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ARL
ARL
ARL - Astral Foods - Audited Annual Financial Results And Dividend Declaration
30 September 2008
ASTRAL FOODS
Incorporated in the Republic of South Africa
Registration no 1978/003194/06
Share code: ARL
ISIN: ZAE000029757
AUDITED ANNUAL FINANCIAL RESULTS AND DIVIDEND DECLARATION
30 September 2008
Highlights
- Operating profit decrease 32%
- Earnings per share decrease 38%
- Dividend unchanged
- Cash from operating activities increased 43%
Condensed Group Income Statement
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2008 Change 2007
R`000 % R`000
Revenue 8 184 205 29 6 329 311
Operating profit (note 5) 547 786 (32) 808 238
Net finance costs (49 401) (1 591)
Profit before income tax 498 385 (38) 806 647
Income tax expense (164 159) (261 089)
Profit for the year 334 226 (39) 545 558
Attributable to:
Equity holders of the parent company 327 261 (39) 537 858
Minority interests 6 965 (10) 7 700
Profit for the year 334 226 (39) 545 558
Earnings per share (cents)
- basic 858 (38) 1 387
- diluted 858 (38) 1 385
Additional information
Headline earnings (R`000) 320 385 (40) 535 521
Headline earnings per share (cents)
- basic 840 (39) 1 381
- diluted 840 (39) 1 379
Dividend per share (cents)
- declared out of earnings for the year 700 - 700
Ordinary shares
- Issued net of treasury shares 38 047 708 38 459 792
- Weighted-average 38 134 718 38 789 127
- Diluted weighted-average 38 157 365 38 825 141
Net asset value per share (Rand) 34,24 2 33,47
Condensed Group Balance Sheet
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2008 2007
R`000 R`000
Assets
Non-current assets 1 614 525 1 416 775
Property, plant and equipment 1 462 364 1 254 028
Intangible assets 12 251 15 718
Goodwill 124 802 123 548
Investments and loans 13 184 2 873
Derivative financial instruments - 15 549
Deferred income tax asset 1 924 5 059
Current assets 1 542 689 1 449 933
Inventories 300 124 249 368
Biological assets 318 218 282 308
Trade and other receivables 723 128 772 490
Current income tax asset s 33 924 22 318
Derivative financial instruments 7 201 16 555
Cash and cash equivalents 160 094 106 894
Total assets 3 157 214 2 866 708
Equity
Capital and reserves attributable to equity
holders of the parent company 1 302 887 1 287 063
Issued capital 736 6 184
Treasury shares (204 435) (211 231)
Reserves 1 506 586 1 492 110
Minority interest in equity 25 263 20 450
Total equity 1 328 150 1 307 513
Liabilities
Non-current liabilities 390 223 327 014
Borrowings 19 757 6 228
Deferred income tax liability 301 756 256 326
Retirement benefit obligations 68 710 64 460
Current liabilities 1 438 841 1 232 181
Trade and other liabilities 1 102 500 958 115
Current income tax liabilities 9 471 14 651
Borrowings 326 870 259 415
Total liabilities 1 829 064 1 559 195
Total equity and liabilities 3 157 214 2 866 708
Condensed Group Cash Flow Statement
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2008 2007
R`000 R`000
Cash operating profit 660 736 913 454
Working capital changes 111 433 (221 711)
Cash generated from operating activities 772 169 691 743
Income tax paid (133 138) (243 790)
Cash flows from operating activities 639 031 447 953
Net cash used in investing activities (269 803) (336 550)
Cash generated for the year 369 228 111 403
Cash used in financing activities (382 249) (385 129)
Proceeds from issuance of shares 441 4 736
Shares repurchased (59 146) (114 871)
Interest paid (68 827) (23 307)
Dividends paid to the company`s shareholders (266 738) (240 818)
Payments to minority interest holders (2 331) (8 289)
Increase/(decrease) in borrowings 14 352 (2 580)
Net decrease in cash and cash equivalents (13 021) (273 726)
Effects of exchange rate changes 3 512 (1 912)
Cash and cash equivalent from
acquisition of subsidiary (2 621) 5 974
Cash and cash equivalent balances at
beginning of year (150 041) 119 623
Cash and cash equivalent balances at end of year (162 171) (150 041)
