Wrap Text
CBH - Country Bird Holdings Limited - Interim results for the period ended 31
December 2011
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")
Interim results for the period ended 31 December 2011
- Revenue up 14%
- Operating profit down 31%
- HEPS down 46%
- KFC supplier of the year
- Interim capital distribution of 5,98 cents per share
Condensed consolidated statement of comprehensive income
31 December 31 December 30 June
2011 2010 % 2011
Unaudited Unaudited change Audited
R`000 R`000 R`000
Revenue 1 609 238 1 415 928 14 2 834 659
Cost of sales (1 460 526) (1 232 129) 19 (2 477 360)
Gross profit 148 712 183 799 (19) 357 299
Other expenses (84 932) (74 991) 13 (148 923)
Other gains and 14 076 3 994 252 12 462
losses
Operating profit 77 856 112 802 (31) 220 838
Finance income 1 208 1 489 (19) 1 841
Finance costs (27 524) (22 988) 20 (47 402)
Share of 1 54 (97) (297)
profit/(loss) of
associate
Profit before income 51 541 91 357 (44) 174 980
tax
Income tax expense (14 453) (25 946) (44) (52 129)
Profit for the year 37 088 65 411 (43) 122 851
Other comprehensive
income:
Currency translation 15 670 (20 151) (178) (13 526)
differences
Total comprehensive 52 758 45 259 17 109 325
income for the year
Profit attributable
to:
Owners of the parent 34 707 63 097 (45) 122 638
Non-controlling 2 381 2 314 3 213
interest
37 088 65 411 (43) 122 851
Total comprehensive
income attributable
to:
Owners of the parent 50 377 42 945 17 109 112
Non-controlling 2 381 2 314 3 213
interest
52 758 45 259 17 109 325
Earnings per share
(cents):
- basic 17,83 33,57 (47) 65,21
- diluted 17,74 32,99 (46) 63,98
Additional
information to
condensed
consolidated
financial statements
Ordinary shares
(total number of
shares)
- Issued net of 197 388 313 188 366 313 188 772 313
treasury shares
- Weighted average 194 680 313 187 972 476 188 071 896
number of ordinary
shares
- Diluted number of 195 630 313 191 284 305 191 674 288
ordinary shares
Headline earnings per
ordinary share
(cents)
-'basic 17,93 33,29 (46) 65,81
-'diluted 17,84 32,71 (45) 64,57
Capital distribution 5,98 11,10 (46) 11,10
per share - interim
(cents)
Capital distribution - - 10,84
per share - final
(cents)
Net asset value per 265,92 227,66 17 251,28
share (cents)
Tangible asset value 217,86 177,67 23 201,46
per share (cents)
Gearing ratio (net of 1,67 1,80 (7) 1,57
cash and cash
equivalents)
Condensed consolidated statement of financial position
As at As at As at
31 December 31 December % 30 June
2011 2010 change 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets 532 229 526 023 1 509 098
Property, plant and 392 931 384 205 2 387 647
equipment
Intangible assets 93 563 93 970 0 93 706
Financial assets and 654 533 23 405
other investments
Investment in 10 098 9 873 2 10 096
associates
Deferred income tax 34 983 37 442 (7) 17 244
assets
Current assets 1 005 254 855 156 18 862 743
Inventories 173 106 153 455 13 143 119
Biological assets 167 703 147 233 14 158 253
Trade and other 502 978 365 731 38 398 578
receivables
Current income tax 4 239 5 453 (22) 3 239
receivable
Cash and cash 157 228 183 284 (14) 159 554
equivalents
Total assets 1 537 483 1 381 179 11 1 371 841
EQUITY
Total equity 517 686 427 933 21 472 592
Ordinary shares 1 974 1 884 5 1 888
Share premium 757 371 798 303 (5) 772 167
Other reserves 29 373 (5 322) (652) 8 029
Retained earnings 533 794 438 174 22 497 715
Common control (832 110) (832 110) 0 (832 110)
deficit
Equity attributable 490 402 400 929 22 447 689
to the owners of the
parent
Non-controlling 27 284 27 004 1 24 903
interest
LIABILITIES
Non-current 332 117 428 891 (23) 355 004
liabilities
Borrowings 224 145 337 843 (34) 269 592
Employee share 1 868 252 100 1 467
scheme liability
Deferred income tax 106 104 90 796 17 83 945
liabilities
Current liabilities 687 680 524 355 31 544 245
Trade and other 469 280 347 621 35 372 637
payables
Current income tax 8 080 14 672 (45) 2 799
liabilities
