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ARL
ARL
ARL - Astral Foods Limited - Unaudited interim results and dividend
declaration
for the six months ended 31 March 2012
Astral Foods Limited
Incorporated in the Republic of South Africa
Registration number 1978/003194/06
Share code: ARL ISIN: ZAE000029757
Unaudited interim results and dividend declaration
for the six months ended 31 March 2012
- Revenue increase 16%
- Operating profit decrease 14%
- Earnings per share decrease 17%
- Interim dividend 336 cents per share
Condensed group statement of financial position
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2012 31 March 2011 30 Sept 2011
R`000 R`000 R`000
ASSETS
Non-current assets 1 773 066 1 784 969 1 876 789
Property, plant and 1 615 939 1 646 487 1 711 966
equipment
Intangible assets 11 333 4 562 11 120
Goodwill 139 147 124 802 140 401
Investments and loans 6 647 9 118 13 028
Deferred tax assets - - 274
Current assets 1 615 358 1 502 994 1 508 605
Inventories 424 352 291 574 321 031
Biological assets 362 156 316 584 342 234
Trade and other receivables 743 563 715 094 662 836
Current tax asset - - 429
Derivative financial 291 385 210
instruments
Cash and cash equivalents 84 996 179 357 181 865
Assets of disposal group 156 842 - -
classified as held for sale
Total assets 3 545 266 3 287 963 3 385 394
EQUITY
Capital and reserves 1 576 583 1 491 307 1 574 194
attributable to equity
holders of the parent
company
Issued capital 2 044 2 321 2 044
Treasury shares (204 435) (204 435) (204 435)
Reserves 1 778 974 1 693 421 1 776 585
Non-controlling interest 11 421 24 626 11 438
Total equity 1 588 004 1 515 933 1 585 632
LIABILITIES
Non-current liabilities 495 473 564 517 569 100
Borrowings 19 045 103 999 99 496
Deferred tax liability 381 863 370 343 378 950
Retirement benefit 94 565 90 175 90 654
obligations
Current liabilities 1 364 943 1 207 513 1 230 662
Trade and other liabilities 1 227 509 1 031 235 1 101 455
Current tax liabilities 5 287 50 586 7 316
Borrowings 132 147 125 692 121 891
Liabilities of disposal 96 846 - -
group classified as held
for sale
Total liabilities 1 957 262 1 772 030 1 799 762
Total equity and 3 545 266 3 287 963 3 385 394
liabilities
Condensed group statement of comprehensive income
Unaudited Unaudited Audited
six six months 12 months
months
ended ended ended
31 March 31 March 2011 Change 30 Sept 2011
2012
R`000 R`000 % R`000
Revenue 4 885 288 4 214 698 16 8 605 904
Operating profit 323 541 375 355 (14) 674 919
Fair value adjustment of - (1 805) (1 805)
investment in assets held
for sale
Finance income 3 070 5 354 12 676
Finance costs (11 387) (14 670) (27 849)
Profit before income tax 315 224 364 234 (13) 657 941
Income tax expense (113 975) (122 036) (222 679)
Profit for the period 201 249 242 198 (17) 435 262
Other comprehensive
income
Foreign currency (5 663) 2 816 13 555
translation adjustments
Total comprehensive 195 586 245 014 (20) 448 817
income for period, net of
tax
Profit attributable to:
Equity holders of the 199 245 240 103 (17) 429 217
parent company
Minority interests 2 004 2 095 (4) 6 045
201 249 242 198 (17) 435 262
Comprehensive income
attributable to:
Equity holders of the 193 733 242 494 (20) 441 278
parent company
Minority interests 1 853 2 520 (26) 7 539
195 586 245 014 (20) 448 817
Earnings per share
(cents)
- basic 523 631 (17) 1 128
- diluted 523 630 (17) 1 126
Condensed group statement of cash flow
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2012 31 March 2011 30 Sept 2011
R`000 R`000 R`000
Cash operating profit 388 565 440 705 809 169
Working capital (86 067) (37 921) 27 782
