| Fri 20 Aug 2010, 16:00 | | CBH - Country Bird Holdings Limited - Audited results for the year ended 30 June |
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CBH
CBH
CBH - Country Bird Holdings Limited - Audited results for the year ended 30 June
2010
Country Bird Holdings Limited
www.cbhltd.co.za
Country Bird Holdings Limited(Incorporated in the Republic of South
Africa)Registration number: 2005/008505/06ISIN: ZAE000094835JSE Share code:
CBH("CBH" or "the group")
Audited results for the year ended 30 June 2010
The people`s choice
Audited condensed consolidated statement of comprehensive income
30 June % 30 June
2010 change 2009
Audited Audited
R000 R000
Revenue 2 433 660 9 2 238 999
Cost of sales (2 159 296) 9 (1 985 064)
Gross profit 274 364 8 253 934
Other expenses (157 751) 13 (140 168)
Other gains and losses 5 614 (92) 72 851
Operating profit 122 227 (35) 186 618
Finance income 2 042 (37) 3 252
Finance costs (55 452) 9 (50 833)
Share of loss of associates (417) (47) (785)
Profit before income tax 68 400 (51) 138 252
Income tax expense (21 395) 69 (12 673)
Profit for the year 47 005 (63) 125 579
Other comprehensive income
Currency translation differences (1 769) (87) (13 181)
Total comprehensive income for the year 45 236 (60) 112 398
Profit attributable to:
Owners of the parent 44 353 (64) 123 005
Non-controlling interest 2 652 3 2 574
47 005 (63) 125 579
Total comprehensive income attributable
to:
Owners of the parent 42 584 (61) 109 824
Non-controlling interest 2 652 3 2 574
45 236 (60) 112 398
Earnings per share (cents)
-?basic 23.71 (64) 65.74
-?diluted 23.31 (64) 65.38
Additional information to condensed
consolidated financial statements
Profit for the year attributable to 44 353 (64) 123 005
owners of the parent
Reversal of non-recurring items per note 12 750 (137) (34 096)
2
Adjusted profit attributable to owners 57 103 (36) 88 909
of the parent
Adjusted earnings per share (cents)
-?basic 30.52 (36) 47.52
-?diluted 30.01 (37) 47.26
Ordinary shares
-?Issued net of treasury shares 187 099 313 187 099 313
-?Weighted average number of ordinary 187 099 313 187 099 313
shares
-?Diluted number of ordinary shares 190 296 036 188 129 044
Headline earnings per ordinary share
(cents)
-?basic 23.64 (59) 57.05
-?diluted 23.25 (59) 56.74
Dividend/capital distribution per share 6.41 (33) 9.50
- interim (cents)
Capital distribution per share - final 1.47 (85) 9.52
(cents)
Net asset value per share 204.62 5 194.16
Tangible asset value per share 154.17 8 143.33
Gearing ratio 2.44 (2) 2.50
Audited condensed consolidated statement of financial position
As at 30 June 2010 30 June % 30 June
2010 change 2009
Audited Audited
R000 R000
ASSETS
Non-current assets 541 377 (6) 576 795
Property, plant and equipment 397 156 12 355 507
Intangible assets 94 395 (1) 95 094
Financial assets and other investments 384 (99) 72 045
Investment in associates 9 213 9 8 459
Deferred income tax assets 40 229 (12) 45 690
Current assets 775 075 12 694 488
Inventories 128 170 2 125 526
Biological assets 131 266 (6) 139 568
Trade and other receivables 384 143 11 346 515
Current income tax receivable 7 696 (13) 8 850
Cash and cash equivalents 123 800 67 74 029
Total assets 1 316 452 4 1 271 283
EQUITY
Total equity 382 850 5 363 264
Ordinary shares 1 871 1 871
Share premium 795 887 (4) 825 721
Other reserves 17 435 16 15 021
Retained earnings 375 077 13 330 723
Common control deficit (832 110) (832 110)
Equity attributable to the owners of the 358 160 5 341 226
parent
Non-controlling interest 24 690 12 22 038
LIABILITIES
Non-current liabilities 435 171 436 977
Borrowings 345 655 (3) 355 306
Deferred income tax liabilities 89 516 10 81 671
Current liabilities 498 431 6 471 042
Trade and other payables 326 257 (6) 347 962
Current income tax liabilities 1 672 100 1
Borrowings 169 419 39 122 057
Provision for other liabilities and 1 083 6 1 022
charges
Total liabilities 933 602 3 908 019
Total equity and liabilities 1 316 452 4 1 271 283