Borrowings 209 819 161 873 30 168 779
Provision for other 501 189 165 30
liabilities and
charges
Total liabilities 1 019 797 953 246 7 899 249
Total equity and 1 537 483 1 381 179 11 1 371 841
liabilities
Condensed consolidated statement of cash flows
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash flows from operating
activities
Net cash generated from 24 884 101 080 179 613
operating activities
Cash receipts from customers 1 504 839 1 434 340 2 820 224
Cash paid to suppliers and (1 445 (1 301 (2 564
employees 663) 102) 051)
Cash generated from operations 59 176 133 238 256 173
Interest paid (27 524) (22 988) (47 402)
Income tax paid (6 768) (9 170) (29 158)
Cash flows from investing
activities
Net cash used in investing (16 365) (22 177) (42 287)
activities
Purchases of property, plant and (17 621) (23 553) (43 799)
equipment
Proceeds from sale of property, 296 642 873
plant and equipment
Purchases of financial assets (248) (149) (22)
and investments
Increase in investment in - (606) -
associates
Interest received 1 208 1 489 661
Cash flows from financing
activities
Net cash used in financing (19 619) (11 459) (103 693)
activities
Proceeds from the issuance of 7 116 1 267 1 673
ordinary shares
Proceeds from borrowings 202 732 17 099 104 458
Repayments of borrowings (208 056) (27 059) (186 104)
Capital repayments to (21 411) (2 766) (23 720)
shareholders
Net increase/(decrease) in cash (11 100) 67 444 33 633
and cash equivalents
Cash and cash equivalents at 16 299 (14 513) (14 513)
beginning of period
Exchange gains on cash and bank 7 860 (2 561) (2 821)
overdrafts
Cash and cash equivalents at end 13 059 50 370 16 299
of 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 2010 1 871 795 887 17 435 375 077
Total comprehensive - - (20 151) 63 097
income
Proceeds from shares 13 5 182 - -
issued
Employee share scheme - - (2 605) -
Capital distribution - (2 766) - -
to shareholders
Balance at 31 December 1 884 798 303 (5 321) 438 174
2010
Total comprehensive - - 6 625 59 541
income
Proceeds from shares 4 (5 182) 1 656 -
issued
Employee share scheme - - 5 069 -
Capital distribution - (20 954) - -
to shareholders
Balance at 30 June 1 888 772 167 8 029 497 715
2011
Total comprehensive - - 15 670 34 707
income
Shares issued to 86 6 615 - -
employees
Employee share scheme - - 5 674 1 372
Capital distribution - (21 411) - -
to shareholders
Balance at 31 December 1 974 757 371 29 373 533 794
2011
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 (832 110) 358 160 24 690 382 850
2010
Total comprehensive - 42 945 2 314 45 259
income
Proceeds from shares - 5 195 - 5 195
issued
Employee share scheme - (2 605) - (2 605)
Capital distribution - (2 766) - (2 766)
to shareholders
Balance at 31 (832 110) 400 929 27 004 427 933
December 2010
Total comprehensive - 66 167 (2 101) 64 066
income
Proceeds from shares - (3 522) - (3 522)
issued
Employee share scheme - 5 069 - 5 069
Capital distribution - (20 954) - (20 954)
to shareholders
Balance at 30 June (832 110) 447 689 24 903 472 592
2011
Total comprehensive - 50 377 2 381 52 758
income
Shares issued to - 6 701 - 6 701
employees
Employee share scheme - 7 046 - 7 046
Capital distribution - (21 411) - (21 411)
to shareholders
Balance at 31 (832 110) 490 402 27 284 517 686
December 2011
Condensed segment report
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Revenue Revenue Revenue
Poultry 1 029 944 893 417 1 811 519
- South Africa 946 348 826 908 1 674 377
- Other Africa 89 447 73 811 145 478
Intersegment revenue (5 851) (7 302) (8 336)
Animal nutrition 433 013 322 639 677 031
- South Africa 730 559 537 599 1 048 651
- Other Africa 193 449 146 562 309 496
Intersegment revenue (490 995) (361 522) (681 116)
Beef 146 281 199 872 346 109
1 609 238 1 415 928 2 834 659
Revenues of approximately R 145,8 million (2010: R 130,9 million) are derived
from a single external customer. These revenues are attributable to the South
African Poultry segment.
