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Unaudited Interim Results and dividend declaration for the six months ended 31 March 2016
Astral Foods Limited
Incorporated in the Republic of South Africa
Registration number 1978/003194/06
Share code: ARL ISIN: ZAE000029757
UNAUDITED INTERIM RESULTS
AND DIVIDEND DECLARATION
for the six months ended 31 March 2016
Up 1% REVENUE INCREASE
Down 22% OPERATING PROFIT DECREASE
Down 22% EARNINGS PER SHARE DECREASE
Down 23% HEADLINE EARNINGS DECREASE
390(c) INTERIM DIVIDEND PER SHARE
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2016 2015 2015
R'000 R'000 R'000
ASSETS
Non-current assets 2 235 543 2 203 142 2 233 413
Property, plant and equipment 2 043 999 2 022 920 2 054 677
Intangible assets 27 215 16 188 14 389
Goodwill 136 135 136 135 136 135
Investment in associates 25 450 24 447 25 468
Investments and loans 2 744 3 452 2 744
Current assets 2 871 583 2 683 953 2 580 391
Inventories 911 312 419 277 702 340
Biological assets 730 066 594 857 667 540
Trade and other receivables 1 022 221 991 363 882 310
Current tax asset 9 052 – 9 052
Cash and cash equivalents 198 932 678 456 319 149
Total assets 5 107 126 4 887 095 4 813 804
EQUITY
Capital and reserves attributable to equity holders
of the parent company 2 448 016 2 210 636 2 360 866
Issued capital 73 666 72 159 72 357
Treasury shares (204 435) (204 435) (204 435)
Reserves 2 578 785 2 342 912 2 492 944
Non-controlling interests 11 020 15 516 10 714
Total equity 2 459 036 2 226 152 2 371 580
LIABILITIES
Non-current liabilities 581 670 692 607 616 396
Borrowings (note 6) 11 656 134 740 34 501
Deferred tax liability 422 828 417 152 420 192
Employment benefit obligations 147 186 140 715 161 703
Current liabilities 2 066 420 1 968 336 1 825 828
Trade and other liabilities 1 611 155 1 622 142 1 480 309
Current tax liabilities 24 044 41 286 2 290
Borrowings (note 6) 429 357 303 247 341 482
Shareholders for dividend 1 864 1 661 1 747
Total liabilities 2 648 090 2 660 943 2 442 224
Total equity and liabilities 5 107 126 4 887 095 4 813 804
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2016 2015 2015
R'000 R'000 R'000
Cash operating profit 558 713 628 520 1 436 184
Changes in working capital (352 893) 79 846 (440 638)
Cash generated from operating activities 205 820 708 366 995 546
Income tax paid (100 465) (142 210) (344 325)
Cash flows from operating activities 105 355 566 156 651 221
Cash used in investing activities (64 714) (46 527) (185 821)
Capital expenditure (73 116) (49 820) (202 819)
Finance income 909 2 852 12 810
Proceeds on disposal of property, plant and
equipment 7 493 441 4 188
Cash flows from financing activities (248 964) (125 919) (458 321)
Net (decrease)/increase in borrowings (23 975) (23 382) (119 889)
Proceeds from shares issued 1 309 4 284 4 482
Interest paid (3 863) (13 697) (22 268)
Dividends paid (222 435) (93 124) (320 646)
Net movement in cash and cash equivalents (208 323) 393 710 7 079
Effects of exchange rate changes (899) (2 867) (12 885)
Cash and cash equivalent balances at beginning
of year 26 585 32 391 32 391
Cash and cash equivalent balances at end of year
(note 7) (182 637) 423 234 26 585
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2016 2015 2015
