| Tue 20 Nov 2001, 0:00 | | National Chick Limited- Group Results For The Year |
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(Company registration number 1980/008743/06)
(Incorporated in the Republic of South Africa)
Share Code: NCX ISIN number: ZAE000010591
Group results for the year ended 30 September 2001
- Turnover up 28%
- EBIT up 35%
- Headline earnings up 35%
The audited results of the group for the year ended 30 September 2001
are set out below:
GROUP INCOME STATEMENT
2001 Change 2000
R000's % R000's
Revenue 273 846 28 213 343
Operating profit before
finance charges 26 672 35 19 716
Finance charges 7 697 7 078
Operating profit before
exceptional items 18 975 12 638
Exceptional item 3 314 -
Profit before taxation 15 661 24 12 638
Taxation 6 870 3 662
Profit after taxation 8 791 8 976
Profit attributable to
minority interests 1 478 586
Profit attributable to
shareholders 7 313 (13) 8 390
Number of ordinary shares
in issue (000's) 31 660 31 660
Basic earnings per share (cents) 23,1 (13) 26,5
Headline earnings per share (cents) 34,2 35 25,3
Determination of headline earnings
Profit attributable to
shareholders of the company 7 313 8 390
Adjusted for:
Exceptional item 3 314 -
(Profit)/Loss on disposal of
property, plant and equipment 185 (386)
Headline earnings for the year 10 812 35 8 004
ABRIDGED GROUP BALANCE SHEET
2001 2000
R000's R000's
Assets
Non-current assets 110 937 113 376
Current assets 94 413 72 345
Inventory 48 463 42 458
Accounts receivable 33 663 24 025
Cash on hand 12 287 5 862
Total assets 205 350 185 721
Equity and liabilities
Ordinary shareholders' funds 72 767 65 110
Minority interests 8 401 6 585
Shareholders' equity 81 168 71 695
Interest bearing long-term liabilities 36 455 43 726
Deferred taxation 16 512 16 017
Retirement benefit obligation 3 523 3 322
Current liabilities 67 692 50 961
Non-interest bearing 51 988 32 972
Interest bearing 15 704 17 989
Total equities and liabilities 205 350 185 721
Debt to equity (%) 49,1 77,9
Net asset value per share (cents) 230 206
STATEMENT OF CHANGES IN EQUITY
Non-
Share Share distributable Distributable
(R000's) capital premium reserves reserves Total
Balance at
30 September
1999 8 29 349 1 498 32 750 63 605
Prior year
adjustment - - - (1 286) (1 286)
Balance at 30
September 1999
restated 8 29 349 1 498 31 464 62 319
Currency translation
differences - - 38 - 38
Attributable income
for the period - - - 8 390 8 390
Write off of
intangible - (5 637) - - (5 637)
Balance at 30
September 2000 8 23 712 1 536 39 854 65 110
Currency translation
differences - - 344 - 344
Attributable income
for the period - - - 7 313 7 313
Balance at 30
September 2001 8 23 712 1 880 47 167 72 767
ABRIDGED GROUP CASH FLOW STATEMENT
2001 2000
R000's R000's
Cash flows from operating activities
Net profit before taxation 15 661 12 638
Non-cash adjustments 8 106 6 267
Working capital changes 1 968 (6 521)
Cash generated from operations 25 735 12 384
Dividends paid - (4 432)
Normal tax paid (4 943) (1 132)
Net cash inflow from operating activities 20 792 6 820
Cash flows from investing activities
Acquisition of investments
Purchase of property, plant,
equipment and investments (7 006) (30 630)
Proceeds on disposal of property,
plant, equipment and investments 1 657 543
Net cash outflows from investing activities (5 349) (30 087)
Net movement on borrowings (8 256) 32 678
Net cash inflow from financing activities (8 256) 32 678
Net increase in cash
and cash equivalents 7 187 9 411
Cash and cash equivalents at
beginning of the year 1 002 (8 409)
Cash and cash equivalents at end of the year 8 189 1 002
SEGMENTAL REPORT
2001 2000
R000's R000's
Revenue
Genetics 217 734 198 232
Animal Health 24 455 14 946
Nutrition 31 657 165
273 846 213 343
Attributable income
Genetics* 6 474 8 764
Animal Health 877 407
Nutrition (38) (781)
7 313 8 390
*Incorporates exceptional item.
COMMENTS
REVIEW OF OPERATIONS
Earnings
Improved trading conditions in the South African poultry industry had a
positive effect on group results during the year under review.
Revenue increased by 28% from R213 million to R274 million due mainly to the
contribution made by Nutrex, the newly formed milling division. Income
before interest, tax and depreciation stands at a record R34,6 million, as
does the pre-tax income of R19 million. This figure is some 50% higher than
the previous year. The combination of a high tax charge (R6,9 million) and
the provision for the non-recovery of an intercompany loan (R3,3 million)
reduced attributable income, after minority shareholders (R1,5 million) to
R7,3 million. Headline earnings increased from R8,0 million in 2000 to
R10,8 million in 2001, an increase of 35%.
