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ARL - Astral Foods - Unaudited interim results and dividend declaration
for the six months ended 31 March 2008
Astral Foods
Incorporated in the Republic of South Africa
Registration no 1978/003194/06
Share code ARL ISIN ZAE000029757
UNAUDITED INTERIM RESULTS AND DIVIDEND DECLARATION
for the six months ended 31 March 2008
Highlights
* Revenue increased by 29%
* Operating profit decreased by 11%
* Earnings per share decreased by 11%
* Interim dividend unchanged at 260 cents per share
Condensed Income Statement
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 31 March 30 Sept
2008 2007 Change 2007
R`000 R`000 % R`000
Revenue 3 769 363 2 928 191 29 6 329 311
Operating profit 407 582 456 160 (11) 808 238
(note 3)
Net finance (17 535) 2 979 (1 591)
(costs)/income
Profit before income tax 390 047 459 139 (15) 806 647
Income tax expense for (123 349) (153 183) (261 089)
the period
Profit for the period 266 698 305 956 (13) 545 558
Attributable to:
Equity holders of the 263 044 302 004 (13) 537 858
parent company
Minority interests 3 654 3 952 (8) 7 700
Profit for the period 266 698 305 956 (13) 545 558
Earnings per share
(cents)
- basic 688 777 (11) 1 387
- diluted 687 774 (11) 1 385
Additional information
Headline earnings 262 689 301 697 (13) 535 521
(R`000) (note 4)
Headline earnings per
share (cents)
- basic 687 776 (11) 1 381
- diluted 686 773 (11) 1 379
Dividend per share
(cents)
- declared out of 260 260 700
earnings for the period
Ordinary shares
- Issued net of 38 027 508 38 605 692 38 459 792
treasury shares
- Weighted-average 38 229 800 38 892 132 38 789 127
- Diluted weighted- 38 282 369 39 012 658 38 825 141
average
Net asset value per 34,76 30,76 13 33,47
share (Rand)
Condensed Balance Sheet
Assets
Non-current assets 1 507 326 1 289 032 1 416 775
Property, plant and 1 352 573 1 148 468 1 254 028
equipment
Intangible assets 137 432 139 969 139 266
Investments and loans 2 873 595 2 873
Derivative financial 9 102 - 15 549
assets
Deferred income tax 5 346 - 5 059
assets
Current assets 1 394 031 1 063 516 1 449 933
Inventories 262 116 222 516 249 368
Biological assets 312 780 263 079 282 308
Trade and other 683 742 499 367 772 490
receivables
Current income tax 28 091 - 22 318
asset
Derivative financial 9 966 - 16 555
assets
Cash and cash 97 336 78 554 106 894
equivalents
Total assets 2 901 357 2 352 548 2 866 708
Equity and liabilities
Capital and reserves
attributable
to equity holders of
the
parent company 1 321 999 1 187 341 1 287 063
Issued capital 421 19 701 6 184
Reserves 1 321 578 1 167 640 1 280 879
Minority interests 21 765 22 624 20 450
Total equity 1 343 764 1 209 965 1 307 513
Non-current liabilities 350 716 262 017 329 967
Borrowings 6 209 9 613 6 228
Net deferred income 276 948 182 531 256 326
tax liability
Retirement benefit 67 559 69 873 67 413
obligations
Current liabilities 1 206 877 880 566 1 229 228
Trade and other 725 279 676 559 955 162
liabilities
Current income tax 20 644 39 221 14 651
liabilities
Borrowings 460 954 164 786 259 415
Total liabilities 1 557 593 1 142 583 1 559 195
Total equity and 2 901 357 2 352 548 2 866 708
liabilities
Net debt (369 827) (95 845) (158 749)
Condensed Cash Flow Statement
Cash operating profit 453 886 508 249 913 454
Changes in working (174 365) (182 377) (221 711)
capital
Cash generated from 279 521 325 872 691 743
operations
Net finance (17 535) 2 979 (1 591)
(costs)/income
Income tax paid (104 854) (155 062) (243 790)
Cash generated from 157 132 173 789 446 362
operating activities
Cash used in investing (132 496) (159 404) (358 266)
activities
Cash generated for the 24 636 14 385 88 096
period
Cash flows from (229 266) (214 887) (361 822)
financing activities
Proceeds from issue of 137 3 764 4 736
