CFC China Food Co.

TIDMCFC

RNS Number : 4279X

China Food Company PLC

15 February 2012

 
   Press Release     15 February 2012 
 

China Food Company Plc

("China Food" the "Company" or the "Group")

Update on Sale of Fuss Feed

China Food Company plc (AIM: CFC), a leading Chinese manufacturer of cooking and dipping sauces, is pleased to provide the following update on the proposed disposal of Fuss Feed, the Company's animal feed business ("the Disposal").

Proposed Disposal of Fuss Feed

On 14 February 2012 the Company signed a memorandum of understanding ("MOU") with an international animal feed provider to sell 100% of Fuss Feed. As previously stated, the animal feed business is not core to the Company's strategy going forward and the Board believes that the Disposal will reaffirm its objective to become a leader in condiments in Northern China. EBITDA for the Fuss Feed business was approximately GBP1.5 million for 2010. The Disposal will improve the Company's gearing and also provide additional working capital for China Food's core condiments business.

Pursuant to the MOU, CFC has granted the interested party a period of exclusivity to commence the due diligence process with the intention of entering into a definitive sales and purchase agreement in April 2012. The consideration will be satisfied in cash and the Board will update the market as appropriate.

John McLean, Non-Executive Chairman of China Food, commented: "The sale of Fuss Feed will be a transformational transaction for the Group. Once completed, the Disposal will mark a further significant step in the strategic focus of the Company becoming a leading manufacturer and distributor of condiments in Northern China. The Board is pleased that the disposal of this non-core asset is moving towards a successful conclusion."

The Company intends to issue a pre-close trading update by the middle of March 2012.

- Ends -

For further information:

 
 China Food Company Plc 
 John McLean, Non-Executive Chairman        Tel: +44 (0) 7768 031 
                                                              454 
 Raphael Tham Wai Mun, Chief Executive 
                                         www.chinafoodcompany.com 
 Numis 
 David Poutney - Head of Corporate           Tel: +44 (0) 20 7260 
  Broking                                                    1000 
 
  finnCap (Nomad) 
 Geoff Nash / Ben Thompson (Corporate        Tel: +44 (0) 20 7220 
  Finance)                                                   0500 
 Simon Starr (Broking) 
 

Media enquiries:

 
 Abchurch Communications 
 Henry Harrison-Topham / Joanne Shears     Tel: +44 (0) 20 7398 
  / Mark Dixon                                             7709 
 mark.dixon@abchurch-group.com           www.abchurch-group.com 
 

Notes to Editors:

China Food is a well-established food manufacturing business based in Shandong province in the People's Republic of China, a region with a population of circa 94 million. A recent report identified Shandong province as one of the five most attractive 'city clusters' in China, due to the high number of large cities in the province*. The Group manufactures numerous different product lines including soya sauce and bean paste, all targeting the Chinese domestic market, and sold through a network of distributors and outlets of supermarket chains in the north-eastern region of the PRC, such as Tesco, Walmart, Carrefour and Jialejia.

The Chinese sauces, dressings and condiments market is expected to be worth CNY115 billion (US$15 billion) by 2013**, driven by Chinese population growth and economic prosperity. The Chinese domestic market is rapidly expanding, and the Group is well positioned to benefit from China's demographic growth and increased urbanisation.

The first phase of expansion is now complete at the Group's new factory, which was officially opened on 12 May 2010, and this doubles China Food's current capacity. It is proposed that in due course there will be a further two phases, adding capacity of 100,000 tonnes through the building of 230 additional silos. The Group plans to expand into the neighbouring provinces such as Henan and Hebei.

The Group also operates an animal feed business, Fuss Feed. This business produces premix, concentrate and compound feedstuffs, and is the third largest animal feed business in Shandong, an important province for the production of livestock in China.

The Group's operations are highly scalable and able to support further growth, and with net assets of GBP37 million (as at 31 October 2011), the prospects for China Food are strong. Further information on China Food Company can be found atwww.chinafoodcompany.com.

*McKinsey Quarterly Report: Is your emerging market strategy local enough?, April 2011

** Source: Datamonitor report: Sauces, Dressings and Condiments in China to 2013, April 2010

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCDZLFFLLFLBBE

China Food Co. (LSE:CFC)
Historical Stock Chart
From Aug 2024 to Sep 2024

China Food Co. (LSE:CFC)
Historical Stock Chart
From Sep 2023 to Sep 2024