To view the PDF file, sign up for a MySharenet subscription.

CBH - Country Bird Holdings Limited - Audited results: year ended 30 June 2007

Release Date: 26/09/2007 07:00
Code(s): CBH
Wrap Text

CBH - Country Bird Holdings Limited - Audited results: year ended 30 June 2007 COUNTRY BIRD HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 2005/008505/06) JSE share code: CBH ISIN: ZAE000094835 ("CBH" or "the company") (Previously AFRICA`S BEST 339 LIMITED) COUNTRY BIRD HOLDINGS LIMITED Audited results for the year ended 30 June 2007 Revenue up 35% Consolidated Income Statement Year ended 30 June
2007 2006 R`000 R`000 Revenue 1 309 160 972 482 Cost of sales (1 087 964) (754 383) Gross profit 221 197 218 099 Other income 19 535 18 275 Selling and marketing costs (2 309) (2 905) Administrative expenses (78 176) (67 715) Trading income 160 247 165 754 BEE ownership transaction (12 334) - Operating profit 147 913 165 754 Finance income 1 270 1 027 Finance costs (11 982) (16 205) Share of profit of associates 2 228 2 286 Profit before income tax 139 429 152 862 Income tax expense (39 583) (45 021) Profit for the year 99 846 107 841 Attributable to: Equity holders of the Company 98 258 107 186 Minority interest 1 588 655 99 846 107 841 Earnings per ordinary share (cents): - basic 52,52 57,29 Consolidated Balance Sheet As at 30 June 2007 2006 R`000 R`000 ASSETS Non-current assets 273 955 243 469 Property, plant and equipment 247 206 222 626 Intangible assets 15 557 14 918 Financial assets and other investments 198 1 248 Investment in associates 10 140 4 257 Deferred income tax assets 854 420 Current assets 387 026 268 502 Inventories 57 612 37 510 Biological assets 119 676 87 977 Trade and other receivables 175 568 123 230 Cash and cash equivalents 34 170 19 785 Total assets 660 981 511 972 EQUITY Capital and reserves attributable to equity holders of the Company Total equity 234 463 232 762 Share capital 1 871 1 871 Share premium 825 721 933 576 Other reserves 23 003 13 293 Retained earnings 220 109 121 851 Common control deficit (838 605) (838 605) Attributable to equity holders of the 232 099 231 986 company Minority interest 2 364 776 LIABILITIES Non-current liabilities 187 002 142 622 Borrowings 141 314 102 250 Deferred income tax liability 45 688 40 372 Current liabilities 239 518 136 589 Trade and other payables 162 802 106 530 Current income tax liabilities 29 915 2 444 Borrowings 43 462 24 267 Provisions for other liabilities and 3 340 3 347 charges Total liabilities 426 518 279 210 Total equity and liabilities 660 981 511 972 Consolidated Cash Flow Statement Year ended 30 June 2007 2006 R`000 R`000
Cash generated from operating activities Net cash generated from operating 109 622 126 634 activities Cash receipts from customers 1 256 824 1 226 516 Cash paid to suppliers and employees (1 128 069) (1 052 446) Net cash generated from operations 128 755 174 070 Interest paid (11 982) (16 205) Dividend paid - (20 000) Income tax paid (7 151) (11 231) Cash flow from investing activities Net cash used in investing activities (45 642) (91 711) Purchases of property, plant and equipment (53 314) (69 445) Proceeds on disposal of property, plant and 11 235 1 408 equipment Acquisition of subsidiaries and joint (2 239) (25 207) venture Realisation of financial asset and 1 050 2 790 investments Investment in associates (5 883) (2 285) Proceeds on disposal of joint venture 2 239 - Interest received 1 270 1 027 Cash flow from financing activities Net cash used in financing activities (41 240) (16 206) Capital distribution to shareholder (102 000) - Share issue and listing expenses (5 855) - Proceeds from borrowings 66 615 (16 206) Net increase in cash and cash equivalents 22 740 18 717 Cash and cash equivalents at beginning of 10 930 (7 787) year Cash and cash equivalents at end of year 33 670 10 930 Segment Reporting The primary segment is defined as those business units providing products that are subject to risks and returns that are different from those of other business segments. The secondary geographical segment is in respect of providing products in an economic environment that are subject to risks and returns that is different from other economic environments. Revenue Operating profit 2007 2006 2007 2006 R`000 R`000 R`000 R`000
