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ARL
ARL
ARL - Astral Foods - Audited results for the year ended 30 September 2007
Astral Foods
Incorporated in the Republic of South Africa
Registration no 1978/003194/06
Share code ARL & ISIN ZAE000029757
AUDITED RESULTS
For the year ended 30 September 2007
Highlights
Operating profit increase 6%
Headline earnings per share increase 7%
Dividend increase 20%
Condensed Income Statement
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2007 Change 2006
R`000 % R`000
Revenue 6 329 311 22 5 183 664
Operating profit (note 5) 808 238 6 765 953
Net finance (costs)/income (1 591) 4 884
Profit before income tax 806 647 5 770 837
Income tax expense (261 089) (254 339)
Profit for the year 545 558 6 516 498
Attributable to:
Equity holders of the parent 537 858 6 509 517
company
Minority interests 7 700 10 6 981
545 558 6 516 498
Earnings per share (cents)
- basic 1 387 8 1 285
- diluted 1 385 9 1 268
Additional information
Headline earnings (R`000) 535 521 5 509 803
Headline earnings per share (cents)
- basic 1 381 7 1 286
- diluted 1 379 9 1 269
Dividend per share (cents)
- declared out of earnings for the 700 20 585
year
Ordinary shares
- Issued net of treasury shares 38 459 792 38 949 578
- Weighted-average 38 789 127 39 643 913
- Diluted weighted-average 38 825 141 40 177 944
Net asset value per share (Rand) 33,47 18 28,28
Condensed Balance Sheet
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2007 2006
R`000 R`000
Assets
Non-current assets 1 416 775 1 183 199
Property, plant and equipment 1 254 028 1 038 328
Intangible assets 139 266 141 725
Investments and loans 2 873 1 394
Derivative financial instrument 15 549 -
Deferred income tax asset 5 059 1 752
Current assets 1 449 933 989 541
Inventories 249 368 198 228
Biological assets 282 308 214 354
Trade and other receivables 772 490 448 031
Current income tax assets 22 318 -
Derivative financial instrument 16 555 -
Cash and cash equivalents 106 894 128 928
Total assets 2 866 708 2 172 740
Equity
Capital and reserves attributable to
equity
holders of the parent company 1 287 063 1 101 622
Issued capital 6 184 93 711
Reserves 1 280 879 1 007 911
Minority interests in equity 20 450 19 332
Total equity 1 307 513 1 120 954
Liabilities
Non-current liabilities 329 967 249 386
Borrowings 6 228 9 600
Deferred income tax liability 256 326 171 906
Retirement benefit obligations 67 413 67 880
Current liabilities 1 229 228 802 400
Trade and other liabilities 955 162 734 601
Current income tax liabilities 14 651 55 787
Borrowings 259 415 12 012
Total liabilities 1 559 195 1 051 786
Total equity and liabilities 2 866 708 2 172 740
Net (debt)/surplus cash (158 749) 107 316
Condensed Cash Flow Statement
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2007 2006
R`000 R`000
Cash operating profit 913 454 863 644
Working capital changes (221 711) 84 384
Cash generated from operating 691 743 948 028
activities
Net finance income/(costs) (1 591) 4 884
Income tax paid (243 790) (234 434)
Cash flows from operating activities 446 362 718 478
Net cash used in investing (358 266) (293 633)
activities
Cash generated for the year 88 096 424 845
Cash used in financing activities (361 822) (372 173)
Proceeds from issuance of shares 4 736 6 117
Buy-back of shares (114 871) (190 589)
Dividends paid (249 107) (195 114)
- to the company`s shareholders (240 818) (190 876)
- to minority interests (8 289) (4 238)
(Decrease)/increase in borrowings (2 580) 7 413
Net (decrease)/increase in cash and (273 726) 52 672
cash equivalents
Effects of exchange rate changes (1 912) 2 694
Cash and cash equivalent from 5 974 -
acquisition of subsidiary
Cash and cash equivalent 119 623 64 257
balances at beginning of year
Cash and cash equivalent balances at (150 041) 119 623
end of year
Segment Information
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2007 Change 2006
R`000 % R`000
Revenue
Animal Nutrition 3 530 610 32 2 669 705
- South Africa 3 347 738 34 2 500 371
- Other Africa 182 872 8 169 334
Poultry
- South Africa and Swaziland 4 382 651 21 3 623 545
Inter group (1 583 950) (1 109 586)
6 329 311 22 5 183 664
Operating profit
Animal Nutrition 332 707 22 272 265
- South Africa 294 752 25 235 085
- Other Africa 37 955 2 37 180
Poultry
