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ARL
ARL
ARL - Astral Foods Limited - Unaudited interim results and dividend
declaration for the six months ended 31 March 2011
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")
UNAUDITED INTERIM RESULTS AND DIVIDEND DECLARATION for the six months ended
31 March 2011
- Revenue decrease 2%
- Operating profit increase 23%
- Headline earnings per share increase 31%
- Interim dividend increase 5% to 305 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 September
2011 2010 2010
R`000 R`000 R`000
Assets
Non-current assets 1 784 969 1 655 332 1 764 194
Property, plant and equipment 1 646 487 1 514 190 1 625 473
Intangible assets 4 562 6 835 4 913
Goodwill 124 802 124 802 124 802
Investments and loans 9 118 9 505 8 838
Deferred tax asset - - 168
Current assets 1 502 994 1 424 829 1 337 176
Inventories 291 574 298 165 262 278
Biological assets 316 584 329 091 305 430
Trade and other receivables 715 094 675 082 626 698
Current tax assets - - 2 334
Derivative financial 385 238 196
instruments
Cash and cash equivalents 179 357 122 253 140 240
Assets held for sale - - 26 928
Total assets 3 287 963 3 080 161 3 128 298
Equity
Capital and reserves 1 491 307 1 363 860 1 424 091
attributable to equity holders
of the parent company
Issued capital 2 321 736 736
Treasury shares (204 435) (204 435) (204 435)
Reserves 1 693 421 1 567 559 1 627 790
Non-controlling interest 24 626 20 049 22 106
Total equity 1 515 933 1 383 909 1 446 197
Liabilities
Non-current liabilities 564 517 488 225 522 117
Borrowings 103 999 33 733 80 545
Deferred tax liability 370 343 373 449 356 929
Retirement benefit obligations 90 175 81 043 84 643
Current liabilities 1 207 513 1 208 027 1 148 206
Trade and other liabilities 1 031 235 992 535 939 982
Current tax liabilities 50 586 40 638 19 556
Borrowings 125 692 174 854 188 668
Liabilities held for sale - - 11 778
Total liabilities 1 772 030 1 696 252 1 682 101
Total equity and liabilities 3 287 963 3 080 161 3 128 298
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 31 March 30 September
2011 2010 % 2010
R`000 R`000 change R`000
Revenue 4 214 698 4 283 836 (2) 8 367 874
Operating profit 375 355 304 298 23 585 377
Fair value adjustment (1 805) - (7 233)
of investment in assets
held for sale
Finance income 5 354 4 901 12 201
Finance costs (14 670) (16 851) (33 263)
Profit before income 364 234 292 348 25 557 082
tax
Income tax expense (122 036) (103 832) (193 413)
Profit for the period 242 198 188 516 28 363 669
Other comprehensive
income
Foreign currency 2 816 (2 533) (6 401)
translation adjustments
Total comprehensive 245 014 185 983 32 357 268
income for the period,
net of tax
Profit attributable to:
Equity holders of the 240 103 185 242 30 357 637
parent company
Non-controlling 2 095 3 274 (36) 6 032
interest holders
242 198 188 516 28 363 669
Comprehensive income
attributable to:
Equity holders of the 242 494 183 306 32 352 068
parent company
Non-controlling 2 520 2 677 (6) 5 200
interest holders
245 014 185 983 32 357 268
Earnings per share
(cents)
- basic 631 487 30 940
- diluted 630 487 29 939
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 31 March 30 September
2011 2010 2010
R`000 R`000 R`000
Cash operating profit 440 705 365 111 705 744
Working capital changes (37 921) 32 545 62 990
Cash generated from 402 784 397 656 768 734
operating activities
Tax paid (74 583) (52 142) (180 557)
Cash flows from operating 328 201 345 514 588 177
activities
Net cash used in investing (58 897) (55 650) (208 202)
activities
Capital expenditure (78 179) (63 316) (222 372)
Finance income 5 354 4 901 12 201
Proceeds on disposal and 13 928 2 765 1 969
other
Cash used in financing (184 697) (183 081) (250 783)
activities
Increase in borrowings 7 347 5 584 69 380
Interest paid (14 670) (17 438) (38 758)
Dividends paid (178 683) (171 227) (281 508)
Shares issued 1 309 - -
Contribution from non- - - 103
controlling interest holders
Net movement in cash and 84 607 106 783 129 192
cash equivalents
Effect of exchange rate 1 379 (137) (6 046)
changes
Reclassification to assets - - 795
