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Astral - Audited results for the year ended 30 September 2005 ASTRAL FOODS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1978/003194/06) Share code: ARL & ISIN: ZAE000029757 ("the Group") * Operating profit up 47% to R572 million * Headline earnings per share up 45% to 918 cents * Annual dividend up 65% to 380 cents * Cash generated up 100% to R829 million AUDITED RESULTS for the year ended 30 September 2005 Consolidated Income Statement Audited Audited Year ended Year ended
30 Sept 2005 30 Sept 2004 Change R"000 R"000 % Revenue 4 602 391 4 053 142 14 Operating profit (note 4) 572 000 388 979 47 Net interest (paid)/received (11 360) 1 339 Profit before tax 560 640 390 318 44 Tax (162 872) (126 070) Net profit for year 397 768 264 248 51 Minority interests (2 865) (1 845) Attributable profit to ordinary shareholders 394 903 262 403 50 Earnings per share (cents) 952 630 51 Headline earnings per share (cents) 918 631 45 Diluted earnings per share (cents) 926 603 53 Diluted headline earnings per share (cents) 893 605 48 Dividends per share (cents) - declared out of the earnings for year 380 230 65 Net asset value per share (Rand) 22.33 17.36 29 Shares in issue - net of treasury shares (note 6) 40 569 574 41 654 032 Weighted average shares in issue - net of treasury shares 41 482 050 41 640 015 Consolidated Balance Sheet ASSETS Non-current assets 889 032 823 653 Property, plant and equipment 744 905 678 736 Goodwill 123 548 117 033 Intangible assets 17 434 11 053 Loans 2 282 6 715 Deferred tax 863 10 116 Current assets 913 452 1 014 424 Inventories 155 109 199 592 Biological assets 195 398 202 778 Receivables and pre-payments 497 827 568 016 Cash and cash equivalents 65 118 44 038 Total assets 1 802 484 1 838 077 EQUITY AND LIABILITIES Capital and reserves 915 371 764 828 Issued capital 253 765 258 590 Reserves 652 327 496 363 Ordinary shareholders" interest 906 092 754 953 Minority interests 9 279 9 875 Non-current liabilities 184 142 207 181 Long-term liabilities 1 759 2 748 Deferred tax 120 959 142 965 Post-retirement medical aid obligations 61 424 61 468 Current liabilities 702 971 866 068 Trade and other payables 641 782 590 022 Provision for tax 58 965 77 232 Short-term borrowings 2 224 198 814 Total equity and liabilities 1 802 484 1 838 077 Net cash/(Interest bearing borrowings) 61 135 (157 524) Consolidated Cash Flow Statement Cash operating profit 657 653 470 664 Working capital changes 170 948 (57 041) Cash generated from operations 828 601 413 623 Net interest (paid)/received (11 360) 1 339 Tax paid (196 055) (105 137) Dividends paid (115 470) (79 539) Cash inflow from operating activities 505 716 230 286 Net cash outflow to investing activities (154 600) (406 817) Net cash inflow for year 351 116 (176 531) Net cash (outflow)/inflow from financing activities (330 090) 155 362 Net increase/(decrease) in cash and cash equivalents 21 026 (21 169) Effects of exchange rate changes 54 (2 873) Cash and cash equivalent balances at beginning of year 44 038 68 080 Cash and cash equivalent balances at end of year 65 118 44 038 Statement of Changes in Equity Balance beginning of year 764 828 614 695 Profit for year 397 768 264 248 Movement in currency translation difference during year 804 (3 348) Dividends paid for year (115 563) (79 591) Shares issued 8 209 4 923 Decrease in share capital as result of buy-in of shares (140 675) (36 099) Balance end of year 915 371 764 828 Segmental Reporting Rm Rm Revenue Animal Nutrition 2 516.3 2 703.2 Poultry 3 345.2 2 284.7 Inter-Group (1 259.1) (934.8) 4 602.4 4 053.1 Operating profit Animal Nutrition 204.7 151.4 Poultry 367.3 237.6 572.0 389.0 Notes 1. Audit review PricewaterhouseCoopers Inc. has audited the comprehensive financial statements from which the summarised results were derived as well as the summarised announcement of annual results contained herein. The unqualified audit reports on the comprehensive financial statements and the summarised financial results are available for inspection at the Group"s registered office. 