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ASTRALA leading Southern African integrated poultry producer

Table of contentsSalient features 2

Financial highlights 3

Group structure 4

Synopsis of businesses 5

Group activities 6

Directorate 8

Overview 12

Chairman’s review 14

Chief Executive Offi cer’s review 18

Corporate governance 22

Audit and Risk Management Committee report 27

Defi nitions 28

Ratios and statistics 29

Sustainability report 30

Annual fi nancial statements 40

Approval of the annual fi nancial statements 41

Certifi cate by company secretary 41

Annual report 2010

www.astralfoods.com


Statement of directors’ responsibility 42

Independent auditors’ report 43

Directors’ report 44

Directors’ remuneration report 48

Segment report – Group 51

Accounting policies 52

Statement of fi nancial position 64

Statement of comprehensive income 65

Statement of changes in equity 66

Statement of cash fl ows 67

Notes to the statement of cash fl ows 68

Notes to the annual fi nancial statements 69

Analysis of ordinary shareholders 89

Notice of annual general meeting 90

Shareholders’ diary 94

Administration ibc

Form of proxy attached

Astral Annual Report 2010 1

Astral Foods Limited is a leading

South African integrated poultry producer

2 Astral Annual Report 2010

Salient features

Profi leAstral is a leading South African integrated poultry producer. Key activities consist of animal

feed pre-mixes, manufacturing of animal feeds, broiler genetics, production and sale of day-old

chicks and hatching eggs, integrated breeder and broiler production operations, abattoirs and

sales and distribution of various key poultry brands.

Strategic focus• To be a focused integrated poultry operator; and

• To be a low cost producer of poultry meat.

Financial features for 2010

• Revenue down 5%

• Operating profit up 1%

• Headline earnings per share up 8%

• Total dividend for the year at 760 cents per share up 9%


Financial highlights

Revenue (Rm)

0

1 500

3 000

4 500

6 000

7 500

9 000

2002 2003 2004 2005 2006 2007 2008 2009 2010

Dividends per share (cents)

0

200

400

800

600

2002 2003 2004 2005 2006 2007 2008 2009 2010

Operating profit (Rm)

0

150

300

450

600

750

900

2002 2003 2004 2005 2006 2007 2008 2009 2010

Total assets (Rm)

0

500

1 000

1 500

2 000

2 500

3 000

3 500

2002 2003 2004 2005 2006 2007 2008 2009 2010

Headline earnings per share (cents)

0

350

700

1 050

1 400

2002 2003 2004 2005 2006 2007 2008 2009 2010

Cash generated from operating activities (Rm)

0

100

200

300

400

500

600

700

800

2002 2003 2004 2005 2006 2007 2008 2009 2010

The year ended with a gratifying 8% increase in headline earnings,

despite the extremely competitive pricing and depressed

consumer spending


Group structure

Africa Feeds Limited(Zambia)

100%

Feeds Operations

Poultry Operations

Investment Holding

Baking Operations

NuTec SA (Pty) Limited

Progressive Poultry Limited (Zambia)

Meaders Feeds Limited(Mauritius)

East Balt SA Partnership

50%

Meadow Feeds (Eastern Cape) (Pty) Limited

100%

Ross Poultry Breeders (Pty) Limited

90%

33%

50%100%

100%

Central AnalyticalLaboratories

Meadow Feeds

Elite Breeding Farms

National Chicks

County Fair

67%National Chicks

Swaziland (Pty) Limited

Earlybird

80%Meadow Moçambique

Limitada

100%

National Chicks Limited Astral Operations Limited



Synopsis of businesses

Earlybird FarmAs a fully integrated broiler production, processing, distribution and sales and marketing operation, Earlybird Farms processes 2,6 million broilers per week. Earlybird brands include Festive, Goldi and Supa Star.

County FairCounty Fair’s integrated operations comprise breeding farms, hatcheries, broiler grow-out farms, farms services, fresh processing and rendering facilities. County Fair processes 1,3 million broilers per week.

National ChicksNational Chicks conducts business as a international supplier of day-old chick and hatching eggs to the Astral Group and non-integrated independent operations in South Africa, Swaziland, Botswana and Mozambique. At every step in the supply chain, whether from chicken to egg or from egg to chicken, National Chicks plays a key role.

