Wrap Text
Unaudited Interim Results for the period ended 31 December 2012
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 2012
- Other Africa operating profit up 165%
- Other Africa operations contribute 57% of operating profit
- Revenue down 1% at R1,6 billion
- HEPS down 2,9 cents per share
- Operating margin 4,9%
Commentary on results
Profile
Country Bird Holdings Limited (CBH) is a focused African poultry group comprising:
- integrated poultry and stock feed 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
- South African retail and distribution operations trading as Long Iron Meats, Supreme Distributors and Ama Chick
Chick.
CBH currently operates in Botswana, the DRC, Malawi, Mozambique, Namibia, South Africa, Zambia and Zimbabwe.
Financial review
Operating profit for the period was R77,5 million, 0,3% lower than the R77,8 million achieved for the prior years
comparable period; the sustained profitability was primarily as a result of excellent performances by the other African
poultry and feed businesses, and the South African feed operation.
Operating profit of R44,4 million was achieved by the other African businesses for the period ended 31 December 2012
which, when compared to last years figure of R16,8 million, is an increase of 165%.
The improvement is as a result of strong demand, good raw material positions and operational efficiency improvements.
For the first time, the other African operations contributed more than 50% of the Groups operating profit.
The South African poultry industry has been engaging with government on a regional and national level to highlight the
negative impact imports are having on the sector. An application is to be submitted by SAPA for a general tariff
increase on imported poultry.
Expeditious procurement and hedging of raw materials, as well as tight operational controls resulted in the South
African feed operation reporting an operating profit of R48,6 million, 141% higher than the previous years comparative of
R20,2 million.
Group revenue for the period reduced marginally to R1,59 billion (2011 R1,61 billion), and gross profit grew by 6% to
R157,3 million (2011: R148,7 million) as a result of improved performances from the other African businesses.
Higher levels of working capital, resulted in finance costs for the period increasing by 18,2% to R32,8 million.
Profit before income tax dropped 13% to R45 million (2011: R51,5 million).
The Groups tax rate for the period was 17,7%, being positively influenced by the lower tax rates attributable to the
other African operations.
Profit after tax was R37,1 million (2011: R37 million).
Capex spend of R25,5 million for the period was in line with depreciation.
Operational review
Poultry - South Africa
The South African poultry industry is under severe pressure as a result of the global over supply of low priced
bone-in product. Bone-in sales represent a significant portion of the total South African market. World-wide supply and demand
dynamics have changed as a result of the global economic crisis and rapid production increases in traditionally large
import markets such as China and Russia. This, together with increased feed costs, resulted in the Groups South African
poultry operation losing R17,1 million for the period compared to a profit of R43,1 million for the prior years
comparable period.
The South African poultry division reported an increase of 11% in revenue for the period. This was as a result of
volume increases of 4,7% and sales price increases of 6,2%.
Sales volumes to the Groups target markets showed good improvements:
- Quick service restaurant volumes increased 27%;
- Export volumes increased 100%; and
- Factory store volumes increased 15%.
Continued emphasis on cost control and operational efficiencies contributed to a 4% reduction in non-feed costs.
The Groups Arbor Acres breed performed well in a difficult market, its ability to efficiently convert feed into
carcass mass and its low mortality rate, to some extent offset the negative impact of the high commodity prices.
Poultry - Other Africa
Revenue for the period increased by 46% as a result of strong demand for day-old chicks and poultry meat in Zambia and
Botswana.
Day-old chicks sales volumes increased by 23% in Botswana and 9% in Zambia. Poultry meat volumes in Botswana increased
by 61%.
Increases in raw material input costs were fully recovered in the market and as a result operating margins for the
period increased from 13% to 14%.
Animal Nutrition - South Africa
Nutri Feeds reported an increase in revenue of 3% for the period under review and a 141% increase in operating profit.
The Groups procurement function has been streamlined and centralised. Good July maize and soya positions, coupled with
the advantage of strategically well situated mills, resulted in excellent landed raw material positions.
