Wrap Text
Audited results for the year ended 30 June 2013
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)
Audited results for the year ended 30 June 2013
- Group operating profit down 11%
- Other Africa operating profit up 125% contributing 49% of group operating profit
- HEPS up 2%
- EPS down 17%
- Positive cash generation R38,7 million
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
Group revenue for the year increased to R3,2 billion (2012: R3,1 billion) and operating profit of R132,6 million was
11% lower than the R149,5 million achieved for the prior year; this sustained level of profitability was primarily as a
result of excellent performances by the other African poultry and feed businesses, and the South African feed operation
despite losses being incurred in the South African poultry division.
Operating profit of R64,6 million in the other African businesses is an increase of 125% over last years figure of
R28,8 million and represents 49% of the groups operating profit for the year.
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 R98,1 million, 62% higher than the previous years comparative of
R60,6 million.
With finance costs only reducing marginally by 1% to R60,2 million PBIT of R73,3 million was 18% lower than last
years figure of R88,7 million. The attributable tax rate of 21%, being positively affected by the lower tax rates applicable
in the other African operations resulted in a 5% reduction in profit after tax to R58,1 million (2012: R61,1 million).
Operational review
Group
The group recorded a credible set of results, despite the considerable problems facing the poultry industry in South
Africa. The performance from the operations outside of South Africa has been the best since the formation of the group.
The rewards for early recognition and subsequent investment in selected countries in the SADC region are becoming
apparent and these operations together with other selected regional opportunities will continue to be a key component of the
groups strategy going forward. As a result of difficult trading conditions in South Africa and substantial increases in
raw material prices, the working capital requirements and consequent interest charges were high. Despite this the group
was able to show an overall positive increase in cash and cash equivalents for the year of R38,7 million (2012: decrease
of R35,1 million).
Poultry South Africa
The industry remains under severe pressure and has now officially been designated as a distressed industry. The
combination of static volumes with no significant increase in selling prices were insufficient to avoid further margin erosion
with the sector recording an operating loss for the year of R24,7 million compared to an operating profit of R56,6
million in the prior year.
The industry continues to suffer from record levels of imports coupled with high raw material input prices and we,
both as a company and an industry, continue to engage with the relative government ministries in order to find common
ground for relief. In an effort to minimise the impact of these hurdles we have continued to make inroads with our market
diversification policy. We have recorded growth with the existing Quick Service Restaurant business whilst making further
inroads into growth prospects with sustainable new customers.
Poultry Other Africa
Significant volume increases were recorded in our dressed operations in Botswana, from a relatively low base, and we
achieved a 20% increase in day-old chick volumes, mainly due to the Francistown hatchery coming on stream for a full
year. Prices in the poultry industry in general have not kept pace with input costs resulting in margin reduction but we are
well placed with a strong customer base and quality product to take advantage of an upturn when it comes.
The Zambian poultry industry has remained resilient throughout the year and we were able to increase volumes in both
the day-old chick and parent market. This, together with good parent flock utilisation, has enabled Zambia to achieve
excellent operating profits.
Overall, operating profit of R33,9 million for this segment was an improvement of 61% over last years figure of R21
million.
Animal Nutrition South Africa
Nutri Feeds recorded an operating profit for the year under review of R98,1 million against last years figure of
R60,6 million. Efforts were concentrated on cost control and improved efficiencies. These, together with sound procurement
practices enabled our milling operation to remain profitable in a difficult operating environment. Good maize and soya
positions, coupled with the advantage of strategically well situated mills, resulted in favourable landed raw material
positions and improved margins.
Animal Nutrition Other Africa
Operating profit for the year was R35,5 million compared with R7,7 million for the comparative year, an excellent
result. In Botswana management focus was on rationalisation of product lines, efficiency improvement and streamlined
procurement policies. These efforts, together with solid foreign exchange management, ensured significant margin improvement
despite a 5% drop in volumes.
In Zambia, we achieved volume growth of 12% while maintaining margin through the ability to pass on large raw material
input increases. Growth was achieved by establishing exports into neighbouring countries while maintaining market share
in the local economy. Focus remains centred around continual efficiency improvements, cost control and full utilisation
of group resources for quality enhancement and raw material procurement.