Audited condensed consolidated cash flow statement
30 June 30 June
2010 2009
Audited Audited
R000 R000
Cash flows from operating activities
Net cash generated from operating activities 57 920 102 579
Cash receipts from customers 2 396 032 2 158 191
Cash paid to suppliers and employees (2 276 981) (1 945 019)
Cash generated from operations 119 051 213 172
Interest paid (55 452) (50 833)
Income tax paid (5 679) (59 760)
Cash flows from investing activities
Net cash used in investing activities (12 893) (223 018)
Purchases of property, plant and equipment (73 796) (62 083)
Proceeds from sale of property, plant and 1 162 2 589
equipment
Purchases of intangible asset (41) (439)
Purchases of subsidiaries and joint venture, net - (138 324)
of cash acquired
Realisation of financial assets and investments 59 189 1 567
Purchases of financial assets and investments (278) (47 202)
Increase of investment in associates (1 171) (7 379)
Proceeds on disposal of joint venture - 25 000
Interest received 2 042 3 253
Cash flows from financing activities
Net cash used in financing activities (50 036) 57 754
Share issue and listing expenses (29) -
Proceeds from borrowings 57 333 244 743
Repayments of borrowings (76 953) (163 789)
Dividends paid to company`s shareholders - (23 200)
Capital repayments to shareholders (29 805) -
Acquisition of BEE share option (583) -
Net increase/(decrease) in cash and cash (5 009) (62 685)
equivalents
Cash and cash equivalents at beginning of year (6 951) 63 774
Exchange gains on cash and bank overdrafts (2 553) (8 040)
Cash and cash equivalents at end of year (14 513) (6 951)
Audited condensed consolidated statement of changes in equity
Share Share Other Retained
capital premium reserves earnings
R000 R000 R000 R000
Balance at 1 July 2008 1 871 825 721 24 359 230 919
Total comprehensive - - (13 181) 123 004
income
Transactions with owners
Capitalisation of loan - - - -
accounts
Employee share scheme - - 3 843 -
Dividend - - - (23 200)
Total transactions with - - 3 843 (23 200)
owners
Balance at 30 June 2009 1 871 825 721 15 021 330 723
Balance at 1 July 2009 1 871 825 721 15 021 330 723
Total comprehensive - - (1 769) 44 354
income
Transactions with owners
Shares issued to share 150 14 820 - -
incentive trust
Treasury shares held by (150) (14 820) - -
CBH Share Trust
Share issue and listing - (29) - -
expenses
Acquisition of BEE share - - (582) -
option
Employee share scheme - - 4 765 -
Capital distribution to - (29 805) - -
shareholders
Total transactions with - (29 834) 4 183 -
owners
Balance at 30 June 2010 1 871 795 887 17 435 375 077
Audited condensed consolidated statement of changes in equity (continued)
Common Total Non- Total
control attribu- con- equity
deficit table to trolling R000
R000 owners interest
of the R000
parent
R000
Balance at 1 July 2008 (832 110) 250 760 8 114 258 874
Total comprehensive - 109 823 2 574 112 397
income
Transactions with owners
Capitalisation of loan - - 11 350 11 350
accounts
Employee share scheme - 3 843 - 3 843
Dividend - (23 200) - (23 200)
Total transactions with - (19 357) 11 350 (8 007)
owners
Balance at 30 June 2009 (832 110) 341 226 22 038 363 264
Balance at 1 July 2009 (832 110) 341 226 22 038 363 264
Total comprehensive - 42 585 2 652 45 237
income
Transactions with owners
Shares issued to share - 14 970 - 14 970
incentive trust
Treasury shares held by - (14 970) - (14 970)
CBH Share Trust
Share issue and listing - (29) - (29)
expenses
Acquisition of BEE share - (582) - (582)
option
Employee share scheme - 4 765 - 4 765
Capital distribution to - (29 805) - (29 805)
shareholders
Total transactions with - (25 651) - (25 651)
owners
Balance at 30 June 2010 (832 110) 358 160 24 690 382 850
Audited condensed segment report
30 June 30 June 30 June 30 June 2009
2010 2009 2010 Audited
Audited Audited Audited R000
R000 R000 R000 Operating
Revenue Revenue Operating profit
profit
Poultry 1 646 239 1 614 442 84 907 164 067
