Wrap Text
Unaudited Interim Results for the six months ended 31 March 2014
Astral Foods Limited
Incorporated in the Republic of South Africa
Registration number 1978/003194/06
Share code: ARL
ISIN: ZAE000029757
Unaudited
Interim Results
for the six months ended 31 March 2014
REVENUE INCREASE 11%
OPERATING PROFIT INCREASE 260%
EARNINGS PER SHARE INCREASE 96%
HEADLINE EARNINGS INCREASE 308%
INTERIM DIVIDEND OF 200 CENTS PER SHARE
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited Audited
six months six months 12 months 12 months
ended ended ended ended
31 March 2014 31 March 2013 30 Sept 2013 30 Sept 2012
Restated @ Restated @ Restated @
R'000 R'000 R'000 R'000
ASSETS
Non-current assets 2 060 066 1 907 121 1 983 204 1 855 349
Property, plant and equipment 1 874 812 1 722 452 1 796 461 1 678 976
Intangible assets 21 434 21 717 25 320 17 169
Goodwill 136 135 136 135 136 135 136 135
Investment in associate 22 337 18 946 19 940 15 303
Investments and loans 5 348 7 871 5 348 7 766
Current assets 2 036 719 1 692 004 1 938 270 1 672 894
Inventories 523 969 323 229 440 684 379 433
Biological assets 616 480 572 971 592 690 534 806
Trade and other receivables 853 014 758 018 806 821 723 569
Current tax assets 2 480 9 850 4 614 9 819
Cash and cash equivalents 40 776 27 936 93 461 25 267
Held for sale – – – 15 303
Total assets 4 096 785 3 599 125 3 921 474 3 543 546
EQUITY
Capital and reserves attributable to
equity holders of the parent company 1 733 999 1 532 832 1 680 866 1 585 227
Issued capital 2 044 2 044 2 044 2 044
Treasury shares (204 435) (204 435) (204 435) (204 435)
Reserves 1 936 390 1 735 223 1 883 257 1 787 618
Non-controlling interests 14 949 12 369 13 954 10 744
Total equity 1 748 948 1 545 201 1 694 820 1 595 971
LIABILITIES
Non-current liabilities 700 778 606 155 655 790 516 367
Borrowings (note 7) 180 464 92 951 145 255 14 859
Deferred tax liability 423 515 415 494 417 646 407 711
Retirement benefit obligations 96 799 97 710 92 889 93 797
Current liabilities 1 647 059 1 447 769 1 570 864 1 431 208
Trade and other liabilities 1 566 748 1 235 086 1 355 495 1 307 776
Current tax liabilities – 8 766 2 040 5 684
Borrowings (note 7) 78 570 202 198 211 630 116 091
Shareholders for dividend 1 741 1 719 1 699 1 657
Total liabilities 2 347 837 2 053 924 2 226 654 1 947 575
Total equity and liabilities 4 096 785 3 599 125 3 921 474 3 543 546
@ Restated – refer notes 4 and 10.
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2014 31 March 2013 30 Sept 2013
Restated @ Change Restated @
R'000 R'000 % R'000
Revenue 4 699 938 4 218 934 11 8 508 853
Operating profit (note 5) 212 950 59 175 260 261 867
Profit on sale of interest in associate – 46 566 46 566
Profit before interest and tax 212 950 105 741 101 308 433
Finance income 71 481 880
Finance costs (11 891) (12 541) (27 839)
Share of profit from associate 2 397 5 479 6 474
Profit before income tax 203 527 99 160 105 287 948
Tax expense (58 230) (24 632) (77 122)
Profit for the period 145 297 74 528 95 210 826
Other comprehensive income
Foreign currency translation adjustments (6 052) 2 224 12 487
Actuarial gain on post-retirement benefit
obligations – – 3 613
Total comprehensive income for the period 139 245 76 752 81 226 926
Profit attributable to:
Equity holders of the holding company 143 214 73 110 96 207 537
Non-controlling interests 2 083 1 418 47 3 289
145 297 74 528 95 210 826
Comprehensive income attributable to:
Equity holders of the holding company 137 259 75 127 83 223 060
Non-controlling interests 1 986 1 625 22 3 866
139 245 76 752 81 226 926
Earnings per share (cents)
– basic 376 192 96 545
– diluted 376 192 96 545
@ Restated – refer notes 4 and 10.
