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CBH
CBH
CBH - Country Bird Holdings Limited - Unaudited Interim Results for the six
months ended 31 December 2008
Country Bird Holdings Limited
(Incorporated in the Republic of South Africa)
(Reg. no 2005/008505/06)
Share Code: CBH & ISIN: ZAE000094835
Unaudited Interim Results
for the six months ended 31 December 2008
Revenue up 33%
Operating profit up 24%
Condensed Consolidated Income Statement
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2008 2007 2008
Unaudited Unaudited % Audited
R`000 R`000 change R`000
Revenue 1 105 797 832 466 33 1 689 223
Cost of sales (977 488) (714 501) 37 (1 587 839)
Gross profit 128 309 117 965 9 101 384
Other income 25 341 3 957 540 23 819
Selling and (2 383) (3 605) (34) (5 752)
marketing costs
Administrative (54 694) (40 134) 36 (78 338)
expenses
Operating profit 96 573 78 183 24 41 113
Finance income 1 479 465 218 3 465
Finance costs (25 094) (10 311) 143 (27 309)
Share of loss of (457) (378) 21 (978)
associates
Profit before 72 501 67 959 7 16 291
income tax
Income tax (17 676) (19 389) (9) 5 882
expense
Profit for the 54 825 48 570 13 22 173
period
Attributable to:
Equity holders of 53 336 48 497 10 16 423
the Company
Minority interest 1 489 73 1 943 5 750
54 825 48 570 13 22 173
Earnings per
ordinary
share (cents):
- basic 28,51 25,92 10 8,78
- diluted 28,25 25,71 10 8,72
ADDITIONAL
INFORMATION
Weighted average 187 099 187 099 313 187 099 313
number of 313
ordinary shares
Diluted number of 188 810 188 640 188 313 694
ordinary shares 839 531
Headline earnings
per ordinary
share (cents):
- basic 18,60 26,00 (28) 8,87
- diluted 18,43 25,78 (29) 8,81
Dividend per 9,50 - 2,90
share (cents)
Net asset value 163,95 152,85 7 138,36
per share
Tangible asset 112,30 144,53 (22) 130,07
value per share
Gearing ratio 2,46 1,61 53 2,69
Condensed Consolidated Balance Sheet
As at As at As at
31 December 31 December 30 June
2008 2007 2008
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets 489 638 289 909 369 204
Property, plant and 326 199 255 917 281 651
equipment
Intangible assets 96 628 15 558 15 522
Financial assets and 459 1 567 1 691
other investments
Investment in associates 8 104 13 481 14 146
Deferred income tax 58 248 3 386 56 194
assets
Current assets 572 855 456 895 586 601
Inventories 118 564 77 971 109 628
Biological assets 143 604 115 723 134 969
Trade and other 235 655 248 818 265 709
receivables
Cash and cash 75 032 14 383 76 295
equivalents
Total assets 1 062 493 746 804 955 805
EQUITY
Capital and reserves 306 740 285 977 258 875
attributable to equity
holders of the Company
Share capital 1 871 1 871 1 871
Share premium 825 721 825 721 825 721
Other reserves 22 828 25 087 24 361
Retained earnings 278 829 262 993 230 918
Common control deficit (832 111) (832 132) (832 110)
297 138 283 540 250 761
Minority interest 9 602 2 437 8 114
LIABILITIES
Non-current liabilities 412 779 200 150 276 961
Borrowings 324 616 138 478 190 604
Deferred tax liability 88 163 61 672 86 357
Current liabilities 342 974 260 677 419 969
Trade and other payables 233 796 190 510 254 361
Current income tax 26 008 32 322 37 127
liabilities
Borrowings 82 570 33 035 127 615
Provisions for other 600 4 810 866
liabilities and charges
Total liabilities 755 753 460 827 696 930
Total equity and 1 062 493 746 804 955 805
liabilities
Condensed Consolidated Cash Flow Statement
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2008 2007 2008
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash generated from
operating activities
Net cash generated from 21 952 15 783 (38 188)
operating activities
Cash receipts from 1 135 849 759 215 1 599 084
customers
Cash paid to suppliers (1 055 756) (730 252) (1 607 135)
and employees
Net cash generated from 80 093 28 963 (8 051)
operations
Interest paid (25 094) (10 311) (25 113)
Income tax paid (33 047) (2 869) (5 024)
Cash flow from investing
activities
Net cash used in (140 586) (16 915) (48 820)
investing activities
Purchases of property, (27 186) (20 818) (44 182)
plant and equipment
Proceeds on disposal of 542 649 963
property, plant and
equipment
Acquisition of (124 573) - (11 067)
subsidiaries and joint
venture
Realisation/(increase) (15 357) (1 369) (1 493)
in financial assets and
investments
Investment in associates (491) (3 341) (4 006)
Proceeds on disposal of 25 000 7 500 7 500
investments
Interest received 1 479 464 3 465
Cash flow from financing
activities
Cash flow from financing 115 216 (19 976) 115 808
