Astral Foods Annual Report 2008

More documents

Recommendations

Info

CHAIRMAN’S REVIEWThe year marked the break in anexceptional, uninterruptedearnings growth pattern sincelisting in 2001OVERVIEWThe year under review marked the break in an exceptional, uninterrupted earnings growth pattern since thelisting of Astral Foods in 2001. Underlying this was a South African poultry industry that came underunprecedented pressure during the latter half of the year. Reduced consumer spending led to an oversupply andthis, together with a substantial increase in input costs, caused profit margins to come under pressure.The group’s operating margin dropped from 12,8% to 6,7%.The Animal Nutrition Division had an exceptional year and despite high raw material prices, operating profitincreased by 17,5%.Revenue for the year increased by 29% to R8,2 billion but operating income was 32% lower at R548 million.Diligent attention to cash flow, with a focus on working capital management, resulted in the maintenance of astrong balance sheet. Net debt of R186 million was marginally higher than last year’s R159 million. This justifiedthe declaration of a dividend unchanged from last year’s, namely 700 cents per share.The Competition Commission has referred the findings of its investigation into the complaint of anti-competitiveconduct by Astral Operations Limited and the Elite Breeding joint venture to the Competition Tribunal. The boarddisagrees with the views of the Commission and, in particular, the Commission’s view that Astral has, in any way,contravened the provisions of the Competition Act. We will raise, at the appropriate time, substantial factual andlegal issues material to the matter, which were not dealt with by the Commission on its referral.The International Ross 308 bird will enter the market in 2010 replacing the Ascites resistant Ross 788 and theSouth African Ross 308. The International Ross 308 product is sold in 36 countries worldwide and will giveAstral access to the latest developed genetics from Aviagen International. The bird is more feed efficient as wellas a more prolific layer.GROWTHJJ GeldenhuysChairmanIn line with our strategic plan to invest in organic expansion, projects to improve product mix and flexibility at theEarlybird processing plants, at a cost of R202 million, were completed during the year.Astral Foods Annual Report 2008The new parent breeding operations of National Chicks Swaziland to produce 60 000 day-old chicks per week,was successfully commissioned in July 2008 at a cost of R14 million. Production is now in the correct locationand transportation of eggs has been reduced.County Fair Foods completed its expansion to increase its broiler production by 55 000 broilers to 1,25 millionper week in August 2008 at a total cost of R48 million.10
Construction was started on a breeding operation and broiler hatchery in Lusaka (Zambia) to produce 200 000day-old chicks per week. R18 million of the total cost of R55 million was spent during the year.As a result of the current broiler expansion programmes, our Animal Nutrition Division will continue to grow.Astral Foods acquired a 50% interest in East Balt South Africa effective 1 July 2008. East Balt South Africa bakeshamburger buns, English muffins, Kaiser rolls and other sandwich carriers primarily for selling to McDonald’s andKentucky Fried Chicken outlets in South Africa. Capital expenditure of R58 million for a second bakery in theWestern Cape was approved.Central Analytical Laboratories (Cape), the agronomy side of the Cape Analytical Laboratories operations, wasperceived as non-core to Astral and was sold to SGS South Africa (Pty) Limited for R3,8 