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CBH
CBH
CBH - Country Bird Holdings Limited - Interim results for the period ended 31
December 2010
Country Bird Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 2005/008505/06?
ISIN: ZAE000094835
JSE Share code: CBH
("CBH" or "the group")
The people`s choice
Interim results for the period ended 31 December 2010
Revenue up 13%
Operating profit up 37%
HEPS up 73%
Cash flows from operating activities R101 million
Interim capital distribution of 11,1 cents per share
Condensed consolidated statement of comprehensive income
31 December 31 December % 30 June
2010 2009 change 2010
Unaudited Unaudited Audited
R`000 R`000 R`000
Revenue 1 415 928 1 257 590 13 2 433 660
Cost of sales (1 232 129) (1 104 988) 12 (2 159 296)
Gross profit 183 799 152 602 20 274 364
Other expenses (74 991) (74 850) 0 (157 751)
Other gains and losses 3 994 4 646 (14) 5 614
Operating profit 112 802 82 398 37 122 227
Finance income 1 489 2 636 (44) 2 042
Finance costs (22 988) (28 806) (20) (55 452)
Share of profit/(loss) of 54 (166) (133) (417)
associate
Profit before income tax 91 357 56 062 63 68 400
Income tax expense (25 946) (18 188) 43 (21 395)
Profit for the year 65 411 37 874 73 47 005
Other comprehensive income
Currency translation (20 152) (638) 3 058 (1 769)
differences
Total comprehensive income 45 259 37 236 22 45 236
for the year
Profit attributable to:
Owners of the parent 63 097 36 061 75 44 353
Non-controlling interest 2 314 1 813 28 2 652
65 411 37 874 73 47 005
Total comprehensive income
attributable to:
Owners of the parent 42 945 35 423 21 42 584
Non-controlling interest 2 314 1 813 28 2 652
45 259 37 236 22 45 236
Earnings per share (cents)
-?basic 33,57 19,27 74 23,71
-?diluted 32,99 18,98 74 23,31
Additional information to
condensed consolidated
financial statements
Profit for the year 63 097 36 061 75 44 353
attributable to owners of
the parent
Reversal of non-recurring - 9 926 (100) 12 750
items per note 2
Adjusted profit 63 097 45 987 37 57 103
attributable to owners of
the parent
Adjusted earnings per share
(cents)
-?basic 33,57 24,58 37 30,52
-?diluted 32,99 24,20 36 30,01
Ordinary shares (total
number of shares)
-?Issued net of treasury 188 366 313 187 099 313 187 099 313
shares
-?Weighted average number 187 972 476 187 099 313 187 099 313
of ordinary shares
-?Diluted number of 191 284 305 190 027 110 190 296 036
ordinary shares
Headline earnings per
ordinary share (cents)
-?basic 33,29 19,22 73 23,64
-?diluted 32,71 18,92 73 23,25
Capital distribution per 11,10 6,41 73 6,41
share - interim (cents)
Capital distribution per - - 1,47
share - final (cents)
Net asset value per share 227,66 214,82 6 204,62
(cents)
Tangible asset value per 177,67 164,23 8 154,17
share (cents)
Gearing ratio (net of cash 1,80 1,87 (4) 2,12
and cash equivalents)
Condensed consolidated statement of financial position
As at As at % As at
31 December 31 December change 30 June
2010 2009 2010
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets 526 023 583 329 (10) 541 377
Property, plant and 384 205 377 134 2 397 156
equipment
Intangible assets 93 970 94 665 (1) 94 395
Financial assets and other 533 71 695 (99) 384
investments
Investment in associates 9 873 8 893 11 9 213
Deferred income tax assets 37 442 30 942 21 40 229
Current assets 855 156 647 087 32 775 075
Inventories 153 455 126 307 21 128 170
Biological assets 147 233 137 533 7 131 266
Trade and other receivables 365 731 297 778 23 384 143
Current income tax 5 453 9 035 (40) 7 696
receivable
Cash and cash equivalents 183 284 76 434 140 123 800
Total assets 1 381 179 1 230 416 12 1 316 452
EQUITY
Total equity 427 933 401 931 6 382 850
Ordinary shares 1 884 2 021 (7) 1 871
Share premium 798 303 822 700 (3) 795 887
Other reserves (5 322) 18 685 (128) 17 435
Retained earnings 438 174 366 784 19 375 077
Common control deficit (832 110) (832 110) 0 (832 110)
Equity attributable to the 400 929 378 080 6 358 160
owners of the parent
Non-controlling interest 27 004 23 851 13 24 690
LIABILITIES
Non-current liabilities 428 891 434 884 (1) 435 171
Borrowings 337 843 354 303 (5) 345 655