Retail and distribution
This new division was formed by combining Supreme Distributors, Long Iron Meats and Ama Chick Chick factory retail
outlets. The operation will focus on optimising distribution and logistics for the group. The difficult trading conditions
previously referred to resulted in the segment realising an operating loss of R10,2 million compared with an operating
profit of R3,6 million in the prior year.
Prospects
We continue to liaise closely with all relevant departments in Government to seek a mutually acceptable resolution to
the problems facing the industry with regard to unequal treatment and dumping in respect of imported bone in cuts. It is
an industry in crisis and until such time as we get greater understanding and action from all concerned parties, the
industry will remain depressed and under threat.
In South Africa we will concentrate our efforts on providing efficient and sustainable milling operations while
aggressively targeting poultry market segments which we can serve to best advantage and thereby minimise the effect of imports
competing on an uneven playing field.
In Zambia, we will commission a new state of the art hatchery during the first half of the new year, providing an
additional 40% capacity. The local market is robust, in line with the economy, and we plan to increase our market share.
Breeder expansion will need to accompany this first phase but will take place at a later date. The feed mill has sufficient
capacity to take up local growth and we should benefit in this regard. We also believe there is potential for growth in
the regional parent market as neighbouring economies produce growth which we are well placed to take advantage of.
In Botswana, the economy remains strong and we are well positioned to take advantage of any natural growth as well as
to become more competitive in existing markets. We will relook at entering the ruminant market in order to take
advantage of excess capacities in the milling sector.
With regard to the International Finance Corporation ("IFC") and the US$ 25 million convertible instrument transaction, all
necessary regulatory requirements have been met and the funds have been disbursed subsequent to year end. We look forward to
growing in Africa with the IFC as our partners, and see this as a critical pillar to the success of our group strategy going forward.
Forecast financial information included in the commentary on results has not been reviewed or audited by the groups auditors, in
accordance with Section 8.40(a) of the JSE Listings Requirements.
Final capital distribution or dividend
Given the uncertainties surrounding the South African poultry industry with regard to the implementation and timing of
an appropriate tariff structure, and the inevitable difficult trading conditions that will prevail until such time as
relief is forthcoming, it is considered prudent that no final capital distribution or dividend be declared.
By order of the board
MP Stander
Chief executive officer
27 August 2013
Audited condensed consolidated statement of comprehensive income
30 June 30 June
2013 2012
Audited % Audited
R000 change R000
Revenue 3 236 576 5 3 094 519
Operating profit 132 597 (11) 149 469
Finance income 921 95 472
Finance costs (60 204) (1) (61 075)
Profit before income tax 73 314 (18) 88 866
Income tax expense (15 179) (45) (27 803)
Profit for the year 58 135 (5) 61 063
Other comprehensive income:
Currency translation differences 24 602 144 10 064
Total comprehensive income for the year 82 737 16 71 127
Profit attributable to:
Owners of the parent 51 396 (14) 60 010
Non-controlling interest 6 739 540 1 053
58 135 (5) 61 063
Total comprehensive income attributable to:
Owners of the parent 75 998 8 70 074
Non-controlling interest 6 739 540 1 053
82 737 16 71 127
Earnings per share (cents):
- basic 25,63 (17) 30,79
- diluted 25,63 (17) 30,79
Additional information to condensed consolidated financial statements
Ordinary shares
- issued net of treasury shares 202 443 918 198 372 313
- weighted average number of ordinary shares 200 524 282 194 931 980
- diluted number of ordinary shares 200 524 282 194 931 980
Headline earnings per ordinary share (cents):
- basic 25,51 2 24,93
- diluted 25,51 2 24,93
Dividend/capital distribution per share - interim (cents) - (100) 5,98