R'000 R'000 R'000
Balance at beginning of year 2 371 580 1 944 840 1 944 840
Total comprehensive income for the period 308 412 369 867 742 718
Dividends to the company's shareholders (222 435) (92 804) (315 159)
Payments to non-controlling interest holders – (320) (5 560)
Proceeds on shares issued 1 309 4 284 4 482
Option value of share options granted 170 285 259
Balance at end of period 2 459 036 2 226 152 2 371 580
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2016 2015 % 2015
R'000 R'000 change R'000
Revenue 5 822 631 5 754 605 1 11 265 962
Profit before interest and tax (note 4) 428 785 550 161 (22) 1 100 484
Finance income 909 2 852 12 810
Finance costs (5 063) (12 944) (22 988)
Share of profit from associate (18) 2 267 3 288
Profit before income tax 424 613 542 336 (22) 1 093 594
Tax expense (123 934) (154 351) (313 655)
Profit for the period 300 679 387 985 (23) 779 939
Other comprehensive income
Remeasurement of post-employment benefit
obligations (net of deferred tax) 791
Change in the value of available-for-sale
financial assets (709)
Foreign currency loss on investment loans
to foreign subsidiaries (2 905)
Foreign currency translation adjustments 7 733 (18 118) (34 398)
Total comprehensive income for the period 308 412 369 867 (17) 742 718
Profit attributable to:
Equity holders of the holding company 300 531 386 353 (22) 778 126
Non-controlling interests 148 1 632 (91) 1 813
300 679 387 985 (23) 779 939
Comprehensive income attributable to:
Equity holders of the holding company 307 730 369 199 (17) 741 612
Non-controlling interests 682 668 2 1 106
308 412 369 867 (17) 742 718
Earnings per share (cents)
– basic 777 999 (22) 2 013
– diluted 776 997 (22) 2 009
CONDENSED GROUP SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2016 2015 % 2015
R'000 R'000 change R'000
Revenue
Poultry 4 436 029 4 502 695 (1) 8 739 488
Feed 3 460 793 2 960 583 17 6 235 955
Other Africa 258 227 256 251 1 493 508
Inter-group (2 332 418) (1 964 924) (4 202 989)
5 822 631 5 754 605 1 11 265 962
Operating profit
Poultry 194 137 350 903 (45) 661 002
Feed 233 276 185 726 26 422 885
Other Africa 1 372 13 531 (90) 16 597
428 785 550 160 (22) 1 100 484
ADDITIONAL INFORMATION
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March % 30 September
2016 2015 change 2015
Headline earnings (R'000) – (note 5) 299 367 386 999 (23) 779 649
Headline earnings per share (cents)
– basic 774 1 001 (23) 2 016
– diluted 773 999 (23) 2 013
Dividends per share (cents) 390 575 (32) 1 150
Number of ordinary shares
– Issued net of treasury shares 38 684 308 38 670 408 38 672 708
– Weighted average 38 682 687 38 663 233 38 663 740
– Diluted weighted average 38 705 309 38 751 439 38 734 021
Net(debt)/surplus cash – cash and cash
equivalents less borrowings (R'000) (242 081) 56 834
Net debt to equity percentage 9,8% 240 469 2,4
Net asset value per share (Rand) 63,28 57,17 61,05
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 2016 have been
prepared in accordance with International Reporting Standards ("IFRS"), IAS 34 – Interim Financial
Reporting, the Listing 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 condensed interim 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 2015.
