to our range, have done so well. We were also delighted that our popular Zimbabwe Fund made the short list for an award.

“Awards recognition has a wider significance for our continent and industry. By spotlighting superior investment returns out of Africa, awards such as this contribute to the global re-rating of sub-Saharan Africa as an investment destination.

“Strong performance by managers and markets will accelerate capital market development and help drive sustained progress by our continent.”

Harare-based John Legat, head of Imara’s asset management division, is manager of the Imara African Opportunities Fund while Bruce Williamson manages the Imara Africa Resources Fund.

John Legat noted: “We view awards recognition such as this as an endorsement of the Imara approach to equity investment in sub-Saharan markets. We have extensive on-the-ground representation across Africa and conduct in-depth research and face-to-face interviews to ensure portfolio construction is backed by thorough understanding of challenges and opportunities in all jurisdictions.”

• Imara is an independent, Botswana-listed investment banking group that prides itself on objective decision making in the service of its clients. The company is mid-sized and has offices in Angola, Botswana, South Africa and the UK and associate offices in Malawi, Mauritius, Zambia and Zimbabwe. Imara has also partnered with Chapel Hill Denham in Nigeria, NIC Capital in Kenya, Namibia Equity Brokers and Mac Capital in Dubai.The Group is an active participant in Africa’s financial markets and maintains an extensive research coverage of regional equities. Funds under management exceed US$450m and assets under administration exceed US$1.77 billion.Imara provides a range of specialised financial products and services that can be broadly categorised as:
  • Asset management (institutional and private client)
  • Corporate finance and advisory services
  • Securities
  • Trust and administration services

  Imara Group subsidiaries are regulated by: NBFIRA in Botswana, the FSA (UK), the FSB, JSE, SAFEX (South Africa), SEC, ZSE and Reserve Bank of Zimbabwe, the FSC (Mauritius) and the Reserve Bank of Malawi.

ISSUED ON BEHALF OF:	IMARA
BY:	CLEAR DISTINCTION COMMUNICATIONS
CONSULTANCY CONTACT:	Carol Dundas Tel: 011 444-0650 Mobile: 083 447 6648 Email: carol@cleardistinction.co.za
IMARA CONTACT:	Mark Tunmer Tel: 083 788 9037

Africa Equity Fund of the Year over $50m – Imara African Opportunities Fund Limited – “The Imara fund’s strong 12 month return of 25.87% with average volatility versus its peers made it the clear winner in this category, with the next best fund returning 12.23%”

Africa Equity Fund of the Year under $50m – Imara African Resources Fund – “Imara’s African Resources Fund achieved a 41.94% return to make it the stand-out pan-African strategy in this category”

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They are setting a trend. AICO Africa;, the Zimbabwe Stock Exchange listed seed, cotton and FMCG group podcast its analyst presentation for the half year results to 30 September 2011. The is the second time AICO has podcast its full investor presentation and the company is setting the lead in Zimbabwe in consistently applying investor outreach initiatives.

The company is under-capitalised and has significant operational challenges, but their investment story is positive in the short-term, and exciting in the long-term given the profile of agriculture and food globally. Seed Co, also listed, is the Group largest asset and is also applying progressive investor outreach initiatives through their website and communication practices.

Some key stats from AICO’s presentation:-

1. Revenues up by 117% to US$m
2. PAT growth in Cotton up by 183% – recorded profit of US$4.6 m
3. Growth in Group sales volumes up by 19%

So does the investment story of a company determine whether the management adopts progressive online communications practices? Clearly not. Management, or the Board does. This quote from Standard Boardroom Practice, prepared by the Institute of Directors, London, revised 1971 is still appropriate (or perhaps more appropriate) in modern times:

“Although the process of encouraging shareholders to take an interest in the affairs of the company may be a rather slow one, directors should not be discouraged. It is their duty to make the maximum use of the methods open to them of keeping the shareholders informed.”

The “methods open to them”: a website, Twitter, Facebook, RSS feeds, Linkedin, SMS, emails, podcasts, conference calls, webcasts…….none of these applied in 1971, but they do now and they provide companies the opportunity to build brand and corporate reputation by forming and retaining relationships with stakeholders individually. At low cost. How? Technology.