Capital distribution per share - final (cents) - (100) 2,33
Net asset value per share 314,67 11 282,75
Tangible asset value per share 261,43 14 229,83
Gearing ratio (net of cash and cash equivalents) 1,80 4 1,72
Audited condensed consolidated statement of financial position
As at As at
30 June 30 June
2013 2012
Audited % Audited
R000 change R000
ASSETS
Non-current assets 623 940 12 559 295
Property, plant and equipment 499 542 12 445 235
Intangible assets 106 757 3 103 160
Financial assets and other investments 931 43 653
Deferred income tax assets 16 710 63 10 247
Current assets 1 331 595 22 1 092 350
Inventories 367 986 31 280 373
Biological assets 214 585 25 171 330
Trade and other receivables 553 045 15 481 015
Derivative financial instruments 3 355 (58) 7 999
Current income tax receivable 1 023 118 469
Cash and cash equivalents 191 601 27 151 164
Total assets 1 955 535 18 1 651 645
EQUITY
Total equity 630 994 14 551 178
Ordinary shares 2 024 2 1 984
Share premium 761 103 2 745 508
Other reserves 36 880 20 30 834
Retained earnings 622 955 9 571 559
Common control deficit (832 110) 0 (832 110)
Equity attributable to the owners of the parent 590 852 14 517 775
Non-controlling interest 40 142 20 33 403
LIABILITIES
Non-current liabilities 283 280 (17) 340 566
Borrowings 179 499 (25) 240 091
Employee share scheme liability 1 752 (21) 2 223
Deferred income tax liabilities 102 029 4 98 252
Current liabilities 1 041 261 37 759 901
Trade and other payables 744 360 43 520 038
Current income tax liabilities 4 403 93 2 284
Borrowings 292 448 24 235 070
Provision for other liabilities and charges 50 (98) 2 509
Total liabilities 1 324 541 20 1 100 467
Total equity and liabilities 1 955 535 18 1 651 645
Audited condensed consolidated statement of cash flows
30 June 30 June
2013 2012
Audited Audited
R000 R000
Cash flows from operating activities
Net cash generated from operating activities 127 492 9 082
Cash receipts from customers 3 164 542 3 012 083
Cash paid to suppliers and employees (2 959 035) (2 928 646)
Cash generated from operations 205 507 83 437
Interest paid (60 204) (61 075)
Income tax paid (17 811) (13 280)
Cash flows from investing activities
Net cash used in investing activities (76 844) (27 712)
Purchases of property, plant and equipment (82 154) (47 684)
Proceeds from sale of property, plant and equipment 4 667 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 (278) -
Interest received 921 472
Cash flows from financing activities
Net cash used in financing activities (11 938) (16 518)
Proceeds from the issuance of ordinary shares - 8 100
Share issue and listing expenses (6) -
Proceeds from borrowings 107 776 318 496
Repayments of borrowings (114 991) (309 840)
Capital repayments to shareholders (4 717) (33 274)
Net increase/(decrease) in cash and cash equivalents 38 710 (35 148)
Cash and cash equivalents at beginning of year (15 591) 16 299
Exchange gains on cash and bank overdrafts (2 274) 3 258
Cash and cash equivalents at end of year 20 845 (15 591)
Audited condensed segment report
REVENUE OPERATING PROFIT ASSETS
30 June 30 June 30 June 30 June 30 June 30 June
2013 2012 2013 2012 2013 2012
Audited Audited Audited Audited Audited Audited
R000 R000 R000 R000 R000 R000
Poultry 1 783 588 2 039 310 9 208 77 608 1 283 738 1 135 183
- South Africa 2 007 573 2 408 513 (24 666) 56 562 884 884 885 369
Intersegment revenue (506 098) (554 224) - - - -
- Other Africa 287 138 205 772 33 874 21 046 398 854 249 814
Intersegment revenue (5 026) (20 751) - - - -
Animal Nutrition 860 709 848 621 133 582 68 267 497 854 455 834
- South Africa 1 579 294 1 551 178 98 116 60 561 409 503 374 045
Intersegment revenue (1 118 254) (1 021 924) - - - -
- Other Africa 507 945 394 440 35 466 7 706 88 351 81 789
Intersegment revenue (108 276) (75 073) - - - -
Retail and Distribution 592 279 206 588 (10 193) 3 594 173 943 60 628
- South Africa 593 385 206 725 (5 500) 3 594 150 805 60 628
Intersegment revenue (4 804) (137) - - - -
- Other Africa 6 678 - (4 693) - 23 138 -
Intersegment revenue (2 981) - - - - -
3 236 576 3 094 519 132 597 149 469 1 955 535 1 651 645
Revenues of approximately R366,4 million (2012: R241,5 million) are derived from a single external customer. These revenues
are attributable to the South African Poultry segment.
