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Unaudited interim results and dividend declaration for the six months ended 31 March 2018
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 2018
Revenue increased 15%
Operating profit increased 393%
Earnings per share increased 460%
Headline earnings per share increased 455%
Interim dividend R10.00 per share
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2018 31 March 2017 30 Sept 2017
R'000 R'000 % change R'000
Revenue 6 666 331 5 794 696 15 12 351 125
Cost of sales (4 718 445) (4 853 542) 107 (9 780 667)
Gross profit 1 947 886 941 154 2 570 458
Administrative expenses (450 489) (310 574) (714 222)
Distribution costs (360 956) (331 757) (673 805)
Marketing expenditure (93 117) (90 737) (168 944)
Other income and gains 837 3 889 64 974
Profit before interest and tax (note 4) 1 044 161 211 975 393 1 078 461
Finance costs - net 21 960 (15 970) (14 839)
Finance income 26 569 343 5 088
Finance costs (4 609) (16 313) (19 927)
Profit before income tax 1 066 121 196 005 444 1 063 622
Tax expense (299 578) (59 939) (308 709)
Profit for the period 766 543 136 066 463 754 913
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurement of post-employment benefit
obligations (net of deferred tax) 3 742
Items that may be subsequently reclassified to
profit or loss
Foreign currency gain on investment loans to
foreign subsidiaries 526 2 857 5 747
Foreign currency translation adjustments (12 014) (1 524) (3 080)
Total comprehensive income for the period 755 055 137 399 450 761 322
Profit attributable to:
Equity holders of the holding company 764 824 136 448 461 754 405
Non-controlling interests 1 719 (382) (550) 508
766 543 136 066 463 754 913
Comprehensive income attributable to:
Equity holders of the holding company 753 336 137 769 447 760 792
Non-controlling interests 1 719 (370) (565) 530
755 055 137 399 450 761 322
Earnings per share (Rand)
- basic R19.73 R3.53 460 R19.48
- diluted R19.71 R3.52 459 R19.47
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2018 31 March 2017 30 Sept 2017
R'000 R'000 R'000
ASSETS
Non-current assets 2 301 542 2 221 219 2 228 052
Property, plant and equipment 2 103 837 2 037 796 2 036 033
Intangible assets 61 570 44 544 55 884
Goodwill 136 135 136 135 136 135
Investments and loans 2 744
Current assets 3 580 376 2 625 619 3 128 210
Biological assets 759 316 718 981 658 047
Inventories 593 618 832 713 551 278
Trade and other receivables 1 226 851 989 918 1 221 039
Current tax asset 30 579 32 141 30 579
Cash and cash equivalents 970 012 51 866 667 267
Assets held for sale 24 826
Total assets 5 881 918 4 871 664 5 356 262
EQUITY
Capital and reserves attributable to equity
holders of the parent company 3 438 883 2 467 166 3 022 466
Issued capital 83 727 79 450 81 463
Treasury shares (204 435) (204 435) (204 435)
Reserves 3 559 591 2 592 151 3 145 438
Non-controlling interest 12 241 9 622 10 522
Total equity 3 451 124 2 476 788 3 032 988
LIABILITIES
Non-current liabilities 597 500 630 976 609 699
Deferred tax liability 453 738 481 047 433 469
Employment benefit obligations 143 762 149 929 176 230
Current liabilities 1 833 294 1 763 900 1 713 575
Trade and other liabilities 1 393 173 1 365 946 1 248 050
Employment benefit obligations 341 225 174 633 306 511
Current tax liabilities 61 213 6 961 42 390
Borrowings (note 6) 35 556 214 431 114 692
Shareholders for dividend 2 127 1 929 1 932
Total liabilities 2 430 794 2 394 876 2 323 274
Total equity and liabilities 5 881 918 4 871 664 5 356 262