Condensed Group Segment Information
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2008 Change 2007
R`000 % R`000
Revenue
Animal Nutrition 5 138 064 46 3 530 610
- South Africa 4 825 052 44 3 347 738
- Other Africa 313 012 71 182 872
- Intergroup (1 774 073) (1 324 106)
Poultry
- South Africa and Swaziland 5 099 284 16 4 382 651
- Inter group (279 070) (259 844)
8 184 205 29 6 329 311
Operating profit
Animal Nutrition 384 922 16 332 707
- South Africa 339 052 15 294 752
- Other Africa 45 870 21 37 955
Poultry
- South Africa and Swaziland 162 864 (66) 475 531
547 786 (32) 808 238
Assets
Animal Nutrition 1 172 300 27 923 615
- South Africa 1 010 086 22 826 690
- Other Africa 162 214 67 96 925
Poultry
- South Africa and Swaziland 2 235 666 7 2 097 183
Inter group (250 752) (154 090)
3 157 214 10 2 866 708
Liabilities
Animal Nutrition 596 545 (13) 686 724
- South Africa 519 444 (19) 640 684
- Other Africa 77 101 67 46 040
Poultry
- South Africa and Swaziland 1 483 271 44 1 026 561
Inter group (250 752) (154 090)
1 829 064 17 1 559 195
Condensed Group Statement of Changes in Equity
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2008 2007
R`000 R`000
Balance beginning of year 1 307 513 1 120 954
Profit for the year 334 226 545 558
Movement in currency translation
difference during the year 8 789 (1 633)
Dividends to the company`s shareholders (266 905) (240 852)
Payments to minority interest holders (2 331) (8 289)
Decrease in equity as result of share repurchases (59 146) (114 871)
Shares issued 441 4 736
Option value of share options granted 5 563 503
Minority interest in subsidiary acquired - 1 407
Balance at end of year 1 328 150 1 307 513
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 2008
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), 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 September 2008, and consistent with those applied in previous years,
except for the adoption of IFRS 7. The adoption of IFRS 7 impacted disclosures
made in the financial statements. The adoption of the standard had no impact on
the reported profits or financial position of the group.
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 on 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 52 week reporting period for 2008 (2007: 53
weeks).
The extra trading week in 2007 yielded additional revenue and operating profit
of R78 million and R6 million respectively.
Audited Audited
Year ended Year ended
30 Sept 30 Sept
2008 2007
R`000 R`000
5. Operating profit
The following items have been accounted
for in the operating profit:
Auditors` remuneration 4 455 3 902
Directors` remuneration 9 058 13 929
Cash settled share based payments 2 439 36 349
Equity call options - fair value loss 22 121 760
Biological assets - fair value gain 1 231 2 557
Amortisation of intangible assets 4 744 4 475
Depreciation on property,
plant and equipment 84 191 101 818
Profit on disposal of property,
plant and equipment 8 609 746
Foreign exchange profit 338 83
6. Reconciliation to headline earnings
Earnings for the year 327 261 537 858
Profit on sale of property, plant and equipment (7 371) (503)
Impairment of assets 495 -
Investment previously written off now reversed - (714)
Excess fair value over cost of
investment in business - (1 120)
Headline earnings for the year 320 385 535 521
7. Share capital
In terms of the share buy back programme
- 450 000 shares were acquired during the
period under review at a total cost
of R59 146 000.
In terms of the Group`s share incentive scheme,
37 916 shares were issued in respect of share
options exercised during the period under review.
8. Capital commitments
Capital expenditure approved not contracted 84 856 72 782
Capital expenditure contracted not recognised
in financial statements 24 417 83 893
9. Contingent liabilities
- A referral was made to the Competition Tribunal regarding alleged anti-
competitive conduct by Astral Operations Limited and Elite Breeding Farms. The
group is opposing the referral.
