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CBH
CBH
CBH - Country Bird Holdings - Audited Results For The Year Ended 30 June 2008
and dividend declaration
COUNTRY BIRD Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/008505/06)
Share Code: CBH & ISIN: ZAE000094835
("CBH" or "The Company" or "The Group")
Audited results for the year ended 30 June 2008
Consolidated Income Statement
Year ended 30 June
2008 2007
R`000 R`000
Revenue 1 689 223 1 309 161
Cost of sales (1 587 839) (1 087 965)
Gross profit 101 384 221 196
Distribution cost (5 752) (2 309)
Administrative expenses (78 338) (78 176)
Other income 23 819 19 535
Trading income 41 113 160 246
BEE ownership transaction - (12 334)
Operating profit 41 113 147 912
Finance income 3 465 1 270
Finance costs (27 309) (11 982)
Share of profit/(loss) of (978) 2 228
associates
Profit before income tax 16 291 139 428
Income tax expense 5 882 (39 583)
Profit for the year 22 173 99 845
Attributable to:
Equity holders of the Company 16 423 98 257
Minority interest 5 750 1 588
22 173 99 845
Earnings per ordinary share
(cents):
- basic 8,78 52,52
- diluted 8,72 52,52
Consolidated Balance Sheet
As at 30 June
2008 2007
R`000 R`000
ASSETS
Non-current assets 369 204 273 954
Property, plant and equipment 281 651 247 206
Intangible assets 15 522 15 557
Financial assets and other 1 691 198
investments
Investment in associates 14 146 10 140
Deferred income tax assets 56 194 853
Current assets 586 601 387 028
Inventories 109 628 57 613
Biological assets 134 969 119 677
Trade and other receivables 265 709 175 568
Cash and cash equivalents 76 295 34 170
Total assets 955 805 660 982
EQUITY
Capital and reserves attributable to
equity holders of the Company
Total equity 258 875 234 462
Share capital 1 871 1 871
Share premium 825 721 825 721
Other reserves 24 361 23 002
Retained earnings 230 918 220 109
Common control deficit (832 110) (838 605)
Attributable to equity holders of 250 761 232 098
the Company
Minority interest in equity 8 114 2 364
LIABILITIES
Non-current liabilities 276 961 187 002
Borrowings 190 604 141 314
Deferred income tax liabilities 86 357 45 688
Current liabilities 419 969 239 518
Trade and other payables 254 361 162 801
Current income tax liabilities 37 127 29 915
Borrowings 127 615 43 462
Provisions for other liabilities 866 3 340
and charges
Total liabilities 696 930 426 520
Total equity and liabilities 955 805 660 982
Consolidated Cash Flow Statement
Year ended 30 June
2008 2007
R`000 R`000
Cash generated from operating
activities
Net cash generated from operating (38 188) 109 623
activities
Cash receipts from customers 1 599 084 1 256 825
Cash paid to suppliers and (1 607 135) (1 128 069)
employees
Cash generated from operations (8 051) 128 756
Interest paid (25 113) (11 982)
Income tax paid (5 024) (7 151)
Cash flow from investing activities
Net cash used in investing (48 820) (45 642)
activities
Purchases of property, plant and (44 182) (53 314)
equipment
Proceeds on sale of property, plant 963 11 235
and equipment
Acquisition of subsidiaries and (11 067) (2 239)
joint venture
Realisation of financial asset and (1 493) 1 050
investments
Investment in associates (4 006) (5 883)
Proceeds on disposal of joint 7 500 2 239
venture/subsidiary
Interest received 3 465 1 270
Cash flow from financing activities
Net cash used in financing 115 808 (41 241)
activities
Capital distribution to - (102 000)
shareholder
Share issue and listing expenses - (5 855)
Proceeds from borrowings 121 421 66 614
Dividends paid to company`s (5 613) -
shareholders
Net increase in cash and cash 28 800 22 740
equivalents
Cash and cash equivalents at 33 670 10 930
beginning of year
Exchange gains on cash and bank 1 305 -
overdrafts
Cash and cash equivalents at end of 63 775 33 670
year
Segment Reporting
The primary segment is defined as those business units providing products
that are subject to risks and returns that are different from those of other
business segments.
