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CBH - Country Bird Holdings Limited - Interim results for the period ended 31

Release Date: 26/01/2011 16:00
Code(s): CBH
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CBH - Country Bird Holdings Limited - Interim results for the period ended 31 December 2010 Country Bird Holdings Limited (Incorporated in the Republic of South Africa) Registration number: 2005/008505/06' ISIN: ZAE000094835 JSE Share code: CBH ("CBH" or "the group") The people`s choice Interim results for the period ended 31 December 2010 Revenue up 13% Operating profit up 37% HEPS up 73% Cash flows from operating activities R101 million Interim capital distribution of 11,1 cents per share Condensed consolidated statement of comprehensive income 31 December 31 December % 30 June 2010 2009 change 2010 Unaudited Unaudited Audited R`000 R`000 R`000
Revenue 1 415 928 1 257 590 13 2 433 660 Cost of sales (1 232 129) (1 104 988) 12 (2 159 296) Gross profit 183 799 152 602 20 274 364 Other expenses (74 991) (74 850) 0 (157 751) Other gains and losses 3 994 4 646 (14) 5 614 Operating profit 112 802 82 398 37 122 227 Finance income 1 489 2 636 (44) 2 042 Finance costs (22 988) (28 806) (20) (55 452) Share of profit/(loss) of 54 (166) (133) (417) associate Profit before income tax 91 357 56 062 63 68 400 Income tax expense (25 946) (18 188) 43 (21 395) Profit for the year 65 411 37 874 73 47 005 Other comprehensive income Currency translation (20 152) (638) 3 058 (1 769) differences Total comprehensive income 45 259 37 236 22 45 236 for the year Profit attributable to: Owners of the parent 63 097 36 061 75 44 353 Non-controlling interest 2 314 1 813 28 2 652 65 411 37 874 73 47 005 Total comprehensive income attributable to: Owners of the parent 42 945 35 423 21 42 584 Non-controlling interest 2 314 1 813 28 2 652 45 259 37 236 22 45 236 Earnings per share (cents) -'basic 33,57 19,27 74 23,71 -'diluted 32,99 18,98 74 23,31 Additional information to condensed consolidated financial statements Profit for the year 63 097 36 061 75 44 353 attributable to owners of the parent Reversal of non-recurring - 9 926 (100) 12 750 items per note 2 Adjusted profit 63 097 45 987 37 57 103 attributable to owners of the parent Adjusted earnings per share (cents) -'basic 33,57 24,58 37 30,52 -'diluted 32,99 24,20 36 30,01 Ordinary shares (total number of shares) -'Issued net of treasury 188 366 313 187 099 313 187 099 313 shares -'Weighted average number 187 972 476 187 099 313 187 099 313 of ordinary shares -'Diluted number of 191 284 305 190 027 110 190 296 036 ordinary shares Headline earnings per ordinary share (cents) -'basic 33,29 19,22 73 23,64 -'diluted 32,71 18,92 73 23,25 Capital distribution per 11,10 6,41 73 6,41 share - interim (cents) Capital distribution per - - 1,47 share - final (cents) Net asset value per share 227,66 214,82 6 204,62 (cents) Tangible asset value per 177,67 164,23 8 154,17 share (cents) Gearing ratio (net of cash 1,80 1,87 (4) 2,12 and cash equivalents) Condensed consolidated statement of financial position As at As at % As at 31 December 31 December change 30 June 2010 2009 2010 Unaudited Unaudited Audited
R`000 R`000 R`000 ASSETS Non-current assets 526 023 583 329 (10) 541 377 Property, plant and 384 205 377 134 2 397 156 equipment Intangible assets 93 970 94 665 (1) 94 395 Financial assets and other 533 71 695 (99) 384 investments Investment in associates 9 873 8 893 11 9 213 Deferred income tax assets 37 442 30 942 21 40 229 Current assets 855 156 647 087 32 775 075 Inventories 153 455 126 307 21 128 170 Biological assets 147 233 137 533 7 131 266 Trade and other receivables 365 731 297 778 23 384 143 Current income tax 5 453 9 035 (40) 7 696 receivable Cash and cash equivalents 183 284 76 434 140 123 800 Total assets 1 381 179 1 230 416 12 1 316 452 EQUITY Total equity 427 933 401 931 6 382 850 Ordinary shares 1 884 2 021 (7) 1 871 Share premium 798 303 822 700 (3) 795 887 Other reserves (5 322) 18 685 (128) 17 435 Retained earnings 438 174 366 784 19 375 077 Common control deficit (832 110) (832 110) 0 (832 110) Equity attributable to the 400 929 378 080 6 358 160 