- Profile Feeds (Pty) Limited and Paarl Poultry Farms (Pty) Limited instituted
claims against Astral Operations Limited on the basis of purported cancellation
of a long term feed agreement in the sum of R42 million, alternatively R21
million, alternatively R3,7 million. The prospects for success of these claims
are regarded as being remote and any possible financial loss has been estimated
and provided for in the financial statements.
Financial Overview
Profit for the year fell by 39% to R334 million from last year`s R545 million.
The South African poultry industry came under pressure during the year
following the reduction in consumer spending early in 2008 which led to an over
supply situation developing. This, together with a substantial further increase
in input costs, squeezed poultry margins severely.
Revenue increased by 29% from R6,329 million to R8,184 million driven largely
by input costs, but operating profit was 32% lower at R548 million (2007: R808
million). While Animal Nutrition operating profit improved by 16%, Poultry
operating profit was down 66%. The group`s operating margin of 6,7% was down on
last year`s 12,8%.
Net interest paid for the year of R49,4 million compares to last year`s
R1,6 million.
Earnings per share decreased by 38% from 1 387 cents to 858 cents.
Cash from operating activities for the year of R639 million was 43% higher than
the R448 million generated in 2007.
Net debt for the year increased by R28 million to R187 million representing a
debt to equity ratio of 14%.
A final dividend of 440 cents per share has been declared, resulting in a total
dividend for the year of 700 cents, the same as last year. The distribution is
justified by our robust underlying cash flow and strong balance sheet.
Operational Overview
Animal Nutrition Division
Revenue improved by 46% to R5,138 million (2007: R3,531 million) driven by high
agricultural input commodities prices. Volumes for the period increased by 2%.
Operating profits increased by 16% to R385 million but margins came under
pressure and reduced from last year`s 9,4% to 7,5%. Operating costs were well
contained in a difficult environment. Operating profit of other Africa
operations increased by a healthy 21%.
Poultry Division
Revenue increased by 16% to R5,099 million (2007: R4,383 million) but operating
profit fell by 66% to R163 million and operating margins dropped from 10,8% to
3,2%. The demand for poultry products was under pressure due to reduced
consumer spending. Sales volumes increased by 11% mainly due to the poultry
expansion projects coming into full production and the selling price of poultry
meat increased by 8% but was totally insufficient to compensate for the 29%
increase in feed prices. The average live cost to produce a broiler increased
by 23%.
Prospects
Due to the global economic crisis together with forecast normal summer weather
season, prices of agricultural commodities have already eased. This, together
with lower imports of poultry products, should result in improved earnings for
next year.
Declaration of Ordinary Cash Dividend No. 16
Notice is hereby given that a final cash dividend (no.16) of 440 cents per
ordinary share (excluding any withholding or dividend tax) has been declared in
respect of the year ended 30 September 2008.
Salient dates 2009
Last date to trade cum dividend Friday, 9 January
Shares commence trading ex dividend Monday, 12 January
Record date Friday, 16 January
Payment of dividend Monday, 19 January
Share certificates may not be dematerialised or rematerialised between Monday,
12 January 2009 and Friday, 16 January 2009, both days inclusive.
On behalf of the board
J J Geldenhuys N C Wentzel
Chairman Chief Executive Officer
Pretoria
13 November 2008
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 J Geldenhuys (Chairman),
*N C Wentzel (Chief Executive Officer),
*C E Schutte, 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 (Pty) Limited
PO Box 61051
Marshalltown, 2107
Telephone: (011) 370-5000
Sponsor
J.P. Morgan Equities Ltd.
(Johannesburg Branch)
1 Fricker Road, Illovo
Johannesburg, 2196
Private Bag X9936
Sandton, 2146
Telephone: (011) 507-0430
Date: 14/11/2008 07:05:04 Produced by the JSE SENS Department.
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