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2014 31 March 2013 30 Sept 2013
Restated @ Restated @
R'000 R'000 R'000
Balance beginning of year 1 694 820 1 595 971 1 595 971
Total comprehensive income for the period 139 245 76 752 226 926
Dividends to the company's shareholders (84 494) (127 882) (127 882)
Payments to non-controlling interest holders (990) – (660)
Option value of share options granted 367 360 465
Balance at end of period 1 748 948 1 545 201 1 694 820
@ Restated – refer notes 4 and 10.
CONDENSED GROUP SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2014 31 March 2013 30 Sept 2013
Restated @ Change Restated @
R'000 R'000 % R'000
Revenue
Poultry 3 316 919 2 952 420 12 6 000 605
Feed 2 550 501 2 396 820 6 4 915 626
Other Africa 248 263 203 303 22 442 146
Services and ventures – –
As previously reported 30 246 30 246
Restatement (30 246) (30 246)
Inter-group (1 415 745) (1 333 609) (2 849 524)
Feed to Poultry (1 333 609) (2 702 755)
Other (15 123) (161 892)
Restatement 15 123 15 123
4 699 938 4 218 934 11 8 508 853
Operating profit
Poultry 44 944 (116 619) 139 (112 526)
As previously reported (109 412)
Restatement (3 114)
Feed 157 059 156 201 1 329 372
As previously reported 331 276
Restatement (1 904)
Other Africa 10 947 19 593 (44) 45 021
Services and ventures – –
As previously reported 4 672 4 673
Restatement (4 672) (4 673)
212 950 59 175 260 261 867
@ Restated – refer notes 4 and 10.
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2014 31 March 2013 30 Sept 2013
Restated @ Restated @
R'000 R'000 R'000
Cash operating profit 287 474 122 289 388 463
Changes in working capital 57 984 (89 100) (150 736)
Cash generated from operating activities 345 458 33 189 237 727
Income tax paid (52 128) (14 950) (66 705)
Cash flows from operating activities 293 330 18 239 171 022
Cash used in investing activities (148 186) (36 609) (160 418)
Capital expenditure (149 513) (104 431) (234 802)
Investment income 71 481 880
Proceeds on disposal of investment – 63 706 63 706
Proceeds on disposal of property, plant and equipment 1 256 3 635 9 798
Cash flows to financing activities (55 032) (58 532) (7 609)
Net increase in borrowings 49 077 85 190 155 334
Interest paid (18 667) (15 902) (34 443)
Dividends paid (85 442) (127 820) (128 500)
Net movement in cash and cash equivalents 90 112 (76 902) 2 995
Effects of exchange rate changes 4 131 562 (3 688)
Cash and cash equivalent balances at beginning of year (78 028) (77 335) (77 335)
Cash and cash equivalent balances at end of period (note 8) 16 215 (153 675) (78 028)
@ Restated – refer notes 4 and 10.
ADDITIONAL INFORMATION
Unaudited Unaudited Audited
six months six months 12 months
ended ended Change ended
31 March 2014 31 March 2013 % 30 Sept 2013
Headline earnings (R'000) – (note 6) 146 841 35 948 308 165 070 @
Headline earnings per share (cents)
– basic 386 94 308 434 @
– diluted 386 94 308 434 @
Dividends per share (cents) 200 – 222
Number of ordinary shares
– issued net of treasury shares 38 060 308 38 060 308 38 060 308
– weighted average 38 060 308 38 060 308 38 060 308
– diluted weighted average 38 064 308 38 069 482 38 065 338
Net debt (borrowings less cash and cash
equivalents) (R'000) 218 258 267 213 263 424
Net debt to equity percentage (%) 12,5 17,3 15,5 @
Net asset value per share (Rand) 45,56 40,27 @ 44,16 @
@ Restated
NOTES
1. Nature of business
Astral is a leading South African integrated poultry producer. Key activities consist of 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 2014 have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), IAS 34 – Interim Financial Reporting, the Listings Requirements of the
JSE Limited and the South African Companies Act (2008). These condensed interim financial statements have been prepared
under the supervision of the financial director, DD Ferreira CA(SA).
These financial statements have not been reviewed or audited by the Group's auditors.
3. Accounting policies
The accounting policies applied in this interim financial statements comply with IFRS and is consistent with those applied in the
preparation of the Group's annual financial statements for the year ended 30 September 2013, except for changes as required
by the mandatory adoption of IFRS 11 and IAS 19R (refer to notes 4 and 10).