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2018 31 March 2017 30 Sept 2017
R'000 R'000 R'000
Cash operating profit 1 102 157 281 579 1 428 219
Changes in working capital (49 778) (38 607) (63 512)
Cash generated from operating activities 1 052 379 242 972 1 364 707
Income tax paid (258 974) (49 649) (310 259)
Cash flows from operating activities 793 405 193 323 1 054 448
Cash used in investing activities (69 031) (67 899) (145 256)
Purchases of property, plant and equipment (127 003) (60 810) (157 606)
Costs incurred on intangibles (8 645) (8 034) (22 492)
Proceeds on disposal of property, plant and equipment 48 945 1 510
Finance income 26 569 5 088
Payment received on investment sold during previous year 40 000
Cost incurred with disposal of investment (624)
Government grant received 28 868
Cash flows to financing activities (338 701) (71 118) (152 349)
Dividends paid (338 988) (38 697) (108 429)
Proceeds from shares issued 2 264 5 493 7 506
Finance expense (1 977) (14 417) (16 140)
Decrease in borrowings (23 497) (35 286)
Net movement in cash and cash equivalents 385 673 54 306 756 843
Effects of exchange rate changes (3 792) (338) 476
Cash and cash equivalent balances at beginning of year 552 575 (204 744) (204 744)
Cash and cash equivalent balances at end of period (note 7) 934 456 (150 776) 552 575
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2018 31 March 2017 30 Sept 2017
R'000 R'000 R'000
Balance at beginning of year 3 032 988 2 372 534 2 372 534
Profit for the period 766 543 136 066 754 913
Other comprehensive income for the period, net of tax (11 488) 1 333 6 409
Dividends to the company's shareholders (339 183) (38 706) (108 441)
Proceeds on shares issued 2 264 5 493 7 506
Option value of share options granted 68 67
Balance at end of period 3 451 124 2 476 788 3 032 988
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2018 31 March 2017 30 Sept 2017
R'000 R'000 % change R'000
Revenue
Poultry 5 480 838 4 455 856 23 9 850 348
Feed 3 096 521 3 448 115 (10) 6 583 184
Other Africa 184 519 215 613 (14) 426 530
Inter-group (2 095 547) (2 324 888) (4 508 937)
6 666 331 5 794 696 15 12 351 125
Profit before interest and tax
Poultry 835 815 22 301 Inf. 629 760
Feed 191 479 184 404 4 391 376
Other Africa 16 867 5 270 220 26 775
Profit on sale of investment 30 550
1 044 161 211 975 393 1 078 461
ADDITIONAL INFORMATION
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2018 31 March 2017 % change 30 Sept 2017
Headline earnings (R'000) - (note 5) 765 333 137 645 456 735 323
Headline earnings per share (Rand)
- basic R19.74 R3.56 455 R18.99
- diluted R19.72 R3.55 456 R18.97
Dividends per share (Rand) - declared out of
earnings for the period
- Interim dividend R10.00 R1.80 R1.80
- Final dividend R8.75
- Total dividend R10.55
Number of ordinary shares
- Issued net of treasury shares 38 773 208 38 739 308 38 752 208
- Weighted - average 38 762 630 38 705 146 38 724 902
- Diluted weighted - average 38 806 822 38 732 173 38 753 283
Net cash/(debt) - cash and cash equivalents less
borrowings (R'000) 934 456 (162 565) 552 575
Net debt to equity percentage 6.6%
Net asset value per share (Rand) R88.69 R63.69 R77.99
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 2018 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 condensed interim financial statements have not been reviewed or audited by the group's auditors.
3. Accounting policies
The accounting policies applied in these 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 2017.