-?South Africa 1 514 098 1 512 536 90 121 155 012
-?Other Africa 144 706 168 814 (5 214) 9 055
Intersegment revenue (12 565) (66 908) - -
Animal nutrition 493 431 448 822 38 141 19 315
-?South Africa 927 210 840 528 27 205 10 759
-?Other Africa 190 551 190 756 10 936 8 556
Intersegment revenue (624 330) (582 462) - -
Beef 293 990 175 735 (821) 3 236
2 433 660 2 238 999 122 227 186 618
Notes to the condensed consolidated financial statements
1. Basis of preparation
The audited condensed consolidated financial information
announcement for the year ended 30 June 2010 was prepared in
accordance with International Financial Reporting Standards
(IFRS), International Standard 34, the Listings Requirements of
the JSE Limited and the South African Companies Act 61 of 1973.
The accounting policies are consistent with those of the previous
financial year and comply with IFRS, except for the impact of the
standards noted below that became effective on 1 July 2009: IAS1
Presentation of Financial Statements (revised) and IFRS 8
Operating Segments. The adoption of these standards has no effect
on the results, nor has it required any restatement of the
results. 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 2010. These
results have been audited by PricewaterhouseCoopers Inc, Chartered
Accountants (SA), Registered Auditors. Their unqualified audit
opinion is available for inspection at the company`s registered
office.
These audited condensed consolidated financial statements were
approved by the board of directors on 20 August 2010.
The following new amendments to IFRS are relevant to the group and
are mandatory for the first time for the financial year beginning
1 July 2009:
IAS 1 (revised), Presentation of Financial Statements. The revised
standard prohibits the presentation of items of income and expense
(that is `non-owner` changes in equity) in the statement of
changes in equity, requiring `non-owner changes in equity` to be
presented separately from owner changes in equity. All `non-owner`
changes in equity are required to be shown in a performance
statement. Entities can choose whether to present one performance
statement (the statement of comprehensive income) or two
statements (the income statement and statement of comprehensive
income). The group has elected to present one performance
statement: a statement of comprehensive income. The financial
statements have been prepared under the revised disclosure
requirements.
IFRS 8 Operating Segments. The revised standard requires segmental
disclosure based on information that management uses to run the
business. The adoption of this standard has no effect on the
results, nor has it required any restatement of the results.
30 June 2010 30 June 2009
Audited Audited
R000 R000
2. Operating profit
The following amounts have been
accounted for in the operating
profit:
Profit/(loss) on sale of (4 552) 18 467
investment
Fair value gains/(losses) on (8 198) 15 629
financial assets at fair value
through profit or loss
3. Reconciliation to headline
earnings
Profit attributable to owners of 44 353 123 005
parent
Adjusted for:
Profit on disposal of property, (117) (375)
plant and equipment
Profit on disposal of associate - (15 882)
Adjusted headline earnings 44 235 106 748
4. Capital expenditure and
depreciation
Capital expenditure 73 796 62 083
Depreciation 31 131 24 856
Amortisation of intangible assets 553 369
5. Capital and other commitments
Inventories contracted for 69 702 75 691
6. Cash and cash equivalents
Bank balances, deposits and cash 123 800 74 030
Short-term borrowings (138 313) (80 980)
(14 513) (6 950)
7. Acquisition of BEE share options
On 1 July 2009, the group repurchased the 25% of the shares held
in the subsidiary company Supreme Poultry (Pty) Ltd, for an amount
of R582 771. These shares were held by Jacinda (Pty) Ltd as part
of a BEE initiative whereby a BEE share option was granted in 2007
to Union Square Properties 49 (Pty) Ltd.