million.PROSPECTSConsumption of poultry meat has increased steadily over the past few years and is expected to continue, albeit ata slower rate. The current weakness of the rand, if it persists, will continue to make imports of poultry meat veryexpensive.Due to the weakening of world markets, international agricultural commodity prices are likely to remain weak,placing downward pressure on food inflation.Reduced input costs together with lower imports are forecast in the new financial year. We therefore expect animprovement in earnings for the coming year, provided South African consumer demand for our products,particularly poultry, remains at acceptable levels despite a very uncertain global economy.THE BOARDMike Kingston, group poultry director since 2001, resigned with effect from 1 November 2008. Our thanks for ajob well done and best wishes accompany him into the future.APPRECIATIONI would like to take this opportunity to thank my colleagues on the board for their wise counsel and to thankNick Wentzel, his management team and all the staff at Astral for yet another fine effort under extremely difficultconditions during the past year.JJ GeldenhuysChairman13 November 2008Astral Foods Annual Report 200811
Page 1 and 2: Astral FoodsAnnual Report 2008
Page 3 and 4: PROFILEAstral Foods is a leading So
Page 5 and 6: POULTRYBROILER GENETICSRoss Poultry
Page 7 and 8: GREAT EMPHASIS IS PLACED ON CASH FL
Page 9 and 10: DIRECTORATEINDEPENDENT NON-EXECUTIV
Page 11: EXECUTIVE DIRECTORSNICOLAAS CORNELI
Page 15 and 16: The South African animal feed marke
Page 17 and 18: CORPORATE GOVERNANCEOur approach to
Page 19 and 20: Board:2007 2008Director 8/11 24/1
Page 21 and 22: To further enhance the effectivenes
Page 23 and 24: INTERNAL AUDITWe have established a
Page 25 and 26: with Meadow Feeds Paarl, Meadow Fee
Page 27 and 28: VALUE-ADDED STATEMENTfor the year e
Page 29 and 30: DEFINITIONSOperating profit marginO
Page 31 and 32: APPROVAL OF ANNUAL FINANCIAL STATEM
Page 33 and 34: INDEPENDENT AUDITOR’S REPORTWe ha
Page 35 and 36: 4. BUSINESS REVIEW (continued)The f
Page 37 and 38: 9. DIRECTORS (continued)Subsequent
Page 39 and 40: SHARE INCENTIVE SCHEME INTERESTSSha
Page 41 and 42: SEGMENT REPORT - GROUPfor the year
Page 43 and 44: 2. NEW STANDARDS AND INTERPRETATION
Page 45 and 46: 3. INTEREST IN GROUP ENTITIES (cont
Page 47 and 48: 6. PROPERTY, PLANT AND EQUIPMENT (c
Page 49 and 50: 12. FINANCIAL ASSETS (continued)Loa
Page 51 and 52: 21. DERIVATIVE FINANCIAL INSTRUMENT
Page 53 and 54: 22. EMPLOYEE BENEFITS (continued)Sh
Page 55 and 56: 26. CRITICAL ACCOUNTING ESTIMATES A
Page 57 and 58: INCOME STATEMENTfor the year ended
Page 59 and 60: CASH FLOW STATEMENTfor the year end
Page 61 and 62: NOTES TO THE ANNUAL FINANCIAL STATE
Page 63 and 64:
6. BIOLOGICAL ASSETSEgg Breeding Br
Page 65 and 66:
GROUPCOMPANY2008 2007 2008 2007R’
Page 67 and 68:
11. SHARE-BASED PAYMENTS (continued
Page 69 and 70:
GROUPCOMPANY2008 2007 2008 2007R’
Page 71 and 72:
GROUPCOMPANY2008 2007 2008 2007R’
Page 73 and 74:
GROUPCOMPANY2008 2007 2008 2007R’
Page 75 and 76:
GROUPCOMPANY2008 2007 2008 2007R’
Page 77 and 78:
GROUPCOMPANY2008 2007 2008 2007R’
Page 79 and 80:
28. FINANCIAL INSTRUMENTS (continue
Page 81 and 82:
Group2008 2007R'000 R'00029. RELATE
Page 83 and 84:
31. INTEREST IN SUBSIDIARY COMPANIE
Page 85 and 86:
ANALYSIS OF ORDINARY SHAREHOLDERSat
Page 87 and 88:
AMENDMENT OF ARTICLES OF ASSOCIATIO
Page 89 and 90:
SHAREHOLDERS’ DIARYFinancial year
Page 91 and 92:
FORM OF PROXYASTRAL FOODS LIMITED(I
Page 93 and 94:
Astral Foods Annual Report 2008
show all

Astral Foods Annual Report 2008

Create successful ePaper yourself

Delete template?

Save as template?