Animal Nutrition - Other Africa
Revenues for the combined Zambian and Botswana operations increased 32%. Improved formulations, good raw material
positions and improved operational efficiencies resulted in an increase in operating profit of 468%.
Retail and distribution
This new division was formed by combining Supreme Distributors, Long Iron Meats and Ama Chick Chick factory retail
outlets. The new operation will focus on optimising distribution and logistics for the Group.
KFC Restaurants
The award of the KFC franchises for Zimbabwe to CBH during last year resulted in the establishment of the first
franchise outlet in Harare, civil works have been completed and it is expected that the store will open before year end.
Negotiations are progressing to secure three more sites.
Prospects
The influx of cheap poultry imports into the country and phytosanitary non-tariff barriers that prevent local
producers from accessing lucrative export markets are the key reasons the South African poultry industry remains under severe
pressure.
Although import levels have reduced since October they will continue to have a negative impact on margins for the
medium term. As a result the Groups poultry operations are expected to remain under pressure. Good volume growth at
acceptable margins is however expected for the quick service restaurant, export and factory store market.
The South African feed milling operations are performing well and renewed focus has been placed on growing external
business. Procurement and effective hedging will remain a key focus.
The demand for day-old chicks in Zambia and Botswana is expected to remain strong in the medium term and, as a result,
pricing and profitability should be good. The feed mills in Zambia and Botswana are now well established and performing
credibly, delivering good margins. Improved volume growth is expected to continue as a result of good feed performance
and increased demand.
The Groups strategy is to remain a key supply chain partner of YUM in both South Africa and the rest of Africa, and
to further build the export market and factory store business.
Interim capital distribution or dividend
Notwithstanding the performance of the Group over the first six months of the financial year, and given the difficult
trading conditions and the uncertainty with regard to imported product, it is considered prudent that no interim capital
distribution or dividend be declared.
Cautionary announcement
The Group has entered into negotiations with the International Finance Corporation to secure funding to enable the
Group to continue with its ongoing commitment to expand its geographic footprint in the African continent.
Shareholders are referred to the SENS announcement on 22 February 2013. Accordingly shareholders are advised to
continue to exercise caution when dealing in the Groups securities until a further announcement is made.
By order of the board
JD Wright
Chief executive officer
25 February 2013
Condensed consolidated statement of comprehensive income
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited % Audited
R000 R000 change R000
Revenue 1 594 008 1 609 238 (1) 3 094 519
Operating profit 77 512 77 856 0 149 469
Finance income 118 1 208 (90) 472
Finance costs (32 543) (27 524) 18 (61 075)
Share of profit/(loss) of associate - 1 (100) -
Profit before income tax 45 087 51 541 (13) 88 866
Income tax expense (7 982) (14 453) (45) (27 803)
Profit for the year 37 105 37 088 0 61 063
Other comprehensive income:
Currency translation differences 5 184 15 670 (67) 10 064
Total comprehensive income for the year 42 289 52 758 (20) 71 127
Profit attributable to:
Owners of the parent 30 879 34 707 (11) 60 010
Non-controlling interest 6 226 2 381 162 1 053
37 105 37 088 0 61 063
Total comprehensive income attributable to:
Owners of the parent 36 063 50 377 (28) 70 074
Non-controlling interest 6 226 2 381 162 1 053
42 289 52 758 (20) 71 127
Earnings per share (cents):
- basic 15,36 17,83 (14) 30,79
- diluted 15,36 17,74 (13) 30,79