RossRoss Poultry Breeders is the sole distributor and supplier of the Ross 308 parent stock to the South African broiler industry. In close association with Aviagen Limited, the global leader in poultry genetics based in Scotland, Ross Poultry Breeders continually develops and implements progressive bio-security and production processes to ensure the delivery of disease free generic material to the South African poultry industry.

MeadowMeadow acknowledges and supports consumers’ increased awareness and demand for ethical practices leading to safer food and product quality guarantees. This is increasingly relevant to modern agriculture, with commercial and emerging farmers demanding the very best in animal feed. The application of world-class technology, the high-test standards in feed safety and production methods, ensures that Meadow delivers what farmers require most – good value, safe feed and superior yields!

NuTecNuTec’s range of high quality standard vitamin/mineral pre-mixes, enables the agricultural industry to optimise livestock nutrition. Key to NuTec’s operations is providing a comprehensive feed solution involving feed formulations and modern husbandry practices.

Central Analytical LaboratoriesCentral Analytical Laboratories offers a dedicated and diverse range of analyses to the Animal Feed industry. CAL’s qualifi ed and experienced team of analysts employs the latest instruments and methods to provide the best possible service to our client base – which is wider than just the Astral Group.


Group activities

Poultry

Integrated broiler operationsWe have three fully integrated broiler production, processing, distribution, sales and marketing operations. The combined production capacity of 3 935 million processed broilers per week, made up as follows:

Earlybird Standerton 1 350 millionEarlybird Olifantsfontein 1 285 millionCounty Fair 1 300 million

Both Earlybird Olifantsfontein and County Fair market and distribute a full range of fresh and frozen poultry products whereas Earlybird Standerton’s primary products are in the form of individually quick frozen products.

County Fair and Earlybird market and distribute a full range of value-added products comprising frozen reformed fi lled products, ready to eat chicken products and a dedicated range of emulsifi ed products.

Day-old broiler and hatching egg supplierThe National Chicks operation conducts business as a day-old chick and hatching egg supplier to our integrated broiler operations and the independent non-integrated broiler producers in South Africa, Swaziland, Botswana and Mozambique. National Chicks supplies small hatcheries in Africa with fertile eggs and has a technical team servicing its customer base.

Broiler geneticsRoss Poultry Breeders (Pty) Limited is the sole distributor and supplier of Ross 308 parent stock to the South African broiler industry. The company has a technology agreement with Aviagen Limited, a multi-national company that holds the world-wide proprietary rights to the “Ross” brand. The company has entered into an agreement with Aviagen Limited for the exclusive rights to the International Ross 308 broiler/breeder that is world-renowned for its superior broiler and breeder performance. The performance of the breed will be evident from 2010 onwards. Aviagen Limited has a 10% shareholding in the company.

Elite Breeding Farms supply parent stock to National Chicks and County Fair.


Feed

Feed DivisionEleven strategically placed feed mills in Southern Africa are well-equipped to produce and distribute a wide range of specialised products for all commercially farmed animal species.

The South African operations consist of mills located in Randfontein, Delmas, Welkom, Paarl, Port Elizabeth, Pietermaritzburg, Ladismith and a speciality mill which was relocated from Richmond to Pietermaritzburg during the year.

The African operations consist of a feed mill in Lusaka (Zambia) and an 80% shareholding in a mill in Maputo (Mozambique). Our 33% shareholding in the feed mill in Port Louis (Mauritius) was disposed of subsequent to year-end.

Services and Ventures

Animal feed pre-mixNuTec Southern Africa (Pty) Limited, a 50% joint venture with Provimi Holding BV based in Holland, manufactures and markets vitamin and mineral pre-mixes for animal feed as well as a wide range of feed additives, commodity and speciality raw materials.

Analytical LaboratoriesCentral Analytical Laboratories analyses animal feed and water samples for the agricultural sector.

BakeryEast Balt South Africa, a 50% joint venture, bakes hamburger buns, English muffi ns, Kaiser rolls and other sandwich carriers, primarily for selling to fast food outlets in South Africa. A second state-of-the-art bakery was commissioned in the Western Cape during the year.


