Published: 8 hours ago

Zambeef Products Plc has disclosed a significant related-party transaction under AIM Rule 13, entering into a long-term electricity supply agreement with Kanona Power Company Limited, a company linked to its non-executive director Katebe Monica Musonda.

The agreement, signed on January 28, 2025 and effective from February 1, 2025, appoints Kanona as the sole electricity supplier to Zambeef's Mpongwe farming operations, one of the group's most strategically important production hubs. Initially structured as a six-month contract, the arrangement has since been extended through two addenda, with the current term running to July 31, 2026.

In the first full year of the agreement, covering February 2025 to January 2026, Zambeef Products Plc procured electricity worth approximately US$5 million, inclusive of taxes. From February 2026, the contract price increased by 3.1852% on a tax-exclusive basis, reflecting a modest escalation aligned with prevailing cost conditions. The contract remains cancellable by either party on 30 days' notice, preserving a degree of operational flexibility.

Zambeef said the arrangement has materially improved both the cost efficiency and reliability of electricity supply, a critical input for its Mpongwe operations, which underpin a large share of the group's irrigated crop production, feedlot systems and downstream processing activities. These operations form a central pillar of Zambeef's vertically integrated model across Zambia, as well as its regional footprint in Nigeria and Ghana.

The agreement comes against a backdrop of persistent electricity supply constraints in Zambia, where load-shedding and grid instability have disrupted industrial and agricultural output. Securing a dedicated power supplier reflects a broader shift among large corporates toward self-managed or contracted energy solutions to stabilise production and mitigate operational risk.

Given the involvement of a board member in the supplying entity, the transaction is classified as a related-party deal under AIM rules, requiring enhanced governance scrutiny. Zambeef said its independent directors, excluding Musonda, reviewed the agreement in consultation with its nominated adviser, Cavendish Capital Markets Limited, and concluded that the terms are fair and reasonable from a shareholder perspective.

The company emphasised that the agreement was negotiated on an arm's-length basis and that no material commercial terms were altered beyond the agreed pricing adjustment and contract extensions.

The disclosure highlights the balancing act facing agribusiness firms operating in constrained environments, where securing reliable inputs such as electricity is critical to sustaining output, even as governance standards demand transparency and independence in related-party transactions. For Zambeef, the Kanona agreement underscores a strategic priority to de-risk energy supply while maintaining compliance with international market regulations.
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