4. Restatement of comparative amounts for prior periods
The Group adopted IFRS 11 (Joint Arrangements) and the revised IAS 19R (Employee Benefits) with effect from its financial
year starting 1 October 2013. The impact of these standards on the comparative results for prior periods are as follows:
– IFRS 11 (Joint Arrangements)
In terms of IFRS 11 which superseded IAS 31, interests in joint ventures must be reported on the equity accounted
basis. The requirement to remeasure the retained portion of an equity accounted investment in the event of a disposal
of a portion of the investment has been removed. The Group has accordingly reversed items previously proportionally
consolidated, as well as a remeasurement profit of R32 860 000 previously recognised in profit and loss.
– IAS 19R (Employee Benefits)
In terms of the revised IAS 19R, actuarial gains and losses on post-employment benefits have to be recognised in other
comprehensive income, previously being recognised in profit and loss.
The actuarial gains and losses are determined and assessed once a year at September by the Group, and there is
therefore no effect on the results for the six months ended 31 March 2013, whilst an amount of R5 018 000 (R3 613 000
after tax) has been excluded from profit and loss for the 12 months ended 30 September 2013.
Refer to note 10 for details of the impact on the comparative amounts for prior periods.
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2014 31 March 2013 30 Sept 2012
R'000 R'000 R'000
5. Operating profit
The following items have been accounted for in the
operating profit:
Amortisation of intangible assets 4 531 1 621 3 305
Depreciation on property, plant and equipment 60 677 58 868 119 424
Impairment of property, plant and equipment 2 251 – 3 697
(Loss)/Profit on sale of property, plant and equipment (787) 2 703 1 926
Directors' remuneration – – 23 572
Profit on sale of unlisted investment – – 2 485
Foreign exchange (loss)/profit – – (146)
6. Reconciliation to headline earnings
Net profit attributable to shareholders 143 214 73 110 207 537 @
Loss/(Profit) on sale of property, plant and equipment
(net of tax) 566 (2 174) (2 759)
Loss on assets scrapped (net of tax) 1 440 – 1 055
Impairment of assets (net of tax) 1 621 – 2 661
Profit on disposal of interest in associate (net of tax) – (34 988) (34 988) @
Profit on sale of unlisted investments – – (2 021)
Insurance recovery on damaged assets (net of tax) – – (6 415)
Headline earnings for the period 146 841 35 948 165 070 @
@ Restated
7. Borrowings
Non-current
Secured loans 26 517 46 618 37 229
Unsecured loans 207 956 66 920 148 167
Less: Portion payable within 12 months included in
current liabilities (54 009) (20 587) (40 141)
180 464 92 951 145 255
Current
Bank overdrafts 24 561 181 611 171 489
Portion of non-current secured loans payable within
12 months 54 009 20 587 40 141
78 570 202 198 211 630
8. Cash and cash equivalents per cash flow statement
Bank overdrafts (included in current borrowings) (24 561) (181 611) (171 489)
Cash at bank and in hand 40 776 27 936 93 461
Cash and cash equivalents per cash flow statement 16 215 (153 675) (78 028)
9. Capital commitments
Capital expenditure approved not contracted 133 898 134 467 108 270
Capital expenditure contracted not recognised in
financial statements 135 686 119 576 72 069
10. Effect of restatement on comparative amounts
10.1 Condensed Group statement of financial position
Unaudited Audited Audited
six months 12 months 12 months
ended ended ended
31 March 2013 30 Sept 2013 30 Sept 2012
R'000 R'000 R'000
Investment in associate
As previously reported 51 806 52 800 –
Restatement – IFRS 11 (32 860) (32 860) 15 303
Restated 18 946 19 940 15 303
Reserves
As previously reported 1 768 083 1 916 117 –
Restatement – IFRS 11 (32 860) (32 860) –
Restated 1 735 223 1 883 257 –
10.2 Restatement of the statement of comprehensive income for the six months ended 31 March 2013
Unaudited Unaudited
six months six months
ended ended
31 March 2013 31 March 2013
As previously IFRS 11
reported Restatement Restated
R'000 R'000 R'000
Revenue 4 234 057 (15 123) 4 218 934
Operating profit 63 847 (4 672) 59 175
Profit on sale of interest in associate 79 426 (32 860) 46 566
Profit before interest and tax 143 273 (37 532) 105 741
Finance income 538 (57) 481
Finance expense (12 541) – (12 541)
Share of profit from associate 1 806 3 673 5 479
Profit before income tax 133 076 (33 916) 99 160
Tax expense (25 688) 1 056 (24 632)