owners of the parent Non-controlling interest 27 004 23 851 13 24 690 LIABILITIES Non-current liabilities 428 891 434 884 (1) 435 171 Borrowings 337 843 354 303 (5) 345 655 Financial liability through 252 - 100 - profit and loss Deferred income tax 90 796 80 581 13 89 516 liabilities Current liabilities 524 355 393 601 33 498 431 Trade and other payables 347 621 225 091 54 326 257 Current income tax 14 672 703 1 987 1 672 liabilities Borrowings 161 873 167 601 (3) 169 419 Provision for other 189 206 (8) 1 083 liabilities and charges Total liabilities 953 246 828 485 15 933 602 Total equity and liabilities 1 381 179 1 230 416 12 1 316 452 Condensed consolidated statement of cash flows 31 December 31 December 30 June 2010 2009 2010 Unaudited Unaudited Audited
R`000 R`000 R`000 Cash flows from operating activities Net cash generated from operating 101 080 4 816 57 920 activities Cash receipts from customers 1 434 340 1 306 327 2 396 032 Cash paid to suppliers and (1 301 102) (1 268 632) (2 276 981) employees Cash generated from operations 133 238 37 695 119 051 Interest paid (22 988) (28 806) (55 452) Income tax paid (9 170) (4 073) (5 679) Cash flows from investing activities Net cash used in investing (22 177) (31 746) (12 893) activities Purchases of property, plant and (23 553) (40 144) (73 796) equipment Proceeds from sale of property, 642 69 1 162 plant and equipment Purchases of intangible asset - - (41) Realisation of financial assets and - 6 164 59 189 investments Purchases of financial assets and (149) (203) (278) investments Increase in investment in (606) (268) (1 171) associates Interest received 1 489 2 636 2 042 Cash flows from financing activities Net cash used in financing (11 459) (19 366) (50 036) activities Proceeds from the issuance of 1 267 - - ordinary shares Share issue and listing expenses - (29) (29) Proceeds from borrowings 17 099 29 219 57 333 Repayments of borrowings (27 059) (30 744) (76 953) Capital repayments to shareholders (2 766) (17 812) (29 805) Acquisition of BEE share option - - (583) Net increase/(decrease) in cash and 67 444 (46 296) (5 009) cash equivalents Cash and cash equivalents at (14 513) (6 950) (6 951) beginning of period Exchange gains on cash and bank (2 561) 2 635 (2 553) overdrafts Cash and cash equivalents at end of 50 370 (50 611) (14 513) period Condensed consolidated statement of changes in equity Share Share Other Retained
capital premium reserves earnings R`000 R`000 R`000 R`000 Balance at 1 July 2009 1 871 825 721 15 021 330 723 Total comprehensive income - - (638) 36 061 Shares issued to share 150 14 820 - - incentive trust Share issue and listing - (29) - - expenses Acquisition of BEE share - - (568) - option Capital distribution to - (17 812) - - shareholders Employee share scheme - - 4 870 - Balance at 31 December 2009 2 021 822 700 18 685 366 784 Total comprehensive income - - (1 131) 8 293 Treasury shares held by CBH (150) (14 820) - - Share Trust Acquisition of BEE share - - (14) - option Employee share scheme - - (105) - Capital distribution to - (11 993) - - shareholders Balance at 30 June 2010 1 871 795 887 17 435 375 077 Total comprehensive income - - (20 152) 63 097 Shares issued to employees 13 5 182 - - Employee share scheme - - (2 605) - Capital distribution to - (2 766) - - shareholders Balance at 31 December 2010 1 884 798 303 (5 322) 438 174 Condensed consolidated statement of changes in equity (continued) Common Total Non- Total control attribu- con- equity
deficit table to trolling R`000 R`000 owners interest of the R`000 parent
R`000 Balance at 1 July 2009 (832 110) 341 226 22 038 363 264 Total comprehensive income - 35 423 1 813 37 236 Shares issued to share - 14 970 - 14 970 incentive trust Share issue and listing - (29) - (29) expenses Acquisition of BEE share - (568) - (568) option Capital distribution to - (17 812) - (17 812) shareholders Employee share scheme - 4 870 - 4 870 Balance at 31 December 2009 (832 110) 378 080 23 851 401 931 Total comprehensive income - 7 162 839 8 001 Treasury shares held by CBH - (14 970) - (14 970) Share Trust Acquisition of BEE share - (14) - (14) option Employee share scheme - (105) - (105) Capital distribution to - (11 993) - (11 993) shareholders Balance at 30 June 2010 (832 110) 358 160 24 690 382 850 Total comprehensive income - 42 945 2 314 45 259 Shares issued to employees - 5 195 - 5 195 Employee share scheme - (2 605) - (2 605) Capital distribution to - (2 766) - (2 766) shareholders Balance at 31 December 2010 (832 110) 400 929 27 004 427 933 Condensed segment report 31 December 31 December 30 June 2010 2009 2010 Unaudited Unaudited Audited
