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ARL
ARL
ARL - Astral Foods - Unaudited interim results and dividend declaration
for the six months ended 31 March 2010
Astral Foods
Incorporated in the Republic of South Africa
Registration no 1978/003194/06
Share code ARL
ISIN ZAE000029757
UNAUDITED INTERIM RESULTS and DIVIDEND DECLARATION
for the six months ended 31 March 2010
Highlights
- Revenue decrease 4%
- Operating profit increase 9%
- Earnings per share increase 17%
- Headline earnings per share increase 20%
- Interim dividend increase 12% to 290 cents per share
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
Assets
Non-current assets 1 655 332 1 638 906 1 650 167
Property, plant and 1 514 190 1 490 459 1 504 338
equipment
Intangible assets 6 835 10 011 8 396
Goodwill 124 802 124 802 124 802
Investments and loans 9 505 13 634 11 973
Deferred income tax - - 658
assets
Current assets 1 424 829 1 481 192 1 523 473
Inventories 298 165 281 791 329 775
Biological assets 329 091 333 871 357 130
Trade and other 675 082 727 307 685 116
receivables
Current income tax - 8 809 13 298
asset
Derivative financial 238 4 255 309
instruments
Cash and cash 122 253 125 159 137 845
equivalents
Total assets 3 080 161 3 120 098 3 173 640
Equity and liabilities
Capital and reserves 1 363 860 1 265 905 1 346 044
attributable to equity
holders of the parent
company
Issued capital 736 736 736
Treasury shares (204 435) (204 435) (204 435)
Reserves 1 567 559 1 469 604 1 549 743
Minority interests 20 049 17 834 20 405
Total equity 1 383 909 1 283 739 1 366 449
Non-current liabilities 488 225 425 537 471 856
Borrowings 33 733 20 562 29 057
Deferred income tax 373 449 334 894 365 801
liability
Retirement benefit 81 043 70 081 76 998
obligations
Current liabilities 1 208 027 1 410 822 1 335 335
Trade and other 992 535 963 101 1 028 429
liabilities
Current income tax 40 638 14 920 10 722
liabilities
Borrowings 174 854 432 801 296 184
Total liabilities 1 696 252 1 836 359 1 807 191
Total equity and 3 080 161 3 120 098 3 173 640
liabilities
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
31 March 31 March 30 Sept
2010 2009 % 2009
R`000 R`000 change R`000
Revenue 4 283 836 4 462 220 (4) 8 833 638
Operating profit 304 298 279 018 9 580 921
Finance income 4 901 4 103 12 802
Finance costs (16 851) (33 945) (62 960)
Profit before income tax 292 348 249 176 17 530 763
Income tax expense (103 832) (86 246) (177 771)
Profit for the period 188 516 162 930 16 352 992
Other comprehensive
income
Foreign currency (2 533) (11 543) (22 107)
translation adjustments
Total comprehensive 185 983 151 387 23 330 885
income for the period
net of tax
Profit attributable to:
Equity holders of the 185 242 158 478 17 344 564
parent company
Minority interests 3 274 4 452 (26) 8 428
188 516 162 930 16 352 992
Comprehensive income
attributable to:
Equity holders of the 183 306 146 835 25 323 912
parent company
Minority interests 2 677 4 552 (41) 6 973
185 983 151 387 23 330 885
Earnings per share
(cents)
- basic 487 417 17 906
- diluted 487 416 17 905
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
Balance beginning of year 1 366 449 1 328 150 1 328 150
Total comprehensive income 185 983 151 387 330 885
for the period
Dividends to the company`s (167 411) (167 410) (266 334)
shareholders
Payments to minority (3 630) (1 592) (1 592)
interest holders
Option value of share 2 518 1 174 3 525
options granted
Cost of minority interest - (27 970) (28 185)
in a subsidiary acquired
Balance at end of period 1 383 909 1 283 739 1 366 449
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
Cash operating profit 365 111 327 437 690 717
Working capital changes 32 545 (139 547) (106 474)
Cash generated from 397 656 187 890 584 243
operating activities
Income tax paid (52 142) (20 997) (91 359)
Cash flows from operating 345 514 166 893 492 884
activities
Net cash used in investing (55 650) (107 226) (148 890)
activities
Capital expenditure (63 316) (92 679) (154 371)
Finance income 4 901 4 103 12 802
Cost of minority interest - (25 000) (25 000)
acquired
Proceeds on disposal and 2 765 6 350 17 679
other
Cash used in financing (183 081) (202 503) (322 572)
activities
Increase in borrowings 5 584 350 12 673
Interest paid (17 438) (33 945) (67 464)
Dividends paid (171 227) (168 908) (267 781)
Net decrease/(increase) in 106 783 (142 836) 21 422
cash and cash equivalents
Effect of exchange rate (137) 1 515 (12 186)
changes
Cash and cash equivalent (152 935) (162 171) (162 171)
balances at beginning of
year
Cash and cash equivalent (46 289) (303 492) (152 935)
balances at end of period
CONDENSED GROUP SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
31 March 31 March 30 Sept
2010 2009 % 2009
