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ARL - Astral Foods Limited - Unaudited interim results and dividend

Release Date: 16/05/2011 07:05
Code(s): ARL
Wrap Text

ARL - Astral Foods Limited - Unaudited interim results and dividend declaration for the six months ended 31 March 2011 Astral Foods Limited Incorporated in the Republic of South Africa Registration number 1978/003194/06 Share code ARL ISIN: ZAE000029757 ("Astral" or "the company" or "the group") UNAUDITED INTERIM RESULTS AND DIVIDEND DECLARATION for the six months ended 31 March 2011 - Revenue decrease 2% - Operating profit increase 23% - Headline earnings per share increase 31% - Interim dividend increase 5% to 305 cents per share CONDENSED GROUP STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited
six months six months 12 months ended ended ended 31 March 31 March 30 September 2011 2010 2010
R`000 R`000 R`000 Assets Non-current assets 1 784 969 1 655 332 1 764 194 Property, plant and equipment 1 646 487 1 514 190 1 625 473 Intangible assets 4 562 6 835 4 913 Goodwill 124 802 124 802 124 802 Investments and loans 9 118 9 505 8 838 Deferred tax asset - - 168 Current assets 1 502 994 1 424 829 1 337 176 Inventories 291 574 298 165 262 278 Biological assets 316 584 329 091 305 430 Trade and other receivables 715 094 675 082 626 698 Current tax assets - - 2 334 Derivative financial 385 238 196 instruments Cash and cash equivalents 179 357 122 253 140 240 Assets held for sale - - 26 928 Total assets 3 287 963 3 080 161 3 128 298 Equity Capital and reserves 1 491 307 1 363 860 1 424 091 attributable to equity holders of the parent company Issued capital 2 321 736 736 Treasury shares (204 435) (204 435) (204 435) Reserves 1 693 421 1 567 559 1 627 790 Non-controlling interest 24 626 20 049 22 106 Total equity 1 515 933 1 383 909 1 446 197 Liabilities Non-current liabilities 564 517 488 225 522 117 Borrowings 103 999 33 733 80 545 Deferred tax liability 370 343 373 449 356 929 Retirement benefit obligations 90 175 81 043 84 643 Current liabilities 1 207 513 1 208 027 1 148 206 Trade and other liabilities 1 031 235 992 535 939 982 Current tax liabilities 50 586 40 638 19 556 Borrowings 125 692 174 854 188 668 Liabilities held for sale - - 11 778 Total liabilities 1 772 030 1 696 252 1 682 101 Total equity and liabilities 3 287 963 3 080 161 3 128 298 CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited six months six months 12 months ended ended ended 31 March 31 March 30 September
2011 2010 % 2010 R`000 R`000 change R`000 Revenue 4 214 698 4 283 836 (2) 8 367 874 Operating profit 375 355 304 298 23 585 377 Fair value adjustment (1 805) - (7 233) of investment in assets held for sale Finance income 5 354 4 901 12 201 Finance costs (14 670) (16 851) (33 263) Profit before income 364 234 292 348 25 557 082 tax Income tax expense (122 036) (103 832) (193 413) Profit for the period 242 198 188 516 28 363 669 Other comprehensive income Foreign currency 2 816 (2 533) (6 401) translation adjustments Total comprehensive 245 014 185 983 32 357 268 income for the period, net of tax Profit attributable to: Equity holders of the 240 103 185 242 30 357 637 parent company Non-controlling 2 095 3 274 (36) 6 032 interest holders 242 198 188 516 28 363 669 Comprehensive income attributable to: Equity holders of the 242 494 183 306 32 352 068 parent company Non-controlling 2 520 2 677 (6) 5 200 interest holders 245 014 185 983 32 357 268 Earnings per share (cents) - basic 631 487 30 940 - diluted 630 487 29 939 CONDENSED GROUP STATEMENT OF CASH FLOWS Unaudited Unaudited Audited six months six months 12 months
ended ended ended 31 March 31 March 30 September 2011 2010 2010 R`000 R`000 R`000
Cash operating profit 440 705 365 111 705 744 Working capital changes (37 921) 32 545 62 990 Cash generated from 402 784 397 656 768 734 operating activities Tax paid (74 583) (52 142) (180 557) Cash flows from operating 328 201 345 514 588 177 activities Net cash used in investing (58 897) (55 650) (208 202) activities Capital expenditure (78 179) (63 316) (222 372) Finance income 5 354 4 901 12 201 Proceeds on disposal and 13 928 2 765 1 969 other Cash used in financing (184 697) (183 081) (250 783) activities Increase in borrowings 7 347 5 584 69 380 Interest paid (14 670) (17 438) (38 758) Dividends paid (178 683) (171 227) (281 508) Shares issued 1 309 - - Contribution from non- - - 103 controlling interest holders Net movement in cash and 84 607 106 783 129 192 cash equivalents Effect of exchange rate 1 379 (137) (6 046) changes Reclassification to assets - - 795 held for sale Cash and cash equivalent (28 994) (152 935) (152 935) balances at beginning of year Cash and cash equivalent 56 992 (46 289) (28 994) balances at end of period (note 6) GROUP STATEMENT OF CHANGES IN EQUITY Unaudited Unaudited Audited six months six months 12 months
ended ended ended 31 March 31 March 30 September 2011 2010 2010 R`000 R`000 R`000
