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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
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COMPANY SECRETARY
Robbie Taylor
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(PO Box 11079
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REPORTING ACCOUNTANTS
PricewaterhouseCoopers Inc.
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Date: 26/09/2007 07:00:01 Supplied by www.sharenet.co.za
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