| Mon 15 Nov 2010, 7:05 | | ARL - Astral Foods Limited - Audited annual financial results and dividend |
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ARL
ARL
ARL - Astral Foods Limited - Audited annual financial results and dividend
declaration
Astral Foods Limited
Incorporated in the Republic of South Africa
Registration number 1978/003194/06
Share code ARL ISIN: ZAE000029757
("Astral" or "the company" or "the group")
AUDITED ANNUAL FINANCIAL RESULTS AND DIVIDEND DECLARATION
30 September 2010
- Revenue down 5%
- Operating profit up 1%
- Headline earnings per share up 8%
- Final dividend at 470 cents per share up 7%
- Total dividend for the year up 9%
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Audited Audited
Year ended Year ended
30 Sept 2010 30 Sept 2009
R`000 R`000
Assets
Non-current assets 1 764 194 1 650 167
Property, plant and equipment 1 625 473 1 504 338
Intangible assets 4 913 8 396
Goodwill 124 802 124 802
Investments and loans 8 838 11 973
Deferred tax asset 168 658
Current assets 1 337 176 1 523 473
Inventories 262 278 329 775
Biological assets 305 430 357 130
Trade and other receivables 626 698 685 116
Current tax assets 2 334 13 298
Derivative financial 196 309
instruments
Cash and cash equivalents 140 240 137 845
Assets held for sale 26 928
Total assets 3 128 298 3 173 640
EQUITY AND LIABILITIES
Capital and reserves attributable 1 424 091 1 346 044
to equity holders of the parent
company
Issued capital 736 736
Treasury shares (204 435) (204 435)
Reserves 1 627 790 1 549 743
Non-controlling interests 22 106 20 405
Total equity 1 446 197 1 366 449
Liabilities
Non-current liabilities 522 117 471 856
Borrowings 80 545 29 057
Deferred tax liability 356 929 365 801
Retirement benefit obligations 84 643 76 998
Current liabilities 1 148 206 1 335 335
Trade and other liabilities 939 982 1 028 429
Current tax liabilities 19 556 10 722
Borrowings 188 668 296 184
Liabilities held for sale 11 778
Total liabilities 1 682 101 1 807 191
Total equity and liabilities 3 128 298 3 173 640
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Year ended Year ended
30 Sept 2010 Change 30 Sept 2009
R`000 % R`000
Revenue 8 367 874 (5) 8 833 638
Operating profit (note 5) 585 377 1 580 921
Fair value adjustment of net (7 233)
investment in assets and
liabilities held for sale
Finance income 12 201 12 802
Finance costs (33 263) (62 960)
Profit before income tax 557 082 5 530 763
Tax expense (193 413) (177 771)
Profit for the year 363 669 3 352 992
Other comprehensive income
Foreign currency translation (6 401) (22 107)
adjustments
Total comprehensive income for 357 268 8 330 885
the year net of tax
Profit attributable to:
Equity holders of the parent 357 637 4 344 564
company
Non-controlling interests 6 032 (28) 8 428
363 669 3 352 992
Comprehensive income attributable
to:
Equity holders of the parent 352 068 9 323 912
company
Non-controlling interests 5 200 (25) 6 973
357 268 8 330 885
Earnings per share (cents)
- basic 940 4 906
- diluted 939 4 905
CONDENSED GROUP STATEMENT OF CASH FLOWS
Audited Audited
Year ended Year ended
30 Sept 2010 30 Sept 2009
R`000 R`000
Cash operating profit 705 744 690 717
Working capital changes 62 990 (106 474)
Cash generated from operating 768 734 584 243
activities
Tax paid (180 557) (91 359)
Cash flows from operating 588 177 492 884
activities
Net cash used in investing (208 202) (148 890
activities
Capital expenditure (222 372) (154 371)
Finance income 12 201 12 802
Cost of non-controlling (25 000)
interest acquired
Proceeds on disposal and other 1 969 17 679
