Astral Foods Annual Report 2008

The South African animal feed market is mature with the only significant growth prospects coming from theexpanding poultry industry. Our division is well positioned to take full advantage of any future poultry expansion.Quality remains one of our core focus areas and a major reason for our strong market position. The division hasachieved certification with regard to ISO 22000/2005, ISO 9001/2000, Good Manufacturing Practices (GMP) andHazard Analysis and Critical Control Point (HACCP) at all of the main feed mills which offer complete producttraceability in line with European Union standards of feed safety.The technical agreement with Provimi Holding BV, a leading international animal feed research and developmentorganisation, gives us access to the latest developments in animal feed nutrition.Animal feed pre-mixNuTec Southern Africa, a 50% joint venture with Provimi Holding BV, produced an excellent financialperformance despite significantly higher vitamin prices brought about by world wide shortages.Service companiesNational Veterinary Supplies showed good progress in both its animal health and chemical divisions.Central Analytical Laboratories, our laboratory operation, also reported satisfactory results.A 50% stake in East Balt South Africa was acquired effective 1 July 2008 and reported results in line withbudget.POULTRYThe division comprises three separate business units – integrated broiler operations, broiler genetics and theproduction and sale of day-old broiler chicks and hatching eggs.Revenue from Poultry increased by 16% from R4,4 billion to R5,1 billion. However, with only an 8% increase inpoultry meat realisations against a 29% increase in feed costs, operating profit fell by 66% from R475 million toR163 million and operating margins dropped from 10,8% to 3,2%.Integrated broiler operationsThe integrated broiler operations are represented by Earlybird, with production and processing facilities inGauteng and Mpumalanga, and County Fair Foods in the Western Cape.Imported poultry products remain a strong competitor in the local market.Disease is always a major threat in the poultry industry and control measures are a major feature of ourmanagement focus. Sporadic outbreaks of Newcastle disease continued into 2008. Avian influenza remains athreat to the industry and its status is constantly monitored.Broiler geneticsThe broiler genetics company, Ross Poultry Breeders (Pty) Limited, operates in association with one of the twolargest global providers of broiler breeding stock, Aviagen Limited, which is a 10% shareholder. Despite increasedinput costs the company recorded good results.Day-old broilers and hatching eggsOur National Chicks group has operations in Gauteng, KwaZulu Natal and Swaziland. Profit for the year wasmarginally below last year as high input costs could not be fully recovered in the market place.A parent breeding operation in Swaziland to produce an additional 60 000 day-old chicks per week wascompleted in July 2008.Astral Foods Annual Report 200813