R`000 R`000 R`000 Revenue Revenue Revenue Poultry 893 417 843 969 1 646 239 - South Africa 826 908 780 252 1 514 098 - Other Africa 73 811 76 325 144 706 Intersegment revenue (7 302) (12 608) (12 565) Animal nutrition 322 639 253 688 493 431 - South Africa 537 599 512 446 927 210 - Other Africa 146 562 119 015 190 551 Intersegment revenue (361 522) (377 773) (624 330) Beef 199 872 159 934 293 990 1 415 928 1 257 590 2 433 660
Condensed segment report (continued) 31 December 31 December 30 June 2010 2009 2010 Unaudited Unaudited Audited
R`000 R`000 R`000 Operating Operating Operating profit profit profit Poultry 82 464 68 313 84 907 - South Africa 73 138 67 552 90 121 - Other Africa 9 326 761 (5 214) Intersegment revenue - - - Animal nutrition 32 473 13 497 38 141 - South Africa 20 966 6 486 27 205 - Other Africa 11 507 7 011 10 936 Intersegment revenue - - - Beef (2 135) 588 (821) 112 802 82 398 122 227 Notes to the condensed consolidated financial statements 1. Basis of preparation The unaudited condensed consolidated interim financial information announcement for the half-year ended 31 December 2010 was prepared in accordance with International Financial Reporting Standards, IAS 34, Interim Financial Reporting and in compliance with the Listing Requirements of the JSE Limited and the South African Companies Act (1973). The accounting policies are consistent with those of the previous financial period and comply with International Financial Reporting Standards (IFRS). These financial statements do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements as at and for the year ended 30 June 2010. These unaudited condensed consolidated interim financial statements were approved by the board of directors on 26 January 2011. 31 December 31 December 30 June 2010 2009 2010 Unaudited Unaudited Audited R`000 R`000 R`000
2. Operating profit The following amounts have been accounted for in the operating profit: Profit/(loss) on sale of - - (4 552) investment Fair value gains/(losses) on - (9 926) (8 198) financial assets at fair value through profit or loss 3. Reconciliation to headline earnings Net profit attributable to the 63 097 36 061 44 353 owners of the parent Adjusted for: Profit on disposal of property, (528) (56) (117) plant and equipment Profit/(loss) on sale of - (45) - investment Adjusted headline earnings 62 569 35 960 44 236 4. Capital expenditure and depreciation Capital expenditure 23 553 40 144 73 796 Depreciation 18 611 16 278 31 131 Amortisation of intangible 241 277 553 assets 5. Capital and other commitments Inventories contracted for 67 559 47 029 69 702 67 559 47 029 69 702
6. Cash and cash equivalents Bank balances, deposits and 183 284 76 434 123 800 cash Short-term borrowings (132 914) (127 045) (138 313) 50 370 (50 611) (14 513) 7. Reclassification of comparative figures In the prior period condensed consolidated interim financial information announcement, proceeds from borrowings and repayments of borrowings were disclosed net in the group`s statement of cash flows. Furthermore, proceeds from financial assets and investments and acquisition of financial assets and investments were also disclosed net in the group`s statement of cash flows. In order to more fairly present the cash flow information, these amounts have been separately disclosed in the current period statement of cash flows. This has resulted in the restatement of the prior period figures. 31 December 2009 Unaudited R`000