Poultry 1 280 885 943 076 129 414 146 433 - South Africa 1 201 552 872 567 104 103 129 272 - Other Africa 79 333 70 509 25 311 17 161 Animal nutrition 326 991 285 108 18 501 19 321 - South Africa 326 991 285 108 18 501 19 321 Intergroup revenue (298 716) (255 702) - - 1 309 161 972 482 147 913 165 754 Consolidated Statement of Changes in Equity Share Share capital premium R`000 R`000 Balance at 1 July 2005 Opening balance - - Proceeds from shares issued* 1 871 933 576 Acquisition of subsidiaries and joint - - venture Currency translation differences - - Profit for the year - - Dividends - - Balance at 30 June 2006 1 871 933 576 Balance at 1 July 2006 1 871 933 576 Capital distribution - (102 000) BEE ownership transaction - - Currency translation differences - - Share issue and listing expenses - (5 855) Profit for the year - - Balance at 30 June 2007 1 871 825 721 Common
Other Retained control reserves earnings deficit R`000 R`000 R`000 Balance at 1 July 2005 Opening balance 7 290 34 665 - Proceeds from shares issued* - - - Acquisition of subsidiaries - - (838 605) and joint venture Currency translation 6 003 - - differences Profit for the year - 107 186 - Dividends - (20 000) - Balance at 30 June 2006 13 293 121 851 (838 605) Balance at 1 July 2006 13 293 121 851 (838 605) Capital distribution - - - BEE ownership transaction 12 334 - - Currency translation (2 624) - - differences Share issue and listing - - - expenses Profit for the year - 98 258 - Balance at 30 June 2007 23 003 220 109 (838 605) Total attributable
to equity holders of the parent Minority Total company interest equity
R`000 R`000 R`000 Balance at 1 July 2005 Opening balance 41 955 121 42 076 Proceeds from shares issued* 935 447 - 935 447 Acquisition of subsidiaries (838 605) - (838 605) and joint venture Currency translation 6 003 - 6 003 differences Profit for the year 107 186 655 107 841 Dividends (20 000) - (20 000) Balance at 30 June 2006 231 986 776 232 762 Balance at 1 July 2006 231 986 776 232 762 Capital distribution (102 000) - (102 000) BEE ownership transaction 12 334 - 12 334 Currency translation (2 624) - (2 624) differences Share issue and listing (5 855) - (5 855) expenses Profit for the year 98 258 1 588 99 846 Balance at 30 June 2007 232 099 2 364 234 463 * Shares only issued during 2007. Share capital and share premium were recognised in 2006 in accordance with the application of predecessor accounting and the Group`s accounting policy. NOTES TO THE RESULTS 1. Basis of preparation The condensed consolidated financial information ("financial information") announcement is based on the audited financial statements of the Group for the year ended 30 June 2007 which have been prepared in accordance with International Financial Reporting Standards ("IFRS"), the listing requirements of the JSE Limited and the South African Companies Act (1973). 2. Independent audit by the auditors These condensed consolidated results have been audited by our auditors PricewaterhouseCoopers Inc., who have performed their audit in accordance with International Standards on Auditing. A copy of their unqualified audit is available for inspection at the registered office of the Company. 3. Earnings per share Earnings per share is calculated by dividing the earnings attributable to shareholders for the year by the number of 187 099 313 (2006: 187 099 313) ordinary shares in issue during the year. 4. Headline earnings per ordinary share The calculation of headline earnings per share is based on headline earnings of R98,3 million (2006: R106,9 million) and the number of 187 099 313 (2006: 187 099 313) ordinary shares in issue during the year. Reconciliation between net profit attributable to the equity holders of the company and headline earnings: June 2007 June 2006
R`000 R`000 Profit for the year attributable to the 98 258 107 186 equity holders of the Group Profit on sale of property, plant and (157) (287) equipment Loss from sale of joint venture 424 - Headline earnings 98 525 106 899 Headline earnings per share (cents) 52,66 57,13 5. Declaration of dividend A distribution from capital in respect of the year ended 30 June 2007 is to be proposed by the directors at the next Annual General Meeting. COMMENTARY ON RESULTS 1. PROFILE Country Bird Holdings Limited which was listed on the JSE Limited on 3 May 2007 is a holding company incorporating large integrated poultry and stock feed business operations in South Africa operating as Supreme and Nutri Feeds and poultry breeding operations in the Southern African region operating as Ross Africa. Country Bird Holdings currently operates in South Africa, Botswana and Zambia. 