With the slackening off of global markets and the withdrawal of foreign demand for securities in emerging African markets companies feel that they need to go “the extra mile” to seek and retain investors’ attention. There are two aspects of this “extra mile” that are disturbing. The first is that the “extra mile” should be the “norm” in these markets, as they are elsewhere and secondly, the number of companies not adopting the basic tenets of online disclosure (timely and comprehensive info) is high. My favourite quote above has been lost in time. Lost to the regulators and lost to directors because they are stuck in their past ways. But times have changed.

My experience with our clients is that the core decision makers know that “it is the right thing to do” but do not necessarily understand how or why – which is fair game. I make the mistake trying to promote these practices by  jumping up and down and waving my hands because I’m so excited. But life is not like that. Learning happens slowly. Confidence building takes time, as does seeing the benefits of how online communications benefits companies in areas other than investor relations.

The fact is that in the absence of prescriptive regulation, proactive adoption of good corporate governance it is only the commercial imperative that remains as a key motivator to promote progressive online investors. This message is not lost on AICO and Seed Co and they are building now for the future. Others are following too.

Ironically, when the world is embracing technology because of the opportunity to link directly with people at zero or almost zero cost, Africa is going in the opposite direction. Regulator’s dropping of the requirement to send annual reports (and proxy voting material) to shareholders (Kenya is one example of where this has been entrenched in law) is evidence of this. As is the absence of technology being adopted by Africa’s regulators.

Dominic Jones , a world leader in online investor relations, has this opinion about the trends in African markets regarding de-linking the direct communications channel with shareholders:

“Scrapping requirements for companies to mail printed disclosure documents to investors is a global trend, but it has exacerbated shareholder apathy in every jurisdiction where it has been implemented. This is largely because regulators have failed to replace printed disclosures with suitable standards of online disclosures. Apathy and an uniformed investing public is, to my mind, the single worst thing that can happen in any market. It ultimately will lead to market abuses.”

Brokers are realising the opportunity to link with investors too and the recent launch of the Lynton-Edwards website ( a Zimbabwe Stock Exchange registered stockbroking firm) shows how investment data can be used to reach out, identify investors and create a secure two way communications channel with them.

Sounds so airy-fairy doesn’t it? Consultant’s or marketing speak. But its not.

• Listen to the AICO business overview podcast here
• Listen to the AICO financial overview podcast here
• Listen to the AICO “Q & A section” podcast here
• View the latest AICO investor presentation here
• Sign up to AICO investor alerts here
• Sign up to Seed Co investor alerts here
• Visit the Seed Co investor relations website here

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The Nairobi Stock Exchange sells a broad array of data and generates close to US$100,000 a year from this activity which accounts for approximately 2.5% of total revenues. There are 7 authorised data vendors whose deposits held at the NSE total about US$8,500. These data vendors re-package the NSE data into products and services that theoretically “add-value” to the users thereof. Data vendors in most cases re-charge for this data or package it in a way that they are able to generate revenues therefrom eg portal sites, that generate advertising revenues by virtue of their website traffic.

 

For the larger media firms such as Thompson Reuters and Bloomberg the value add to investors is significant as the data is bundled into global databases and other products.

There is a bigger question here for the NSE and that’s whether the foregone benefits of wider information dissemination exceed US$100,000 of revenue every year? “A bird in the hand is worth two in the bush”? At the moment it would seem that its easier to justify the 100-grand-in-the-hand. Is the NSE rent seeking from data that it should not be?

The products below show what you can buy – you can buy this information from the NSE using your cell phone! Which IS progressive, but is it really necessary? As a shareholder or an active investor, is it acceptable for me to pay for basic investment data? How many people does NSE have to sell to, to add to the “bottom line” and is the “bottom line” becoming more and more important for the NSE now that it is de-mutualising? Are the long term interests of Kenya’s capital markets being prejudiced by virtue of the fact that the  NSE is a monopoly on investment data and is selling it?

An alternative view is that this investment data should only be consumed by those that understand it and can afford it and through registered investment professionals i.e brokers. Yes, there are the ignoramus investors out there being misguided all the time as a result of their ignorance, but that’s the nature of the industry (look at World markets and they are supposed to be filled with educated people). From a regulators perspective, one could argue that  no-one really understands the markets so who cares? My retort to this response is consider the power of 4 million ignoramuses (those with access to internet in Kenya and with shares but no knowledge) being misguided by their ignorance and able to express this ignorance on a global platform 24/7. Phew!! An example? IPOs whose share prices rocket to stratospheric levels and then collapse: no shortage of evidence of this in Kenya.