activities
Proceeds 120 642 (14 363) 121 421
from/(repayments of)
borrowings
Dividends paid to (5 426) (5 613) (5 613)
Company`s shareholders
Net increase/(decrease) (3 418) (21 108) 28 800
in cash and cash
equivalents
Cash and cash 63 774 33 670 33 670
equivalents at beginning
of period
Foreign exchange (2 861) 221 1 305
differences
Cash and cash 57 495 12 783 63 775
equivalents at end of
period
Condensed Statement of Changes in Equity
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2008 2007 2008
Unaudited Unaudited Audited
R`000 R`000 R`000
Opening balance 258 872 234 461 234 461
Sale of subsidiary - 6 474 6 495
included in common
control deficit
Share incentive scheme 1 175 1 123 2 790
Currency translation (2 706) 962 (1 432)
differences
Profit for the year 53 336 48 497 16 423
Minorities share of 1 489 73 5 750
profits and reserves
Dividend paid (5 426) (5 613) (5 613)
At end of period 306 740 285 977 258 875
Condensed Segment Reporting
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2008 2007 2008
Unaudited Unaudited Audited
R`000 R`000 R`000
REVENUE
Poultry 860 828 662 593 1 291 178
- South Africa 782 812 616 469 1 189 211
- Other Africa 78 016 46 124 101 967
Animal nutrition 369 250 234 717 473 513
- South Africa 276 871 234 717 412 183
- Other Africa 92 379 - 61 330
Beef 65 629 - 87 869
Intersegment revenues (189 910) (64 844) (163 337)
1 105 797 832 466 1 689 223
OPERATING PROFIT
Poultry 66 200 61 095 23 486
- South Africa 51 402 45 760 995
- Other Africa 14 798 15 335 22 491
Animal nutrition 28 801 17 088 17 095
- South Africa 25 314 17 088 14 730
- Other Africa 3 487 - 2 365
Beef 1 572 - 532
96 573 78 183 41 113
Notes to the Condensed Consolidated Financial Statements
1. Basis of preparation
The unaudited condensed consolidated interim financial information ("interim
financial information") announcement for the half year ended 31 December 2008
was prepared in accordance with IAS 34, "Interim financial reporting" and in
compliance with the Listing Requirements of the JSE Limited and the South
African Companies Act (1973). The accounting policies are consistent with those
of the previous financial period and comply with International Financial
Reporting Standards (IFRS). These financial statements do not include all the
information required for full annual financial statements and should be read in
conjunction with the consolidated financial statements as at and for the year
ended 30 June 2008.
These financial statements have not been reviewed or audited by the Group`s
auditors. The condensed consolidated interim financial statements were approved
by the Board of Directors on 9 February 2009.
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2008 2007 2008
Unaudited Unaudited Audited
R`000 R`000 R`000
2. Reconciliation to
headline earnings
Net profit attributable 53 336 48 497 16 423
to the Company`s equity
holders
Adjusted for:
Profit on disposal of (67) (149) (627)
property, plant and
equipment
(Profit)/loss on sale of (18 467) - 791
investment
Adjusted headline 34 802 48 348 16 587
earnings
3. Capital expenditure 27 186 20 818 53 314
incurred
4. Capital expenditure and
commitments
Capital expenditure - 165 2 404
contracted for
Capital expenditure 6 236 2 050 -
approved but not yet
contracted
Inventories contracted 88 952 - 79 576
for
95 188 2 215 81 980
5. Cash and cash
equivalents
Bank balances, deposits 75 032 14 383 76 295
and cash
Short-term borrowings (17 537) (1 600) (12 520)
57 495 12 783 63 775
6. Business combinations
On 24 October 2008, the Group acquired the remaining 50% of the share capital of
Nutri Feeds (Pty) Limited, which has stock feed operations in South Africa, and
Hollyberry Props 40 (Pty) Limited, a rental company. The acquired business
contributed revenues of R138,4 million and net profit of R4,7 million to the
Group for the period 24 October 2008 to 31 December 2008. The purchase price
allocation has not been finalised.
Details of the net assets acquired and goodwill are as R`000
follows:
Purchase consideration paid in cash 124 573
Cost of property, plant and equipment acquired 44 071
Goodwill 80 502
Furthermore, on 1 July 2008 the Group acquired selected assets within a newly
established company, Oistens (Pty) Limited, which will operate as a poultry
operation in Botswana. The acquired business contributed revenues of R12,3
million and net loss of R26 196 to the Group for the period 1 July 2008 to 31
December 2008. The purchase price allocation has not been finalised.