The secondary geographical segment is in respect of providing products in an
economic environment that are subject to risks and returns that are different
from other economic environments.
Revenue Operating profit
2008 2007 2008 2007
R`000 R`000 R`000 R`000
Poultry 1 291 178 1 280 885 23 486 129 412
- South Africa 1 189 211 1 201 552 995 104 102
- Other Africa 101 967 79 333 22 491 25 310
Animal nutrition 473 513 326 992 17 095 18 500
- South Africa 412 183 326 992 14 730 18 500
- Other Africa 61 330 - 2 365 -
Intergroup revenue (163 337) (298 716) - -
Beef 87 869 - 532 -
1 689 223 1 309 161 41 113 147 912
Consolidated Statement of Changes in Equity
Share Share Other
capital premium reserves
R`000 R`000 R`000
Balance at 1 July 2006 1 871 933 576 13 293
Capital distribution - (102 000) -
BEE ownership transaction - - 12 334
Currency translation - - (2 624)
differences
Share issue and listing - (5 855) -
expenses
Profit for the year - - -
Balance at 30 June 2007 1 871 825 721 23 003
Balance at 1 July 2007 1 871 825 721 23 003
Disposal of subsidiary - - -
Currency translation - - (1 432)
differences
Profit for the year - - -
Employee share scheme - - 2 790
Dividend - - -
Balance at 30 June 2008 1 871 825 721 24 361
Total
attributable
to equity
Common holders of
Retained control the parent
earnings deficit company
R`000 R`000 R`000
Balance at 1 July 2006 121 851 (838 605) 231 986
Capital distribution - - (102 000)
BEE ownership transaction - - 12 334
Currency translation - - (2 624)
differences
Share issue and listing - - (5 855)
expenses
Profit for the year 98 257 - 98 257
Balance at 30 June 2007 220 108 (838 605) 232 098
Balance at 1 July 2007 220 108 (838 605) 232 098
Disposal of subsidiary - 6 495 6 495
Currency translation - - (1 432)
differences
Profit for the year 16 423 - 16 423
Employee share scheme - - 2 790
Dividend (5 613) - (5 613)
Balance at 30 June 2008 230 918 (832 110) 250 761
Minority Total
interest equity
R`000 R`000
Balance at 1 July 2006 776 232 762
Capital distribution - (102 000)
BEE ownership transaction - 12 334
Currency translation - (2 624)
differences
Share issue and listing - (5 855)
expenses
Profit for the year 1 588 99 845
Balance at 30 June 2007 2 364 234 462
Balance at 1 July 2007 2 364 234 462
Disposal of subsidiary - 6 495
Currency translation - (1 432)
differences
Profit for the year 5 750 22 173
Employee share scheme - 2 790
Dividend - (5 613)
Balance at 30 June 2008 8 114 258 875
Notes to the results
1. Basis of preparation
The condensed consolidated financial information ("financial information")
announcement is based on the audited financial statements of the Group for
the year ended 30 June 2008 which have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), the listing
requirements of the JSE Limited and the South African Companies Act (1973),
as amended.
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 June 2008 and are consistent with those applied in previous
years.
3. INDEPENDENT REPORT BY THE AUDITORS
These condensed consolidated results have been audited by our auditors
PricewaterhouseCoopers Inc., who have performed their audit in accordance
with International Standards on Auditing. A copy of their unqualified audit
report is available for inspection at the registered office of the Company.
4. EARNINGS PER SHARE
Earnings per share is calculated by dividing the earnings attributable to
shareholders for the year by the number of 187 099 313 (2007: 187 099 313)
ordinary shares in issue during the year.
5. HEADLINE EARNINGS PER ORDINARY SHARE
The calculation of headline earnings per share is based on headline earnings
of R16,4 million (2007: R98,2 million) and the number of 187 099 313 (2007:
187 099 313) ordinary share in issue during the year.