Profit for the year 107 388 (32 860) 74 528
Other comprehensive income
Foreign currency translation adjustments 2 224 – 2 224
Total comprehensive income for the year 109 612 (32 860) 76 752
Profit attributable to:
Equity holders of the company 105 970 (32 860) 73 110
Non-controlling interest 1 418 – 1 418
Profit for the year 107 388 (32 860) 74 528
Total comprehensive income attributable to:
Equity holders of the company 107 987 (32 860) 75 127
Non-controlling interest 1 625 – 1 625
Total comprehensive income for the year 109 612 (32 860) 76 752
10.3 Restatement of the statement of comprehensive income for the 12 months ended 30 September 2013
Audited Audited
12 months 12 months
ended ended
30 Sept 2013 IFRS 11 IAS 19R 30 Sept 2013
As previously Restatement Restatement Restated
reported R'000 R'000 R'000
Revenue 8 523 976 (15 123) – 8 508 853
Operating profit 271 558 (4 673) (5 018) 261 867
Profit on sale of interest in
associate 79 426 (32 860) – 46 566
Profit before interest and tax 350 984 (37 533) (5 018) 308 433
Finance income 937 (57) – 880
Finance expense (27 839) – – (27 839)
Share of profit from associate 2 800 3 674 – 6 474
Profit before income tax 326 882 (33 916) (5 018) 287 948
Tax expense (79 583) 1 056 1 405 (77 122)
Profit for the year 247 299 (32 860) (3 613) 210 826
Other comprehensive income:
Foreign currency translation
adjustments 12 487 – – 12 487
Actuarial gain on post-retirement
benefit obligations – – 3 613 3 613
Total comprehensive income
for the year 259 786 (32 860) – 226 926
Profit attributable to:
Equity holders of the company 244 010 (32 860) (3 613) 207 537
Non-controlling interest 3 289 – – 3 289
Profit for the year 247 299 (32 860) (3 613) 210 826
Total comprehensive income
attributable to:
Equity holders of the company 255 920 (32 860) – 223 060
Non-controlling interest 3 866 – – 3 866
Total comprehensive income
for the year 259 786 (32 860) – 226 926
FINANCIAL OVERVIEW
The increase in headline earnings from R35,9 million for the previous year's first six months, to R148,8 million for the first six months
of the 2014 financial year, was attributable to the turnaround in the profitability of the poultry division.
Revenue increased by 11% to R4 700 million, contributed by a 12% increase in poultry revenue and a 6% increase in feed's external
revenue.
The Group's operating profit increased by 260% to R212,9 million. The poultry division's reported profit of R44,9 million, was a
significant turnaround from the previous year's reported losses of R116,6 million, and resulted in the improvement in the group's
operating profit. Profitability of the feed division at R157,1 million was marginally higher (1%), than its previous year's profits.
The Africa division's profit at R10,9 million was down on the previous year's R19,6 million resulting from a combination of stock
mismanagement and unfavourable raw material positions.
Profit before tax was 101% higher than the previous year's R105,7 million which include a profit of R46,6 million on the sale of a
portion of an interest in a joint venture. This amount have been restated (previously reported at R79,4 million) following the mandatory
adoption of a new accounting policy in terms of IFRS 11 ( refer to notes 4 and 10.2).
Finance cost at R11,8 million was marginally lower than the previous year, however, interest of R6,8 million on finance raised to
fund the construction of the new feed mill, has been capitalised. The finance cost on this loan will be expensed in the statement of
comprehensive income once the feed mill is commissioned later during the year.
The improvement in cash flows from operating activities, at an inflow of R293,3 million from the previous year's inflow of R18,2 million,
follows the improvement in profits together with an inflow of R58 million from changes in working capital. Capital expenditure at
R149,5 million was higher than the previous year due to the ongoing expenditure on the new feed mill. An amount of R52 million was
drawn down on the feed mill project during the period under review. The net movement in cash and cash equivalents, including the
payment of the 2013 final dividend, was an inflow of R90,1 million. The net debt equity ratio including the funding of the new feed
mill, was at 12,5%, down from 15,5% as at 30 September 2013.
The board has declared an interim dividend of 200 cents per share. The distribution will be supported by the low debt to equity level
and the underlying liquidity capabilities of the Group.
