| Mon 14 Nov 2011, 7:08 | | 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 30 September 2011
Astral Foods Limited
Incorporated in the Republic of South Africa
Registration number 1978/003194/06
Share code ARL
ISIN: ZAE000029757
AUDITED ANNUAL FINANCIAL RESULTS AND DIVIDEND DECLARATION 30 SEPTEMBER 2011
- Revenue increase 3%
- Operating profit increase 15%
- Headline earnings per share increase 20%
- Final dividend increase 7% to 505 cents per share
- Total dividend for the year increase 7%
Condensed group statement of financial position
Audited Audited
Year ended Year ended
30 Sept 2011 30 Sept 2010
R`000 R`000
Assets
Non-current assets 1 876 789 1 764 194
Property, plant and equipment 1 711 966 1 625 473
Intangible assets 11 120 4 913
Goodwill 140 401 124 802
Investments and loans 13 028 8 838
Deferred tax asset 274 168
Current assets 1 508 605 1 337 176
Inventories 321 031 262 278
Biological assets 342 234 305 430
Trade and other receivables 662 836 626 698
Current tax assets 429 2 334
Derivative financial instruments 210 196
Cash and cash equivalents 181 865 140 240
Assets held for sale - 26 928
Total assets 3 385 394 3 128 298
EQUITY AND LIABILITIES
Capital and reserves attributable to 1 574 194 1 424 091
equity holders of the parent company
Issued capital 2 044 736
Treasury shares (204 435) (204 435)
Reserves 1 776 585 1 627 790
Non-controlling interests 11 438 22 106
Total equity 1 585 632 1 446 197
Liabilities
Non-current liabilities 569 100 522 117
Borrowings 99 496 80 545
Deferred tax liability 378 950 356 929
Retirement benefit obligations 90 654 84 643
Current liabilities 1 230 662 1 148 206
Trade and other liabilities 1 101 455 939 982
Current tax liabilities 7 316 19 556
Borrowings 121 891 188 668
Liabilities held for sale - 11 778
Total liabilities 1 799 762 1 682 101
Total equity and liabilities 3 385 394 3 128 298
Condensed group statement of comprehensive income
Audited Audited
Year ended Year ended
30 Sept 2011 Change 30 Sept 2010
R`000 % R`000
Revenue 8 605 904 3 8 367 874
Operating profit (note 5) 674 919 15 585 377
Fair value adjustment of net (1 805) (7 233)
investment in assets and
liabilities held for sale
Finance income 12 676 12 201
Finance costs (27 849) (33 263)
Profit before income tax 657 941 18 557 082
Tax expense (222 679) (193 413)
Profit for the year 435 262 20 363 669
Other comprehensive income
Foreign currency translation 13 555 (6 401)
adjustments
Total comprehensive income for the 448 817 26 357 268
year net of tax
Profit attributable to:
Equity holders of the parent 429 217 20 357 637
company
Non-controlling interests 6 045 6 032
435 262 20 363 669
Comprehensive income attributable
to:
Equity holders of the parent 441 278 25 352 068
company
Non-controlling interests 7 539 45 5 200
448 817 26 357 268
Earnings per share (cents)
- basic 1 128 20 940
- diluted 1 126 20 939
Condensed group statement of cash flows
Audited Audited
Year ended Year ended
30 Sept 2011 30 Sept 2010
R`000 R`000
Cash operating profit 809 169 705 744
Changes in working capital 27 782 62 990
Cash generated from operations 836 951 768 734
Income tax paid (214 564) (180 557)
Cash generated from operating activities 622 387 588 177
Cash used in investing activities (193 261) (208 202)
Capital expenditure (147 556) (222 372)
Finance income 12 676 12 201
Acquisition of business unit (82 261) (2 245)
Proceeds on disposal of investment held 13 935 -
for sale
Proceeds on disposal and other 9 945 4 214
Cash generated for the year 429 126 379 975
Cash flows to financing activities (337 654) (250 783)
Increase in borrowings 5 021 69 380
Interest paid (31 021) (38 758)
Cost of minority interest acquired (14 000) -
Dividends paid (298 962) (281 508)
Shares issued 1 308 -
Contribution from non-controlling - 103
interest holder
Net movement in cash and cash equivalents 91 472 129 192
Effects of exchange rate changes 6 938 (6 046)
Reclassification to assets held for sale - 795
Cash and cash equivalent balances at (28 994) (152 935)
beginning of year
Cash and cash equivalent balances at end 69 416 (28 994)
of year
Condensed group statement of changes in equity
Audited Audited
Year ended Year ended
30 Sept 2011 30 Sept 2010
R`000 R`000
Balance beginning of year 1 446 197 1 366 449
Total comprehensive income for the year 448 817 357 268