Condensed segment report continued
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Operating Operating Operating
profit profit profit
Poultry 55 744 82 464 159 735
- South Africa 43 072 73 138 142 114
- Other Africa 12 672 9 326 17 621
Intersegment revenue - - -
Animal nutrition 24 288 32 473 63 510
- South Africa 20 168 20 966 48 950
- Other Africa 4 120 11 507 14 560
Intersegment revenue - - -
Beef (2 176) (2 135) (2 407)
77 856 112 802 220 838
Revenues of approximately R 145,8 million (2010: R 130,9 million) are derived
from a single external customer. These revenues are attributable to the South
African Poultry segment.
Condensed segment report continued
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Assets Assets Assets
Poultry 1 038 092 846 168 919 031
- South Africa 814 212 709 655 726 303
- Other Africa 223 880 136 513 192 728
Intersegment revenue - - -
Animal nutrition 464 748 492 162 419 495
- South Africa 355 071 380 312 367 970
- Other Africa 109 677 111 850 51 525
Intersegment revenue - - -
Beef 34 643 42 849 33 315
1 537 483 1 381 179 1 371 841
Revenues of approximately R 145,8 million (2010: R 130,9 million) are derived
from a single external customer. These revenues are attributable to the South
African Poultry segment.
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 2011 was prepared
in accordance with International Financial Reporting Standards
(IFRS), Accounting Standard 34, Interim Financial Reporting, the
Listing Requirements of the JSE Limited, and the South African
Companies Act of 2008. The condensed consolidated financial
statements were supervised by RJ Taylor (BCom, CA(Z)). The
accounting policies are consistent with those of the previous
financial period and comply with 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 2011.
These unaudited condensed consolidated interim financial
statements were approved by the board of directors on 21 February
2012.
31 31 30 June
December December 2011
2011 2010 Audited
Unaudited Unaudite R`000
R`000 d
R`000
2. Reconciliation to headline
earnings
Net profit attributable to the 34 707 63 097 122 638
owners of the parent
Adjusted for:
Profit on disposal of 201 (528) 1 135
property, plant and equipment
Adjusted headline earnings 34 908 62 569 123 773
3. Capital expenditure and
depreciation
Capital expenditure 17 621 23 553 43 799
Depreciation 19 861 18 611 37 832
Amortisation of intangible 241 241 553
assets
4. Capital and other commitments
Inventories contracted for 86 661 67 559 136 752
5. Cash and cash equivalents
Bank balances, deposits and 157 229 183 284 159 554
cash
Short-term borrowings (144 170) (132 (143 255)
914)
13 059 50 370 16 299
6. Declaration of capital distribution
Notice is hereby given that a capital distribution out of share
premium of 5,98 cents per ordinary share in respect of the half-
year ended 31 December 2011 has been declared by the board. The
total capital distribution for the period is three times covered
by headlines earnings per share.
The salient dates of the declaration and payment of this capital
distribution is as follows:
Last date to trade ordinary Friday, 4 May 2012
shares cum capital distribution
Ordinary shares trade ex Monday, 7 May 2012
capital distribution
Record date Friday, 11 May 2012
Payment date Monday, 14 May 2012
Share certificates may not be dematerialised or rematerialised
between Monday, 7 May 2012 and Friday, 11 May 2012 (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 24 November 2011.
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 after
5,98 cents per the
share on distribution
R`000 R`000
Assets
Cash and cash equivalents (11 642) 145 586
Equity and liabilities
Equity attributable to owners (11 642) 478 760
of the parent
NAV (cents per share) (5,98) 259,94
TNAV (cents per share) (32,70) 185,15
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 Botswana, the DRC, Malawi, Mozambique, Namibia, South
Africa and Zambia.