Cash used in financing activities (250 783) (322 572)
Increase in borrowings 69 380 12 673
Interest paid (38 758) (67 464)
Dividends paid (281 508) (267 781)
Contribution from non- 103
controlling interest holder
Net decrease in cash and cash 129 192 21 422
equivalents
Effects of exchange rate (6 046) (12 186)
changes
eclassification to assets held 795
for sale
Cash and cash equivalent (152 935) (162 171)
balances at beginning of year
Cash and cash equivalent balances (28 994) (152 935)
at end of year
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Audited Audited
Year ended Year ended
30 Sept 2010 30 Sept 2009
R`000 R`000
Balance beginning of year 1 366 449 1 328 150
Total comprehensive income for 357 268 330 885
the year
Dividends to the company`s (277 750) (266 334)
shareholders
Payments to non-controlling (3 630) (1 592)
interest holders
Option value of share options 3 757 3 525
granted
Contribution from a non- 103
controlling interest holder
Cost of non-controlling interest (28 185)
in a subsidiary acquired
Balance at end of year 1 446 197 1 366 449
CONDENSED GROUP SEGMENTAL ANALYSIS
Audited Audited
(restated)
Year ended Year ended
30 Sept 2010 Change 30 Sept 2009
R`000 % R`000
Revenue
Poultry
- South Africa and Swaziland 5 350 966 (2) 5 465 922
Feed 4 224 542 (11) 4 753 792
- South Africa 4 089 104 (10) 4 552 243
- Other Africa 135 438 (33) 201 549
Services and ventures 269 610 (27) 368 410
Inter-group (1 477 244) (1 754 486)
- Feed to Poultry (1 408 987) (1 620 781)
- Services and ventures to (68 257) (133 705)
Poultry and Feed
8 367 874 (5) 8 833 638
Operating profit
Poultry
- South Africa and Swaziland 262 248 (7) 281 607
Feed 281 159 8 260 796
- South Africa 280 791 13 247 974
- Other Africa 368 (97) 12 822
Services and ventures 41 970 9 38 518
585 377 1 580 921
Capital expenditure
Poultry
- South Africa and Swaziland 85 393 (17) 103 472
Feed 43 708 (1) 44 131
- South Africa 32 014 57 20 456
- Other Africa 11 694 (51) 23 675
Services and ventures 98 769 INF 11 272
227 870 43 158 875
Depreciation, amortisation and
impairment
Poultry
- South Africa and Swaziland 79 845 8 73 978
Feed 19 542 (6) 20 885
- South Africa 16 942 (8) 18 445
- Other Africa 2 600 7 2 440
Services and ventures 9 180 6 8 698
108 567 5 103 561
Assets
Poultry
- South Africa and Swaziland 2 259 783 (3) 2 324 294
Feed 786 738 (26) 1 060 430
- South Africa 707 280 (27) 968 476
- Other Africa 79 458 (14) 91 954
Services and ventures 465 815 37 340 365
Assets held for sale 26 928
Set-off of inter-group balances (410 966) (551 449)
3 128 298 (1) 3 173 640
Liabilities
Poultry
- South Africa and Swaziland 1 370 978 (6) 1 461 951
Feed 622 487 (25) 833 453
- South Africa 578 665 (27) 794 501
- Other Africa 43 822 13 38 952
Services and ventures 87 824 39 63 236
Liabilities held for sale 11 778
Set-off of inter-group balances (410 966) (551 449)
1 682 101 (7) 1 807 191
ADDITIONAL INFORMATION
Audited Audited
Year ended Change Year ended
30 Sept 2010 % 30 Sept 2009
Headline earnings (R`000) 365 162 8 338 492
Headline earnings per share
(cents)
- basic 960 8 890
- diluted 959 8 890
Dividend per share (cents)
- declared out of earnings for 760 9 700
the year
Ordinary shares
- Issued net of treasury shares 38 047 708 38 047 708
- Weighted-average 38 047 708 38 047 708
- Diluted weighted-average 38 072 092 38 053 527
Net debt (borrowings less cash 128 973 (31) 187 396
and cash equivalents) (R`000)
Net asset value per share (Rand) 37,43 6 35,38
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 sales and distribution
of various key poultry brands.