1

2

3

4

5

6

78

9

10

Directorate


Independent non-executive directors 1. Jurie Johannes Geldenhuys (67)

2. Thabang Charlotte Christine Mampane (52)

3. Malcolm Macdonald (68)

4. Nombasa Tsengwa (45)

5. Theunis Eloff (55)

6. Izak Stephanus Fourie (63)

Executive directors 7. Christiaan Ernst Schutte (50)

8. Daniel Dirk Ferreira (54)

9. Theo Delport (50)

10. Obed Mooki Lukhele (35)


Directorate (continued)

Independent non-executive directors1. Jurie Johannes Geldenhuys (67)Independent non-executive directorBSc (Eng Elec), BSc (Eng Mining), MBADirector of companiesAppointed to the board on 24 May 2001

Chairman of the board, chairman of the Human Resources and Remuneration Committee, chairman of the Nominations Committee and member of the Audit and Risk Management Committee until 1 October 2010.

Previously served on the boards of Anglovaal Limited, Avmin Limited and its various gold mines, and Iscor Limited (now ArcelorMittal South Africa). Served as the Chamber of Mines president (1993 – 1994) and on its Executive Council, Gold Producers’ Committee and various chamber-related board committees.

Previously served on the Council of the Atomic Energy Corporation and on the National Water Advisory Council. Retired as managing director of Avgold Limited during 2001. Currently a director of the listed Exxaro Resources Limited (chairman of the safety and sustainable development committee and member of the transformation, remuneration, human resources and nomination committee).

2. Thabang Charlotte Christine Mampane (52)Independent non-executive directorBA (Hons) (Public Administration), Masters in ManagementGroup Executive in the Group’s CEO’s offi ce and Regions: South African Broadcasting CorporationAppointed to the board on 14 November 2003Member of the Human Resources and Remuneration Committee and member of the Nominations Committee.

Started career at the SABC in 1983 as a junior announcer on Radio Seswana and remained in this position until promoted into the role of senior announcer in 1989. Promoted to Manager: Drama, Culture and Language in 1991. Joined Telkom as Manager of the Audio Visual Section in 1995 but returned to the SABC in 1996 as General Manager of the portfolio of eight radio stations, thereafter appointed as Chief Executive, Radio division for three years. Head of Regions from 2002 to 2005 before being appointed to her current position as Group Executive in the Group’s CEO’s offi ce and Regions. Non-executive director of National Film and Video Foundation.

3. Malcolm Macdonald (68)Independent non-executive directorBCom, CA(SA) Director of CompaniesAppointed to the board on 14 November 2003Chairman of the Audit and Risk Management Committee

Served as fi nancial director of Iscor Limited (now ArcelorMittal South Africa) and its international steel marketing company until retirement in 2004. Previously general manager of the Industrial Development Corporation and non-executive director of many of its associated companies in a variety of industries (engineering, agriculture, chemicals, shipping, fi nancial services, minerals extraction and processing).

Currently serves on the boards and as chairman of the audit committees of the listed GijimaAST Group, ArcelorMittal South Africa and unlisted Coris Capital.

4. Nombasa Tsengwa (45)Independent non-executive directorBSc, MSc, PhD (Biotechnology). Executive General Manager: Safety and Sustainable Development, Exxaro Resources LimitedAppointed to the board on 8 May 2007 Member of the Nominations Committee and the Human Resources and Remuneration Committee.

Started career as Research Assistant, University of Transkei. Previous positions include Lecturer: Department of Genetics, University of Pretoria and Senior Co-ordinator: Agriculture and Agro-processing Sector within the National Research and Technology Foresight Project. Appointed as Corporate Manager: Biotechnology and Innovation Futures at the Council of Scientifi c and Industrial Research in 1999 before being appointed as Deputy-Director General: Environmental Management at the National Department of Environmental Affairs and Tourism in 2000.

5. Theunis Eloff (55)Independent non-executive directorBJur (Econ), ThB, ThM, ThD. Vice-Chancellor of North-West UniversityAppointed to the board on 8 May 2007Member of the Audit and Risk Management Committee from 1 October 2010

Ordained as minister of religion of a congregation at the University of Pretoria. Completed Doctorate in Theology with a dissertation on “Government, Justice and Race Classifi cation”. Left the ministry in 1989 and joined the Consultative Business Movement and was appointed as Executive Director in 1990.