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2016 2015 2015
R'000 R'000 R'000
4. Operating profit
The following items have been accounted for in
the operating profit:
Amortisation of intangible assets 2 607 2 579 5 353
Depreciation on property, plant and equipment 72 141 70 467 147 803
Profit/(loss) on sale of property, plant and equipment 1 604 (895) 1 593
Foreign exchange losses 3 046 6 202 (10 327)
Directors' remuneration 53 102
Biological assets – fair value gain 9 049
Assets scrapped 4 046
Insurance recoveries 2 991
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2016 2015 2015
R'000 R'000 R'000
5. Reconciliation to headline earnings
Net profit attributable to shareholders 300 531 386 353 778 126
(Profit)/loss on sale of property, plant and
equipment (net of tax) (1 164) 646 (1 399)
Loss on assets scrapped (net of tax) 2 922
Headline earnings for the period 299 367 386 999 779 649
6. Borrowings
Non-current
Secured loans 957 10 176 3 642
Unsecured loan 58 487 172 589 79 777
Less: Portion payable within 12 months included
in current liabilities (47 788) (48 025) (48 918)
11 656 134 740 34 501
Current
Bank overdrafts 381 569 255 222 292 564
Portion of non-current secured loans payable
within 12 months 47 788 48 025 48 918
429 357 303 247 341 482
7. Cash and cash equivalents per cash flow
statement
Bank overdrafts (included in current borrowings) (381 569) (255 222) (292 564)
Cash at bank and in hand 198 932 678 456 319 149
Cash and cash equivalents per cash flow
statement (182 637) 423 234 26 585
8. Capital commitments
Capital expenditure approved not contracted 32 049 51 180 43 497
Capital expenditure contracted not recognised in
financial statements 70 943 31 435 23 415
FINANCIAL OVERVIEW
The decrease in headline earnings from R387 million for the previous year's first six months, to
R299 million for the first six months of the 2016 financial year, is attributable to lower profits from the
Poultry division following mainly drought-related increases in feed costs.
Revenue increased marginally by 1,2% to R5 823 million as result of the increase in the value of
external feed sales.
The group's operating profit decreased by 22,1 % to R429 million. The Poultry division's contribution of
R194 million, is down on its previous year's reported operating profit of R351 million. The Feed division
recovered the increased maize costs in its selling prices for feed and its profits at R233 million, is
25,6 % higher than the profit for the comparative period. The new Standerton feed mill continued with
its significant contribution to the profitability of the Feed division. The Africa division's contribution to
profits at R1 million, is down on the previous year's R13 million. Trading conditions in both Zambia an
Mozambique were negatively affected by the devaluation of the respective local currencies which had
a negative impact on those economies.
The net finance cost at R4 million is lower than the previous year, reflecting the benefits from the built-
up of surplus funds at the end of the previous financial year.
Cash inflow from operating activities at R206 million is down on the previous year's inflow of
R708 million as a result of lower profits and an outflow to working capital to finance higher poultry
and feed stock holdings. Capital expenditure of R73 million reflects normalised ongoing expenditure.
The net movement in cash and cash equivalents, including the payment of the 2015 final dividend,
was an outflow of R208 million. The net debt of R242 million, which includes the remaining balance of
the long-term funding of the new Standerton feed mill, equates to a net debt to equity ratio of 9,8%.
The Board has declared an interim dividend of 390 cents per share. The distribution will be
accommodated within the liquidity capabilities of the group.
OPERATIONAL OVERVIEW
Poultry division
Revenue for the division was down by 1.5% to R4 436 million (2015: R4 503 million) impacted by lower
sales volumes for the period under review. Weaker demand and the continued high level of EU poultry
imports led to a build-up in poultry stock levels, with subsequent broiler production cutbacks.
The average selling price for poultry increased by a negligible 1.5% for the period, and this despite
significant consumer food price inflation on the total basket measured. Poultry feed prices increased
by an average of 13.9% over the comparable period which resulted in an increase in the live bird
production cost. The above factors resulted in the operating profit for the division decreasing to
R194 million (2015: R351 million).
Consistent broiler production efficiencies were achieved for the period under review. The product mix
continued to improve with a further decrease in IQF participation of 2% driven largely by an increase
in fresh and value added sales volumes.
Poultry imports remained high during the period, with the first shipment of US poultry under the AGOA
quota landing in March 2016. An average 7,7 million birds per week (total poultry product imports) was
recorded for the six months ending March 2016.
Feed division
Revenue for the division increased by 16.8% to R3 461 million (2015: R2 961 million) as a result of
higher selling prices (up 16.2%) to recover the increase in raw material costs on the back of the severe
drought. Sales volumes increased marginally by 0.6% driven by a small increase in external sales.