2. 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 2010
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.
3. Accounting policies
The accounting policies applied in the 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.
4. Independent audit by the auditors
These condensed consolidated results have been audited by our accredited
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.
Audited Audited
Year ended Year ended
30 Sept 2010 30 Sept 2009
R`000 R`000
5. Operating profit
The following items have been accounted
for in the operating profit:
Auditors` remuneration 5 701 4 877
Directors` remuneration 12 053 9 119
Cash settled share-based payments - fair 1 069 (2 100)
value loss/(gain
Equity call options - fair value loss 582
Biological assets - fair value 1 388 (2 581)
loss/(gain)
Amortisation of intangible assets 4 536 5 081
Depreciation on property, plant and 104 031 98 480
equipment
Loss/(profit) on disposal of property, 418 (6 859)
plant and equipment
Foreign exchange losses 536 2 369
6. Reconciliation to headline earnings
Earnings for the year 357 637 344 564
After-tax net loss/(profit) on sale of 491 (6 576)
property, plant and equipment
Fair value adjustment of investment held 7 233
for sale
Negative goodwill (199)
Impairment of assets 504
Headline earnings for the year 365 162 338 492
7. Cash and cash equivalents per cash flow
statement
Bank overdrafts (included in current (169 234) (290 780)
borrowings)
Cash at bank and in hand 140 240 137 845
Cash and cash equivalents per cash flow (28 994) (152 935)
statement
8. Share capital
No shares were repurchased in terms of the share buy-back programme during the
year (2009: nil).
No shares were issued in terms of the group`s share incentive scheme during the
period under review (2009: nil).
9. Capital commitments
Capital expenditure approved not 120 124 93 956
contracted
Capital expenditure contracted not 20 156 34 505
recognised in financial statements
10. Business combination
The group acquired the assets and operating activities of Vredebest Plase, a
poultry farming and hatching operation in the Western Cape, effective from the
29 September 2010. Vredebest`s revenue was generated mainly from sales to the
Astral group prior tothe acquisition. The purchase allocation has been performed
and is considered as final.
Property, plant and equipment 18 921
Biological assets 3 964
Deferred tax liability (420)
Negative goodwill (199)
Purchase consideration 22 266
11. Litigation
- A referral was made to the Competition Tribunal regarding alleged anti-
competitive conduct by subsidiaries in the group in 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, however it offered all reasonable co-operation
to the Commission in regard to their investigation into the industry.
Financial Overview
Headline earnings for the year increased by 8% to R365 million from last year`s
R338 million, mainly as result of lower finance charges.
Revenue decreased by 5% from R8 834 million to R8 368 million due to lower
agricultural input costs and lower poultry realisations.
Poultry`s operating profit was down 7% to R262 million (2009: R282 million). The
division was not being able to capitalise on lower feed input costs due to
poultry realisations continue to be depressed. The Feed division however
improved its profitability with 8% from R261 million for 2009 to R281 million.
The Services and Ventures segment which consist mainly of NuTec and the East
Balt bakery, improved its profitability by 9% to R42 million (2009: R38
million).
A decision has been taken to divest from Meaders Feeds Limited (Mauritius) and
the group`s share of assets and liabilities have been disclosed as held for
sale. The value of these assets have been impaired by R7,2 million in order to
reflect the market value of the group`s share in the issued share capital of
Meaders Feeds Limited.
The operating profit margin for the group at 7,0% is a marginal improvement on
the previous year`s 6,6%.
Net interest paid for the year of R21 million is well down on last year`s R50
million.
Cash generated from operating activities for the year of R769 million was an
improvement of 32% on last year`s R584 million. The net debt to equity ratio
reduced to 9% (2009: 14%).
The Board has declared an increased final dividend of 470 cents, resulting in a
total dividend for the year of 760 cents (2009: 700 cents). The distribution
will be supported by the strong balance sheet and underlying cash flow
generation capabilities.
Operational Overview
Poultry Division
Turnover for the division at R5 351 million was down by 2% from R5 466 million
in 2009 on the back of significantly lower selling prices, due to an oversupply
of products to a depressed consumer market. However, the increase in sales
volumes to a large extent compensated for the lower selling prices.