Dividends to the company`s shareholders (294 909) (277 750)
Payments to non-controlling interest (4 571) (3 630)
holders
Option value of share options granted 2 790 3 757
Contribution from a non-controlling - 103
interest holder
Shares issued 1 308 -
Cost of non -controlling interest in a (14 000) -
subsidiary acquired
Balance at end of year 1 585 632 1 446 197
Condensed group segmental analysis
Audited Audited
Year ended Year ended
30 Sept 2011 Change 30 Sept 2010
R`000 % R`000
Revenue
Poultry
- South Africa and Swaziland 5 599 160 5 5 350 966
Feed 4 210 296 4 224 542
- South Africa 4 004 451 (2) 4 089 104
- Other Africa 205 845 52 135 438
Services and ventures 275 902 2 269 610
Inter-group (1 479 454) (1 477 244)
- Feed to Poultry (1 395 071) (1 408 987)
- Services and ventures to (84 383) (68 257)
Poultry and Feed
8 605 904 3 8 367 874
Operating profit
Poultry
- South Africa and Swaziland 353 193 35 262 248
Feed 282 329 281 159
- South Africa 257 536 (8) 280 791
- Other Africa 24 793 info 368
Services and ventures 39 397 (6) 41 970
674 919 15 585 377
Capital expenditure
Poultry
- South Africa and Swaziland 103 700 21 85 393
Feed 30 051 (31) 43 708
- South Africa 25 040 (22) 32 014
- Other Africa 5 011 (57) 11 694
Services and ventures 16 977 inf 98 769
150 728 (34) 227 870
Depreciation, amortisation and
impairment
Poultry
- South Africa and Swaziland 82 961 4 79 845
Feed 20 977 7 19 542
- South Africa 16 459 (3) 16 942
- Other Africa 4 518 74 2 600
Services and ventures 15 187 65 9 180
119 125 10 108 567
Assets
Poultry
- South Africa and Swaziland 2 522 303 12 2 259 783
Feed 764 062 (3) 786 738
- South Africa 649 227 (8) 707 280
- Other Africa 114 835 45 79 458
Services and ventures 368 044 (21) 465 815
Assets held for sale - 26 928
Set-off of inter-group balances (269 015) (410 966)
3 385 394 8 3 128 298
Liabilities
Poultry
- South Africa and Swaziland 1 401 361 2 1 370 978
Feed 545 408 (12) 622 487
- South Africa 485 354 (16) 578 665
- Other Africa 60 054 37 43 822
Services and ventures 122 008 39 87 824
Liabilities held for sale - 11 778
Set-off of intergroup balances (269 015) (410 966)
1 799 762 7 1 682 101
Additional information
Audited Audited
Year ended Change Year ended
30 Sept 2011 % 30 Sept 2010
Headline earnings (R`000) 436 697 20 365 162
Headline earnings per share
(cents)
- basic 1 148 20 960
- diluted 1 145 19 959
Dividend per share (cents)
- declared out of earnings for 810 7 760
the year
Ordinary shares
- Issued net of treasury shares 38 060 308 38 047 708
- Weighted-average 38 055 446 38 047 708
- Diluted weighted-average 38 124 355 38 072 092
Net debt (borrowings less cash 39 522 (69) 128 973
and cash equivalents)
Net asset value per share (Rand) 41,36 11 37,43
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 2011 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 (2008). The financial statements
have been prepared by the financial director, DD Ferreira CA(SA), and were
approved by the board on 10 November 2011.
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 2010.
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 2011 30 Sept 2010
R`000 R`000
5. Operating profit
The following items have been accounted for
in the operating profit:
Directors` remuneration 15 318 12 053
Cash settled share based payments - fair 1 049 1 069
value loss
Biological assets - fair value gain 2 620 1 388
Amortisation of intangible assets 2 679 4 536
Depreciation on property, plant and equipment 115 251 104 031
Loss on disposal of property, plant and 6 338 418
equipment
Foreign exchange gains/(losses) 1 214 (536)
6. Reconciliation to headline earnings
Earnings for the year 429 217 357 637
Loss on sale of property, plant and equipment 4 392 491
(net of tax)
Loss on disposal/fair value adjustment of 1 805 7 233
investment held for sale
Negative goodwill - (199)
Loss on assets scrapped (net of tax) 132 -
Impairment of assets (net of tax) 1 151 -
Headline earnings for the year 436 697 365 162
7. Cash and cash equivalents per cash flow
statement
Bank overdrafts (included in current (112 449) (169 234)
borrowings)
Cash at bank and in hand 181 865 140 240
Cash and cash equivalents per cash flow 69 416 (28 994)
statement
8. Share capital
No shares were repurchased in terms of the share buy-back programme during
the year (2010: nil).