The Standerton feed mill produced an average of 28 000 tons of poultry feed per month for the period
under review (capacity utilisation of 70%), with the operational efficiencies achieved continuing to
contribute positively to the profitability of the feed division.
Operating profit improved to R233 million (2015: R186 million) with an operating profit margin at 6.7%
(2015 6.3%). Rand per ton margins increased over the comparable period in the prior year, supported
by the successful management of other operating costs below inflationary levels.
Other Africa division
Revenue for the division increased by 0.8% to R258 million (2015: R256 million) driven largely by
higher feed selling prices in Zambia.
The operating profit for the division decreased to R1.4 million (2015: R14 million). For the period under
review the profitability from the Mozambican feed and day-old chick operations was severely impacted
by currency exchange movements and availability, as well as poor market demand due to the severe
economic downturn in that country.
The deteriorating economic situation in Mozambique is a concern as it impacts on the value of Astral's
business operations in that country.
Ongoing power outages in Zambia had a significant impact on operating costs with a high diesel
requirement to power standby generators.
PROSPECTS
– It is expected that the demand for poultry will continue to be constrained due to limited consumer
discretionary spend and weaker seasonal poultry consumption patterns.
– High maize and feed prices will continue until at least rainfall patterns normalise, with some mid-size
industry producers already showing signs of financial distress.
– Rand weakness will continue to negatively impact input costs on imports of poultry genetics, maize
and soya.
– The high level of poultry imports and the potential AGOA impact of US poultry will see local broiler
production cutbacks due to an imbalance in supply and demand.
– A weakening of the El Niño weather event could favour better planting conditions for maize in the
coming season as normal rainfall is predicted.
– World raw material stocks are exceptionally healthy.
DECLARATION OF ORDINARY DIVIDEND NUMBER 30
The Board has approved an interim dividend of 390 cents per ordinary share (gross) in respect of the
six months ended 31 March 2016.
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).
– The gross local dividend is 390 cents per ordinary share for shareholders exempt from the Dividend Tax.
– The net local dividend is 331.5 cents per ordinary share for shareholders liable to pay Dividend Tax.
– Astral Foods Limited has currently 42 772 885 ordinary shares in issue (which includes 4 088 577
treasury shares held by a subsidiary).
– 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 Friday, 3 June 2016
– Shares commence trading ex-dividend Monday,6 June 2016
– Record date Friday, 10 June 2016
– Payment of dividend Monday, 13 June 2016
Share certificates may not be dematerialised or rematerialised between Monday, 6 June 2016 and
Friday, 10 June 2016, both days inclusive.
On behalf of the board
T Eloff CE Schutte
Chairman Chief Executive Officer
Pretoria
16 May 2016
Astral Foods Limited Directors Transfer secretaries
Incorporated in the Republic Dr T Eloff Chairman Computershare Investor Services
of South Africa CE Schutte* Chief Executive Officer (Pty) Limited
Registration number GD Arnold* 70 Marshall Street,
1978/003194/06 AB Crocker* Johannesburg, 2001
Share code: ARL T Delport* PO Box 61051,
ISIN: ZAE000029757 DD Ferreira* Financial Director Marshalltown, 2107
DJ Fouche Telephone: +27 (0)11 370 5000
Registered office IS Fourie
92 Koranna Avenue, Doringkloof TP Maumela Sponsor
Centurion, 0157, South Africa TM Shabangu JP Morgan Equities South Africa
Postnet Suite 278, Dr N Tsengwa Pty) Limited
Private Bag X1028 *Executive director 1 Fricker Road, Illovo,
Doringkloof, 0140 Johannesburg, 2146
Telephone: +27 (0)12 667 5468 Company secretary Private Bag X9936, Sandton,
Website: www.astralfoods.com MA Eloff 2146
Telephone: +27 (0)11 507 0430
www.astralfoods.com
Date: 16/05/2016 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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