Reconciliation between net profit attributable to the equity holders of the
company and headline earnings:
June 2008 June 2007
R`000 R`000
Profit for the year attributable to the 16 423 98 257
equity holders of the Group
Profit on sale of property, plant and (627) (157)
equipment
Loss on sale of joint venture - 424
Profit on sale of subsidiary 791 -
Headline earnings 16 587 98 524
Headline earnings per share (cents) 8,87 52,66
Diluted earnings per share (cents) 8,81 52,66
6. CAPITAL COMMITMENTS
Capital expenditure contracted for but not 81 980 50 070
yet incurred
7. BUSINESS COMBINATIONS
On 1 January 2008, the Group acquired 60% of the share capital of Master
Farmer Feeds (Pty) Limited, a feed producer operating in Botswana. The
acquired business contributed revenues of R72 million and net profit of R5
million to the Group for the period from 1 January 2008 to 30 June 2008. The
purchase price allocation has not been finalised.
Details of the net assets acquired are as follows:
Purchase consideration paid in cash 11 067
Cost of property, plant and equipment 11 067
acquired
-
The assets and liabilities as of 1 January 2008 arising from the acquisition
are as follows:
Acquiree`s
R`000 Cost carrying amount
Property, plant and equipment 11 081 43 882
Trade and other payables (4) (17)
Deferred tax liabilities (10) (39)
Net assets 11 067 43 826
Minority interests (40%) (4 427)
Net asset acquired 6 640
On 1 July 2007, the Group took a 50% equity stake in a newly formed company,
Long Iron Meats (Pty) Limited. The company is a start-up company and had no
assets and liabilities at the date of acquisition. The purchase consideration
was R60. The business contributed revenues of R87 million and net loss of R17
545 to the Group for the period from 1 July 2007 to 30 June 2008.
On 10 March 2008, the Group took a 100% equity stake in a newly formed
company, Master Farmer Zambia Limited. The company is a start-up company and
had no assets and liabilities at the date of acquisition. The purchase
consideration was R10 514. The operations are still in the process of being
established and the acquired business has not contributed to revenues and net
profit of the Group for the year to 30 June 2008.
8. EVENTS AFTER BALANCE SHEET DATE
Subsequent to year end, the Group acquired the remaining 50% of the share
capital of Nutri Feeds (Pty) Limited, which has stock feed business
operations in South Africa, and Hollyberry Props 40 (Pty) Limited, a rental
company, for a cash consideration of R106 million.
Furthermore, the Group acquired selected assets within a newly established
company, Oistins (Pty) Limited, which will operate as a poultry operation in
Botswana. The purchase consideration was R8 million.
9. DECLARATION OF DIVIDEND
Notice is hereby given that a dividend of 2,90 (2007: 3,00) cents per
ordinary share in respect of the twelve months ended 30 June 2008 has been
declared by the board. The total dividend for the year is 3 times covered by
basic earnings per share.
The salient dates of the declaration and payment of this dividend is as
follows:
Last date to trade ordinary shares cum Friday, 21 November 2008
dividend
Ordinary shares trade ex dividend Monday, 24 November 2008
Record date Friday, 28 November 2008
Payment date Monday, 1 December 2008
Share certificates may not be dematerialised or rematerialised between
Monday, 24 November 2008 and Friday, 28 November 2008 (both dates inclusive).
COMMENTARY ON RESULTS
PROFILE
Country Bird Holdings Limited (CBH) is an agricultural group comprising:
- integrated poultry and stock feed business operations in South Africa
trading as Supreme and Nutri Feeds
- poultry breeding and stock feed operations in the southern African region
trading as Ross Africa and Master Farmer, and
- a South African red meat abattoir and trading operation.
CBH currently operates in South Africa, Botswana, Namibia and Zambia.
FINANCIAL REVIEW
Operating profit of R41 113 was 72% down on the figure for the corresponding
period of R147 912. Increased gearing resulted in net finance costs
increasing by 128% and, as a result, attributable profit of R16 423 was 83%
lower than the figure of R98 257 for the previous period.