changes
Cash generated from 302 498 402 784 836 951
operating activities
Tax paid (111 196) (74 583) (214 564)
Cash flows from 191 302 328 201 622 387
operating activities
Net cash used in (81 157) (58 897) (193 261)
investing activities
Capital expenditure (85 780) (78 179) (147 556)
Finance income 3 070 5 354 12 676
Proceeds on disposal 1 553 13 928 9 945
of property, plant
and equipment
Acquisition of - - (82 261)
business unit
Proceeds on disposal - - 13 935
of investment held
for sale
Cash generated for 110 145 269 304 429 126
the period
Cash used in (212 365) (184 697) (337 654)
financing activities
(Decrease)/Increase (5 808) 7 347 5 021
in borrowings
Interest paid (12 623) (14 670) (31 021)
Dividends paid (193 934) (178 683) (298 962)
Cost of non- - - (14 000)
controlling interest
acquired
Shares issued - 1 309 1 308
Net movement in cash (102 220) 84 607 91 472
and cash equivalents
Effects of exchange 1 928 1 379 6 938
rate changes
Reclassification to (12 839) - -
assets held for sale
Cash and cash 69 416 (28 994) (28 994)
equivalent balances
at beginning of
period
Cash and cash (43 715) 56 992 69 416
equivalent balances
at end of period
(note 6)
Condensed group statement of changes in equity
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2012 31 March 2011 30 Sept 2011
R`000 R`000 R`000
Balance beginning of 1 585 632 1 446 197 1 446 197
period
Total comprehensive 195 586 245 014 448 817
income for period
Dividends to the (192 205) (178 825) (294 909)
company`s
shareholders
Payments to non- (1 869) - (4 571)
controlling interest
holders
Option value of share 860 1 648 2 790
options granted
Shares issued from - 1 309 1 308
share options
exercised
Cost of non- - 590 (14 000)
controlling interest
acquired
Balance at end of 1 588 004 1 515 933 1 585 632
period
Condensed group segmental analysis
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2012 31 March 2011 Change 30 Sept 2011
R`000 R`000 % R`000
Revenue
Poultry
- South Africa and 3 101 529 2 771 716 12 5 599 160
Swaziland
Feed 2 588 888 2 052 909 26 4 210 296
- South Africa 2 468 605 1 956 925 26 4 004 451
- Other Africa 120 283 95 984 25 205 845
Services and ventures 155 127 132 236 17 275 902
Inter-group (960 256) (742 163) (1 479 454)
- Feed to Poultry (912 160) (703 573) (1 395 071)
- Services and (48 096) (38 590) (84 383)
ventures to Poultry
and Feed
4 885 288 4 214 698 16 8 605 904
Operating profit
Poultry
- South Africa and 144 188 228 904 (37) 353 193
Swaziland
Feed 166 261 133 048 25 282 329
- South Africa 151 069 120 603 25 257 536
- Other Africa 15 192 12 445 22 24 793
Services and ventures 13 092 13 403 (2) 39 397
323 541 375 355 (14) 674 919
Additional information
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2012 31 March 2011 Change 30 Sept 2011
R`000 R`000 % R`000
Headline earnings 198 739 241 886 (18) 436 697
(R`000) (note 5)
Headline earnings per
share (cents)
- basic 522 636 (18) 1 148
- diluted 521 635 (18) 1 145
Dividends per share 336 305 10 810
(cents)
Number of ordinary
shares
- Issued net of 38 060 308 38 060 308 38 060 308
treasury shares
- Weighted-average 38 060 308 38 050 557 38 055 446
- Diluted weighted- 38 111 641 38 096 186 38 124 355
average
Net debt (borrowings 66 196 50 334 39 522
less cash and cash
equivalents) (R`000)
Net asset value per 41,42 39,18 6 41,36
share (Rand)
Notes
1. Nature of business
Astral is a leading South African integrated poultry producer. Key activities
consist of: 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 as well as animal feed
pre-mixes and the manufacturing of animal feeds.