held for sale
Cash and cash equivalent (28 994) (152 935) (152 935)
balances at beginning of
year
Cash and cash equivalent 56 992 (46 289) (28 994)
balances at end of period
(note 6)
GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 31 March 30 September
2011 2010 2010
R`000 R`000 R`000
Balance beginning of year 1 446 197 1 366 449 1 366 449
Total comprehensive income 245 014 185 983 357 268
for the period
Dividends to the company`s (178 825) (167 411) (277 750)
shareholders
Option value of share 1 648 2 518 3 757
options granted
Shares issued from share 1 309 - -
options exercised
Currency translation loss 590 - -
realised
Payments to non-controlling - (3 630) (3 630)
interest holders
Contribution from non- - - 103
controlling interest holder
Balance at end of period 1 515 933 1 383 909 1 446 197
CONDENSED GROUP SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 31 March 30 September
2011 2010 % 2010
R`000 R`000 change R`000
Revenue
Poultry
- South Africa and 2 771 716 2 739 921 1 5 350 966
Swaziland
Feed 2 052 909 2 171 061 (5) 4 224 542
- South Africa 1 956 925 2 104 262 4 089 104
- Other Africa 95 984 66 799 135 438
Services and ventures 132 236 143 067 (8) 269 610
Inter-group (742 163) (770 213) (1 477 244)
- Feed to Poultry (703 573) (736 166) (1 408 987)
- Services and (38 590) (34 047) (68 257)
ventures to Poultry
and Feed
4 214 698 4 283 836 (2) 8 367 874
Operating profit
Poultry
- South Africa and 228 904 134 155 71 262 248
Swaziland
Feed 133 048 151 295 (12) 281 159
- South Africa 120 603 153 638 280 791
- Other Africa 12 445 (2 343) 368
Services and ventures 13 403 18 848 (29) 41 970
375 355 304 298 23 585 377
ADDITIONAL INFORMATION
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 31 March % 30 September
2011 2010 change 2010
Headline earnings 241 886 185 071 31 365 162
(R`000) (note 5)
Headline earnings per
share (cents)
- basic 636 486 31 960
- diluted 635 486 31 959
Dividend per share 305 290 5 760
(cents)
Number of ordinary
shares
- Issued net of 38 060 308 38 047 708 38 047 708
treasury shares
- Weighted-average 38 050 557 38 047 708 38 047 708
- Diluted weighted- 38 096 186 38 065 066 38 072 092
average
Net debt (borrowings 50 334 86 334 128 973
less cash and cash
equivalents) (R`000)
Net asset value per 39,18 35,85 9 37,43
share (Rand)
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
2011 have been prepared in accordance with International Reporting Standards
("IFRS"), and IAS 34 - Interim Financial Reporting, the Listings 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
2010.
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 31 March 30 September
2011 2010 2010
R`000 R`000 R`000
4. Operating profit
The following items have been
accounted for in the operating
profit:
Biological assets - fair value 410 (1 351) (1 388)
gain/(loss)
Amortisation of intangible 1 403 2 552 4 536
assets
Depreciation on property, plant 56 799 54 250 104 031
and equipment
Profit/(loss) on disposal of 31 161 (418)
property, plant and equipment
Foreign exchange profit/(loss) 187 1 206 (536)
5. Reconciliation to headline
earnings
Earnings for the period 240 103 185 242 357 637
After tax net (profit)/loss on (22) (171) 491
sale of property, plant and
equipment
Fair value adjustment of assets 1 805 - 7 233
held for sale
Negative goodwill - - (199)
Headline earnings for the period 241 886 185 071 365 162
6. Cash and cash equivalents per
cash flow statement
Bank overdrafts (122 365) (168 542) (169 234)
Cash at bank and in hand 179 357 122 253 140 240
Cash and cash equivalents per 56 992 (46 289) (28 994)
cash flow statement
7. Capital commitments
Capital expenditure approved not 131 739 75 232 120 124
contracted
Capital expenditure contracted 24 909 24 040 20 156
not recognised in financial
statements
8. 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, but has offered all
reasonable cooperation to the Commission in regard to its investigation into
the industry.
Financial Overview
Headline earnings for the period increased by 31% to R242 million from R185
million for the same period last year as a result of improved operating
profits.
