Wrap Text
Unaudited interim results for the six months ended 31 March 2017
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 2017
REVENUE DECREASE 1%
OPERATING PROFIT DECREASE 51%
EARNINGS PER SHARE DECREASE 55%
HEADLINE EARNINGS DECREASE 54%
INTERIM DIVIDEND PER SHARE 180c
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2017 31 March 2016 Change 30 Sept 2016
R'000 R'000 % R'000
Revenue 5 794 696 5 822 631 (0,5) 11 953 870
Cost of sales (4 853 542) (4 696 368) (10 085 108)
Gross profit 941 154 1 126 263 (16,4) 1 868 762
Administrative expenses (310 574) (301 568) (509 706)
Distribution costs (331 757) (319 391) (651 405)
Marketing expenditure (90 737) (84 202) (174 663)
Other income 3 889 7 683 15 862
Profit before interest and tax
(note 4) 211 975 428 785 (50,6) 548 850
Finance costs - net (15 970) (4 154) (21 995)
Finance income 343 909 5 219
Finance costs (16 313) (5 063) (27 214)
Share of loss from associate - (18) (642)
Profit before income tax 196 005 424 613 (53,8) 526 213
Tax expense (59 939) (123 934) (154 046)
Profit for the period 136 066 300 679 (54,7) 372 167
Other comprehensive income
Items that will not be reclassified
to profit or loss
Remeasurement of post-
employment benefit obligations
(net of deferred tax) - - 651
Items that may be subsequently
reclassified to profit or loss
Foreign currency gain/(loss)
on investment loans to foreign
subsidiaries 2 857 - (9 688)
Foreign currency translation
adjustments (1 524) 7 733 9 091
Total comprehensive income for
the period 137 399 308 412 (55,4) 372 221
Profit attributable to:
Equity holders of the holding
company 136 448 300 531 (54,6) 372 972
Non-controlling interests (382) 148 (358,1) (805)
136 066 300 679 (54,7) 372 167
Comprehensive income
attributable to:
Equity holders of the holding
company 137 769 307 730 (55,2) 373 257
Non-controlling interests (370) 682 (154,3) (1 036)
137 399 308 412 (55,4) 372 221
Earnings per share (cents)
- basic 353 777 (54,6) 964
- diluted 352 776 (54,6) 964
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2017 31 March 2016 30 Sept 2016
R'000 R'000 R'000
ASSETS
Non-current assets 2 221 219 2 235 543 2 229 776
Property, plant and equipment 2 037 796 2 043 999 2 052 284
Intangible assets 44 544 27 215 38 613
Goodwill 136 135 136 135 136 135
Investment in associates 25 450
Investments and loans 2 744 2 744 2 744
Current assets 2 625 619 2 871 583 2 724 533
Biological assets 718 981 730 066 734 958
Inventories 832 713 911 312 716 851
Trade and other receivables 989 918 1 022 221 1 103 569
Current tax asset 32 141 9 052 32 754
Cash and cash equivalents 51 866 198 932 136 401
Assets held for sale 24 826 - 24 826
Total assets 4 871 664 5 107 126 4 979 135
EQUITY
Capital and reserves attributable
to equity holders of the parent
company 2 467 166 2 448 016 2 362 542
Issued capital 79 450 73 666 73 957
Treasury shares (204 435) (204 435) (204 435)
Reserves 2 592 151 2 578 785 2 493 020
Non-controlling interest 9 622 11 020 9 992
Total equity 2 476 788 2 459 036 2 372 534
LIABILITIES
Non-current liabilities 630 976 581 670 645 531
Borrowings (note 6) - 11 656 -
Deferred tax liability 481 047 422 828 473 572
Employment benefit obligations 149 929 147 186 171 959
Current liabilities 1 763 900 2 066 420 1 961 070
Trade and other liabilities 1 540 579 1 611 155 1 578 178
Current tax liabilities 6 961 24 044 4 541
Borrowings (note 6) 214 431 429 357 376 431
Shareholders for dividend 1 929 1 864 1 920
Total liabilities 2 394 876 2 648 090 2 606 601