Disclosure as per condensed consolidated statement of cash flows for the half-year ended 31 December 2009: Realisation of financial assets and investments 5 961 Proceeds from borrowings (1 525) Disclosure as per condensed consolidated statement of cash flows for the half-year ended 31 December 2010: Realisation of financial assets and investments 6 164 Purchases of financial assets and investments (203) Proceeds from borrowings 29 219 Repayment of borrowings (30 744) In the prior period condensed consolidated interim financial information announcement, distribution costs and administrative expenses were disclosed separately on the consolidated statement of comprehensive income. In the current period, these amounts are now disclosed under other expenses. Furthermore, in the prior period, expenses to the value of R2 754 million were incorrectly allocated to cost of sales. This amount should have formed part of other expenses. This has resulted in the restatement of prior period figures. Disclosure as per condensed consolidated statement of comprehensive income for the half-year ended 31 December 2009: Cost of sales (1 107 742) Distribution costs (6 741) Administrative expenses (65 355) Disclosure as per condensed consolidated statement of comprehensive income for the half-year ended 31 December 2010: Cost of sales (1 104 988) Other expenses (74 850) 8. Declaration of capital distribution Notice is hereby given that a capital distribution out of share premium of 11,10 cents per ordinary share in respect of the half- year ended 31 December 2010 has been declared by the board. The total capital distribution for the period is 3 times covered by headline earnings per share. The salient dates of the declaration and payment of this capital distribution are as follows: Last date to trade ordinary shares cum capital Friday, 6 May 2011 distribution Ordinary shares trade ex capital distribution Monday, 9 May 2011 Record date Friday, 13 May 2011 Payment date Monday, 16 May 2011 Share certificates may not be dematerialised or rematerialised between Monday, 9 May 2011 and Friday, 13 May 2011 (both dates inclusive). The board of directors were given the general authority to make payments to shareholders out of the company`s share premium account at the annual general meeting held on 22 November 2010. The illustrative financial effects of the distribution set out below have been prepared to assist shareholders in assessing the impact of the distribution of capital out of share premium on the Net Asset Value per share ("NAV") and Tangible Net Asset Value per share ("TNAV"). Impact of the Pro forma
distribution of 11,10 cents after per share on the R`000 distribution R`000
Assets Cash and cash equivalents (20 865) 162 419 Equity and liabilities Equity attributable to ordinary (20 865) 380 064 shareholders NAV (cents per share) (11,10) 216,56 TNAV (cents per share) (47,51) 130,15 Commentary on results Profile Country Bird Holdings Limited (CBH) is an agricultural group comprising: - integrated poultry and stock feed business operations in South Africa trading as Supreme Poultry and Nutri Feeds; - poultry breeding, broiler and stock feed operations in the southern African region trading as Ross Africa and Master Farmer; and - a South African red meat abattoir and trading operation trading as Long Iron Meats. CBH currently operates in South Africa, Botswana and Zambia. Financial review Operating profit of R112,8 million was achieved for the six months ended 31 December 2010, which when compared to last year`s figure of R82,4 million is an increase of 37%. This was the result of a combination of factors predominated by good performances in the African businesses and a strong showing from Nutri Feeds, as well as an improvement in market conditions generally. Revenue was up 13% to R1,42 billion for the period (2009: R1,26 billion), with gross profit increasing by 20% to R183,8 million (2009: R152,6 million) after accounting for a 12% increase in cost of sales attributable to volume growth. Profit before income tax rose 63% to R91,4 million (2009: R56,1 million) primarily as a result of a reduction in finance costs through reduced interest rates and strict financial discipline, specifically with regard to capital expenditure. The net increase in cash and cash equivalents for the period was R67,5 million. Operational review Poultry - South Africa The South African poultry