- South Africa and Swaziland 475 531 (4) 493 688
808 238 6 765 953
Assets
Animal Nutrition 923 615 19 778 942
- South Africa 826 690 19 696 356
- Other Africa 96 925 17 82 586
Poultry
- South Africa and Swaziland 2 097 183 37 1 530 174
Inter group (154 090) (136 376)
2 866 708 32 2 172 740
Liabilities
Animal Nutrition 686 724 29 533 606
- South Africa 640 684 31 487 559
- Other Africa 46 040 - 46 047
Poultry
- South Africa 1 026 561 57 654 556
Inter group (154 090) (136 376)
1 559 195 48 1 051 786
Condensed Statement of Changes in Equity
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2007 2006
R`000 R`000
Balance beginning of year 1 120 954 983 192
Profit for the year 545 558 516 498
Movement in currency translation (1 633) 974
difference during the year
Dividends to the company`s (240 852) (191 000)
shareholders
Payments to minority interest (8 289) (4 238)
holders
Decrease in equity as result of buy- (114 871) (190 589)
back of shares
Shares issued 4 736 6 117
Option value of share options 503 -
granted
Minority interest in subsidiary 1 407 -
acquired
Balance at end of year 1 307 513 1 120 954
Notes
1. Basis of preparation
The condensed consolidated financial information announcement is based on the
audited financial statements of the Group for the year ended 30 September 2007
which have been prepared in accordance with International Financial Reporting
Standards ("IFRS"), the Listings Requirements of the JSE Limited and the South
African Companies Act (1973).
2. Accounting policies
The accounting policies applied in these condensed consolidated financial
statements comply with IFRS and IAS 34 and are in agreement with those applied
in the preparation of the group`s annual financial statements for the year
ended 30 September 2007 and consistent with those applied in previous years.
3. Independent audit by the auditors
These condensed consolidated results have been audited by our auditors
PricewaterhouseCoopers Inc. who have performed their audit in accordance with
the International Standards in Auditing. A copy of their unqualified audit
report is available for inspection at the registered office of the company.
4. Trading weeks
The reporting period for the poultry segment ends on the last Saturday of the
financial year, resulting in a 53 week reporting period for 2007 (2006: 52
weeks).
The extra trading week yielded additional revenue and operating profit of R78
million and R6 million respectively.
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2007 2006
R`000 R`000
5. Operating profit
The following items have been
accounted for in the operating
profit:
Auditors` remuneration 3 902 3 503
Directors` remuneration 16 244 15 805
Fair value adjustment of cash 36 845 14 111
settled share-based payments
Biological assets - fair value 2 557 710
gain
Amortisation of intangible assets 4 475 2 969
Depreciation on property, plant 101 618 85 766
and equipment
Profit on disposal of property, 746 47
plant and equipment
Foreign exchange profit/(loss) 83 (390)
6. Reconciliation to headline
earnings
Earnings for the year 537 858 509 517
Profit on sale of property, plant (503) (303)
and equipment
Investment written off - 589
Investment previously written off (714) -
now reversed
Excess fair value over cost of
investment in business (1 120) -
Headline earnings for the year 535 521 509 803
7. Share capital
In terms of the share buy-back programme 1 036 886 shares were acquired during
the period under review at a total cost of R114 669 565.
In terms of the Group`s share incentive scheme, 547 100 shares were issued in
respect of share options exercised during the period under review.
8. Capital commitments
Capital expenditure approved not 72 782 58 557
contracted
Capital expenditure contracted not 83 893 65 628
recognised in financial statements
Financial Overview
Profit for the year at R546 million showed a 6% increase over the
corresponding period despite a significant increase in the prices of all
agricultural input commodities.
Revenue increased by 22% from R5,184 million to R6,329 million and operating
profit by 6% from R766 million to R808 million. Poultry operating profit was
down 4% whilst Animal Nutrition showed an increase of 22% on last year. The
Group`s operating margin of 12,8% was down on last year`s 14,8%.