R`000 R`000 change R`000
Revenue
Poultry 2 739 921 2 663 216 3 5 465 922
- South Africa and 2 999 338 2 899 518 5 880 654
Swaziland
- Intersegment sales to (259 417) (236 302) (414 732)
Poultry
Feed 2 171 061 2 464 087 (12) 4 753 792
- South Africa 2 104 262 2 340 051 (10) 4 552 243
- Other Africa 66 799 124 036 (46) 201 549
Services and ventures 143 067 225 067 (36) 368 410
Intergroup (770 213) (890 150) (1 754 486)
4 283 836 4 462 220 (4) 8 833 638
Operating profit
Poultry 134 155 137 219 (2) 281 607
Feed 151 295 126 438 20 260 796
- South Africa 153 638 116 422 32 247 974
- Other Africa (2 343) 10 016 (123) 12 822
Services and ventures 18 848 15 361 23 38 518
304 298 279 018 9 580 921
ADDITIONAL INFORMATION
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
31 March 31 March % 30 Sept
2010 2009 change 2009
Headline earnings (R`000) 185 071 154 247 20 338 492
Headline earnings per share
(cents)
- basic 486 405 20 890
- diluted 486 405 20 890
Dividends per share (cents) 290 260 12 700
Net asset value per share 35,85 33,27 8 35,38
(Rand)
Number of ordinary shares
- Issued net of treasury 38 047 708 38 047 708 38 047 708
shares
- Weighted-average 38 047 708 38 047 708 38 047 708
- Diluted weighted- 38 065 066 38 050 048 38 053 527
average
Net debt (borrowings less 86 334 328 204 187 396
cash and cash equivalents)
(R`000)
Notes
1. Nature of business
Astral is a leading South African integrated poultry producer. Key activities
consist of animal feed pre-mixes, manufacturing of animal feeds, broiler
genetics, production and sale of day-old chicks and hatching eggs, integrated
breeder and broiler production operations, abattoirs and sale and distribution
of various key poultry brands.
2. Basis of preparation
The condensed interim financial statements for the six months ended 31 March
2010 have been prepared in accordance with International Reporting Standards
("IFRS"), and IAS 34 - Interim Financial Reporting, the Listing Requirements
of the JSE Limited and the South African Companies Act (1973) as amended.
These financial statements have not been reviewed or audited by the Group`s
auditors.
3. Accounting policies
The accounting policies applied in these interim financial statements comply
with IFRS and IAS 34 and are consistent with those applied in the preparation
of the Group`s annual financial statements for the year ended 30 September
2009, except for the adoption of the revised IAS 1 - Presentation of Financial
Statements, IFRS 8 - Operating Segments and Circular 3/2009 on Headline
Earnings. The presentation of the financial statements and operating segments
disclosures have been changed according to the changes in IAS 1 and IFRS 8
respectively, with no adjustment necessary on the adoption of Circular 3/2009.
The operating segments are now reported in a manner consistent with the
internal reporting provided to the chief executive officer.
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
4. Operating profit
The following items have
been accounted for in the
operating profit:
Biological assets - fair (1 351) (740) 2 581
value (loss)/gain
Amortisation of intangible 2 552 2 555 5 081
assets
Depreciation on property, 54 250 47 795 98 480
plant and equipment
Profit on disposal of 161 4 476 6 859
property, plant and
equipment
Foreign exchange 1 206 (9 066) (2 369)
profit/(loss)
5. Reconciliation to
headline earnings
Earnings for the period 185 242 158 478 344 564
After tax profit on sale (171) (4 231) (6 576)
of property, plant and
equipment
Impairment of assets - - 504
Headline earnings for the 185 071 154 247 338 492
period
6. Cash and cash
equivalents per cash flow
statement
Bank overdrafts (168 542) (428 651) (290 780)
Cash at bank and in hand 122 253 125 159 137 845
Cash and cash equivalents (46 289) (303 492) (152 935)
per cash flow statement
7. Capital commitments
Capital expenditure 75 232 46 351 93 956
approved not contracted
Capital expenditure 24 040 25 458 34 505
contracted not recognised
in financial statements
8. Litigation
A referral was made to the Competition Tribunal regarding alleged anti-
competitive conduct by Astral Operations Limited and Elite Breeding Farms
during 2008. The Group is opposing the referral.
During September 2009 the Competition Commission initiated complaints against
all past and present members of the Animal Feeds Manufacturers Association and
the South African Poultry Association as well as other players involved in the
production of poultry feed, in breeding stock and broiler production, and in
the poultry products industry. Astral is not aware of any transgressions of
the Competition Act within the Group, but has offered all reasonable
cooperation to the Commission in regard to its investigation into the
industry.