Details of the net assets acquired and goodwill are as R`000
follows:
Purchase consideration paid in cash 5 500
Cost of property, plant and equipment acquired 5 500
Goodwill -
7. Disposal of investment in associate
On 28 November 2008, the Group sold its 18% shareholding in Elite Breeding Farms
and Kayfour Investments (Pty) Limited for the amount of R25 million, and
realising a profit of R18,5 million.
8. Declaration of dividend
Notice is hereby given that a dividend of 9,5 cents per ordinary share in
respect of the six months ended 31 December 2008 has been declared by the board.
The total dividend for the period is 3 times covered by basic earnings per
share.
The salient dates of the declaration and payment of this dividend are as
follows:
Last date to trade ordinary shares cum Wednesday, 22 April 2009
dividend
Ordinary shares trade ex dividend Thursday, 23 April 2009
Record date Thursday, 30 April 2009
Payment date Monday, 4 May 2009
Share certificates may not be dematerialised or rematerialised between Thursday,
23 April 2009 and Thursday, 30 April 2009 (both dates inclusive).
Commentary
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, broiler 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 increased by 24% to R96,6 million for the six months ended 31
December 2008 (2007: R78,2 million). Revenue was up 33% to R1,11 billion for the
period (2007: R832 million), with gross profit increasing by 9% to R128,3
million (2007: R117,9 million) after accounting for a 37% increase in cost of
sales, due principally to higher feed and other input costs.
Profit before income tax only rose 7% to R72,5 million (2007: R67,9 million) due
primarily to a 2,5-fold increase in finance charges. The group`s gearing ratio
increased to 2,46 from 1,61 a year ago due mainly to the R106 million debt
incurred to effect the acquisition of the remaining 50% of Nutri Feeds. Included
in these results is the effect of the Elite JV disposal, being a before tax
profit of R18,5 million.
Operational review
Poultry - South Africa
The South African poultry division reported a 13,7% increase in volumes sold for
the period at an 11,6% increase in net sales value. However, the margin was
under pressure and it contracted to 7,6% (2007: 9,2%). The result was an
operating profit of R51,4 million for the period, versus R45,8 million for the
comparable period in 2007. Industry figures show a decline of about 20% in
poultry imports in 2008 from 2007, mainly attributable to the weakening of the
rand.
Poultry - Other Africa
This comprises a grandparent breeding operation in Zambia, a parent breeding
operation in Botswana and a broiler operation in the same country which was
acquired during the period. Operating profit declined marginally to R14,8
million (2007: R15,3 million) whilst revenues increased by 70%. The drop in
margins is as a result of the inclusion of broiler operations with none in the
preceeding period. Both operations in Botswana and Zambia are progressing well,
and are poised for strong growth over the next two years.
Animal Nutrition - South Africa
Nutri Feeds reported an improvement of 11% in volumes sold for the period under
review, and this, together with the feed price increases, resulted in a healthy
improvement in operating profit to R25,3 million (2007: R17,1 million).
The motivating factors for the acquisition of the balance of the shareholding in
Nutri Feeds remain and the full effect will be felt as we achieve greater
capacity utilisation.
Animal Nutrition - Other Africa
The Feed Mill in Botswana has been turned around and is now showing a profit as
opposed to the losses at the time of acquisition. Further improvements are
anticipated.
Red Meat
A small operating profit of R1,5 million is very encouraging at a time when many
red meat businesses are facing losses. Availability of cattle for purchase is
becoming a problem in the market but efficiencies and rationalisation have
positioned this business well to take advantage of the recovery which is
anticipated within the next 18 months.
PROSPECTS
For the second half of the current financial year the poultry industry in South
Africa is likely to continue operating at reduced margins compared to those of
recent previous years, but there are signs that demand and supply are
stabilising with imports expected to remain at reduced levels. Input costs
should reduce given the anticipated decrease in the price of maize from previous
high levels. Should this recovery in the Poultry Industry be sustainable,
margins are likely to show an improvement.
The feed operation is increasing its volumes and provided feed margins can be
maintained the increase in capacity utilisation should result in higher
operating income.
Volume growth in the Feed Mill in Botswana, together with improved operational
efficiencies, should produce increased revenues and the feed milling operation
in Zambia is expected to commence production towards the end of the second half.
DIVIDEND
In line with the Group`s dividend policy of three times cover, a dividend of
9,50 cents per share for the period has been declared for payment on 4 May 2009.
DIRECTORS OF CBH*
BH Kent (Chairman)#, CD Stein#,
KW James, GP Heath,
JD Wright, RJ Taylor
#Independent non-executive
REGISTERED OFFICE
15 Coro Street
Old East End
Bloemfontein, 9301
(PO Box 6851
Bloemfontein, 9301)
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
9300)
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)
11 February 2009
Date: 11/02/2009 11:55:02 Produced by the JSE SENS Department.
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