In 1995 appointed as Chief Executive of the National Business Initiative. Served on the Economic Advisory Council of the Northwest Province, the Board of Business Against Crime and the Board of the Centre for Confl ict Resolution. In 2002 became Vice-Chancellor of the Potchefstroom University for Christian Higher Education. In 2004 became Vice-Chancellor of the newly merged North-West University. Past chairman of Higher Education South Africa (HESA) and since July 2009, chairman of the Association of Commonwealth Universities. Vice-President of the Afrikaanse Handelsinstituut.


6. Izak Stephanus Fourie (63)Independent non-executive directorBCom, CA(SA)Director of CompaniesAppointed to the board on 1 July 2010Member of the Audit and Risk Management Committeeand Human Resources and Remuneration Committee from 1 October 2010

Retired as COO of PricewaterhouseCoopers in 2005. Served on the PricewaterhouseCoopers Global Board and before that on the Coopers & Lybrand International Board. Also served on the Coopers & Lybrand International Audit and Accounting Standards Committee.

Previously served as the chairman of Business Skills for South Africa, a PricewaterhouseCoopers initiative with the National African Federated Chamber of Commerce and Industry to train emerging business people.

Executive directors7. Christiaan Ernst Schutte (50)Chief executive offi cerManagement Business Administration and Finance Dip.Chief Executive Offi cer with effect from 1 May 2009Appointed to the board on 18 August 2005

Joined Golden Lay Farms, a division of Tiger Brands, the leading egg producing organisation in Southern Africa, in October 1984 as assistant farm manager. Spent 18 years with the group in various positions including as sales director from 1996 to 2002. Joined Astral Foods in May 2002 as manager of retail sales for Meadow Feeds before being appointed as sales and marketing director in August 2002.

Appointed as managing director for the Animal Feeds Division in July 2004 responsible for Meadow Feeds Southern Africa, National Veterinary Services, Central Analytical Laboratories and East Balt.

He was appointed as Chief Executive Offi cer on 1 May 2009.

8. Daniel Dirk Ferreira (54)BCom, B Compt (Hons), CA(SA)Financial DirectorAppointed to the board on 1 May 2009

Employed by ICS Group Limited before the acquisition of ICS by Tiger Brands, where he held positions in operational fi nancial management, tax management, project management and as group fi nancial manager. He joined Genfood as group fi nancial manager for two years before joining Astral Foods in February 2001 as group fi nancial manager.

He was appointed as Financial Director on 1 May 2009.

9. Theo Delport (50) Dip. Sales ManagementManaging Director: Poultry DivisionAppointed to the board on 23 March 2009

Started his career in 1984 as sales representative with Todays Frozen Foods and joined Spekenham in 1988 as sales manager marketing. He joined County Fair in 1992 as national sales manager (retail) and was appointed managing director in 2001.

He resigned from County Fair in 2007 to become a partner in a private business venture but returned to Astral Foods in May 2008 as sales and marketing executive of the Poultry Division.

He was appointed as managing director of the Poultry Division in March 2009.

10. Obed Mooki Lukhele (35) BVMCh, BSc (Hons) EntomologyGroup Veterinary DirectorAppointed to the board on 1 May 2009

Started career at Virbac Animal Health in 2000 as a Poultry Technical Manager until mid-2002. Thereafter he held an Export Managerial position at Pfi zer Animal Health for four years responsible for various sub-Saharan African countries.

Joined Astral Operations Limited in May 2007 as the group technical manager for veterinary services. He co-authored three scientifi c papers in the fi eld of entomology, veterinary anatomy and bovine infectious diseases.

He was appointed as Group Veterinary Director on 1 May 2009.


Overview

Astral Foods is an integrated poultry operator and we focus

to be a low cost producer

of poultry meat


Maryna EloffGroup Company Secretary

Evert PotgieterAudit and Risk Executive

Gary ArnoldDirector Business Development – Astral Operations

Len HansenHuman Resources Director – Astral Operations

Anil RamballyExecutive Manager: Sustainability and Preferential Purchasing – Astral Operations

Corporate offi ce services


Chairman’s review

2010 retrospectiveIn my review last year, following a satisfactory 6% increase on the 2008 headline earnings, I stressed the extreme uncertainty in the business environment in which we operated. All we could build our expectations on was our favourable position with respect to feed input costs and chicken as the preferred and affordable source of protein. The Chief Executive Offi cer, Chris Schutte, also derived considerable comfort from the quality of our senior management and the application of best management practices.