Financial Overview
Profit for the period increased by 16% to R189 million from R163 million for
the same period last year.
The improvement in profitability was contributed to by increased profits from
the feed division and lower finance costs. Continued strain on consumer
spending put downward pressure on poultry selling prices and together with the
impact of the industrial action at the Standerton abattoir, resulted in
poultry profits marginally below the same period last year.
Revenue decreased by 4% from R4 462 million to R4 284 million on the back of
lower agricultural input costs and lower poultry realisations. Operating
profit at R304 million was 9% higher than the previous year. While poultry`s
operating profit was down 2% to R134 million (2009: R137 million), the feed
division`s profit improved by 20% to R151 million (2009: R126 million). The
new separately reported segment, which consists mainly of the East Balt bakery
and NuTec, contributed R19 million to the operating profit, up 23% from the
previous year. The Group`s operating profit margin improved from 6,3% to 7,1%.
Net finance costs at R12 million were well down on the previous year`s R30
million following reduced interest rates and a lower level of borrowings.
Earnings per share increased by 17% from 417 cents to 487 cents, and headline
earnings per share increased by 20% to 486 cents per share (2009: 405 cents
per share).
Cash generated from operating activities at R398 million (2009: R188 million)
was sufficient to fund the investing activities and dividends paid during the
period, and to reduce the net debt of R187 million at the end of September
2009 by 54% to R86 million.
The Board has declared an increased interim dividend of 290 cents per share
(2009: 260 cents per share) in view of the improved cash flow and strong
balance sheet.
Operational Overview
Poultry Division
Revenue for the period increased by 3% to R2,7 billion (2009: R2,6 billion),
whilst sales volumes increased by 13,2%. The volume growth was on the back of
improved production results supported by better poultry health status.
Depressed consumer spending, together with higher levels of imports and high
local stock levels, contributed to vigorous promotional activity with prices
at levels below historical levels. Reduced feeding costs during the period
countered the effects of lower poultry selling prices. Margins for the poultry
division showed a slight decrease to 4.9% (2009: 5,1%). Operating profit for
the period decreased by 2% to R134 million (2009: R137 million). A lengthy
period of industrial action at Earlybird Standerton negatively impacted the
profitability of the division.
Feed Division
Revenue for the period decreased by 12% to R2,2 billion (2009: R2,5 billion)
as a result of lower feed pricing, driven by lower grain prices on the back of
much improved local and global crop yields and lower demand. Sales volumes
increased by 4% as a direct result of higher demand from the Group`s poultry
operations. Operating profit increased by 20% to R151 million (2009: R126
million). Improved margins were achieved through higher sales volumes and
improved capacity utilisation. Net margin improved to a level of 7,0% (2009:
5,1%). The division`s Zambian and Mozambican operations posted disappointing
results due to the contraction of those economies, exacerbated by the
weakening of those local currencies.
Services and Ventures
The group`s feed pre-mix operation as well as the industrial bakery posted
good results.
Prospects
Continued favourable grain and agricultural commodity prices are expected to
benefit chicken production costs throughout the second half of the year. The
extent to which this can translate to improved earnings will depend on the
domestic poultry supply and demand balance, currently still negatively
impacted by depressed consumer demand and relatively high import levels.
Declaration of Ordinary Dividend No. 19
Notice is hereby given that dividend no.19 of 290 cents per ordinary share has
been declared in respect of the six months ended 31 March 2010.
Last date to trade cum dividend Thursday, 10 June 2010
Shares commence trading ex dividend Friday, 11 June 2010
Record date Friday, 18 June 2010
Payment of dividend Monday, 21 June 2010
Share certificates may not be dematerialised or rematerialised between Friday,
11 June 2010 and Friday, 18 June 2010, both days inclusive.
On behalf of the board
JJ Geldenhuys CE Schutte
Chairman Chief Executive Officer
Pretoria
17 May 2010
Registered office
Block 9, The Boardwalk Office Park
107 Haymeadow Crescent, Faerie Glen, Pretoria, 0043
Postnet Suite 329, Private Bag X10, Elarduspark, 0048
Telephone: (012) 990-8260
Website address: www.astralfoods.com
Directors
JJ Geldenhuys (Chairman)
*CE Schutte (Chief Executive Officer)
*T Delport,
* DD Ferreira (Financial Director)
*Dr OM Lukhele
M Macdonald
TCC Mampane
Dr T Eloff
Dr N Tsengwa
(*Executive Director)
Company Secretary
MA Eloff
Transfer secretaries
Computershare Investor Services (Pty) Limited
PO Box 61051
Marshalltown, 2107
Telephone: (011) 370-5000
Sponsor
JP Morgan Equities Limited
(Johannesburg Branch)
1 Fricker Road, Illovo
Johannesburg, 2146
Private Bag X9936
Sandton, 2146
Telephone: (011) 507-0430
Date: 17/05/2010 07:05:23 Produced by the JSE SENS Department.
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