Audited 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 - - 10 064 60 010 - 70 074 1 053 71 127
Transactions with owners
Proceeds from shares issued 96 6 616 8 019 - - 14 731 - 14 731
Shares to be issued related
to business combination - - 18 556 - - 18 556 - 18 556
Employee share scheme transferred
to retained earnings - - (13 834) 13 834 - - - -
Capital distribution to shareholders - (33 275) - - - (33 275) - (33 275)
Non-controlling interest arising on
business combination - - - - - - 7 447 7 447
Total transactions with owners 96 (26 659) 12 741 13 834 - 12 7 447 7 459
Balance at 30 June 2012 1 984 745 508 30 834 571 559 (832 110) 517 775 33 403 551 178
Balance at 1 July 2012 1 984 745 508 30 834 571 559 (832 110) 517 775 33 403 551 178
Total comprehensive income - - 24 602 51 396 - 75 998 6 739 82 737
Transactions with owners
Proceeds from shares issued 40 20 312 - - - 20 352 - 20 352
Shares to be issued related to
business combination - - (18 556) - - (18 556) - (18 556)
Capital distribution to shareholders - (4 717) - - - (4 717) - (4 717)
Total transactions with owners 40 15 595 (18 556) - - (2 921) - (2 921)
Balance at 30 June 2013 2 024 761 103 36 880 622 955 (832 110) 590 852 40 142 630 994
Notes to the condensed consolidated financial statements
1. Basis of preparation
The audited condensed consolidated financial information announcement for the year ended 30 June 2013 was prepared in accordance
with International Financial Reporting Standards (IFRS), International Standard 34, the Listing Requirements of the JSE Limited
and the South African Companies Act of 2008. The condensed consolidated financial statements were supervised by MJC Antunes (CA (SA)).
The accounting policies are consistent with those of the previous financial year 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 2013. These results have been audited by PricewaterhouseCoopers Inc,
Chartered Accountants (SA), Registered Auditors. Their unqualified audit opinion is available for inspection at the companys registered
office.
These audited condensed consolidated financial statements were approved by the board of directors on 26 August 2013.
30 June 30 June
2013 2012
Audited Audited
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 (4 644) 9 075
3. Reconciliation to headline earnings
Profit attributable to owners of the parent 51 396 60 010
Adjusted for:
(Profit)/loss on disposal of property, plant and equipment (243) (239)
Gain on bargain purchase of Silver Blade Abattoir Proprietary Limited - (11 171)
Adjusted headline earnings 51 153 48 600
4. Capital expenditure and depreciation
Capital expenditure 82 154 47 684
Depreciation 48 440 42 698
Amortisation of intangible assets 553 553
5. Capital and other commitments
Inventories contracted for 135 729 108 975
6. Cash and cash equivalents
Bank balances, deposits and cash 191 603 151 164
Short-term borrowings (170 758) (166 755)
20 845 (15 591)
7. Reclassification of comparative figures
In the prior period condensed consolidated 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 year 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.
30 June
2012
Audited
R000
Condensed segment report as previously disclosed
Poultry 2 039 310
- South Africa 1 861 270
- Other Africa 189 760
Intersegment revenue (11 720)
Animal Nutrition 848 621
- South Africa 1 378 566
- Other Africa 394 440
Intersegment revenue (924 385)
Beef 206 588
- South Africa 206 725
Intersegment revenue (137)
Disclosure as per condensed segment report for the year ended 30 June 2012:
Poultry 2 039 310
- South Africa 2 408 513
Intersegment revenue (554 224)
- Other Africa 205 772
Intersegment revenue (20 751)
Animal Nutrition 848 621
- South Africa 1 551 178
Intersegment revenue (1 021 924)
- Other Africa 394 440
Intersegment revenue (75 073)
Retail and distribution 206 588
- South Africa 206 725
Intersegment revenue (137)
Directors of CBH Limited: BH Kent (Chairman)#, R Gibbison#, GP Heath, IWM Isdale#, KW James, MP Stander, CD Stein#
#Independent non-executive
Registered office: 8 Melville Road, Illovo, Johannesburg, 2196 (PO Box 412523, Craighall, 2024)
Attorneys: Fluxmans Inc, 11 Biermann Avenue, Rosebank, Johannesburg, 2196 (Private Bag X41, Saxonwold, 2132)
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, 48 President Steyn Street, Westdene, 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: 27/08/2013 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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