Financial liability through 252 - 100 -
profit and loss
Deferred income tax 90 796 80 581 13 89 516
liabilities
Current liabilities 524 355 393 601 33 498 431
Trade and other payables 347 621 225 091 54 326 257
Current income tax 14 672 703 1 987 1 672
liabilities
Borrowings 161 873 167 601 (3) 169 419
Provision for other 189 206 (8) 1 083
liabilities and charges
Total liabilities 953 246 828 485 15 933 602
Total equity and liabilities 1 381 179 1 230 416 12 1 316 452
Condensed consolidated statement of cash flows
31 December 31 December 30 June
2010 2009 2010
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash flows from operating
activities
Net cash generated from operating 101 080 4 816 57 920
activities
Cash receipts from customers 1 434 340 1 306 327 2 396 032
Cash paid to suppliers and (1 301 102) (1 268 632) (2 276 981)
employees
Cash generated from operations 133 238 37 695 119 051
Interest paid (22 988) (28 806) (55 452)
Income tax paid (9 170) (4 073) (5 679)
Cash flows from investing
activities
Net cash used in investing (22 177) (31 746) (12 893)
activities
Purchases of property, plant and (23 553) (40 144) (73 796)
equipment
Proceeds from sale of property, 642 69 1 162
plant and equipment
Purchases of intangible asset - - (41)
Realisation of financial assets and - 6 164 59 189
investments
Purchases of financial assets and (149) (203) (278)
investments
Increase in investment in (606) (268) (1 171)
associates
Interest received 1 489 2 636 2 042
Cash flows from financing
activities
Net cash used in financing (11 459) (19 366) (50 036)
activities
Proceeds from the issuance of 1 267 - -
ordinary shares
Share issue and listing expenses - (29) (29)
Proceeds from borrowings 17 099 29 219 57 333
Repayments of borrowings (27 059) (30 744) (76 953)
Capital repayments to shareholders (2 766) (17 812) (29 805)
Acquisition of BEE share option - - (583)
Net increase/(decrease) in cash and 67 444 (46 296) (5 009)
cash equivalents
Cash and cash equivalents at (14 513) (6 950) (6 951)
beginning of period
Exchange gains on cash and bank (2 561) 2 635 (2 553)
overdrafts
Cash and cash equivalents at end of 50 370 (50 611) (14 513)
period
Condensed consolidated statement of changes in equity
Share Share Other Retained
capital premium reserves earnings
R`000 R`000 R`000 R`000
Balance at 1 July 2009 1 871 825 721 15 021 330 723
Total comprehensive income - - (638) 36 061
Shares issued to share 150 14 820 - -
incentive trust
Share issue and listing - (29) - -
expenses
Acquisition of BEE share - - (568) -
option
Capital distribution to - (17 812) - -
shareholders
Employee share scheme - - 4 870 -
Balance at 31 December 2009 2 021 822 700 18 685 366 784
Total comprehensive income - - (1 131) 8 293
Treasury shares held by CBH (150) (14 820) - -
Share Trust
Acquisition of BEE share - - (14) -
option
Employee share scheme - - (105) -
Capital distribution to - (11 993) - -
shareholders
Balance at 30 June 2010 1 871 795 887 17 435 375 077
Total comprehensive income - - (20 152) 63 097
Shares issued to employees 13 5 182 - -
Employee share scheme - - (2 605) -
Capital distribution to - (2 766) - -
shareholders
Balance at 31 December 2010 1 884 798 303 (5 322) 438 174
Condensed consolidated statement of changes in equity (continued)
Common Total Non- Total
control attribu- con- equity
deficit table to trolling R`000
R`000 owners interest
of the R`000
parent
R`000
Balance at 1 July 2009 (832 110) 341 226 22 038 363 264
Total comprehensive income - 35 423 1 813 37 236
Shares issued to share - 14 970 - 14 970
incentive trust
Share issue and listing - (29) - (29)
expenses
Acquisition of BEE share - (568) - (568)
option
Capital distribution to - (17 812) - (17 812)
shareholders
Employee share scheme - 4 870 - 4 870
Balance at 31 December 2009 (832 110) 378 080 23 851 401 931
Total comprehensive income - 7 162 839 8 001
Treasury shares held by CBH - (14 970) - (14 970)
Share Trust
Acquisition of BEE share - (14) - (14)
option
Employee share scheme - (105) - (105)
Capital distribution to - (11 993) - (11 993)
shareholders
Balance at 30 June 2010 (832 110) 358 160 24 690 382 850