We ended the 2010 year with a gratifying 8% increase in headline earnings. This was despite extremely competitive pricing and disappointing results from the Africa Operations in the feed division, and distinctly “depressed” consumer spending, higher levels once again of imports and the impact of the unfortunate political service-provision-related unrest and industrial action in the Standerton area, in the poultry division.

I am convinced that good on-farm production performance, the exceptionally good health status of poultry in South Africa, sound management, and in particular skilful in-touch marketing under adverse conditions, played a decisive role in successfully weathering the unfavourable and uncertain economic conditions.

Strategic reviewDuring March this year the board spent two days intensively grappling with Astral’s medium- and longer-term future, to guide our thinking in an uncertain political and economic environment, in the best interests of the company and its shareholders.

During this review invaluable inputs were given by seasoned experts, and meaningful board interaction took place on matters relating to, inter alia:

• international meat protein supply, demand and production patterns;• world grain and protein production and outlook;• the political and social landscape of South Africa; and• the spending/buying power of our population seen within our demographic context.

The outcome was a coherent focus on medium-term operational actions and longer-term strategic investment planning.

These deliberations put non-executive and executive directors alike on the same wave-length and will greatly facilitate and expedite high level decision-making in the company.

Sound management, particularly, skilful in-touch marketing, has played a decisive role in successfully weathering the unfavourable and uncertain economic conditions

Jurie GeldenhuysChairman


2010 Milestones

2010 Achievements

2011 Focus

• An 8% profi tability improvement in the Feed division and completion of second phase capital project at Tiger Chicks in Zambia

• The new East Balt industrial bakery joint venture in the Western Cape commissioned

• Total dividend for the year up 9%

• On-farm effi ciencies give rise to an 11,5% sales volume increase

• Poultry health status improvement in broiler operations encouraged optimisation of genetic integrated production

• Future uncertain economic environment requires continuing focus on our current effi ciencies drive

• Coherent focus on medium-term operational actions and longer-term strategic investment planning

SustainabilitySustainability for Astral in its broadest sense, entails on the one hand, the management of all external inputs and infl uences, and on the other hand, the impact of the company on its various stakeholders. This entails, fi rstly, a wise balance by the board and the executive regarding risk aversion and risk appetite and the related rewards and/or punishment! Secondly, this requires sound management of all stakeholder-related processes and impacts. The latter relates, amongst others, in particular to the well-being of our employees and the communities and the physical environment in which we operate.

Sustainability is an integral component of our management philosophy as detailed in this annual report. The report refl ects some of the outcomes of this approach.

The most relevant outstanding, safety, health, environmental and other responsibility issues have been formally addressed in the past two years. We have recently engaged outside assistance to conduct a carbon footprint assessment of the business units and subsidiaries, to establish our carbon emissions baseline, to identify opportunities to reduce emissions and generally assist in formalising our emission management.

Corporate governanceWe remain fully committed to the principles of transparency, integrity and accountability. The primary responsibility for good corporate governance rests with the full board and its chairman. It is gratifying to report that this approach pervades the board’s deliberations and decision-making processes.

Compliance with King III requirements places considerable demands on companies with small boards, especially in respect of independent non-executive responsibilities. During most of the fi nancial year for instance, because of the composition and skills mix of the board, I also served as a member of the Audit and Risk Management Committee. This matter was rectifi ed

towards the end of the year when Mr Stefan Fourie, a Chartered Accountant, agreed to join our board and serve on the Audit and Risk Management Committee. Mr Fourie is a past COO of PWC Southern Africa and eminently satisfi ed the three main criteria set by the Nominations Committee, namely competence, personality and availability. I still attend Audit and Risk Management Committee meetings by invitation.

In our opinion all critical King III requirements are met in the corporate governance framework of the company. Certain environmental issues are still being addressed.

We continue to co-operate fully with the Competition Commission in its investigations and do not anticipate any unfavourable developments.

2011 prospectsOur South African economy cannot escape the global impact of the rather unhappy and uncertain economies of the USA and Europe. It is true that, as a substantial resource producer, our economic destiny is substantially and favourably infl uenced by the good fortunes of the Indian and Chinese economies. However, the latter countries’ GDP together, constitute about half of that of the USA, and are indeed interdependent on the USA and European economies. We would therefore have to live with at least another year of serious global uncertainty.

