News blog

China Food Company

BY: Andrew Hore |
POSTED: 18/07/2012 |
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Cooking sauces maker China Food Company is selling its animal feeds business for a total of $16m.

The business of Fuss Feed is being acquired by Korean company Wisehand Planning Co. This business made a post-tax profit of £1.6m in 2011 and there will be a one-off gain of £4.8m.

There are three components to the payment: $8.75m for the feed business, $5.5m for a new feed factory and $1.75m for the land on which the factory is being built. Due diligence is being carried out and the first payment of $4.5m should be made by the end of July, with a further $3.5m due in the autumn and the rest by the end of the year. There are a number of conditions including the completion of the new factory by the end of 2012, trading is in line with expectations and government approvals are received. CFC may be liable to pay damages of up to $300,000 per month of delay in completing the factory.

At 25.25p a share, up 1.25p, CFC is valued at £18m.

House broker finnCap forecasts a return to profit in 2012 but it will be modest at £700,000 and it will be due to the final contribution from the animal feed business. CFC is investing in the marketing of its Xaka brand of sauces and this pushed it into loss in 2011 and it will stop a return to profit in 2012.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFJuly2012_34.pdf