Total equity and liabilities 4 871 664 5 107 126 4 979 135
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2017 31 March 2016 30 Sept 2016
R'000 R'000 R'000
Cash operating profit 281 579 558 713 546 544
Changes in working capital (38 607) (352 893) (46 103)
Cash generated from operating
activities 242 972 205 820 500 441
Income tax paid (49 649) (100 465) (122 251)
Cash flows from operating
activities 193 323 105 355 378 190
Cash used in investing activities (67 899) (64 714) (160 748)
Capital expenditure (60 810) (57 591) (145 410)
Costs incurred on intangibles (8 034) (15 525) (28 585)
Proceeds on disposal of property,
plant and equipment 945 7 493 8 028
Finance income - 909 5 219
Cash flows to financing activities (71 118) (248 964) (447 008)
Dividends paid (38 697) (222 435) (373 143)
Proceeds from shares issued 5 493 1 309 1 600
Finance expense (14 417) (3 863) (26 449)
Decrease in borrowings (23 497) (23 975) (49 016)
Net movement in cash and cash
equivalents 54 306 (208 323) (229 566)
Effects of exchange rate changes (338) (899) (1 763)
Cash and cash equivalent balances
at beginning of year (204 744) 26 585 26 585
Cash and cash equivalent
balances at end of period (note 7) (150 776) (182 637) (204 744)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2017 31 March 2016 30 Sept 2016
R'000 R'000 R'000
Balance at beginning of year 2 372 534 2 371 580 2 371 580
Profit for the period 136 066 300 679 372 167
Other comprehensive income for
the period, net of tax 1 333 7 733 54
Dividends to the company's
shareholders (38 706) (222 435) (373 316)
Proceeds on shares issued 5 493 1 309 1 600
Option value of share options
granted 68 170 135
Other - - 314
Balance at end of period 2 476 788 2 459 036 2 372 534
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2017 31 March 2016 Change 30 Sept 2016
R'000 R'000 % R'000
Revenue
Poultry 4 455 856 4 436 029 0,4 9 128 645
Feed 3 448 115 3 460 793 (0,4) 7 189 614
Other Africa 215 613 258 227 (16,5) 515 346
Inter-group (2 324 888) (2 332 418) (4 879 735)
5 794 696 5 822 631 (0,5) 11 953 870
Operating profit
Poultry 22 301 194 137 (88,5) 58 900
Feed 184 404 233 276 (21,0) 484 967
Other Africa 5 270 1 372 284,1 4 983
211 975 428 785 (50,6) 548 850
ADDITIONAL INFORMATION
Unaudited Unaudited Audited
six months six months 12 months
ended ended Change ended
31 March 2017 31 March 2016 % 30 Sept 2016
Headline earnings (R'000) - (note 5) 137 645 299 367 (54,0) 373 305
Headline earnings per share (cents)
- basic 356 774 (54,0) 965
- diluted 355 773 (54,1) 964
Dividends per share (cents) 180 390 490
Number of ordinary shares
- Issued net of treasury shares 38 739 308 38 684 308 38 687 308
- Weighted average 38 705 146 38 682 687 38 683 748
- Diluted weighted average 38 732 173 38 705 309 38 705 090
Net debt - cash and cash
equivalents less borrowings (R'000) 162 565 242 081 240 030
Net debt to equity percentage 6,6 9,8 10,1
Net asset value per share (Rand) 63,69 63,28 61,07
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 2017 have been
prepared in accordance with International 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 condensed interim financial statements have not been reviewed or audited by the Group's
auditors.
3. Accounting policies
The accounting policies applied in this condensed interim financial statements comply with IFRS
and are consistent with those applied in the preparation of the Group's annual financial statements
for the year ended 30 September 2016.