In South Africa foreign and local fi xed direct investment will be negatively affected by sentiments relating to political uncertainty on unresolved issues such as nationalisation in the mining industry, media freedom, land redistribution and the mooted centralisation of power. This will ultimately impact on consumer confi dence and spending power.

Continuing job losses (275 000 during the most recent three quarters) with unemployment formally estimated in excess of 25% will take its toll again in the form of reduced consumer


confi dence and spending power. However, decreased interest rates, some generous wage increases during this year and lower infl ation may be offsetting factors. Regrettably the stronger Rand, and the related higher imports of poultry products is likely to further aggravate an already tough oversupply situation and thus keep margins under pressure.

More specifi cally regarding market trends in the feeds industry, the graph below is a useful aid to understand the dynamics of one of the main drivers of food prices. The drought in Russia led to a ban on exports of wheat from the Black Sea region, which resulted in an 80% rise in international wheat prices between June and August of 2010. This was further exacerbated by a strong El Ni

~no phenomenon which led to adverse conditions in

Chairman’s review (continued)

the USA and a sharp drop in the estimated yield of the current US maize crop. Consequently the international maize price also rose sharply by 80% from early July to October 2010. The result is that world food price infl ation is again lagging world commodity prices. The question is for how long commodity prices will outpace food infl ation and the answer lies in world economic growth prospects. World economic growth has recovered from the deep recession in the USA and Europe in 2009. Despite the risks posed by unemployment and high debt levels, the world economy should grow at around over 4% in 2011, driven mainly by China and India. In all likelihood food infl ation will catch up with commodity prices which should lead to higher food prices in the year ahead.

Raw materials are Astral’s major input cost and it should be remembered that yellow maize, soybeans and soybean meal are Dollar-based commodities. It is clear from the graph above that the local price of yellow maize has substantially lagged the international price of maize since October 2007 partially as a result of a strong Rand and also because of the bumper local maize crop last year which forced local prices down to export parity levels. It is however conceivable that this relative weakness in the local maize price is unsustainable.

In short, this could be indicating the turning point in the very favourable feed input cost environment from which we have benefi ted during the last year.

U.S. maize price and SA yellow maize price ($)

50

75

100

125

150

175

200

2007 2008 2009 2010

U.S. maize price SA yellow maize price

Astral is in a position to face

another tough and uncertain year with considerable confi dence inspired by its success

during the past as a focused low cost broiler producer


Turning to the poultry side of our business, similar conditions to last year are likely to prevail. Local broiler production for 2010 grew by an estimated 4% compared to 2009. Total imports grew by an equivalent 13% over the same period.

Despite strong market growth an increase in per capita consumption was driven largely by lower selling prices. A downturn in market conditions linked to higher industry stock levels for most of the year resulted in an extremely competitive sales environment. Gains achieved through production and cost effi ciencies were largely passed on to consumers who reacted positively to reduced selling prices compared to the previous year.

2011 will in all likelihood see more of the same making it truly a year of survival of the fi ttest.

Astral is however soundly placed regarding farm and abattoir effi ciencies, best management practices generally and a well-motivated management team. Its route to the market is via a powerful base of independent and formal wholesale and retail consumers, who are serviced directly and via a long-standing distribution agent.

In summary, Astral is in a position to face another tough and uncertain year with considerable confi dence inspired by its success during the past as a focused low cost broiler producer.

AppreciationOn behalf of the board I wish to convey a heartfelt vote of gratitude to Chris Schutte and his colleagues for a magnifi cent team effort in an extremely diffi cult year. We have every reason to believe in their competence in dealing with what is likely to be an equally challenging year ahead.

I am greatly indebted to my board colleagues, executive and non-executive alike, for their dedicated enthusiastic and ever-professional contributions to the good governance of Astral.

JURIE GELDENHUYSChairman

11 November 2010

Poultry imports – volume (tons)

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2003 2004 2005 2006 20082007 2009 2010

Premier Helen Zille

offi ciated at the

grand opening of

the state-of-the-art

East Balt Western

Cape bakery


Chief Executive Offi cer’s review

IntroductionI present the year under review in this, Astral’s tenth integrated annual report, which refl ects on the group’s operational achievements in one of the worst economic trading periods in our existence as a fully integrated poultry producer.