Additional information to condensed
consolidated financial statements
Ordinary shares (total number of shares)
- Issued net of treasury shares 202 443 918 197 388 313 198 372 313
- Weighted average number of ordinary shares 201 086 716 194 680 313 194 931 980
- Diluted number of ordinary shares 201 086 716 195 630 313 194 931 980
Headline earnings per ordinary share (cents)
- basic 14,98 17,93 (16) 24,93
- diluted 14,98 17,84 (16) 24,93
Capital distribution per share - interim (cents) - 5,98 (100) 5,98
Capital distribution per share - final (cents) - - 2,33
Net asset value per share (cents) 293,68 265,92 10 282,75
Tangible asset value per share (cents) 240,52 217,86 10 229,83
Gearing ratio (net of cash and cash equivalents) 1,60 1,67 (4) 1,72
Condensed consolidated statement of financial position
As at As at As at
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited % Audited
R000 R000 change R000
ASSETS
Non-current assets 584 875 532 229 10 559 295
Property, plant and equipment 448 958 392 931 14 445 235
Intangible assets 106 900 93 563 14 103 160
Financial assets and other investments 673 654 3 653
Investment in associates - 10 098 (100) -
Deferred income tax assets 28 344 34 983 (19) 10 247
Current assets 1 102 505 1 005 254 10 1 092 350
Inventories 271 653 173 106 57 280 373
Biological assets 191 597 167 703 14 171 330
Trade and other receivables 478 103 502 978 (5) 481 015
Derivative financial instruments 6 610 - 100 7 999
Current income tax receivable 1 064 4 239 (75) 469
Cash and cash equivalents 153 478 157 228 (2) 151 164
Total assets 1 687 380 1 537 483 10 1 651 645
EQUITY
Total equity 590 546 517 686 14 551 178
Ordinary shares 2 024 1 974 3 1 984
Share premium 761 103 757 371 0 745 508
Other reserves 17 462 29 373 (41) 30 834
Retained earnings 602 437 533 794 13 571 559
Common control deficit (832 110) (832 110) 0 (832 110)
Equity attributable to the owners of the parent 550 916 490 402 12 517 775
Non-controlling interest 39 630 272 834 (85) 33 403
LIABILITIES
Non-current liabilities 360 737 332 117 9 340 566
Borrowings 244 060 224 145 9 240 091
Employee share scheme liability 1 158 1 868 (38) 2 223
Deferred income tax liabilities 115 519 106 104 9 98 252
Current liabilities 736 097 687 680 7 759 901
Trade and other payables 499 456 469 280 6 520 038
Current income tax liabilities 6 163 8 080 (24) 2 284
Borrowings 226 791 209 819 8 235 070
Provision for other liabilities and charges 3 687 501 636 2 509
Total liabilities 1 096 834 1 019 797 8 1 100 467
Total equity and liabilities 1 687 380 1 537 483 10 1 651 645
Condensed consolidated statement of cash flows
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
Cash flows from operating activities
Net cash generated from operating activities 30 513 24 884 9 082
Cash receipts from customers 1 596 919 1 504 839 3 012 083
Cash paid to suppliers and employees (1 528 079) (1 445 663) (2 928 646)
Cash generated from operations 68 840 59 176 83 437
Interest paid (32 543) (27 524) (61 075)
Income tax paid (5 784) (6 768) (13 280)
Cash flows from investing activities
Net cash used in investing activities (20 724) (16 365) (27 712)
Purchases of property, plant and equipment (25 515) (17 621) (47 684)
Proceeds from sale of property, plant and equipment 4 693 296 2 960
Acquisition of subsidiaries, net of cash acquired - - 5 047
Realisation of financial assets and investments - - 11 493
Purchases of financial assets and investments (20) (248) -
Interest received 118 1 208 472
Cash flows from financing activities
Net cash used in financing activities (7 946) (19 619) (16 518)
Proceeds from the issuance of ordinary shares - 7 116 8 100
Share issue and listing expenses (5) - -
Proceeds from borrowings 40 828 202 732 318 497
Repayments of borrowings (44 052) (208 056) (309 840)
Capital repayments to shareholders (4 717) (21 411) (33 275)
Net increase/(decrease) in cash and cash equivalents 1 843 (11 100) (35 148)
Cash and cash equivalents at beginning of period (15 591) 16 299 16 299