In 2007, a BEE share option to the value of R12 333 514 was
recognised as an expense in the statement of comprehensive income
and a reserve within equity and thus resulted in a decrease of
6.59 cents in earnings per share. However, in terms of the
accounting standard IFRS 2 Share-based Payment, the group cannot
recognise the balance of the reserve resulting from the repurchase
of this BEE share option as a gain of R11 750 743 in the statement
of comprehensive income. This amount therefore remains as a
reserve within equity.
8. Reclassification of comparative figures
In the prior year financial statements proceeds from borrowings
and repayment of borrowings were disclosed net in the group`s
statement of cash flows. Furthermore, proceeds from financial
assets and investments and acquisition of financial assets and
investments were also disclosed net in the group`s statement of
cash flows. In order to more fairly present the cash flow
information, these amounts have been separately disclosed in the
current year statement of cash flows. This has resulted in the
restatement of the prior year figures.
30 June 2009
Audited
R000
Disclosure as per condensed consolidated
statement of cash flows for the year
ended 30 June 2009:
Purchases of financial assets and (45 635)
investments
Proceeds from borrowings 80 954
Disclosure of comparative figures as per
condensed consolidated statement of cash
flows for the year ended 30 June 2010:
Realisation of financial assets and 1 567
investments
Purchases of financial assets and (47 202)
investments
Proceeds from borrowings 244 743
Repayments of borrowings (163 789)
In the prior year financial statements,
distribution costs and administrative
expenses were disclosed separately on
the consolidated statement of
comprehensive income. In the current
year, these amounts are now disclosed
under other expenses. Furthermore, in
the prior year, expenses to the value of
R8.758 million were incorrectly
allocated to costs of sales. This amount
should have formed part of other
expenses. This has resulted in the
restatement of prior year figures.
Disclosure as per condensed consolidated
statement of comprehensive income for
the year ended 30 June 2009:
Cost of sales (1 993 823)
Distribution costs (11 925)
Administrative expenses (119 484)
Disclosure of comparative figures as per
condensed consolidated statement of
comprehensive income for the year ended
30 June 2010:
Cost of sales (1 985 064)
Other expenses (140 168)
9. Declaration of capital distribution
Notice is hereby given that a capital distribution out of share
premium of 1.47 cents per ordinary share in respect of the year
ended 30 June 2010 has been declared by the board. The total
capital distribution for the period is 3 times covered by headline
earnings per share.
The salient dates of the declaration and payment of this capital
distribution is as follows:
Last date to trade ordinary shares cum Friday, 19 November 2010
capital distribution
Ordinary shares trade ex capital Monday, 22 November 2010
distribution
Record date Friday, 26 November 2010
Payment date Monday, 29 November 2010
Share certificates may not be dematerialised or rematerialised
between Monday, 22 November 2010 and Friday, 26 November 2010
(both dates inclusive).
The board of directors were given the general authority to make
payments to shareholders out of the company`s share premium
account at the annual general meeting held on 24 November 2009.
The illustrative financial effects of the distribution set out
below have been prepared to assist shareholders in assessing the
impact of the distribution of capital out of share premium on the
net asset value per share ("NAV") and tangible net asset value per
share ("TNAV").
Impact of the Pro forma after
distribution the distribution
of 1.47 cents
per share on
Assets
Cash and cash equivalents (2 750) 121 049
Equity and liabilities
Equity attributable to (2 750) 355 410
ordinary shareholders
NAV (cents per share) (1.47) 203.15
TNAV (cents per share) (15.72) 138.46
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 Poultry 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 trading as Long Iron
Meats.
CBH currently operates in South Africa, Botswana, and Zambia.
Financial review
Operating profit of R122.2 million was achieved for the year ended 30 June 2010,
which when compared to last year`s figure of R186.6 million is a decline of 35%.