Revenue decreased by 2% from R4 284 million to R4 215 million due to lower
sales by the feed division, whilst the revenue from the poultry division was
only marginally higher than the previous year.
The operating profit at R375 million was 23% higher than the profit for the
same period last year. The improvement was all contributed by the poultry
division due to improved poultry production efficiencies combined with lower
feed input costs.
Net finance costs at R9 million were down on the previous year`s R12 million
following lower average level of borrowings and lower interest rates during
the period under review.
Earnings per share increased by 30% from 487 cents to 631 cents, and headline
earnings per share increased by 31% to 636 cents per share (2010: 486 cents
per share).
Continued positive cash flow during the period resulted in the net debt
(borrowings less cash and cash equivalents) reducing to R50 million from the
R129 million as at the end of September 2010. The net debt to equity ratio is
now at 3%, compared to 9% at September 2010.
The Board has declared an increased interim dividend of 305 cents per share
(2010: 290 cents per share) in view of the improved profits and strong
balance sheet.
Operational Overview
Poultry Division
Turnover for the division at R2 772 million was marginally up by 1% from R2
740 million in 2010 on the back of slightly lower selling volumes which were
offset by improved selling prices.
Local poultry demand levels were negatively impacted by job losses during the
past eighteen months together with record levels of poultry imports due to
the strong local currency and "classical" dumping.
Reduced stock levels before the festive season together with firmer sales
during December resulted in marginally better pricing levels post the festive
period.
The improvement in profitability was mainly supported by efficiency
improvements in on-farm production results that, together with lower feed
input costs resulted in advantageous production costs.
The non-recurring direct costs of an industrial action in the prior period
also played a role in the improved results
Margins for the division reflected an increase to 8,3% compared to the 4,9%
for the comparable period and operating profit increased by 71% to R229
million (2010: R134 million).
The implementation of the "new" Ross 308 genetic line has been fully
integrated during March 2011 and the efficiency improvements of the new bird
are in line with expectations.
Feed Division
Revenue for the period decreased by 5% from R2 171 million in 2010 to R2 053
million for the period under review mainly as a result of lower feed volumes
both internally and externally together with lower selling prices on the back
of lower grain prices procured during mid-2010. The reduced internal sales
volumes were partly driven by reduced demand from the Poultry division due to
improved efficiencies.
Operating profit decreased by 12% to R133 million (2010: R151 million) and
the margin at 6,5% (2010: 7,0%) were negatively affected by higher fixed
costs per unit, resulting from reduced volumes.
The division`s Zambian and Mozambican operations posted satisfactory results
as both these operations increased profitability with signs of further
improvement.
Services and Joint Ventures Division
Although the division performed satisfactorily, a decrease in revenue was
brought about by the disposal of the Mauritian feed operation.
Operating profit for all services and joint venture units were in line with
expectations. The group`s bakery unit, East Balt, performed well, despite the
fact that it had to bear the start-up costs of its Cape Town facility as well
as still having low capacity utilisation.
Prospects
The business environment for the next reporting period is not expected to be
significantly different from the present. The global outlook remains that
grains as a key cost driver for both feed and poultry production, will trade
higher as soft commodity prices firm up due to tighter global soft
commodities balance sheets. The continued strength of the local currency
should be favourable for high levels of poultry imports. The balance of local
production and imported product against a stressed trading environment will
be critical for pricing and profitability improvement.
Declaration of Ordinary Dividend No. 21
Notice is hereby given that dividend No. 21 of 305 cents per ordinary share
has been declared in respect of the six months ended 31 March 2011.
Last date to trade cum dividend Thursday, 9 June 2011
Shares commence trading ex dividend Friday, 10 June 2011
Record date Friday, 17 June 2011
Payment of dividend Monday, 20 June 2011
Share certificates may not be dematerialised or rematerialised between
Friday, 10 June 2011 and Friday, 17 June 2011, both days inclusive.
On behalf of the Board
JJ Geldenhuys CE Schutte
Chairman Chief Executive Officer
Pretoria
16 May 2011
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 Equities
1 Fricker Road, Illovo
Johannesburg, 2146
Private Bag X9936, Sandton, 2146
Telephone: +27 (0) 11 507 0430
Date: 16/05/2011 07:05:08 Produced by the JSE SENS Department.
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