2. Basis of preparation
The condensed interim financial statements for the six months ended 31 March
2012 have been prepared in accordance with International Reporting Standards
("IFRS"), IAS 34 - Interim Financial Reporting, the Listings Requirements of
the JSE Limited and the South African Companies Act (2008). These condensed
interim financial statements have been prepared by the financial director, DD
Ferreira, CA(SA).
These financial statements have not been reviewed or audited by the group`s
auditors.
3. Accounting policies
The accounting policies applied in this 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
2011.
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2012 31 March 2011 30 Sept 2011
R`000 R`000 R`000
4. Operating profit
The following items have been
accounted for in the
operating profit:
Biological assets - fair 1 673 410 2 620
value gain
Amortisation of intangible 1 208 1 403 2 679
assets
Depreciation on property, 59 380 56 799 115 251
plant and equipment
Profit/(Loss) on disposal of 703 31 (6 338)
property, plant and equipment
Foreign exchange (830) 187 1 214
(loss)/profit
Provision for Competition 17 000 - -
Commission settlement
5. Reconciliation to headline
earnings
Earnings for period 199 245 240 103 429 217
(Profit)/Loss on sale of (506) (22) 4 392
property, plant and equipment
- net of tax
Loss on disposal of - 1 805 1 805
investment held for sale
Loss on assets scrapped - net - - 132
of tax
Impairment of assets - net of - - 1 151
tax
Headline earnings for period 198 739 241 886 436 697
6. Cash and cash equivalents
per cash flow statement
Bank overdrafts - included in (128 711) (122 365) (112 449)
current borrowings
Cash at bank and in hand 84 996 179 357 181 865
Cash and cash equivalents per (43 715) 56 992 69 416
cash flow statement
7. Capital commitments
Capital expenditure approved 340 306 131 739 142 769
not contracted
Capital expenditure 33 662 24 909 27,542
contracted not recognised in
financial statements
8. Disposal group classified as held for sale
The assets and liabilities of East Balt, a 50% owned joint venture disclosed
as part of the Services and Ventures segment, have been presented as held for
sale following a decision to divest from the business.
Financial overview
Headline earnings for the period decreased by 18% to R199 million from R242
million for the same period last year mainly as result of increases in feed
and other input costs not all recovered in selling price increases.
Revenue increased by 16% from R4 215 million to R4 885 million due to
increased volumes and higher sales realisations from all the business
segments.
Operating profit at R324 million was 14% down on the profit for the same
period last year. The high increase in feed costs experienced during the past
six months impact negatively on the Poultry division`s profit margins,
resulting in a 37% decline in operating profit. Poultry`s operating profit
also includes a provision of R17 million in respect of a proposed settlement
of anti-competitive and alleged anti-competitive conduct by Astral. The Feed
division on the other hand maintained its profit margin and reported a 25%
increase in profits, in line with the higher revenue realised. The Other
Africa operations reported increased profits and the Service and Ventures`
profits were the same as the previous year.
Net finance costs at R8 million were marginally down on the previous year`s R9
million.
Earnings per share decreased by 17% from 631 cents to 523 cents, and headline
earnings per share decreased by 18% from 636 cents to 522 cents.
Negative cash flow for the period, partly as result of the increase in working
capital, resulted in a negative cash and cash equivalent balance of R44
million, compared to the surplus of R69 million at 30 September 2011. The net
debt level of R66 million (30 September 2011: R39 million) excludes R80
million in respect of East Balt`s borrowings which is now disclosed as part of
liabilities held for sale. The net debt to equity ratio remained low at 4% (30
September 2011: 3%).
The board has declared an interim dividend of 336 cents per share (2011: 305
cents per share). The dividend includes 31 cents per share to partially
compensate for the portion of newly introduced Dividend Tax, which replaced
the Secondary Tax on Companies (STC) previously part of the group`s tax
charge.