However, after stripping out the effects of the sale of Elite and the net effect
of the fair value adjustments of Sovereign in 2009 and 2010 the reduction is
11.5% which given the industry`s overall market conditions is satisfactory.
Revenue was up 9% to R2.43 billion for the period (2009: R2.24 billion), with
gross profit increasing by 8% to R274.4 million (2009: R253.9 million) after
accounting for a 9% increase in cost of sales attributable to volume growth.
Profit before income tax fell 51% to R68.4 million (2009: R138.3 million)
primarily as a result of the non-recurring items reflected above and in note 2.
The group`s gearing ratio improved slightly to 2.44 from 2.50 a year ago due
mainly to the sale of the financial assets being the shares in Sovereign Food
Investments.
Operational review
Poultry - South Africa
The South African poultry division reported an 8.0% increase in volumes sold for
the period. This, together with a 9.3% improvement in the cost of feed and
substantial improvements in operational efficiencies was more than offset by the
8% reduction in realisations over last year. The non-recurring items mentioned
above and in note 2 were accounted for in Supreme, and after stripping them out
the adjusted operating profit for the period was R102.9 million versus R120.9
million - a drop of 15%.
Poultry - Other Africa
This comprises a grandparent breeding operation in Zambia and a parent breeding
operation and broiler operation in Botswana. Revenues for the year decreased by
14%. As a result of challenging trading conditions operating profit declined to
a loss of R5.2 million (2009: profit of R9.1 million).
Animal Nutrition - South Africa
Nutri Feeds reported further improvement of 16.2% in volumes sold for the period
under review. As a result of maize price reductions during the year, revenues
only increased by 10.3%, however margins improved to yield an operating profit
of R27.2 million (2009: R10.8 million). Internal sales (to Supreme) account for
65% of the volume sold from Nutri Feeds.
Animal Nutrition - Other Africa
Both mills in Zambia and Botswana are on target for penetration into their
markets, and operations in these new businesses are running smoothly. Revenues
for the combined operations are flat at R190.6 million (2009: 190.8 million) but
operating profit has increased 27.8% to R10.9 million (2009: R8.6 million).
Red Meat
New product launches and penetration into new markets have seen volumes increase
by 11% and realisations increase by 50% giving a total increase in turnover of
67% to R294.0 million (2009: R175.7 million). Margins remain under intense
pressure resulting in an operating loss for the period of R0.8 million (2009:
R3.2 million profit).
Prospects
Realisations for the poultry industry for the medium term will remain under
pressure from weak demand and higher levels of imported poultry brought about by
the strong Rand. Continued efficient grain procurement, further improvements in
operational efficiencies and cost control should result in improved operating
margins, whilst on the marketing side, focus will remain on driving exports and
the quick service restaurant business.
In the South African feed business further scientific development of bespoke
feed rations has assisted Supreme Poultry and its customers to achieve
outstanding growing results. The feed operation is increasing its volumes and
the increase in capacity utilisation should result in higher operating income.
The feed mills in Zambia and Botswana are performing well and the re-
establishment of Tswana Prides Abattoir that had burnt down will result in good
growth in feed volume and market penetration. Operational efficiency and margin
improvement are the focus going forward.
The African Poultry operations are returning to profitability and some
restructuring and strategic acquisitions are under consideration.
Capital distribution
In line with the group`s dividend policy of three times cover, a capital
distribution of 1.47 cents per share for the period has been declared for
payment on 29 November 2010.
By order of the board
JD Wright
Chief executive officer 20 August 2010
DIRECTORS OF CBH Limited BH Kent (Chairman)#, R Gibbson#, GP Heath,
IWM Isdale#, KW James, CD Stein#, RJ Taylor, JD Wright
#Independent non-executive
REGISTERED OFFICE 15 Coro Street, Bloemfontein, 9301
(PO Box 6851, Bloemfontein, 9300)
ATTORNEYS Ramsay Webber 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 MJC Antunes, 15 Coro Street, Bloemfontein, 9301
(PO Box 6851, Bloemfontein, 9300)
AUDITORS PricewaterhouseCoopers Inc.
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: 20/08/2010 16:00:01 Produced by the JSE SENS Department.
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