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2017 31 March 2016 30 Sept 2016
R'000 R'000 R'000
4. Operating profit
The following items have been accounted for in
the operating profit:
Amortisation of intangible assets 2 119 2 607 4 401
Depreciation on property, plant and equipment 70 776 72 141 139 286
(Loss)/profit on sale of property, plant and
equipment (1 574) 1 604 2 034
Foreign exchange profits/(losses) 2 302 (3 046) (6 746)
Biological assets - fair value (loss)/gain (3 951) 671 (7 190)
5. Reconciliation to headline earnings
Net profit attributable to shareholders 136 448 300 531 372 972
Loss/(profit) on sale of property, plant and
equipment (net of tax) 1 197 (1 164) (1 475)
Loss on assets scrapped (net of tax) - - 1 808
Headline earnings for the period 137 645 299 367 373 305
6. Borrowings
Non-current
Secured loans - 957 -
Unsecured loans 11 789 58 487 35 286
Less: Portion payable within 12 months included
in current liabilities (11 789) (47 788) (35 286)
- 11 656 -
Current
Bank overdrafts 202 642 381 569 341 145
Portion of non-current secured loans payable
within 12 months 11 789 47 788 35 286
214 431 429 357 376 431
7. Cash and cash equivalents per cash flow
statement
Bank overdrafts (included in current borrowings) (202 642) (381 569) (341 145)
Cash at bank and in hand 51 866 198 932 136 401
Cash and cash equivalents per cash flow
statement (150 776) (182 637) (204 744)
8. Capital commitments
Capital expenditure approved not contracted 46 886 32 049 37 967
Capital expenditure contracted not recognised in
financial statements 60 735 70 943 66 813
Raw material contracted amounts not recognised
in the statement of financial position 1 386 663 2 156 370 1 804 973
FINANCIAL OVERVIEW
The headline earnings for the six months ended 31 March 2017 at R138 million was down on the R299
million for the previous year's first six months due to lower volume and the impact of drought-related
cost increases, in particular on the profitability of the poultry businesses.
Revenue decreased marginally by 0,5% to R5 795 million, as result of lower sales volumes by both
divisions compared to the comparative period.
The Group's operating profit decreased by 50,6% to R212 million. The Poultry division's contribution
of R22 million was substantially down on prior period's reported operating profit of R194 million,
whilst the Feed division's profits at R184 million was 21,0% down on the profit for the comparative
period. The other Africa division's contribution to profits at R5 million, although an improvement on
the prior period's R1 million, was still low and a reflection of ongoing difficult trading conditions in
those regions.
The net finance cost at R16 million is higher than the comperative year, reflecting the general higher level
of borrowings following the lower profitability during this reporting period.
Cash inflow from operating activities at R243 million was an improvement on the prior period's
inflow of R206 million as result of the lower outflow to working capital of R39 million, compared to the
working capital outflow of R353 million for the comparative period. Capital expenditure of R69 million
reflected normalised ongoing expenditure. The net movement in cash and cash equivalents, including
the payment of the 2016 final dividend, was an inflow of R54 million. The net debt of R163 million was
down on the net debt as at 30 September 2016, and equates to a net debt to equity ratio of 6,6%.
The board has declared an interim dividend of 180 cents per share. The distribution will be accommodated
within the liquidity capabilities of the Group.
OPERATIONAL OVERVIEW
The period under review includes a number of key factors that distort comparison to the same period in
the prior year, mainly brought about by the new brining regulations, which impacted the Group's poultry
product mix, sales volumes and average sales realisations.
Poultry Division
Revenue for the division increased marginally by 0.4% to R4 456 million (2016: R4 436 million) being
the net of lower volumes and higher average poultry sales realisations.
Sales volumes were significantly down by 10.5% (24 020 tons) due to a combination of less meat sold and
lower brining levels. Average sales realisations were impacted when Astral discontinued the lower priced
IQF range with a brine uptake of 30%, which was replaced with a higher cost product offering. The new IQF
product range conforms to the brining legislation promulgated in October 2016 with a brine uptake capped
at 15%, and this change has distorted year-on-year pricing comparisons.
Poultry feed prices reached a record high, increasing by an average 16.8% over the comparable period, as a
result of high raw material costs following the devastating drought together with a revised poultry feeding
program. Improved broiler production efficiencies on the new feeding program partly negated the higher
feed cost.
The inability to fully recover higher feed input costs through the selling price of poultry, resulted in the
operating profit for the division dropping significantly by 88.5% to R22 million (2016: R194 million).