Cash generated for the year of R88 million was impacted by abnormally higher
debtor levels due to the financial year ending on a Sunday.
Headline earnings per share increased by 7% from 1 286 cents to 1 381 cents
per share.
A final dividend of 440 cents per share has been declared, resulting in a
total dividend for the year of 700 cents, compared to last year`s 585 cents,
an increase of 20%.
During the second half of the year we received an expression of interest from
a private equity company for a leverage buy-out. A committee of unaffected
directors was appointed to consider the matter. After due consideration and
involvement of advisors, the committee considered the offer to be an
undervaluation of the company. This was duly communicated and there was no
further development.
Operational Overview
Animal Nutrition Division
The South African maize producing industry experienced its worst drought in 30
years and the domestic price of maize remained at high levels. The average
Safex based yellow maize price increased by 62% over the corresponding period.
International prices of agricultural commodities increased sharply as demand
for ethanol production increased and erratic weather conditions disrupted
world production.
Revenue increased by 32% to R3,531 million (2006: R2,670 million) driven by
high agricultural input commodity prices. Volumes for the period increased by
6% mainly due to the effect of the Earlybird expansion project coming into
full production in July 2007. Operating profits increased by 22% to R333
million but margins came under pressure and reduced from last year`s high of
10,2% to 9,4%. Operating costs were well contained. During the year, the Group
increased its shareholding in Meadow Feeds Mozambique from 33% to 80%.
Poultry Division
The demand for poultry products remained strong. Selling prices of poultry
meat increased by 13%, insufficient to compensate for the 29% increase in feed
prices. Sales volumes increased by 9% mainly due to the poultry expansion
project at Earlybird coming into full production in July 2007.
Revenue for the year increased by 21% to R4,383 million (2006: R3,624 million)
but operating profit fell by 4% to R475 million due to the increased feed
price. Operating margins dropped from 13,6% to 10,9%. The capital expansion
project to increase production at Earlybird from 2,1 million broilers per week
to 2,5 million was successfully completed by the end of June 2007. The second
project to improve product mix and flexibility in the plants will be fully
operational by the end of December 2007.
Board Changes
Tom Pritchard, Group Financial Director since 2001, retired at the end of
August 2007.
Prospects
Due to good early rains and high maize prices, farmers are expected to plant
more maize in the coming season which could result in lower prices going
forward. This, together with the benefits of the Poultry expansion projects
should result in improved earnings.
Declaration of Ordinary Dividend No. 14
Notice is hereby given that a final dividend (no.14) of 440 cents per ordinary
share has been declared in respect of the year ended 30 September 2007.
Salient dates 2008
Last date to trade cum dividend Friday, 4 January
Shares commence trading ex dividend Monday, 7 January
Record date Friday, 11 January
Payment of dividend Monday, 14 January
Share certificates may not be dematerialised or rematerialised between Monday,
7 January 2008 and Friday, 11 January 2008, both days inclusive.
On behalf of the board
J L van den Berg N C Wentzel
Chairman Chief Executive Officer
Pretoria
8 November 2007
Registered office
Block 9, The Boardwalk Office Park
107 Haymeadow Crescent, Faerie Glen, Pretoria, 0043
Postnet 329, Private Bag X10, Elarduspark, 0048
Telephone: (012) 990-8260
Website address: www.astralfoods.com
Directors
J L van den Berg (Chairman)
*N C Wentzel (Chief Executive Officer)
*M A Kingston, *C E Schutte, J J Geldenhuys
C G van Veyeren, M Macdonald, T C C Mampane,
Dr T Eloff, Dr. N Tsengwa
(*Executive director)
Company Secretary:
M Eloff
Transfer secretaries
Computershare Investor Services 2006 (Pty) Limited
PO Box 61051
Marshalltown, 2107
Telephone: (011) 370-5000
Sponsor
JP Morgan Chase Bank NA
(Johannesburg Branch)
1 Fricker Road, Illovo
Johannesburg 2196
Private Bag X9936
Sandton, 2146
Telephone: (011) 507-0430
Date: 08/11/2007 17:56:18 Produced by the JSE SENS Department.
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