2. Accounting policies The financial statements of the Group are prepared in accordance with and comply with South African Statements of Generally Accepted Accounting Practice. The financial statements are prepared under the historical cost convention, as modified by the restatement of certain financial instruments and biological assets to fair value. The accounting policies of the Group are consistent in all material respects with those applied in the previous financial year, except for goodwill which is no longer amortised and is now reviewed annually for impairment. The effect of the accounting treatment of escalations in operating leases on a straight-line basis over the lease periods was immaterial. R"000 R"000 3. Commitments Capital expenditure commitments 44 814 9 242 Operating lease commitments 128 374 125 747 4. Operating profit The following items have been accounted for in the operating profit: Auditors" remuneration 2 637 2 406 Amortisation of goodwill - 3 405 Depreciation on property, plant and equipment and intangible assets 102 145 71 247 Operating lease payments 30 599 23 499 Directors" remuneration 9 659 8 832 Profit on disposal of property 15 287 - 5. Reconciliation to headline earnings Net profit for year 394 903 262 403 Loss related to sale of business unit 1 039 - Profit on sale of property, plant and equipment (15 020) (137) Amortisation of goodwill - 3 405 Recovery of loans - (2 736) Headline earnings for year 380 922 262 935 6. Share capital In terms of a share buy-back programme 2 105 591 (2004: 1 238 871) shares were acquired by a subsidiary of Astral Foods Limited at a total cost of R141 million (2004: R36 million). In terms of the Group"s share incentive scheme, 1 021 000 (2003: 632 000) options were exercised. 7. Restatement of financial information under International Financial Reporting Standards ("IFRS") The Group will report its financial information for the 2006 financial year in accordance with IFRS. The comparative financial information for 2006 (i.e. the results for the year ended 30 September 2005) will have to be restated in accordance with IFRS,and these restated results are disclosed below for information purposes only, in order to give an indication of the effect of IFRS on the results and balance sheet for the year ended 30 September 2005. Stated in Restated in accordance with accordance
SA GAAP with IFRS Audited Unaudited Year ended Year ended 30 Sept 2005 30 Sept 2005
Consolidated Income Statement R"000 R"000 Revenue 4 602 391 4 613 287 Operating profit 572 000 600 329 Net interest paid (11 360) (11 323) Profit before tax 560 640 589 006 Taxation (162 872) (171 932) Net profit for year 397 768 417 074 Minority interests (2 865) (5 318) Attributable profit to ordinary shareholders 394 903 411 756 Earnings per share (cents) 952 993 Headline earnings per share (cents) 918 959 Consolidated Balance Sheet Assets Non-current assets 889 032 981 976 Current assets 913 452 919 387 Total assets 1 802 484 1 901 363 Equity and Liabilities Capital and reserves 915 371 983 045 Non-current liabilities 184 142 212 891 Current liabilities 702 971 705 427 Total equity and liabilities 1 802 484 1 901 363 Reconciliation of net profit for year Net profit in accordance with SA GAAP 397 768 Reduced depreciation -after tax 19 306 Net profit in accordance with IFRS 417 074 Changes to the IFRS information presented above may be required due to different interpretations of standards as practice develops. Financial overview Good operating performances from both poultry and animal nutrition resulted in headline earnings per share improving by 45% on last year from 631 cents to 918 cents. Revenue for the year increased by 14% to R4.6 billion (2004: R4.1 billion) mainly as a result of the acquisition of the remaining 50% of Earlybird in September 2004. Operating profit for the period increased by 47% to R572 million (2004: R389 million). The current year"s figure includes R15 million profit on the sale of poultry properties due to urban encroachment. Poultry continues to be the main profit contributor with R367 million (64%) whilst Animal Nutrition contributed R205 million (36%). Operating margin for the year at 12.4 % is well up from last year"s 9.6%. Net finance cost of R11.4 million compares with the previous year"s net income of R1.3 million. The effective tax rate of 29.1% is down on the prior year"s rate of 32.3% following the reduction in the statutory rate of 1% as well as reversals of prior year"s over provisions. The balance sheet reflects an increase in net asset value per share of 29% to R22.33 (2004: R17.36). The strong cash generation continued with a net cash inflow of R351 million (2004: outflow of R177 million following the Earlybird acquisition for R262 