The global fi nancial crisis received a kickstart with the ‘sub-prime’ phenomenon in the USA, then continued through 2010, a year earmarked by speculation on the various graphical shapes of a possible future recovery. In South Africa, the eternal optimists had high hopes that the 2010 FIFA World CupTM event alone would save, protect and bolster our economy from the grim global outlook. It did not happen. From a poultry producing perspective, we realistically planned for a NON-event, which proved to be closer to reality.

The key elements that contributed to the tough market conditions were spearheaded by unemployment and continued job shedding to the tune of a further 1,2 million reported retrenchments.The market contraction, together with increased levels of poultry imports and an over-supply of local poultry meat, brought about by earlier unrealistic growth expectations by players in the industry, exerted extreme pressure on pricing levels, which culminated in four-year low prices.

Our strategy and focus, as stated in my previous review, to optimise our integrated production capabilities and reinforce a methodical approach to farming practices and production effi ciencies, has clearly differentiated us as a low cost producer.

Our results for the period under review are evidence of excellent poultry production effi ciencies, cost control and working capital management.

Strategic alliances are at the forefront of the success of our business and we value and enjoy exceptionally strong relationships with many international and local companies who collaborate, add value and contribute to all key aspects of our integrated operations and to the success of our group.

The key international alliances that we actively reinforce and promote include the following:

• Aviagen Group, the global market leader in poultry genetics;• Provimi, a world leader in animal nutrition with 87 factories in 30 countries;• Nutron Foods, a subsidiary of the Dutch group Provimi, who have been recognized by

Magazine Globo Rural for three consecutive years (2007, 2008 and 2009) as the best animal nutrition company in Brazil;

• Cargill, an international producer and marketer of food, agricultural, fi nancial and industrial products and services; and

• Seaboard Corporation, a unique company with its roots in grain and agriculturally derived products.

Chris SchutteChief Executive Offi cer

Our strategy and focus remains to optimise our integrated production capabilities and reinforce a methodical approach to farming practices and production effi ciencies


2010 Milestones

2010 Achievements

2011 Focus

• Group operating profi t increased to R585 million, an improvement to 7% in operating margin

• A signifi cant 32% improvement in cash generated from operating activities

• Application of best management practices, skilful in-touch marketing, excellent production effi ciencies and gains result in positive consumer reaction to reduced selling prices

• Focus on sustainable wise risk aversion, risk appetite and working capital management and related rewards of our results

• Focus on on-farm production effi ciencies and best practices across all integrated operations

We are in continuous contact with all these role players and obtain advice and guidance in a variety of areas which are benefi cial to our group, such as poultry genetics, animal nutrition as well as the production and marketing of feed.

Local alliances include CJA Strategic Risk Brokers, who provide our group with modelling and scenario planning on the procurement of key raw materials for use in feed production.

Financial resultsResults for the year showed an 8% improvement in headline earnings.

After reporting satisfactory results for the fi rst half of the fi nancial period, the growth on the comparative prior period did not continue to the same extent, mainly as a result of continued depressed poultry selling prices and the reduced contribution from lower feed input costs, when compared to the fi rst half of the 2010 fi nancial year.

Revenue for the group decreased by 5,3% to R8,4 billion (2009: R8,8 billion) on the back of lower poultry selling prices coupled with lower feed prices. However, operating profi t increased by 1,0% to R585 million (2009: R581 million) and the operating margin of 7,0% showed an improvement from the prior period (2009: 6,6%).

Despite challenging trading conditions, tainted by an oversupply of chicken products and the lower selling prices necessary to maintain manageable stock levels, our focus on working capital management resulted in a marked improvement in both cash fl ow and net debt.

Cash generated from operating activities could be regarded as a signifi cant achievement, with a 32% improvement to R769 million (2009: R584 million), with net borrowings reducing by R58 million to R129 million. The debt to equity ratio reduced to a more than satisfactory level of 9% (2009: 14%).

The Poultry division’s operating profi t was down 7% to R262 million (2009: R282 million) as the business was not able to fully capitalise on lower feed input costs, due to poultry realisations in the second half of the period reducing more than the benefi ts derived from the lower input cost. Production effi ciencies and improvements did however play a major role towards the satisfactory performance of the division as a whole.

The Feed division improved its profi tability by 8% to R281 million (2009: R261 million) on the back of both volume and margin increases. The African feed operations were however negatively impacted by currency depreciations in both Zambia and Mozambique.