Financial review
Operating profit of R77,9 million was achieved for the period ended 31 December
2011 which, when compared to last year`s figure of R112,8 million, is a decrease
of 31%.The major part of the decline in operating profit arose out of a nine-
week strike at Supreme Poultry`s Botshabello plant during July, August and
September 2011. It is estimated that the adverse impact on the operating profit
was R25 million. Revenue was up 14% to R1,61 billion for the period (2010: R1,42
billion), but gross profit decreased by 19% to R148,7 million (2010: R183,8
million) after accounting for a 19% increase in cost of sales attributable to
the strike, volume growth and increased commodity prices.
Higher levels of working capital, resulting from increases in raw material input
prices, have resulted in increased finance costs for the period.
Profit before income tax dropped 44% to R51,5 million (2010: R91,4 million).
Tight control over capital expenditure continued through from the prior year
with only essential maintenance capex of R17,6 million being spent (2010: R23,6
million).
Operational review
Poultry - South Africa
The South African poultry division reported an increase of 14,4% in revenue for
the period. This was as a result of volume increases of 6% and a sales price
increase of 8%. It was pleasing to note that the Group`s focus on the quick
service restaurant market and its factory outlets is proving successful. Sales
volumes in these sectors rose by 44% in the period under review.
The improved revenue did not convert into profitability, mostly as a result of
the negative impact of the strike. Feed prices increased by 12,8% in the period,
which also put margins under pressure.
Poultry - Other Africa
This comprises a grandparent breeding operation in Zambia and a parent breeding
operation and broiler operation in Botswana. Revenues for the year increased
through better pricing in Botswana and an increase in demand for day-old chicks
in Zambia. These factors combined to provide an increase in operating profit of
36% for the segment to R12,7 million (2010: R9,3 million).
Animal Nutrition - South Africa
Nutri Feeds reported an improvement of 12% in volumes sold for the period under
review. This was enhanced by a 21% increase in selling prices, giving a net 36%
increase in revenue. Disciplined cost control and improved capacity usage were
insufficient to offset the increase in raw material prices resulting in a slight
decline in operating profit to R20,2 million (2010: 21,0 million).
Animal Nutrition - Other Africa
Both mills in Zambia and Botswana are now well established and performing well.
Revenues for the combined operations increased 32% to R193,4 million (2010:
R146,6 million). However, the volatility of commodity prices and unavailability
of quality raw material resulted in a 64% drop in operating profit to R4,1
million (2010: R11,5 million).
Red Meat
This business continued to face industry-wide challenges, including scarcity of
supply. Turnover reduced by 27% to R146,3 million (2010: R199,9 million) mainly
as a result of a 38% reduction in slaughter numbers, and the division reported a
loss of R2,2 million (2010: 2,1 million).
Prospects
Following the strike, there has been satisfactory resolution of a number of
labour issues and a more stable labour environment is expected. The recent
increase in import tariffs is an important success for local poultry producers
which will assist in eliminating the harmful effects of dumping and improve the
stability of the local industry. Poultry prices and volume sales are expected to
increase in the run-up to Easter.
The South African feed milling operations continue to penetrate new markets in a
mature and discerning industry. This indicates the superior levels of quality
and service provided by Nutri Feeds, and management is motivated to continue
this progress.
The feed mills in Zambia and Botswana are performing well and operational
efficiency and margin improvement remain the key focus areas.
It is particularly pleasing that the Group was KFC`s Supplier of the Year for
2011. It is CBH`s strategic intent to become a key supply chain partner of KFC
as it expands into Africa.
The award of the KFC franchises for Zimbabwe to CBH will result in the new
Zimbabwe business drawing supply from KFC-rated abattoirs. This presents an
opportunity for the existing South African operations, as well as providing
potential opportunities for the Zambian and Botswana operations. This is a most
exciting development for the Group and all viable opportunities in this arena
are being explored.
Consultations are currently in progress concerning the closure of the abattoir
at the red meat business.
Capital distribution
In line with the Group`s dividend policy of three times cover, a capital
distribution of 5,98 cents per share for the period has been declared for
payment on 14 May, 2012.
By order of the board
JD Wright
Chief executive officer
21 February 2012
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)
Date: 21/02/2012 16:00:01 Supplied by www.sharenet.co.za
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