shares
Buy-back of shares (59 143) (77 774) (114 871)
Dividends paid (170 227) (140 748) (249 107)
- to the company`s (167 888) (140 088) (240 818)
shareholders
- to minority (2 339) (660) (8 289)
interests
Decrease in borrowings (33) (129) (2 580)
Net decrease in cash and (204 630) (200 502) (273 726)
cash equivalents
Effects of exchange (6 481) (2 788) (1 912)
rate changes
Cash and cash - - 5 974
equivalents from
acquisition of
subsidiary
Cash and cash (150 041) 119 623 119 623
equivalent balances at
beginning of year
Cash and cash equivalent (361 152) (83 667) (150 041)
balances at end of
period
Segment Information
Revenue
Animal Nutrition 2 193 819 1 628 558 35 3 530 610
- South Africa 2 058 723 1 542 293 33 3 347 738
- Other Africa 135 096 86 265 57 182 872
Poultry 2 562 308 1 999 325 28 4 382 651
Inter group (986 764) (699 692) (1 583 950)
3 769 363 2 928 191 29 6 329 311
Operating profit
Animal Nutrition 224 498 176 685 27 332 707
- South Africa 201 583 160 401 26 294 752
- Other Africa 22 915 16 284 41 37 955
Poultry 183 084 279 475 (34) 475 531
407 582 456 160 (11) 808 238
Condensed Statement of Changes in Equity
Balance beginning of 1 307 513 1 120 954 1 120 954
year
Profit for the period 266 698 305 956 545 558
Movement in currency (4 053) (2 201) (1 633)
translation difference
during the period
Dividends declared (170 320) (140 734) (249 141)
during the period
Decrease in equity as (59 143) (77 774) (114 871)
result of buy-back of
shares
Shares issued 137 3 764 4 736
Option value of share 2 932 - 503
options granted
Minority interest in - - 1 407
subsidiary acquired
Balance at end of period 1 343 764 1 209 965 1 307 513
Notes
1. Basis of preparation
This condensed interim financial statements for the six months ended 31 March
2008 have been prepared in accordance with IAS 34 - Interim Financial Reporting,
and the Listing Requirements of the JSE Limited.
These financial statements have not been reviewed or audited by the Group`s
auditors.
2. Accounting policies
The accounting policies applied in these interim financial statements comply
with IFRS and are consistent with those applied in the preparation of the
Group`s annual financial statements for the year ended 30 September 2007, except
for the adoption of IFRS 7 which has no effect on the results but will result in
additional disclosure in the annual financial statements at year end. Write-off
periods for certain assets were re-assessed in terms of IFRS.
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 31 March 30 Sept
2008 2007 2007
R`000 R`000 R`000
3. Operating profit
The following items have
been accounted for in
the operating profit:
Biological assets - fair 1 203 1 882 2 557
value gain
Amortisation of 2 282 1 876 4 475
intangible assets
Depreciation on 38 599 48 644 101 618
property, plant and
equipment
Profit on disposal of 564 436 746
property, plant and
equipment
Foreign exchange loss 1 223 462 83
4. Reconciliation to headline earnings
Earnings for the period 263 044 302 004 537 858
Profit on sale of (355) (307) (503)
property, plant and
equipment
Investment previously - - (714)
written off now reversed
Excess fair value over - - (1 120)
cost of investment in
business
Headline earnings for 262 689 301 697 535 521
the period
5. Share capital
In terms of the share buy-back programme 450 000 shares (2007: 736 886 shares)
were acquired during the period under review at a total cost of R59 143 000
(2007: R77 774 000).
In terms of the Group`s share incentive scheme, 17 716 shares (2007: 393 000)
were issued in respect of share options exercised during the period under
review.
6. Interest capitalised
Interest of R5 457 000 (2007: R5 358 000) was capitalised in respect of
expenditure on capital projects not yet brought into operation.