Total poultry imports remained at high levels despite EU poultry imports decreasing as a result of Avian
Influenza outbreaks in certain EU countries. Total poultry imports equate to an average 8,2 million birds
per week for the six months ending March 2017, notwithstanding all efforts to curb poultry dumping.
Total poultry imports reached a record high in March 2017 at 66 658 tons (equivalent to 11,7 million birds
per week) which is comparable to approximately 65% of local production.
Feed Division
Revenue for the division was down by 0.4% to R3 448 million (2016: R3 461 million) driven by an 8.0% drop
in sales volumes as a result of; lower internal sales due to broiler production cutbacks, coupled with
improved feed conversion efficiencies, as well as lower external demand across all livestock sectors.
Average selling prices were up by 10.4% in an effort to recover the increase in raw material costs,
which was brought about by the severe drought.
Operating profit decreased to R184 million (2016: R233 million) with an operating profit margin at 5.3%
(2016: 6.7%). Rand per ton margins decreased with selling price pressure partially offset by the
containment of other operating costs below inflationary levels.
Other Africa Division
Revenue for the division decreased by 16.5% to R216 million (2016: R258 million) driven largely by higher
feed selling prices in Zambia.
The operating profit for the division increased to R5.3 million (2016: R1.4 million). Profitability in the
Zambian operations was positively impacted by an improved performance from Tiger Animal Feeds.
The weak economy in Mozambique remains a concern as it continued to impact on the value of Astral's
business operations in that country.
PROSPECTS
- The weakened state of consumer spending is unlikely to improve due to poor economic growth and higher
unemployment.
- The current safeguard duty recommended by ITAC against the EU is not expected to significantly curb
poultry import levels (March 2017 USA spike).
- The new brining regulations will continue to negatively impact total kilograms sold at the revised brining
level of 15% on IQF product.
- The risk of permanent power cuts by Eskom to Astral's operations in Standerton has been negated through an
order of the High Court.
- Record local maize crop is expected for the current harvest season at 14,5 million tons which historically
is the largest change in the crop size year-on-year (2016: 7,7 million tons).
- Poultry production efficiencies are expected to remain intact on the back of superior nutrition optimising
the genetic potential of the Ross 308 breed.
DECLARATION OF ORDINARY DIVIDEND NUMBER 32
The board has approved an interim dividend of 180 cents per ordinary share (gross) in respect of the six
months ended 31 March 2017.
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 20% (twenty per centum);
- The gross local dividend is 180 cents per ordinary share for shareholders exempt from the Dividend Tax;
- The net local dividend is 144 cents per ordinary share for shareholders liable to pay Dividend Tax;
- Astral Foods Limited has currently 42 827 885 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 Tuesday, 6 June 2017
Shares commence trading ex-dividend Wednesday, 7 June 2017
Record date Friday, 9 June 2017
Payment of dividend Monday, 12 June 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 7 June 2017 and
Friday, 9 June 2017 both days inclusive.
On behalf of the board
T Eloff CE Schutte
Chairman Chief Executive Officer
Pretoria
15 May 2017
Registered office 92 Koranna Avenue, Doringkloof, Centurion, 0157 South Africa, Postnet Suite 278, Private Bag X1028, Doringkloof, 0140, Telephone: +27 (0) 12 667 5468
Directors Dr T Eloff (Chairman), *CE Schutte (Chief Executive Officer), *GD Arnold, *AB Crocker, *DD Ferreira (Financial Director), DJ Fouche,
Dr MT Lategan, TP Maumela, TM Shabangu (*Executive director) • Company Secretary MA Eloff • Transfer secretaries Computershare Investor Services Proprietary Limited,
PO Box 61051, Marshalltown, 2107 Telephone: +27 (0) 11 370 5000 • Sponsor Nedbank Corporate and Investing Banking, a division
of Nedbank Limited, 135 Rivonia Campus, Rivonia Road, Sandown, 2196, Telephone: +27 (0) 294 4444
www.astralfoods.com
Date: 15/05/2017 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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