Is this sort of ignoramus behaviour acceptable to the regulators whose core obligation is to protect investors?  ”An informed investor is a protected investor” I believe.

Whether African regulators like it or not, the growth of social media is changing the landscape for everyone. Social media is full of ignoramuses. In the absence of wide and engaging education efforts by the regulators (now) there is significant scope for the ignoramus market to completely dominate (over-positively or over-negatively) the general public’s perception. In that situation the regulator can’t do anything its too late. So they have to be pre-emptive. One could argue that the listed companies should bear some responsibility for educating investors and enabling them to make informed investment decisions – but that’s a different conversation.

My view is this:-

- the NSE should review the products below and make free the ones that are not well subscribed. Charge the top data vendors for the value add data / systems / feeds. Don’t charge for anything else (the basic products) but make it freely available to anyone who wants to sign up.

- engage the market as widely as possible with an online shareholder education course (linked to social media) – charge US$20 for it (enable payment by M-Pesa) and if you get 3,000 people signing up then that’s US$60,000 of the US$100,000 that you might have forgone above. Investors become more “informed” and “protected”. These education initiatives deal specifically with irrational exuberance in IPO situations and ignoramuses are learning things rather than buying data.

There’s a degree of intuition needed here in deciding the way forward for the NSE and I don’t have the stats to be able to say much more. The fact is that they have been selling data now for some time and know what the market does and doesn’t want. They need to reflect on this and amend their strategy to achieve both objectives.

Why is this relevant?

Well with the World melting at the moment, with Africa being seen as the last investment frontier, and with foreign investment at risk, there should not be any barriers to getting hold of timely information. The bigger picture is that the way the web is developing, all of this information is going to be available for free anyway in the future to almost everyone, by phone,iPad, PC, whatever and its only the likes of Thompson Reuters and Bloombergs that can justify the need to pay to re-package packaged real time data on account of their professional investor bases.

All of this debate is all so terribly over-intellectual isn’t it?

BUT, ask yourself whether 10 years ago you would have predicted that so much information and functionality could be available on the web FOR FREE. So really at the end of the day the future for African capital markets is whether the regulators that run them have a vision, a long term vision that embraces how the web is changing the world. A vision that does not involve US$100,000 now, vs benefits that are intangible and in the future and for the greater good. Like investor education. Mmmmm….

Daily FIX Log File (flf)Contains all the day’s trading activity (both equity and debt) in electronic form.	Kshs.50000(monthly subscription)+/- US$6,480 p.a.
End of Day Listed Equity Securities Data (eded)Listed equity data, which is published no sooner than sixty (60) minutes after the close of trade on each trading day.Available in excel format	Kshs.7200(monthly subscription)+/- US$936 p.a.
Historical daily Price lists for bond data (hdpl-bond-market)Historical daily market reports for equity and debt data. Available in excel format.Data Available From 24th Feb 2011 to 13th Oct 2011	Kshs.30(per day’s price list)+/-US$71 p.a.
End of Day Listed Debt Securities Data (eddd)Listed debt data, which is published no sooner than sixty (60) minutes after the close of trade on each trading day. Available in excel format	Kshs.7200(monthly subscription)+/- US$940 p.a.
Historical daily Price lists for equity data (hdpl-equity-market)Historical daily market reports for equity and debt data. Available in excel format.Data Available From 4th Jan 2010 to 13th Oct 2011	Kshs.30(per day’s price list)+/- US$71 p.a.
Historical weekly Price lists for equity data – weekly market statistics (hwpl-equity-market)Historical weekly market reports for equity and debt data. Available in excel formatData Available From 4th Jan 2010 to 16th Sep 2011	Kshs.100(per weekly report)+/- US$56 p.a.
Historical weekly Price lists for debt data – weekly bond statistics (hwpl-bond-market)Historical weekly market reports for equity and debt data. Available in excel formatData Available From 4th Jan 2010 to 2nd Sep 2011	Kshs.100(Per weekly report)+/- US$56 p.a.
Historical monthly trading equity volumes (hmev)Historical trading volumes per month in excel formatData Available From 2010 to 2010	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly trading equity deals (hmed)Historical equity traded deals per month in excel formatCurrently No Files	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly trading equity turnovers (hmet)Historical equity traded turnover per month in excel formatCurrently No Files	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly debt traded deals (hmdd)Historical debt traded deals per month in excel formatCurrently No Files	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly debt traded volume/turnovers (hmdv)Historical debt traded volume/turnover per month in excel formatCurrently No Files	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly foreign investors trading data (hfid)Historical monthly trading summary of foreign investors. Information consists: purchases, sales, total turnover, percentage to total equity market turnoverAvailable in excel format.Data Available From 2009 to 2010	Kshs.3000(cost per annum)+/- US$33 p.a.
Historical Annual equity turnovers (historical-annual-equity-turnovers)Historical equity traded turnover per year in excel formatData Available From 1992 to 2011	Kshs.1000(cost per annum)+/- US$11 p.a.