2. FINANCIAL The Group is reporting its audited results in accordance with International Financial Reporting Standards ("IFRS") and accounting policies set out in the financial statements and prelisting document with special reference to the Common Control Deficit. Despite significant increases in raw material prices CBH is pleased to report that the Group achieved profit after tax of R112,2 million (2006: R107,8 million), when disregarding the once off IFRS2 charge for the Supreme BEE transaction. This translates into normalised Headline Earnings per Share of 59,25 cents (2006: 57,13). Group revenue increased by 34,6% on the back of sustained strong demand for poultry products. The increase in group volumes was off-set by the increases in raw material costs which could not be fully passed on to customers in the Supreme operation. As a result CBH achieved a trading margin of 12,2% (2006: 17,0%). Current year performance also benefited from improved capital management resulting in lower interest as well as a reduction in the effective tax rate to 28,4% (2006: 29,5%) due to favourable income tax rates applicable to our respective operations in Zambia (15%) and in Botswana (25%). The Group operating cash flow amounted to R109,6 million. These cash flows were used to fund R55 million of capital expenditure to increase operational capacity. As a result of a group restructure prior to listing R102 million was returned to shareholders to optimise the Group`s capital structure. Overall CBH increased cash by R22,7 million (2006: R18,7 million). 3. OPERATIONAL Poultry - South Africa The strong demand for poultry products has been maintained in the South African poultry industry during the year under review, resulting in the continued real growth in revenues. This growth has been achieved during a period of significant maize price increases, which have strongly impacted on global and South African food inflation. Revenues increased 37,7% as a result of price increases and volume growth. Volumes have increased as a result of the recently completed and significant capital expenditure programme undertaken over the last two years. The effect of this programme will continue to impact the results for 2008 but will be more fully reflected in the results for 2009. Trading margins reduced in the year under review to 9,7% (2006: 14,8%). This was mainly attributable to the resistance of full cost recoveries in the second half of the year. Margins were also affected by sub standard breeder performance attributable to inappropriate genetics, for which remedial action has been taken. The full potential of the capacity expansion recently created will only be realised once these revised breeding initiatives permeate through the breeding cycle. With strong global demand for all poultry products and the higher prices of poultry prevailing in international markets, it is expected that imports will reduce in the near future allowing for greater cost recoveries in sales. Feed The year under review has been characterised by a substantial restructure since taking control of Senwesko Feeds (Pty) Limited, subsequently renamed to Nutri Feeds, towards the end of 2006. New management have been successfully introduced and the assets of a feed mill in Bloemfontein, previously leased, have been purchased. Capital projects to increase capacities, improve efficiencies and product quality at the Viljoenskroon mill have been completed and as a result a 50% shareholding in Noordwes Voere (Pty) Limited, a milling operation based in Lichtenberg, was sold. The effects of the restructure contributed to much improved results being achieved in the second half of the year. Revenues increased 14,7% mainly as a result of increased prices in raw materials and more specifically that of maize. An operating margin for the year of 5,7% (2006: 6,8%) was achieved. The operating margin for the second half of the year was much improved over that of the first half. Additional capital expenditure will be spent in the coming year to complete the restructure and capacity expansion of the feed milling operations. Consequently, significant volume growth and margin improvements are expected from feed in the coming year. The restructure will provide a reduction in transport charges for a portion of Supreme`s offtake. Ross Africa This division comprises a grandparent breeding operation in Zambia and the only parent breeding operation in Botswana. Revenue