Total comprehensive income - 42 945 2 314 45 259
Shares issued to employees - 5 195 - 5 195
Employee share scheme - (2 605) - (2 605)
Capital distribution to - (2 766) - (2 766)
shareholders
Balance at 31 December 2010 (832 110) 400 929 27 004 427 933
Condensed segment report
31 December 31 December 30 June
2010 2009 2010
Unaudited Unaudited Audited
R`000 R`000 R`000
Revenue Revenue Revenue
Poultry 893 417 843 969 1 646 239
- South Africa 826 908 780 252 1 514 098
- Other Africa 73 811 76 325 144 706
Intersegment revenue (7 302) (12 608) (12 565)
Animal nutrition 322 639 253 688 493 431
- South Africa 537 599 512 446 927 210
- Other Africa 146 562 119 015 190 551
Intersegment revenue (361 522) (377 773) (624 330)
Beef 199 872 159 934 293 990
1 415 928 1 257 590 2 433 660
Condensed segment report (continued)
31 December 31 December 30 June
2010 2009 2010
Unaudited Unaudited Audited
R`000 R`000 R`000
Operating Operating Operating
profit profit profit
Poultry 82 464 68 313 84 907
- South Africa 73 138 67 552 90 121
- Other Africa 9 326 761 (5 214)
Intersegment revenue - - -
Animal nutrition 32 473 13 497 38 141
- South Africa 20 966 6 486 27 205
- Other Africa 11 507 7 011 10 936
Intersegment revenue - - -
Beef (2 135) 588 (821)
112 802 82 398 122 227
Notes to the condensed consolidated financial statements
1. Basis of preparation
The unaudited condensed consolidated interim financial information
announcement for the half-year ended 31 December 2010 was prepared
in accordance with International Financial Reporting Standards, 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 2010.
These unaudited condensed consolidated interim financial statements
were approved by the board of directors on 26 January 2011.
31 December 31 December 30 June
2010 2009 2010
Unaudited Unaudited Audited
R`000 R`000 R`000
2. Operating profit
The following amounts have been
accounted for in the operating
profit:
Profit/(loss) on sale of - - (4 552)
investment
Fair value gains/(losses) on - (9 926) (8 198)
financial assets at fair value
through profit or loss
3. Reconciliation to headline
earnings
Net profit attributable to the 63 097 36 061 44 353
owners of the parent
Adjusted for:
Profit on disposal of property, (528) (56) (117)
plant and equipment
Profit/(loss) on sale of - (45) -
investment
Adjusted headline earnings 62 569 35 960 44 236
4. Capital expenditure and
depreciation
Capital expenditure 23 553 40 144 73 796
Depreciation 18 611 16 278 31 131
Amortisation of intangible 241 277 553
assets
5. Capital and other commitments
Inventories contracted for 67 559 47 029 69 702
67 559 47 029 69 702
6. Cash and cash equivalents
Bank balances, deposits and 183 284 76 434 123 800
cash
Short-term borrowings (132 914) (127 045) (138 313)
50 370 (50 611) (14 513)
7. Reclassification of comparative figures
In the prior period condensed consolidated interim financial
information announcement, proceeds from borrowings and repayments 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 period statement of cash
flows. This has resulted in the restatement of the prior period
figures.
31 December
2009
Unaudited
R`000
Disclosure as per condensed consolidated statement of
cash flows for the half-year ended 31 December 2009:
Realisation of financial assets and investments 5 961
Proceeds from borrowings (1 525)
Disclosure as per condensed consolidated statement of
cash flows for the half-year ended 31 December 2010:
Realisation of financial assets and investments 6 164
Purchases of financial assets and investments (203)
Proceeds from borrowings 29 219
Repayment of borrowings (30 744)
In the prior period condensed consolidated interim
financial information announcement, distribution costs
and administrative expenses were disclosed separately
on the consolidated statement of comprehensive income.
In the current period, these amounts are now disclosed
under other expenses. Furthermore, in the prior period,
expenses to the value of R2 754 million were
incorrectly allocated to cost of sales. This amount
should have formed part of other expenses. This has
resulted in the restatement of prior period figures.