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Imara has had a securities office in Angola for a number of years. The Group is bullish about the prospects for the country whose yet-to-emerge-stock-exchange could be the third or fourth largest in Africa based on the size and value of the companies that could come to market. There is nothing more I would like than to be a regulator in the Angolan Stock Exchange to be able to shape and influence the future of online investor relations in that country. A clean sheet. No bad habits, no legacy issues, just the opportunity to catapult Angolan companies onto the global investment stage with comprehensive, timely information that actually promotes investment, not promises to promote investment. I rub my hands in anticipation……

I replicate the Imara press release below. Their London event sounds ground-breaking and exciting.

Angola’s investment case gets big response – Imara

Angola is fast emerging as the next big sub-Saharan opportunity, judging by the response to the oil-rich nation’s upcoming investment indaba in London. The event on November 8 is believed to be the first forum to be convened in a major financial centre to foster closer contacts between the international institutional investment community and Angolan corporates and public bodies.

It has attracted a Who’s Who of attendees from the fund management and financial service sectors, says Anthony Lopes Pinto, head of Angolan operations at Imara, the pan-African financial services group.

Imara and London-based asset management Group Fleming Family & Partners are co-hosts of the event. Two years ago, the long-time associates launched a similar London investment day to showcase opportunities in Zimbabwe. The initiative helped free up investment flows and contributed to an international reappraisal of Zimbabwe’s post-dollarisation prospects.

“Response to our Angola conference has been overwhelmingly positive,” says Lopes Pinto. “We therefore believe we are well placed to repeat the success of the watershed Zimbabwe event.

“Angola has one of the fastest growing economies in sub-Saharan Africa. Some northern hemisphere economies may be struggling to cope with the continuing international financial crisis, but Angola is back in the black, foreign currency reserves are at an all-time high and government efforts are gaining traction to diversify the economy and reduce Angola’s dependence on oil.”

Delegates are expected from North and South America, Europe and the UK. Representatives of financial service companies significantly outnumber those from the energy and resource sectors. Senior Angolan officials will present a strategic overview of national prospects, with a focus on opportunities for public-private sector partnerships. In addition, speakers from major corporates currently active in the Angolan market will address the conference on operational conditions and progress toward a business-friendly policy environment.

The Angolan government has publicly stated that next year it will develop its capital markets in Luanda, deepening the financial sector and creating new sources of funding for Angolan enterprises.

“The diverse mix of attendees confirms that international investors have picked up official signals that opportunities are not restricted to the oil industry. With the recovery of the oil price, wide-ranging investment possibilities are fast emerging; which is why the response has been so positive from so many quarters.”

Imara has been represented in Luanda for more than two years by Imara Securities Angola SCVM Limitada, a joint-venture with an Angolan conglomerate. The Angolan JV launched corporate finance activities at the beginning of the year. Two deals are currently in the pipeline, a property project and a financial services transaction.

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I welcome the introduction of the Kenya Index Series from the FTSE from a governance and investor relations perspective. Firstly, the indices will provide greater outreach for Kenyan companies on the global investment stage and enable fund managers and investors to benchmark performance on a like for like basis with international peers. Secondly, the existence of the indices will I expect provide tangible empirical evidence of the volatility associated with equity returns from companies in Kenya.