Operational overview
Poultry division
Revenue for the division was up by 12% to R3 102 million (30 September 2011:
R2 772 million) on the back of higher volumes (up 5%) and pricing levels
improving by 7%.
The higher volumes were as a result of an increase in the number of broilers
placed and reared during the period under review.
An increase in feed costs for the period (up 23%) impacted negatively on
margins for the division which reflected a decrease to 4,7% (30 September
2011: 8,3%) with operating profit decreasing by 37% to R144 million (30
September 2011: R229 million).
Poultry imports, primarily from Europe and Brazil, continued to climb to
record levels resulting in pricing pressure on locally produced poultry which,
in turn, led to a significant increase in promotional activity during the
second quarter in order to manage higher stock levels. The above resulted in
the inability to recover significant increases in feed and other input costs,
such as energy in the selling price of chicken, leading to substantial margin
pressure in the Poultry division.
Feed division
Revenue for the division increased by 26% to R2 589 million (30 September
2011: R2 053 million) as a result of higher feed prices on the back of higher
maize and soya pricing levels, and higher sales volumes (up 3%) derived mainly
from an increase in the inter-group requirement for poultry feed.
The operating profit increased by 25% to R166 million (30 September 2011: R133
million) with a stable margin at 6,4% (30 September 2011: 6,5%). The increase
in the operating profit was mainly due to an increase in the net Rand per ton
margins on feed.
The division`s other Africa operations reported a healthy 22% increase in
operating profit.
Services and Joint Ventures
Revenue for the division increased by 17% to R155 million ((30 September 2011:
R132 million) whilst operating profit decreased marginally to R13 million ((30
September 2011: R13,4 million).
Competition Commission
The group`s financial results were impacted by a provision of R17 million in
respect of a proposed settlement with the Competition Commission on various
open matters. The proposed penalty remains to be settled with the Competition
Commission and then reviewed by the Competition Tribunal.
Prospects
The business environment for the next reporting period is not expected to
improve from prevailing conditions. Maize and soya pricing as key cost drivers
in feed and poultry will remain at high levels with limited ability to recover
the increased production costs from a depressed poultry market exacerbated by
record levels of poultry imports.
Declaration of Ordinary Dividend No. 23
The board has approved and declared an interim dividend of 336 cents per
ordinary share (gross) in respect of the six months ended 31 March 2012.
The dividend will be subject to the new Dividends Tax that was introduced with
effect from 1 April 2012. In accordance with paragraphs 11.17 (a) (i) to (x)
and 11.17(c) of the JSE Listings Requirements the following additional
information is disclosed:
The dividend has been declared out of income reserves;
The local Dividends Tax rate is 15% (fifteen per centum);
There are no Secondary Tax on Companies (STC) credits utilised;
The gross local dividend amount is 336 cents per ordinary share for
shareholders exempt from the Dividends Tax;
The net local dividend amount is 285.6 cents per ordinary share for
shareholders liable to pay the Dividends Tax;
Astral Foods has currently 42 148 885 ordinary shares in issue (which
includes 4 088 577 treasury shares); and
Astral Foods Ltd`s income tax reference number is 9125190711.
Shareholders are advised of the following dates in respect of the interim
dividend:
Last date to trade cum dividend Friday, 8 June 2012
Shares commence trading ex dividend Monday, 11 June 2012
Record date Friday, 15 June 2012
Payment of dividend Monday, 18 June 2012
Share certificates may not be dematerialised or rematerialised between Monday,
11 June 2012 and Friday, 15 June 2012, both days inclusive.
On behalf of the board
JJ Geldenhuys CE Schutte
Chairman Chief Executive Officer
Pretoria
14 May 2012
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)
*GD Arnold
*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 Limited
1 Fricker Road, Illovo, Johannesburg, 2196
Telephone: +27 (0) 11 507-0430
Date: 14/05/2012 07:15:06 Produced by the JSE SENS Department.
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