division reported an 8% increase in volumes sold for the period. This, together with a 9% improvement in the cost of feed, further improvements in operational efficiencies and disciplined cost control, more than offset the 2% reduction in realisations over last year. The operating profit for the period improved 8% to R73,1 million (2009: 67,6 million). Poultry - Africa This comprises a grandparent breeding operation in Zambia and a parent breeding operation and broiler operation in Botswana. Revenues for the year decreased slightly by 3%. However, improved market conditions in Zambia driven by favourable economic conditions resulted in a return to better margins and operating profit of R9,3 million was achieved (2009: R0,7 million). Animal Nutrition - South Africa Nutri Feeds reported a further improvement of 16% in volumes sold for the period under review. As a result of input price reductions during the period, revenues only increased by 5%. However, with volumes approaching optimum levels, the resultant efficiencies improved operating profit to R21,0 million (2009: R6,5 million). Animal Nutrition - Africa Both mills in Zambia and Botswana are now well established and performing well. Revenues for the combined operations increased 23% to R146,6 million (2009: R119,0 million) and the focus on operational efficiency and procurement practices yielded a 64% increase in operating profit to R11,5 million (2009: R7,0 million). Red Meat New product launches and penetration into new markets saw volumes increase by 23% and realisations increase by 2%, giving a total increase in turnover of 25% to R199,9 million (2009: R159,9 million). Margins remained under intense pressure resulting in an operating loss for the period of R2,1 million (2009: R0,6 million profit). Prospects Realisations for the poultry industry have shown encouraging signs of recovery in recent months. Continued efficient grain procurement, further improvements in operational efficiencies and cost control should result in improved operating margins, while the marketing focus will remain on driving exports and the quick service restaurant business. In the South African feed business the scientific development of bespoke feed rations has assisted Supreme Poultry and its customers to achieve outstanding growing results. This has attracted new customers, taking production levels to an optimum level of efficiency due to capacity utilisation. The feed mills in Zambia and Botswana are performing well and the re- establishment of Tswana Pride`s Abattoir that had burnt down will result in good growth in feed volume and market penetration. Operational efficiency and margin improvement remain the focus going forward. The African Poultry operations have returned to profitability and continued focus on efficient production remains the priority. Capital distribution In line with the Group`s dividend policy of three times cover, a capital distribution of 11,1 cents per share for the period has been declared for payment on 16 May 2011. By order of the board JD Wright Chief executive officer 26 January 2011 DIRECTORS OF CBH LIMITED BH Kent (Chairman)#, R Gibbson#, GP Heath, IWM Isdale#, KW James, CD Stein#, RJ Taylor, JD Wright #Independent non-executive REGISTERED ADDRESS 269 Oxford Road, Cnr Harries Road, Illovo, Johannesburg, 2196 (PO Box 412523, Craighall, 2024) ATTORNEYS Ramsay Webber Inc. 269 Oxford Road, Illovo, 2196 (PO Box 55232 Northlands, 2116) INVESTMENT BANK and SPONSOR Investec Bank Limited (Registration number 1969/004763/06) 2nd Floor, 100 Grayston Drive, Sandton, 2196 (PO Box 785700, Sandton, 2146) COMPANY SECRETARY MJC Antunes 15 Coro Street, Bloemfontein, 9301 (PO Box 6851, Bloemfontein, 9300) AUDITORS PricewaterhouseCoopers Inc. 61 Second Avenue, Westdene, Bloemfontein, 9301 (PO Box 818, Bloemfontein, 9300) TRANSFER SECRETARIES Computershare Investor Services (Proprietary) Limited (Registration number 2004/003647/07) Ground Floor, 70 Marshall Street Johannesburg, 2001 (PO Box 61051 Marshalltown, 2107) www.cbh.co.za Date: 26/01/2011 16:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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