7. Capital commitments
Capital expenditure 109 572 92 567 72 782
approved not contracted
Capital expenditure
contracted not
recognised in 61 136 114 429 83 893
financial statements
8. Litigation
The Group has been advised that the claim by Paarl Poultry CC enjoys poor
prospects of success.
Financial Overview
Revenue for the period increased by 29% to R3,8 billion (2007: R2,9 billion) but
as increased input costs could only be partially recovered, operating margins
for the Group dropped to 10,8%.
Operating profit decreased by 11% to R408 million (2007: R456 million). The
Animal Nutrition division reported a 27% growth in operating profit but profits
in the Poultry division were 34% down on the previous period. Earnings per share
decreased by 11% from 777 cents to 688 cents per share.
Interest paid of R17,5 million compares with the prior year`s interest received
of R3,0 million.
The effective tax rate (inclusive of STC) of 31,5% was down on last year`s 33,3%
mainly as a result of the 1% reduction in the statutory tax rate.
The net cash generated from operating activities was 10% down on the previous
period mainly due to the lower profitability. Net debt at the end of the period
increased to R369 million resulting in a net gearing of 27%. As the planned
capital expansion nears completion the gearing of the Group should improve.
Operational Overview
Animal Nutrition Division
Raw material prices increased significantly over the period and as a result
Animal Nutrition reported strong growth in revenue to R2,2 billion (2007: R1,6
billion), 35% up on the prior period. Volumes over the period increased by 6%.
Operating profit of R225 million was 27% up on the previous period but margins
came under pressure and reduced from 10,8% to 10,2%. Operating costs were well
contained. The operations outside South Africa increased operating profits by
41%.
Working capital for the division was negatively affected by a decision to import
strategic stocks.
Poultry Division
Poultry profits and margins were under severe pressure mainly due to a slowdown
in consumer spend and the substantial increase in feed prices which could not be
recovered in the market. Feed prices increased on average by 27% whilst selling
prices increased by 9%. Volumes were 19% higher than the previous period due to
the successful completion of the Earlybird expansion project.
Revenue increased by 28% from R1,99 billion to R2,56 billion. With only a 9%
increase in selling prices and substantial costs to be absorbed, operating
profit decreased 34% to R183 million (2007: R279 million).
The electricity disruptions negatively affected farming performance, abattoir
efficiencies and a substantial amount of overtime had to be worked to maintain
production. Abnormal high wastage of fresh and frozen products was also
experienced. Due to the electricity disruptions the benefits of the capital
project to improve product mix and flexibility did not realise as forecast.
Prospects
The weaker rand exchange rate has led to lower imports which supports poultry
prices. South Africa is expecting a good maize harvest in 2008 and this should
lead to more stable maize prices. Although the international price of poultry is
expected to increase the slowdown in consumer spending and the higher costs will
have a negative impact on earnings for the year.
Declaration of Ordinary Dividend No. 15
Notice is hereby given that dividend no.15 of 260 cents per ordinary share has
been declared in respect of the six months ended 31 March 2008.
Last date to trade cum dividend Thursday, 12 June 2008
Shares commence trading ex dividend Friday, 13 June 2008
Record date Friday, 20 June 2008
Payment of dividend Monday, 23 June 2008
Share certificates may not be dematerialised or rematerialised between Friday,
13 June 2008 and Friday, 20 June 2008, both days inclusive.
On behalf of the board
J J Geldenhuys N C Wentzel
Chairman Chief Executive Officer
Pretoria
20 May 2008
Sponsor: J.P.Morgan Equities Limited
Registered office
Block 9, The Boardwalk Office Park
107 Haymeadow Crescent, Faerie Glen, Pretoria, 0043
Postnet 329, Private Bag X10, Elarduspark, 0048
Telephone: (012) 990-8260
Website address:
www.astralfoods.com
Directors
J J Geldenhuys (Chairman)
*N C Wentzel (Chief Executive Officer)
*M A Kingston, *C E Schutte, C G van Veyeren,
M Macdonald, T C C Mampane, Dr T Eloff, Dr. N Tsengwa
(*Executive director)
Company Secretary:
M Eloff
Transfer secretaries
Computershare Investor Services (Pty) Limited
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: 20/05/2008 07:05:47 Supplied by www.sharenet.co.za
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