9. Capital commitments
Capital expenditure approved not contracted 142 769 120 124
Capital expenditure contracted not recognised 27 542 20 156
in financial statements
12 600 shares were issued in terms of the group`s share incentive scheme
during the period under review (2010: nil).
10. Business combination
Mountain Valley
The group acquired the assets and operating activities of a broiler
abbattoir and processing plant in KwaZulu-Natal, generally known as Mountain
Valley. The acquisition is in line with the group strategy of selective
expansion and investments. It is also geographically situated in an area
where the group did not a have previous presence in producing and processing
poultry products.
The impact on the group`s results is minimal as the effective date of the
acquisition was only 1 August 2011 and includes the following:
Revenue 22 284
Operating loss 1 228
The impact on the group`s results had the
acquisition occurred on 1 October 2010, is
not presented as no meaningful results for
the business can be calculated due to
different input costs as prior to the
acquisition.
Details of net assets acquired and the cost
of the investment are as follows:
Property, plant and equipment and intangibles (71 136) (18 921)
Biological assets - (3 964)
Inventory (1 677) -
Trade and other receivables (47) -
Trade and other payables 702 -
Deferred tax liability 2 996 420
Net assets acquired (69 162) (22 465)
Goodwill (15 599) 199
Total purchase consideration for interest in (84 761) (22 266)
subsidiary
Outstanding purchase consideration payable 2 500 20 021
Cash flow on acquisition, net of overdraft (82 261) (2 245)
and cash acquired
The carrying amounts of the assets and liabilities acquired were determined
in accordance with IFRS and equal their fair value.
Goodwill was paid due to the strategic geographical importance of the
business to the group.
The purchase allocation has been performed and is considered as final.
Vredebest Plase
The comparatives relate to an agreement during the previous year to acquire
assets and operating activities of Vredebest Plase, a poultry farming and
hatching operation in the Western Cape. Vredebest`s revenue was generated
mainly from sales to the Astral group prior to the acquisition.
The group assumed control of the activities at Vredebest on 29 September
2010 with no impact on the group`s results except for the negative goodwill
recognised in profit.
If the acquisition had occurred on 1 October 2009, there would have been no
material impact on the group`s results as all of Vredebest`s production was
sold into the group.
The carrying amounts of the assets and liabilities acquired were determined
in accordance with IFRS and equal the fair value.
11. Transaction with non-controlling interest holders
The Group acquired the 10% non-controlling interest in Ross Poultry Breeders
(Pty) Limited for a consideration of R14 million. Non-controlling interest
of R13 656 000 has been derecognised and the equity attributable to
shareholders of the parent company has been decreased by R344 000. The net
effect on equity is a reduction of R14 million.
12. Litigation
- A referral was made to the Competition Tribunal regarding alleged anti-
competitive conduct by subsidiaries in the group in 2008. Astral lodged a
dismissal application based on the late inclusion of Ross Poultry Breeders
(Pty) Limited to the complaint and on 20 October 2011 the Competition
Tribunal ruled in favour of Astral, dismissing the joinder of Ross Poultry
Breeders to the initial complaint. The group is still opposing the initial
referral.
- The Competition Commission received an application for immunity in which
an allegation was made regarding anti-competitive conduct in the market for
fresh chicken products during the periods 2003 to 2007, implicating one of
Astral`s business units. The company has since undertaken a comprehensive
investigation into the allegations. Regrettably, Astral`s investigation has
found some of the allegations are correct. Astral is currently engaged with
the Competition Commission in relation to the finding of Astral`s internal
investigation.
- The Competition Commission issued a summons on 16 August 2011 to Astral
and two other feed companies regarding conduct in the dairy feed industry
requesting information relating to Astral`s involvement in the business of a
dairy study group in the Western Cape. Astral`s response and the required
information was submitted on 16 September 2011.
Astral offered all reasonable cooperation to the Competition Commission in
regard to all investigations and summonses and remained committed not to
entertain any anti-competitive conduct.
Financial Overview
Headline earnings for the year increased by 20% to R437 million from last
year`s R365 million, mainly as result of improved profitability from the
poultry operations.
Revenue increased by 3% from R8 368 million to R8 606 million, from higher
sales by the poultry operations driven by increased volumes and increased
realisations.
Poultry`s operating profit was up 35% to R353 million (2010: R262 million),
benefiting from improved poultry production efficiencies. The Feed division
reported operating profits of R282 million (2010: R281 million) after
experiencing a good recovery in its other African operations. The results
for the South African operations were however down 8% to R258 million (2010:
R281 million), as result of lower volumes. The Services and Ventures
segment`s profits were down 6% to R39 million (2010: R42 million) after
having sold the interest in Meaders Feeds Limited.