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2018 31 March 2017 30 Sept 2017
R'000 R'000 R'000
4. Profit before interest and tax
The following items have been accounted for in the profit before
interest and tax:
Biological assets - fair value gain/(loss) 996 (3 951) 2 856
Amortisation of intangible assets 2 911 2 119 5 243
Depreciation on property, plant and equipment 75 459 70 776 143 490
(Loss)/profit on sale of property, plant and equipment (705) (1 574) 753
Foreign exchange (losses)/gains (1 885) 2 302 3 681
Assets scrapped 3 572
Insurance recoveries 13 476
Breeding and egg stock written off 53 512
Profit on sale of investment 30 550
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 March 2018 31 March 2017 30 Sept 2017
R'000 R'000 R'000
5. Reconciliation to headline earnings
Net profit attributable to shareholders 764 824 136 448 754 405
Loss/(profit) on sale of property, plant and equipment (net of tax) 509 1 197 (549)
Loss on assets scrapped (net of tax) 2 575
Profit on sale of investment (net of tax) (20 627)
Insurance payments received in respect of assets written off (net
of tax) (481)
Headline earnings for the period 765 333 137 645 735 323
6. Borrowings
Non-current
Unsecured loans 11 789
Portion payable within 12 months included in current liabilities (11 789)
Current
Bank overdrafts 35 556 202 642 114 692
7. Cash and cash equivalents per cash flow statement
Bank overdrafts (included in current borrowings) (35 556) (202 642) (114 692)
Cash at bank and in hand 970 012 51 866 667 267
Cash and cash equivalents per cash flow statement 934 456 (150 776) 552 575
8. Capital commitments
Capital expenditure approved not contracted 21 920 46 886 30 101
Capital expenditure contracted not recognised in financial
122 070 60 735 117 764
statements
Cost on intangibles contracted not recognised in financial
426
statements
Raw material contracted amounts not recognised in the
1 522 389 1 386 663 1 254 312
statement of financial position
FINANCIAL OVERVIEW
The group's headline earnings for the six months ended 31 March 2018 at R765 million was an increase of 456% on the
R138 million for the previous year's first six months. The Group benefited from favourable trading conditions in its poultry
businesses, resulting in the improvement on the previous year's profits for the comparative period.
External revenue increased by 15.0% to R6 666 million, supported by a 23.0% increase in the poultry segment's revenue.
The revenue of the feed businesses was lower in monetary value due to the lower input costs of maize raw materials.
The group's profit before interest and tax increased by 392.6% to R1 044 million. The Poultry segment's contribution
of R836 million (March 2017: R22 million) was the main contributor to the group's profits, whilst the Feed segment's
contribution at R191 million was 3.8 % up on the profit for the comparative period. The Other Africa segment's contribution
to profits at R17 million, was a good improvement on the previous year's R5 million, however, still a relative low contribution
to the group's results. The administrative expenses include a provision of R188 million for annual incentive bonuses to
management and other employees, based on the financial performance to date and calculated in terms of the group's
remuneration policy on short-term bonuses.
The group received net finance income of close to R22 million as result of its South African operations being in a net cash
surplus position during the reporting period.
Cash inflow from operating activities at R1 052 million was a marked improvement on the previous year's inflow of
R243 million following the improved operating profits, which also resulted in higher tax payments at R259 million. Additions
to property, plant and equipment and to intangible assets during the reporting period amounted to R162 million of which
R33 million was paid towards the end of the previous financial year. This, together with payments of outstanding amounts
on the previous year's capital expenditure resulted in net capital expenditure of R136 million during the period
(March 2017: R69 million). A payment of R40 million was received following the conclusion of the sale of an investment
during September 2017. The outflow on dividends paid represents the final dividend declared in respect of the 2017
financial year, which was substantially higher due to the recovery in the profitability during the second half of the
previous financial year.The net movement in cash and cash equivalents was positive with an inflow of R386 million for
the period and a net surplus of R934 million at 31 March 2018.
The Board has declared an interim dividend of R10.00 per share which is based on a dividend cover of two times.
The distribution will be accommodated within the liquidity capabilities of the group.
OPERATIONAL OVERVIEW
Poultry Division
Revenue increased by 23.0% to R5.5 billion (2017: R4.5 billion) largely driven by an increase in sales realisations as an
improvement in poultry supply and demand balance gave pricing support. Imports during the period remained high but
at a stable level. The change in legislated brine levels in combination with industry cutbacks, contributed to firmer market
conditions.
Sales volumes were up by 12.6% (25 823 tons) mostly due to higher broiler production numbers (9 million birds) and
increased sales that reduced finished good stock levels. Sales realisations increased by 11.2%, of which a portion relates
to the necessary price adjustment to offset the legislated change in brine levels of specific product lines in the prior period.
Broiler feed prices decreased 11.2% due to significantly lower raw material costs in the reporting period versus the prior year.
Feed conversion efficiency further improved, contributing to a reduced feeding cost per broiler produced.
Profitability for the poultry division improved to R836 million (2017: R22 million) driven largely by the materially lower feed
input costs and an improvement in sales realisations. The net profit margin improved to 15.2% (2017: 0.5%), in relation to
one of the lowest reported profits in the prior period.