Disclosure as per condensed consolidated statement of
comprehensive income for the half-year ended 31
December 2009:
Cost of sales (1 107 742)
Distribution costs (6 741)
Administrative expenses (65 355)
Disclosure as per condensed consolidated statement
of comprehensive income for the half-year ended
31 December 2010:
Cost of sales (1 104 988)
Other expenses (74 850)
8. Declaration of capital distribution
Notice is hereby given that a capital distribution out of share
premium of 11,10 cents per ordinary share in respect of the half-
year ended 31 December 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 are as follows:
Last date to trade ordinary shares cum capital Friday, 6 May 2011
distribution
Ordinary shares trade ex capital distribution Monday, 9 May 2011
Record date Friday, 13 May 2011
Payment date Monday, 16 May 2011
Share certificates may not be dematerialised or rematerialised
between Monday, 9 May 2011 and Friday, 13 May 2011 (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 22 November 2010.
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
distribution of 11,10 cents after
per share on the
R`000 distribution
R`000
Assets
Cash and cash equivalents (20 865) 162 419
Equity and liabilities
Equity attributable to ordinary (20 865) 380 064
shareholders
NAV (cents per share) (11,10) 216,56
TNAV (cents per share) (47,51) 130,15
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 R112,8 million was achieved for the six months ended 31
December 2010, which when compared to last year`s figure of R82,4 million is an
increase of 37%. This was the result of a combination of factors predominated by
good performances in the African businesses and a strong showing from Nutri
Feeds, as well as an improvement in market conditions generally. Revenue was up
13% to R1,42 billion for the period (2009: R1,26 billion), with gross profit
increasing by 20% to R183,8 million (2009: R152,6 million) after accounting for
a 12% increase in cost of sales attributable to volume growth.
Profit before income tax rose 63% to R91,4 million (2009: R56,1 million)
primarily as a result of a reduction in finance costs through reduced interest
rates and strict financial discipline, specifically with regard to capital
expenditure. The net increase in cash and cash equivalents for the period was
R67,5 million.
Operational review
Poultry - South Africa
The South African poultry division reported an 8% increase in volumes sold for
the period. This, together with a 9% improvement in the cost of feed, further
improvements in operational efficiencies and disciplined cost control, more than
offset the 2% reduction in realisations over last year. The operating profit for
the period improved 8% to R73,1 million (2009: 67,6 million).
Poultry - Africa
This comprises a grandparent breeding operation in Zambia and a parent breeding
operation and broiler operation in Botswana. Revenues for the year decreased
slightly by 3%. However, improved market conditions in Zambia driven by
favourable economic conditions resulted in a return to better margins and
operating profit of R9,3 million was achieved (2009: R0,7 million).
Animal Nutrition - South Africa
Nutri Feeds reported a further improvement of 16% in volumes sold for the period
under review. As a result of input price reductions during the period, revenues
only increased by 5%. However, with volumes approaching optimum levels, the
resultant efficiencies improved operating profit to R21,0 million (2009: R6,5
million).
Animal Nutrition - Africa
Both mills in Zambia and Botswana are now well established and performing well.
Revenues for the combined operations increased 23% to R146,6 million (2009:
R119,0 million) and the focus on operational efficiency and procurement
practices yielded a 64% increase in operating profit to R11,5 million (2009:
R7,0 million).
Red Meat
New product launches and penetration into new markets saw volumes increase by
23% and realisations increase by 2%, giving a total increase in turnover of 25%
to R199,9 million (2009: R159,9 million). Margins remained under intense
pressure resulting in an operating loss for the period of R2,1 million (2009:
R0,6 million profit).
Prospects
Realisations for the poultry industry have shown encouraging signs of recovery
in recent months. Continued efficient grain procurement, further improvements in
operational efficiencies and cost control should result in improved operating
margins, while the marketing focus will remain on driving exports and the quick
service restaurant business.
In the South African feed business the scientific development of bespoke feed
rations has assisted Supreme Poultry and its customers to achieve outstanding
growing results. This has attracted new customers, taking production levels to
an optimum level of efficiency due to capacity utilisation.
The feed mills in Zambia and Botswana are performing well and the re-
establishment of Tswana Pride`s Abattoir that had burnt down will result in good
growth in feed volume and market penetration. Operational efficiency and margin
improvement remain the focus going forward.
The African Poultry operations have returned to profitability and continued
focus on efficient production remains the priority.
Capital distribution
In line with the Group`s dividend policy of three times cover, a capital
distribution of 11,1 cents per share for the period has been declared for
payment on 16 May 2011.
By order of the board
JD Wright
Chief executive officer
26 January 2011
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 ADDRESS
269 Oxford Road, Cnr Harries Road, Illovo, Johannesburg, 2196
(PO Box 412523, Craighall, 2024)
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)
www.cbh.co.za
Date: 26/01/2011 16:00:01 Produced by the JSE SENS Department.
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