Why is this relevant to me? Kenyan corporate governance lags its international peers and the dropping of the core tenet of investor protection, that of ensuring the delivery of hardcopy annual report and proxy voting material, will, over time, reduce listed companies’ accountability to the broader investment community.

Dominic Jones , a world leader in online investor relations, has this opinion about the trends in African markets regarding de-linking the direct communications channel with shareholders:

“Scrapping requirements for companies to mail printed disclosure documents to investors is a global trend, but it has exacerbated shareholder apathy in every jurisdiction where it has been implemented. This is largely because regulators have failed to replace printed disclosures with suitable standards of online disclosures. Apathy and an uniformed investing public is, to my mind, the single worst thing that can happen in any market. It ultimately will lead to market abuses.”

The Kenyan Index Series will hopefully accentuate the need for globally acceptable governance standards in Kenya (albeit slowly and indirectly) and spur regulators and listed companies to treat all shareholders equally and transparently. The advent of social media and general internet access means that now more than ever, investing can be (or will be whether listed companies like it or not) brought into the mainstream. What is required is an educated and informed investment community that is well protected by legislation and good corporate governance practices.

The Kenya Index Series is good for Kenyan capital markets on a number of fronts.

Here is the speech of the CEO of the NSE

REMARKS BY THE CHIEF EXECUTIVE OF THE NAIROBI SECURITIES EXCHANGE
MR. PETER MWANGI
DURING THE LAUNCH OF FTSE NSE KENYA INDEX SERIES
HELD ON 8^th NOVEMBER 2011
AT THE NSE TRADING FLOOR

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Mr. Donald Keith, Deputy Chief Executive Officer, FTSE Group
Mr. Jonathan Cooper, Managing Director, Middle East & Africa, FTSE Group
Mrs Stella Kilonzo, Chief Executive,CMA
Mr. Carilus Ademba, Chief Executive Officer, the Sacco Societies Regulatory Authority (SASRA)
Mrs. Rose Mambo, Chief Executive,CDSC
Board Members of theNairobiSecurities Exchange
Member Firms of theNairobiSecurities Exchange
Members of the Media
Invited Guests, Ladies and Gentlemen

On behalf of the Board of Directors and Management of the Nairobi Securities Exchange, I warmly welcome you all to the official launch of our partnership with FTSE International – the preeminent provider of global indices and index products. Ladies and Gentlemen, we commence our partnership with the launch of the FTSE NSE Kenya Index Series. The index series consists of:

• The FTSE NSE Kenya 25 Index

This tradable index reflects the performance of the 25 most liquid stocks trading on the Nairobi Securities Exchange.

• The FTSE NSE Kenya 15 Index

This tradable index reflects the performance of the largest 15 stocks, ranked by full market capitalisation trading on the Nairobi Securities Exchange.

These equity indices have been developed in partnership with FTSE International and in consultation with local asset owners and fund managers. The FTSE NSE Kenya Index Series is built to FTSE’s renowned standards of index design, which emphasize transparency, tradability and strong governance, with index data available across a range of global vendor platforms. They reflect the growing interest in new domestic investment and diversification opportunities inKenya. The new indices will run concurrently with the NSE 20 Share and NSE All Share Indices. They will act as a gauge by which our investors can measure the performance of their portfolios. They also act as a foundation for the development of index related products such as Exchange Traded Funds (ETFs). The launch of these new indices is a milestone for the NSE.

It is the first such initiative of its kind in East andCentral Africa, and the third inAfricaafter JSE Ltd. (South Africa) and Casablanca Stock Exchange (Morocco).

In line with our vision “To be a leading securities exchange in Africa, with a global reach.”, the NSE endeavors to build on its existing suite of products and services in order to meet the evolving needs of our domestic and international investors. Our partnership with FTSE International, illustrates our commitment to meeting this need. I am convinced that the indices shall attract additional capital flows into the domestic market and enhance liquidity and market capitalization. It is a crucial part of the efforts of the Nairobi Securities Exchange to evolve into a full service securities exchange which supports trading, clearing and settlement of equities, debt, derivatives and other associated instruments. In this regard, we intend to expand the family of FTSE NSE Kenya Index Series by offering a treasury bond index, very shortly. With these few remarks, allow me to welcome Mr. Donald Keith, Deputy CEO, FTSE International, to address us.

PETER MWANGI
CHIEF EXECUTIVE

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