Poultry imports into the country continued unabated. Poultry imports from the European Union (EU) have reduced
considerably due to the ongoing outbreaks of highly pathogenic bird flu in those exporting countries; with a major swing in
imports towards Brazil and the United States of America (USA). On average the monthly total poultry imports for the period
under review equalled approximately 44% of local production or an average of 46 850 tons per month.
The outbreak of highly pathogenic bird flu in South Africa caused significant damage to the local poultry industry in the
prior calendar year. However, Astral's contingency plans allowed the group to avert a short supply of broilers, with the result
that the group was able to maintain broiler slaughter volumes at approximately 5.1 million birds per week (2017: 4.9 million
birds per week) for the period under review. No further incidents of bird flu and related costs were experienced during the
period under review.
Feed Division
Revenue decreased by 10.2% to R3.1 billion (2017: R3.5 billion) as a direct result of lower feed selling prices on the back of
markedly lower maize prices, notwithstanding an increase in sales volumes (up by 7.3%).
Higher external sales volumes (7.4%) were reported as livestock sectors recovered following the high feed costs associated
with the 2016 drought. Internal sales increased (7.2%) due to a higher internal feed requirement as broiler placement
numbers increased year-on-year.
The operating profit increased by 3.8% to R192 million (2017: R184 million) with an improvement in the operating profit
margin to 6.2% (2017: 5.3%).
The record local maize crop for the 2017/18 marketing year of 16.8 million tons resulted in a significant decrease in feed
prices for the reporting period.
Other Africa Division
This division, consisting of both feed and poultry operations in three countries namely; Zambia, Mozambique and Swaziland,
reported a drop in revenue of 14.4% to R185 million (2017: R215 million), due largely to lower feed selling prices on the back
of a reduction in raw material input costs. Sales volumes decreased by 5.0% driven largely by lower feed sales in Zambia.
Operating profit increased to R17 million (2017: R5 million) driven by improved performances across all countries, and a
turnaround in the profits of the Mozambican businesses.
OUTLOOK
- General business confidence improved as well as the prospect for foreign direct investment following the election of a
new President for the country;
- A bumper maize crop in 2017 and the country set to harvest an above average maize crop in 2018 will stand us in good
stead over the next period from a feed input cost point of view;
- Further unlocking the inherent genetic potential of the Ross broiler breed through optimised broiler nutrition therefore
cementing Astral's best cost strategy;
- Higher level of competitiveness as producers have expanded broiler production numbers, and the pork industry has been
forced to sell product at lower prices following the listeria outbreak;
- Continued high levels of poultry imports especially from the USA and Brazil, equivalent to over 40% of local poultry
production;
- Highly Pathogenic Avian Influenza remains a threat and major concern for the poultry industry with the upcoming winter
season.
Astral remains committed to its strategy of being the best cost integrated poultry producer, and will embark on various
identified capital projects that will support its stated strategy, as well as organic growth and efficiency improvement
opportunities.
DECLARATION OF ORDINARY DIVIDEND No 34
The board has approved an interim dividend of R10.00 per ordinary share (gross) in respect of the six months ended
31 March 2018.
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 R10.00 per ordinary share for shareholders exempt from the Dividend Tax
- The net local dividend is R8.00 per ordinary share for shareholders liable to pay Dividend Tax
- Astral Foods Limited has currently 42 861 785 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, 5 June 2018
Shares commence trading ex-dividend Wednesday, 6 June 2018
Record date Friday, 8 June 2018
Payment of dividend Monday, 11 June 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 6 June 2018 and Friday, 8 June 2018,
both days inclusive.
On behalf of the board
T Eloff CE Schutte
Chairman Chief Executive Officer
Pretoria
9 May 2018
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 (Chief Financial Officer),
DJ Fouché, Dr MT Lategan, TP Maumela, TM Shabangu, (*Executive director)
Company secretary
MA Eloff
Transfer secretaries
Computershare Investor Services Proprietary Limited,
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196,
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,
Tel +27 (0) 11 294 4444
www.astralfoods.com
Date: 14/05/2018 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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