Exchange gains on cash and bank overdrafts 1 558 7 860 3 258
Cash and cash equivalents at end of period (12 190) 13 059 (15 591)
Condensed consolidated statement of changes in equity
Total
attribu-
table to Non-
Common owners con-
Share Share Other Retained control of the trolling Total
capital premium reserves earnings deficit parent interest equity
R000 R000 R000 R000 R000 R000 R000 R000
Balance at 1 July 2011 1 888 772 167 8 029 497 715 (832 110) 447 689 24 903 472 592
Total comprehensive income - - 15 670 34 707 - 50 377 2 381 52 758
Proceeds from shares issued 86 6 615 - - - 6 701 - 6 701
Employee share scheme - - 5 674 1 372 - 7 046 - 7 046
Capital distribution to shareholders - (21 411) - - - (21 411) - (21 411)
Balance at 31 December 2011 1 974 757 371 29 373 533 794 (832 110) 490 402 27 284 517 686
Total comprehensive income - - (5 606) 25 303 - 19 697 (1 328) 18 369
Proceeds from shares issued 10 1 8 019 - - 8 030 - 8 030
Shares to be issued related to business combination - - 18 556 - - 18 556 - 18 556
Employee share scheme transferred to retained earnings - - (19 508) 12 462 - (7 046) - (7 046)
Capital distribution to shareholders - (11 864) - - - (11 864) - (11 864)
Non-controlling - - - - - - 7 447 7 447
interest arising
on business
combination
Balance at 1 984 745 508 30 834 571 559 (832 110) 517 775 33 403 551 178
30 June 2012
Total comprehensive income - - 5 184 30 879 - 36 063 6 226 42 289
Shares issued related to business combination 41 20 312 (18 556) - - 1 797 - 1 797
Capital distribution to shareholders - (4 718) - - - (4 718) - (4 718)
Balance at 31 December 2012 2 025 761 102 17 462 602 438 (832 110) 550 917 39 629 590 546
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 2012 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 MB le Roux (CA (SA)). 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 2012.
The reporting period for the poultry segment as well as the animal nutrition segment ends on the last Sunday of the period, resulting in a
27 week reporting period (2011: 26 weeks).
These unaudited condensed consolidated interim financial statements were approved by the board of directors on 25 February 2013.
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
2. Operating profit
The following amounts have been accounted for in the operating profit:
Gain on bargain purchase of Silver Blade Abattoir Proprietary Limited - - 11 171
Fair value gains/(losses) on financial assets at fair value through profit or loss (1 390) - 9 075
3. Reconciliation to headline earnings
Net profit attributable to the owners of the parent 30 879 34 707 60 010
Adjusted for:
(Profit)/loss on disposal of property, plant and equipment (750) 201 (239)
Gain on bargain purchase of Silver Blade Abattoir Proprietary Limited - - (11 171)
Adjusted headline earnings 30 129 34 908 48 600
4. Capital expenditure and depreciation
Capital expenditure 25 515 17 621 47 684
Depreciation 25 194 19 861 42 698
Amortisation of intangible assets 277 241 553
5. Capital and other commitments
Inventories contracted for 89 086 86 661 108 975
6. Cash and cash equivalents
Bank balances, deposits and cash 153 481 157 229 151 164
Short-term borrowings (165 671) (144 170) (166 755)
(12 190) 13 059 (15 591)
7. Reclassification of comparative figures
In the prior period condensed consolidated interim financial information announcement, intersegment revenue in the segment report was
only shown for the Poultry segment, the Animal Nutrition segment and the Beef segment. In order to more fairly present the intersegment
revenue between both the primary and geographical segments, the intersegment revenue is disclosed separately for each of Poultry South Africa,
Poultry Other Africa, Animal Nutrition South Africa, Animal Nutrition Other Africa and Retail and Distribution South Africa. This has resulted
in the restatement of the prior period figures.
Furthermore, the Beef segment has now been renamed Retail and Distribution.This segment will now include all the retail and distribution
operations of the group.