OPERATIONAL OVERVIEW
Poultry Division
Revenue for the division was up by 12,3% to R3 317 million (2013: R2 952 million) on the back of higher broiler volumes which
improved by 6,2% due to normalised bird placements against cutbacks in the comparable reporting period. Sales realisations
increased by 5,9% for the period under review.
Feed costs remained high despite decreasing by 3,2% off the prior period record highs. Operating profit for the division increased
by 138,5% to R45 million (2013: R117 million loss).
High poultry imports continued during the period which equated to an average of approximately 5,1 million birds per week, against
local production of approximately 19,4 million birds per week. Broiler production performances improved for the period in line with
continued focus in this area. An improvement in product mix was realised with Astral's exposure to Individually Quick Frozen (IQF)
portions decreasing by 2%, with an increase in fresh sales.
Feed Division
Revenue for the division increased by 6,4% to R2 550 million (2013: R2 397 million) as a result of higher sales volumes which
increased by 4,1% due to a higher inter-group requirement for poultry feed (up 7,4%), with external feed sales increasing by 0,9%.
Operating profit remained unchanged at R157 million (2013: R156 million) with an operating profit margin at 6,2%. Once off costs
linked to the scrapping of assets, and impairment due to the closure of the Welkom feed mill, were incurred.
Other Africa Division
Revenue for the division increased by 22,1 % to R248 million (2013: R203 million) as a result of higher day old chick sales with the
completion of the expansion project in Zambia.
The operating profit decreased to R10,9 million (2013: R19,6 million), with the profitability of the division impacted by a poor
performance from Tiger Animal Feeds in Zambia as a consequence of unfavourable raw material positions and stock mismanagement.
PROSPECTS
The slowing level of growth in the economy and higher unemployment levels will continue to depress consumer spending. This,
coupled with other factors like industrial action in the mining sector, will continue to impact profit margins in the industry.
There will be a good maize crop in South Africa with an expected softening in grain prices in the coming six months off the highs of
the past reporting period. This will benefit feed prices and broiler production costs.
If the South African Poultry Association application to the International Trade Administration Commission for anti-dumping duties
against the EU is successful, this will go some way to improving the imbalance in the supply and demand for chicken.
DECLARATION OF ORDINARY DIVIDEND NUMBER 26
The board has approved an interim dividend of 200 cents per ordinary share (gross) in respect of the six months ended 31 March 2014.
The dividend will be subject to Dividends Tax that was introduced with effect from 1 April 2012. In accordance with
paragraphs 11.17 (a) (i) to (x) and 11.17(c) of the JSE Listings Requirements the following information is disclosed:
– The dividend has been declared out of income reserves;
– The local Dividend Tax is 15% (fifteen per centum);
– There are no Secondary Tax on Companies (STC) credits utilised;
– The gross local dividend is 200 cents per ordinary share for shareholders exempt from the Dividend Tax;
– The net local dividend is 170 cent per ordinary share for shareholders liable to pay Dividend Tax;
– Astral Foods Limited has currently 42 148 885 ordinary shares in issue (which includes 4 088 577 treasury shares held by a
subsidiary); and
– Astral Foods Limited's income tax reference number is 9125190711.
Shareholders are advised of the following dates in respect of the interim dividend:
Last date to trade cum-dividend Thursday, 12 June 2014
Shares commence trading ex-dividend Friday, 13 June 2014
Record date Friday, 20 June 2014
Payment of dividend Monday, 23 June 2014
Share certificates may not be dematerialised or rematerialised between Friday, 13 June 2014 and Friday, 20 June 2014, both
days inclusive.
On behalf of the board
JJ Geldenhuys CE Schutte
Chairman Chief Executive Officer
Pretoria
19 May 2014
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), *GD Arnold, *T Delport, Dr T Eloff
*DD Ferreira (Financial Director), IS Fourie, *Dr OM Lukhele, M Macdonald, Dr N Tsengwa, TM Shabangu, TP Maumela
(*Executive director)
Company secretary
MA Eloff
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001, PO Box 61051, Marshalltown, 2107, Telephone: +27 (0)11 370 5000
Sponsor
JPMorgan Equities South Africa (Pty) Limited
1 Fricker Road, Illovo, Johannesburg, 2196, Private Bag X9936, Sandton, 2146, Telephone: +27 (0)11 507 0430
Date: 19/05/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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