million). Despite a more aggressive share buy-back (note 6) the group ended the year with surplus cash of R61 million compared to borrowings of R158 million at the end of 2004. Return on equity improved to 48% (2004: 39%). Economic value added improved to R278 million (2004: R134 million). Dividends declared out of profits for the year increased by 65% from 230 cents to 380 cents per share as a result of reducing the dividend cover to 2.4 times compared with last year"s 2.7 times. Operational overview Animal Nutrition Division Following on the high inventory carry over of 3.3 million tonnes of maize from the 2004/2005 marketing season, the estimated crop for the past season of some 12 million tonnes will increase the carry-over stock to 8 months consumption. Record global crops of grains for feed production exacerbate the oversupply situation. Yellow maize prices as a result reduced substantially from R1 015 per ton in October 2004 to R560 per ton in February 2005 although the price subsequently increased by R280 per ton due to weather concerns, speculation about the crop size and the threat of a significant reduction in maize hectares to be planted for the new season. Revenue for the year reduced by 7% to R2.5 billion (2004: R2.7 billion) as a result of 7% lower realisations following the lower raw material prices as well as a 3% volume reduction. The volume reduction is a function of more home mixing following the low maize prices as well as a lower off-take following poultry and pig diseases. Operating profits increased by 36% to R205 million (2004: R151 million) with net margins improving to 8.1% (2004: 5.6%). Strict cost control and operational efficiencies contributed to the improved results. Poultry Division As reported during the interim results, the benefit to the Poultry Division as a result of reduced raw material prices was only felt during the second half of 2005. The market, influenced by record high levels of imports, restricted average realisations to 1% above last year. Sales volumes increased by 45% mainly as a result of the consolidation of the Earlybird operation for a full year, which together with a 7% reduction in the average cost price of feed, resulted in a 54% increase in operating profit to R367 million (2004 : R238 million) and an increase in operating margins to 11% (2004: 10,4%) Poultry supply and demand remained in balance and at no stage did industry stock levels distort the market. Application has been made by the South African Poultry Association for the extension of anti-dumping duties on imported frozen chicken which expires in December this year. Prospects Continued low maize prices, increased disposable income in the hands of consumers and a continued balanced supply and demand for poultry should positively influence the results for the year ahead. Declaration of Ordinary Dividend No. 10 Notice is hereby given that dividend No.10 of 260 cents per ordinary share has been declared in respect of the financial year ended 30 September 2005. Salient dates 2006 Last date to trade cum-dividend Friday, 6 January Shares commence trading ex-dividend Monday, 9 January Record date Friday, 13 January Payment of dividend Monday, 16 January Share certificates may not be dematerialised or rematerialised between Monday, 9 January 2006 and Friday, 13 January 2006, both days inclusive. On behalf of the board J L van den Berg N C Wentzel Chairman Chief Executive Officer Pretoria 17 November 2005 Country Fair Earlybird Farm CAL Labs ROSS NuTec Explicit Nutrition Meadow More than just feed NVS NATIONAL CHICKS TIGER ANIMAL FEEDS More than just feed Registered office Block E, Castle Walk Office Park Erasmuskloof, Pretoria Postnet 329, Private Bag X10, Elarduspark, 0048 Telephone: (012) 347-5077 Website address: www.astralfoods.com Directors J L van den Berg (Chairman), *N C Wentzel (Chief Executive Officer), *T Pritchard (Financial Director) *M A Kingston, *C E Schutte, *C A du Toit, J J Geldenhuys, C G van Veyeren, M Macdonald, T C C Mampane (*Executive director) Company Secretary: M Eloff Transfer secretaries Computershare Investor Services 2004 (Pty) Ltd PO Box 61051 Marshalltown, 2107 Telephone: 011-370-5000 Sponsor JP Morgan Chase Bank NA (Johannesburg Branch) 1 Fricker Road, Illovo Johannesburg 2196 Private Bag X9936 Sandton, 2146 Telephone: (011) 507-0430 Date: 18/11/2005 07:00:41 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