31 December 30 June
2011 2012
Unaudited Audited
R000 R000
Condensed segment report as previously disclosed
Poultry 1 029 944 2 039 310
- South Africa 946 348 1 861 270
- Other Africa 89 447 189 760
Intersegment revenue (5 851) (11 720)
Animal Nutrition 433 013 848 621
- South Africa 730 559 1 378 566
- Other Africa 193 449 394 440
Intersegment revenue (490 995) (924 385)
Beef 146 281 206 588
- South Africa 146 281 206 725
Intersegment revenue - (137)
Disclosure as per condensed segment report for the
half-year ended 31 December 2012
Poultry 1 029 944 2 039 310
- South Africa 952 200 2 408 513
Intersegment revenue (5 851) (554 224)
- Other Africa 100 114 205 772
Intersegment revenue (16 519) (20 751)
Animal Nutrition 433 013 848 621
- South Africa 730 559 1 551 178
Intersegment revenue (463 062) (1 021 924)
- Other Africa 193 449 394 440
Intersegment revenue (27 933) (75 073)
Retail and Distribution 146 281 206 588
- South Africa 146 281 210 318
Intersegment revenue - (3 730)
Condensed segment report
REVENUE OPERATING PROFIT ASSETS
31 December 31 December 30 June 31 December 31 December 30 June 31 December 31 December 30 June
2012 2011 2012 2012 2011 2012 2012 2011 2012
Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited
R000 R000 R000 R000 R000 R000 R000 R000 R000
Poultry 941 026 1 029 944 2 039 310 3 506 55 744 77 608 1 077 293 1 038 092 1 135 183
- South Africa 1 052 774 952 200 2 408 513 (17 107) 43 072 56 562 763 388 814 212 885 369
Intersegment revenue (246 011) (5 851) (554 224) - - - - - -
- Other Africa 146 254 100 114 205 772 20 613 12 672 21 046 313 905 223 880 249 814
Intersegment revenue (11 991) (16 519) (20 751) - - - - - -
Animal Nutrition 334 325 433 013 848 621 72 121 24 288 68 267 445 264 464 748 455 834
- South Africa 751 330 730 559 1 551 178 48 671 20 168 60 561 365 550 355 071 374 045
Intersegment revenue (622 312) (463 062) (1 021 924) - - - - - -
- Other Africa 255 594 193 449 394 440 23 450 4 120 7 706 79 714 109 677 81 789
Intersegment revenue (50 287) (27 933) (75 073) - - - - - -
Retail and Distribution 318 657 146 281 206 588 1 885 (2 176) 3 594 164 823 34 643 60 628
- South Africa 320 730 146 281 210 318 1 514 (2 176) 3 594 147 263 34 643 60 628
Intersegment revenue (5 432) - (3 730) - - - - - -
- Other Africa 3 359 - - 371 - - 17 560 - -
1 594 008 1 609 238 3 094 519 77 512 77 856 149 469 1 687 380 1 537 483 1 651 645
Revenues of approximately R206,8 million (2011: R145,8 million) are derived from a single external customer. These revenues are attributable to the South African Poultry segment.
Registered address
269 Oxford Road, Cnr Harries Road, Illovo, Johannesburg, 2196
(PO Box 412523, Craighall, 2024)
Directors
BH Kent (Chairman)#, R Gibbison#, GP Heath, IWM Isdale#, KW James, MB le Roux, CD Stein#, JD Wright
#Independent non-executive
Company secretary
MJC Antunes, 15 Coro Street, Bloemfontein, 9301
(PO Box 6851, Bloemfontein, 9300)
Investment Bank and Sponsor
Investec Bank Limited, (Registration number 1969/004763/06)
2nd Floor,100 Grayston Drive, Sandton, 2196
(PO Box 785700, Sandton, 2146)
Attorneys
Fluxmans Inc., 11 Biermann Avenue, Rosebank, Johannesburg, 2196
(Private Bag X41, Saxonwold, 2132)
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
26 February 2013
Date: 26/02/2013 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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