increased by 12,5% with operating margins increasing to 31,9% (2006: 24,3%) for the year. Zambia The economy in Zambia remains strong and continues to benefit from successive years of recovery providing good prospects for continued growth. The market is not saturated and further capital projects to expand and maintain current operations will enable greater penetration into the local and retail export markets. Botswana, which is supplied by Zambia, will also benefit from these initiatives. Operating margins in Zambia continue to improve as a result of optimal usage of parent egg production. Botswana This is the second year of operation in Botswana and the first phase of the breeding operation is nearing full cyclical production. Initially the establishment of the new breeder flocks resulted in the hatchery not operating at full capacity which was compounded by limited imports due to the international shortage of hatching eggs. However as the breeding flocks have come on line operating profit has doubled and margins have improved. Earnings are anticipated to grow in the year ahead as production cycles are further established and additional parent sites are commissioned. 4. PROSPECTS The strong growth of the South African economy in recent years has led to increased participation of previously disadvantaged people. Greater consumer expenditure achieved through improved employment levels and real wage increases have resulted in a constant increase in the demand for poultry products. This trend is expected to continue for some time and Supreme should also benefit as a result of the expansion achieved. The growth in poultry products will drive growth in feed requirements. The increased feed capacity at Nutrifeeds will be taken up by the growth of Supreme and Fouries Poultry Farms (Pty) Limited, the co-owner of Nutrifeeds, as well as other companies operating in the poultry and animal feed sectors in close proximity to Nutrifeeds` milling operations. The Klerksdorp beef abattoir has been operational for a few months and the process of renovating the facility and creating market awareness is ongoing. With significant experience of operating in Southern Africa, Ross Africa is well placed to take advantage of the economic upturn currently underway in many countries in Africa. CBH will continue to pursue opportunities to enhance national poultry developments and group synergies in other African countries. CBH will continue to explore all possibilities which exist in relation to its long-term vision of creating a broad-based African protein operation whilst not losing sight of the importance which poultry plays as a core part of the business. 5. BEE CBH continues to address black economic empowerment ("BEE") within its South African operations. Strategic BEE partners have been introduced to Supreme and the Klerksdorp beef abattoir. CBH is aware of the need to comply with the Department of Trade and Industry Codes and processes have been put in place to ensure that the Group remains compliant. In accordance with IFRS2 the accounting effect of the BEE transaction in Supreme resulted in a once-off charge to the income statement of R12,3 million. This charge has been reversed to reflect the normalised earnings of CBH. DIRECTORS OF CBH* BH Kent (Chairman)#, CD Stein#, KW James, GP Heath #Independent non-executive REGISTERED OFFICE Unit 16, Block 76 Silver Lakes Drive Tiger Valley Office Park Tiger Valley Pretoria, 0054 (PO Box 11079 Silver Lakes, 0054) ATTORNEYS Smith Tabata Buchanan Boyes Inc. 269 Oxford Road Illovo, 2196 (PO Box 55232 Northlands, 2116) 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 Robbie Taylor Unit 16, Block 76 Silver Lakes Drive Tiger Valley Office Park Tiger Valley Pretoria, 0054 (PO Box 11079 Silver Lakes, 0054) REPORTING ACCOUNTANTS PricewaterhouseCoopers Inc. Registered Accountants and Auditors (Registration number 1998/012055/21) 61 Second Avenue Westdene Bloemfontein, 9301 (PO Box 818 Bloemfontein, 9300) AUDITORS AND TAX ADVISOR PricewaterhouseCoopers Advisory Services (Proprietary) Limited (Registration number 1999/024417/07) 2 Eglin Road Sunninghill, 2157 (Private Bag X36 Sunninghill, 2157) TRANSFER SECRETARIES Computershare Investor Services 2004 (Proprietary) Limited (Registration number 2004/003647/07) Ground Floor, 70 Marshall Street Johannesburg, 2001 (PO Box 61051 Marshalltown, 2107) Date: 26/09/2007 07:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story