The interest in Meaders Feeds Limited was sold for a consideration of R13,9
million, which was R1,8 million below the fair value as reported at the end
of the previous year.
The operating profit margin for the group at 7,8% is an improvement on the
previous year`s 7,0%.
Net interest paid for the year of R15 million is down on last year`s R21
million as result of lower average borrowings throughout the year.
Cash generated from operating activities for the year of R622 million was an
improvement of 6% on last year`s R588 million. The net debt to equity ratio
reduced further to 3% (2010: 9%).
The Board has declared an increased final dividend of 505 cents, resulting
in a total dividend out of the profit for the year of 810 cents (2010: 760
cents). The distribution will be supported by the strong balance sheet and
underlying cash flow generation capabilities.
Operational Overview
Poultry Division
Revenue for the division was up by 4,6% to R5,6 billion (2010: R5,4 billion)
on the back of marginally higher volumes (up 0,9%) and pricing levels
improving by 4,1%.
This past year witnessed tough market and trading conditions with a strong
Rand driving opportunistic imports of poultry meat. The "classic dumping" of
chicken primarily from Brazil, together with the higher import levels placed
pressure on the ability to move prices in line with cost increases and
inflationary trends.
Margins for the division reflected an increase to 6,3% compared to 4,9% for
the comparable period and operating profit increased by 34,7% to R353
million (2010: R262 million).
The increase in profitability was derived mainly from improvements in
production costs as a result of lower feeding costs together with a marginal
improvement in selling prices. The new Ross 308 genetic line was fully
integrated into all operations as of March 2011 and the efficiency
improvements of the new bird are in line with expectations. Included in the
prior year results is the financial impact of extended industrial action
experienced at Earlybird.
The feed cost per kilogram of chicken produced decreased during the period
despite an increase in the average feed price, and can be attributed to the
improved feed efficiency achieved with the new genetic line.
Feed Division
Revenue for the division decreased marginally by 0,3% to R4,21 billion
(2010: R4,22 billion) due to lower internal sales volumes (down 1,7%) as a
direct result of the improvement in feed conversion with the "new" Ross 308
breed and reduced sales in the dairy sector.
The operating profit increased by 0,4% to R282 million (2010: R281 million)
supported by a significant turnaround in the performance of the Zambian and
Mozambican operations.
Services and Joint Ventures
Revenue for the division increased by 2,3% to R276 million (2010: R270
million). Profitability decreased by 6,1% to R39,4 million (2010: R42,0
million) and was impacted by the non-recovery of overhead costs due to low
capacity utilisation in the new East Balt bakery in Cape Town.
Excluded from the results for the period is the profit contribution from
Meaders Feeds, a Mauritian operation which was disposed of earlier in the
financial year.
Competition Commission
There are continuing investigations into allegations of misconduct within
the integrated poultry industry.
The most recent allegation stems from an application for immunity that was
made regarding anti-competitive conduct in the market for fresh chicken
products in the Western Cape during the periods 2003 to 2007, implicating
one of Astral`s business units. The company has since undertaken a
comprehensive investigation into the allegations. Regrettably, Astral`s
investigation has found that some of the allegations are correct. Astral is
currently engaging with the Commission in relation to the findings of
Astral`s internal investigation.
With reference to the Elite matter, a date has yet to be finalised for the
hearing by the Competition Tribunal.
Prospects
In view of the prevailing uncertainty that exists in the market, the
following factors are relevant to our business:
- On the negative side, a significant increase in the feeding cost of
poultry on the back of record high raw material input costs, together with
current levels of poultry meat imports. It is also anticipated that there
will be limited economic recovery with no significant change to employment
levels.
- On the positive side however, we note manageable poultry stock levels and
a possibility for success in the industry`s application for anti-dumping
tariffs. It is envisaged that there will be upward potential from current
poultry price levels.
Declaration of Ordinary Dividend No. 22
Notice is hereby given that a final dividend (No. 22) of 505 cents per
ordinary share has been declared in respect of the year ended 30 September
2011.
Last date to trade cum dividend Friday, 13 January 2012
Shares commence trading ex dividend Monday, 16 January 2012
Record date Friday, 20 January 2012
Payment of dividend Monday, 23 January 2012
Share certificates may not be dematerialised or rematerialised between
Monday, 16 January 2012 and Friday, 20 January 2012, both days inclusive.
On behalf of the Board
JJ Geldenhuys CE Schutte
Chairman Chief Executive Officer
Pretoria
11 November 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
J.P. Morgan Equities Limited
1 Fricker Road, Illovo, Johannesburg, 2146
Private Bag X9936, Sandton, 2146
Telephone: +27 (0) 11 507-0430
Date: 14/11/2011 07:08:23 Produced by the JSE SENS Department.
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