This translates into a decrease in headline earnings per share (HEPS) of 83%
from 52,66 cents to 8,87 cents.
OPERATIONAL REVIEW
The South African poultry industry was under pressure in the year under
review. The negative impact of these industry conditions was slightly offset
by the less cyclical African operations. To reduce the risk of this
cyclicality, the Directors decided to increase exposure in the animal
nutrition business and diversify into red meat.
Poultry - South Africa
The South African poultry operation produced an operating profit of R995 000
(2007: R104,1 million), 99% below that of the prior year. The industry was
under severe pressure as a consequence of an accumulation of concurrent
negative factors, which impacted on profitability. These included high
interest rates and high consumer inflation, leading to reduced consumer
purchasing power; high production input costs in the form of feed, energy and
other costs, which significantly reduced margins; and an oversupply of
product.
On the positive side, the Arbor Acres genetics were almost fully deployed
throughout the Group`s farms and their performance is meeting expectations.
Poultry Africa
This division comprises a grandparent breeding operation in Zambia and a
parent breeding operation in Botswana. Although revenue increased by 29%,
operating profit declined by 11% to R22 492 (2007: R25 311) as a result of
site establishment delays in Botswana.
Zambia
The economy in Zambia remains buoyant, providing good prospects for continued
growth. In the period, both local market share and exports of the Ross parent
stock continued to grow.
Botswana
Acquisition of the land required to establish the final two breeding sites
was delayed as a result of administrative issues, resulting in insufficient
hatching eggs being produced on the breeding farms. The situation has been
rectified and efficiencies and margins are expected to be restored in the
current financial year.
Animal Nutrition
The Group increased its exposure to animal nutrition through the purchase of
a feed mill in Botswana in January 2008, and through purchasing the remaining
50% of Nutri Feeds from 1 July 2008. The South African feed milling operation
benefited from improved operating efficiencies and prudent raw material
purchasing policies.
Red Meat
Margins on red meat declined significantly due to higher feed prices and less
buoyant realisations, resulting in a break-even outcome for the year under
review.
PROSPECTS
Poultry prices have started to recover as a result of lower imports, falling
inventories and higher red meat prices. Feed input costs are expected to
remain at current levels, allowing for a recovery in poultry margins. In the
medium term, profitability is expected to be under pressure with improvements
only expected in the second half of the 2009 calendar year. In the current
financial year, management is focusing on improving operational efficiencies
in all Group operations.
DIVIDEND
In line with the Group`s dividend policy of three times cover, a dividend of
2,90 cents per share for the period has been declared for payment on 1
December 2008.
DIRECTORS OF CBH*
BH Kent (Chairman)#, CD Stein#,
KW James, GP Heath,
JD Wright, RJ Taylor
#Independent non-executive
REGISTERED OFFICE
Unit 16, Block 76
Silver Lakes Drive
Tiger Valley Office Park
Tiger Valley
Pretoria, 0054
(PO Box 11079
Silver Lakes, 0054)
ATTORNEYS
Smith Tabata
Buchanan Boyes Inc.
269 Oxford Road
Illovo, 2196
(PO Box 55232
Northlands, 2116)
INVESTMENT BANK and SPONSOR
Investec Bank Limited
(Registration number
1969/004763/06)
2nd Floor
100 Grayston Drive
Sandton, 2196
(PO Box 785700
Sandton, 2146)
COMPANY SECRETARY
Maria Antunes
15 Coro Street
Bloemfontein, 9301
(PO Box 6851
Bloemfontein, 9301)
REPORTING AUDITORS
PricewaterhouseCoopers Inc.
Registered Accountants and Auditors
(Registration number
1998/012055/21)
61 Second Avenue
Westdene
Bloemfontein, 9301
(PO Box 818
Bloemfontein, 9300)
TRANSFER SECRETARIES
Computershare Investor Services
(Proprietary) Limited
(Registration number 2004/003647/07)
Ground Floor, 70 Marshall Street
Johannesburg, 2001
(PO Box 61051
Marshalltown, 2107)
Date: 03/09/2008 16:00:01 Produced by the JSE SENS Department.
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