Balance beginning of year 1 446 197 1 366 449 1 366 449 Total comprehensive income 245 014 185 983 357 268 for the period Dividends to the company`s (178 825) (167 411) (277 750) shareholders Option value of share 1 648 2 518 3 757 options granted Shares issued from share 1 309 - - options exercised Currency translation loss 590 - - realised Payments to non-controlling - (3 630) (3 630) interest holders Contribution from non- - - 103 controlling interest holder Balance at end of period 1 515 933 1 383 909 1 446 197 CONDENSED GROUP SEGMENTAL ANALYSIS Unaudited Unaudited Audited six months six months 12 months ended ended ended
31 March 31 March 30 September 2011 2010 % 2010 R`000 R`000 change R`000 Revenue Poultry - South Africa and 2 771 716 2 739 921 1 5 350 966 Swaziland Feed 2 052 909 2 171 061 (5) 4 224 542 - South Africa 1 956 925 2 104 262 4 089 104 - Other Africa 95 984 66 799 135 438 Services and ventures 132 236 143 067 (8) 269 610 Inter-group (742 163) (770 213) (1 477 244) - Feed to Poultry (703 573) (736 166) (1 408 987) - Services and (38 590) (34 047) (68 257) ventures to Poultry and Feed 4 214 698 4 283 836 (2) 8 367 874 Operating profit Poultry - South Africa and 228 904 134 155 71 262 248 Swaziland Feed 133 048 151 295 (12) 281 159 - South Africa 120 603 153 638 280 791 - Other Africa 12 445 (2 343) 368 Services and ventures 13 403 18 848 (29) 41 970 375 355 304 298 23 585 377 ADDITIONAL INFORMATION Unaudited Unaudited Audited
six months six months 12 months ended ended ended 31 March 31 March % 30 September 2011 2010 change 2010
Headline earnings 241 886 185 071 31 365 162 (R`000) (note 5) Headline earnings per share (cents) - basic 636 486 31 960 - diluted 635 486 31 959 Dividend per share 305 290 5 760 (cents) Number of ordinary shares - Issued net of 38 060 308 38 047 708 38 047 708 treasury shares - Weighted-average 38 050 557 38 047 708 38 047 708 - Diluted weighted- 38 096 186 38 065 066 38 072 092 average Net debt (borrowings 50 334 86 334 128 973 less cash and cash equivalents) (R`000) Net asset value per 39,18 35,85 9 37,43 share (Rand) Notes 1. Nature of business Astral is a leading South African integrated poultry producer. Key activities consist of animal feed pre-mixes, manufacturing of animal feeds, 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. 2. Basis of preparation The condensed interim financial statements for the six months ended 31 March 2011 have been prepared in accordance with International Reporting Standards ("IFRS"), and IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE Limited and the South African Companies Act (1973) as amended. These financial statements have not been reviewed or audited by the Group`s auditors. 3. Accounting policies The accounting policies applied in these 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 2010. Unaudited Unaudited Audited
six months six months 12 months ended ended ended 31 March 31 March 30 September 2011 2010 2010
R`000 R`000 R`000 4. Operating profit The following items have been accounted for in the operating profit: Biological assets - fair value 410 (1 351) (1 388) gain/(loss) Amortisation of intangible 1 403 2 552 4 536 assets Depreciation on property, plant 56 799 54 250 104 031 and equipment Profit/(loss) on disposal of 31 161 (418) property, plant and equipment Foreign exchange profit/(loss) 187 1 206 (536) 5. Reconciliation to headline earnings Earnings for the period 240 103 185 242 357 637 After tax net (profit)/loss on (22) (171) 491 sale of property, plant and equipment Fair value adjustment of assets 1 805 - 7 233 held for sale Negative goodwill - - (199) Headline earnings for the period 241 886 185 071 365 162 6. Cash and cash equivalents per cash flow statement Bank overdrafts (122 365) (168 542) (169 234) Cash at bank and in hand 179 357 122 253 140 240 Cash and cash equivalents per 56 992 (46 289) (28 994) cash flow statement 7. Capital commitments Capital expenditure approved not 131 739 75 232 120 124 contracted Capital expenditure contracted 24 909 24 040 20 156 not recognised in financial statements 8. Litigation A referral was made to the Competition Tribunal regarding alleged anti- competitive conduct by subsidiaries in the group in 2008. The group is opposing the referral. During September 2009 the Competition Commission initiated complaints against all past and present members of the Animal Feeds Manufacturers Association and the South African Poultry Association as well as other players involved in the production of poultry feed, in breeding stock and broiler production, and in the poultry products industry. Astral is not aware of any transgressions of the Competition Act within the group, but has offered all reasonable cooperation to the Commission in regard to its investigation into the industry. Financial Overview Headline earnings for the period increased by 31% to R242 million from R185 million for the same period last year as a result of improved operating profits. Revenue decreased by 2% from R4 284 million to R4 215 million due to lower sales by the feed division, whilst the revenue from the poultry division was only marginally higher than the