Exceptional item
A provision has been made for a loan advanced to a subsidiary which may not
be recoverable, due to that company's poor trading results and resultant
poor liquidity.
DIVISIONAL REVIEW OF OPERATIONS
Broiler Chick Division
It is pleasing to report that all hatcheries operated close to full capacity
during the past year. The South African breeder operations performed at
budgeted levels of production and contained costs to less than inflation.
External operations, particularly the hatcheries in Botswana and Swaziland,
made a significant contribution to divisional profits. Distribution of
hatching eggs into regions not served by our own hatcheries has proved
successful and offers enormous potential for the future. The contribution
from Elite Breeding Farms continues to add value to this division.
Layer Chick Division
Despite maintaining market share of around 50%, Hyline Chicks (Pty) Limited
has struggled to convert its dominance into profitability. Market conditions
have restricted the ability to improve selling prices and whilst there are
indications that new production facilities are improving efficiencies, the
rate of progress has proved insufficient to keep this operation out of the
red. Whilst success is slow in coming, indications of a turnaround give
confidence that Hyline will succeed.
Animal Health Division
This operation has seen substantial growth during the past year. Increased
business in the export market has pushed revenue in excess of R30 million
and contribution to group profits is significant. Access to high quality
products backed by a professional marketing team has given National
Veterinary Supplies (Pty) Limited the success it deserves.
Nutrition Division
The entry by Nutrex into the animal feed milling industry has been received
with enthusiasm by the farming community of the Natal Midlands. Support
from all sectors of livestock producers has enabled this new mill to achieve
levels of production in keeping with director's forecasts. The concept of a
mill that is free from animal bi-products has met with the approval of
producers and retailers alike. This coupled with its culture of quality and
service, gives Nutrex KZN a bright future.
FINANCIAL POSITION
After the expansion undertaken in the 2000 financial year, this year was one
of consolidation. Improved margins through production efficiencies and
better trading conditions in the broiler division, coupled with the
continued development of the overseas market by the animal health division,
have helped to return the group to former levels of profitability. The start-
up costs incurred in the nutrition division during 2000 were not experienced
this year, with inefficiencies on lower than capacity production affecting
only the first quarter.
Capital expenditure
Capital expenditure was limited to R7 million (2000: R30,6 million) within
the depreciation cost for the year. Looking ahead, replacement of fixed
assets will form the bulk of expenditure in the 2002 financial year, with
most expansion now complete for the time being.
Working capital
Considering the increased revenue, the group has done well to achieve a net
inflow of capital. This is particularly pleasing in light of the growth of
the nutrition division, where raw materials are to a large extent paid for
in advance.
Debt to equity
Through improved profitability and low capital expenditure, the group has
managed to reduce its debt to equity ratio to 49,1% (from 77,9% in 2000) at
the end of the financial year.
Taxation
The average rate of taxation was considerably higher than in previous years
due to the exceptional item and the reduced expansion. Special farming tax
allowances have in the past reduced the tax rate, but have not been
available in this financial year.
PROSPECTS
Despite increasing production costs - particularly maize and other proteins
- due mainly to the decline of the Rand, the demand for chicken meat remains
firm. The prospects therefore for the independent broiler industry to remain
profitable look reasonably good and the National Chick Group can look
forward to the coming year with optimism.
DIVIDEND
In terms of the scheme of arrangement involving Astral Foods Limited, in the
event that the acquisition is successful, a dividend of 10 cents per share
will be declared. The relevant dates to register will be announced at a
later date.
SCHEME OF ARRANGEMENT WITH ASTRAL FOODS LIMITED
As announced in the press, on 5 October 2001, the shareholders of the
company voted overwhelmingly in favour of the scheme of arrangement to sell
their shares to Astral Foods Limited. The only remaining condition precedent
is the approval of the Competition Commission, and their decision is
expected on or before 7 December 2001. Shareholders will be notified of the
outcome.
By order of the board
M Walne JRM Bowmaker
Executive Chairman Company Secretary
21 November 2001
Registered office: Deverton Estates, District Road D234, Umlaas Road,
KwaZulu-Natal (PO Box 105, Umlaas Road 3730)
Company details: Registration number 1980/008743/06; Telephone: (+27 31) 785-
1383 Telefax: (+27 31) 785-1397; E-mail: natchix@iafrica.com;
Website: www.natchix.co.za
Transfer secretaries: Computershare Services Limited, 2nd Floor, Edura,
41 Fox Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107, RSA)
Directorate: Executive: M Walne* (Executive Chairman), GA Cawood CA(SA),
JB Edmondson*, JH Gray, JAS Pembridge, HG Syme *British
Non-executive: MA Kingston, T Pritchard CA(SA)
Company Secretary: JRM Bowmaker CA(SA)
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