The volume growth achieved was mainly due to efficiency improvements and on-farm
production results. Less than 1% of the higher sales volumes were brought about
by planned placements. 1,2 million jobs were shed during the period under review
together with higher levels of poultry imports supported by a strong local
currency, brought about an oversupply of poultry in the market place which
resulted in depressed poultry prices. Vigorous discounting in all market
segments was the order of the day to manage stock levels. The profitability was
supported by lower feed input costs, as was the case in the first half of the
year.
Margins for the Poultry Division showed a slight decrease to 4,9% as the feed
input costs did not compensate to the full extent for the reduced selling
prices.
Operating profit for the period decreased by 7% to R262 million (2009: R282
million) as a result of the protracted labour action at Earlybird Farm
Standerton.
The incorporation of the "new" Ross 308 genetic line will be accomplished during
the early part of 2011.
Feed Division
Revenue for the period decreased by 11% from R4 754 million to R4 225 million
mainly as a result of lower feed prices driven by lower grain prices. The lower
grain prices came about due to improved global and local plantings and yields as
well as a reduction in global demand.
Sales volumes increased by 1% due to an increased demand from the group`s
Poultry operations offset by a reduction in sales to external markets.
Operating profit increased by 8% from R261 million to R281 million, despite
difficult market conditions. This improvement was made possible by tight cost
controls and higher volume throughput.
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. The Zambian operations however, showed signs of improvement in
trading conditions towards the end of the reporting period.
Services and Joint Ventures
The division performed satisfactory with operating profit at R42 million, being
9% up on the last year`s R38 million. The new East Balt bakery in the Western
Cape was successfully commissioned during July 2010.
Prospects
We do not expect that the business environment for next year will be any
different from the year under review.
The global outlook for grains is a key cost driver for both feed and poultry
production and shows signs of tighter supply and demand prospects which could
lead to prices firming.
The extent at which higher feed prices translate to prospective earnings will be
dependent on both the level of poultry imports supported by a strong local
currency, and the domestic supply and demand balance.
Local demand will be influenced and impacted upon by consumer buying patterns,
unemployment levels and further job shedding.
In the current uncertain economic environment it will be a priority to continue
to focus on our current efficiencies drive.
Declaration of Ordinary Dividend No. 20
Notice is hereby given that a final dividend (No. 20) of 470 cents per ordinary
share has been declared in respect of the year ended 30 September 2010.
Last date to trade cum dividend Friday, 14 January 2011
Shares commence trading ex dividend Monday, 17 January 2011
Record date Friday, 21 January 2011
Payment of dividend Monday, 24 January 2011
Share certificates may not be dematerialised or rematerialised between Monday,
17 January 2011 and Friday, 21 January 2011, both days inclusive.
On behalf of the Board
JJ Geldenhuys CE Schutte
Chairman Chief Executive Officer
Pretoria
11 November 2010
Registered office
92 Koranna Avenue, Doringkloof, Centurion, 0157, South Africa
Postnet Suite 278, Private Bag X1028, Doringkloof, 0140
Telephone: +27 (0) 12 667-5468
Website address:
www.astralfoods.com
Directors
JJ Geldenhuys (Chairman)
*CE Schutte (Chief Executive Officer)
*T Delport
Dr T Eloff
*DD Ferreira (Financial Director)
IS Fourie
*Dr OM Lukhele
M Macdonald
TCC Mampane
Dr N Tsengwa
(*Executive director)
Company Secretary
MA Eloff
Transfer secretaries
Computershare Investor Services (Pty) Limited
PO Box 61051, Marshalltown, 2107
Telephone: +27 (0) 11 370-5000
Sponsor
JP Morgan Chase Bank, N.A.(Johannesburg Branch)
1 Fricker Road, Illovo
Johannesburg, 2146
Private Bag X9936, Sandton, 2146
Telephone: +27 (0) 11 507-0430
Date: 15/11/2010 07:05:09 Produced by the JSE SENS Department.
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