previous year. The operating profit at R375 million was 23% higher than the profit for the same period last year. The improvement was all contributed by the poultry division due to improved poultry production efficiencies combined with lower feed input costs. Net finance costs at R9 million were down on the previous year`s R12 million following lower average level of borrowings and lower interest rates during the period under review. Earnings per share increased by 30% from 487 cents to 631 cents, and headline earnings per share increased by 31% to 636 cents per share (2010: 486 cents per share). Continued positive cash flow during the period resulted in the net debt (borrowings less cash and cash equivalents) reducing to R50 million from the R129 million as at the end of September 2010. The net debt to equity ratio is now at 3%, compared to 9% at September 2010. The Board has declared an increased interim dividend of 305 cents per share (2010: 290 cents per share) in view of the improved profits and strong balance sheet. Operational Overview Poultry Division Turnover for the division at R2 772 million was marginally up by 1% from R2 740 million in 2010 on the back of slightly lower selling volumes which were offset by improved selling prices. Local poultry demand levels were negatively impacted by job losses during the past eighteen months together with record levels of poultry imports due to the strong local currency and "classical" dumping. Reduced stock levels before the festive season together with firmer sales during December resulted in marginally better pricing levels post the festive period. The improvement in profitability was mainly supported by efficiency improvements in on-farm production results that, together with lower feed input costs resulted in advantageous production costs. The non-recurring direct costs of an industrial action in the prior period also played a role in the improved results Margins for the division reflected an increase to 8,3% compared to the 4,9% for the comparable period and operating profit increased by 71% to R229 million (2010: R134 million). The implementation of the "new" Ross 308 genetic line has been fully integrated during March 2011 and the efficiency improvements of the new bird are in line with expectations. Feed Division Revenue for the period decreased by 5% from R2 171 million in 2010 to R2 053 million for the period under review mainly as a result of lower feed volumes both internally and externally together with lower selling prices on the back of lower grain prices procured during mid-2010. The reduced internal sales volumes were partly driven by reduced demand from the Poultry division due to improved efficiencies. Operating profit decreased by 12% to R133 million (2010: R151 million) and the margin at 6,5% (2010: 7,0%) were negatively affected by higher fixed costs per unit, resulting from reduced volumes. The division`s Zambian and Mozambican operations posted satisfactory results as both these operations increased profitability with signs of further improvement. Services and Joint Ventures Division Although the division performed satisfactorily, a decrease in revenue was brought about by the disposal of the Mauritian feed operation. Operating profit for all services and joint venture units were in line with expectations. The group`s bakery unit, East Balt, performed well, despite the fact that it had to bear the start-up costs of its Cape Town facility as well as still having low capacity utilisation. Prospects The business environment for the next reporting period is not expected to be significantly different from the present. The global outlook remains that grains as a key cost driver for both feed and poultry production, will trade higher as soft commodity prices firm up due to tighter global soft commodities balance sheets. The continued strength of the local currency should be favourable for high levels of poultry imports. The balance of local production and imported product against a stressed trading environment will be critical for pricing and profitability improvement. Declaration of Ordinary Dividend No. 21 Notice is hereby given that dividend No. 21 of 305 cents per ordinary share has been declared in respect of the six months ended 31 March 2011. Last date to trade cum dividend Thursday, 9 June 2011 Shares commence trading ex dividend Friday, 10 June 2011 Record date Friday, 17 June 2011 Payment of dividend Monday, 20 June 2011 Share certificates may not be dematerialised or rematerialised between Friday, 10 June 2011 and Friday, 17 June 2011, both days inclusive. On behalf of the Board JJ Geldenhuys CE Schutte Chairman Chief Executive Officer Pretoria 16 May 2011 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) *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 1 Fricker Road, Illovo Johannesburg, 2146 Private Bag X9936, Sandton, 2146 Telephone: +27 (0) 11 507 0430 Date: 16/05/2011 07:05:08 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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