The board has decided on an exit strategy from our minority (33%) investment in Meaders Feeds Limited, a feed producer in Mauritius. The assets and liabilities previously consolidated are now disclosed as held for sale. The value of these assets were impaired by R7,2 million in order to refl ect the market value of a non-controlling interest in the equity of the company.

Expansion capital expenditure for the year totalled R149 million (2009: R77 million) with the major single expenditure items being:

• further expenditure on the greenfi eld poultry operation in Zambia R11 million; and

• completion of the East Balt bakery in Cape Town R92 million.

Replacement capital expenditure of R77 million was in line with the previous year’s level.

Net asset turn of 4,3 times is lower than the prior year (2009: 4,8 times). The return on net assets of 30,1% remains at a similar level to the prior year.

Return on equity of 25,8% was marginally down on the prior year (2009: 26,0%).


Review of operationsOur segmental reporting structure now comprises three distinct divisions, namely Poultry, Feed, and Services and Joint Ventures.

Although it was a tough trading period, all divisions achieved satisfactory results.

Important factors having an impact on the group’s activities during the reporting period can be summarised as follows:

• the strong performance of the currency versus the US Dollar, supporting higher levels of poultry imports;

• an overall poultry health status improvement throughout South Africa;

• oversupply of chicken due to prior expansion activities and better production results;

• in order to balance stock levels, poultry price discounting in a depressed consumer market that was impacted by higher unemployment levels and continued job shedding;

• violent and extended industrial action that lasted six months at our largest processing operation in Standerton; and

• signifi cant increases in electricity charges.

However, despite this tough trading environment, all divisions achieved satisfactory results.

PoultryThe Poultry division comprises separate activities and operations, namely:

1. Broiler operations.2. Day-old chicks and hatching eggs.3. Breeder and broiler genetics.

Broiler OperationsThe integrated broiler operations are represented by three similarly sized production and processing facilities, with Earlybird located in Gauteng and Mpumalanga and County Fair in the Western Cape.

The overall average health status of the poultry industry was encouraging and created a platform for the optimisation of the genetic potential of chicken production across all integrated activities.

As a primary focus area, on-farm production effi ciencies and best practices were identifi ed by management for the period under review and signifi cant progress and improved results were achieved across all three operations with sales volumes up 11,5%, comprising 8,1% effi ciency improvement, 2,6% stock movement and 0,8% placements and yield.

The incorporation of the new Ross 308 International genetic line was approximately 70% accomplished at close of the reporting period, with positive indicators regarding hatchability and feed conversion rates. The integration process will be fully implemented towards the end of April 2011.

The additional weight gains through effi ciencies resulted in a major contribution towards countering lower market realisations. Focus and disciplines to further improve effi ciency optimisation and embed our low cost culture continues. On the negative side, we experienced a lengthy and violent illegal industrial strike action at the Earlybird Standerton operation, at a level never previously experienced in the poultry industry. It lasted

six months with additional costs of R27 million being incurred in order to protect our people and assets and to maintain uninterrupted production with a temporary labour force. Management and non-striking staff went beyond the call of duty to maintain production and avoid a catastrophe and are complimented for their efforts.

Day-old Chicks and Hatching EggsNational Chicks, the group’s commercial hatching egg and day-old chick producer, focuses on external broiler production markets and supplies these products to a wide spectrum of poultry operations in Southern Africa. National Chicks also produces and supplies products to our own broiler operations in order to better utilise and enhance capacity utilisation across the group.

National Chicks delivered satisfactory results, despite a decline in sales volumes to external markets on the back of depressed market conditions. The improvement in production effi ciencies within the group also resulted in lower intra-group demand for hatching eggs.

Breeder and Broiler GeneticsOur poultry genetic operation, Ross Poultry Breeders (Pty) Limited, operates in association with Aviagen Limited, a global leader in genetic development and improvement of key production characteristics of commercially farmed chickens.

With the introduction of the ‘new’ Ross 308 genetics that commenced in May 2008, Ross Poultry has relinquished its status as a great grandparent operator in South Africa, in line with Aviagen’s global strategy to retain primary genetic lines in-house.

It is estimated that the change-over and incorporation of the new genetics, together with the phasing out of great grandparent stock, will be completed by April 2011.

FeedThe division comprises seven local feed mills in South Africa and operations in Mozambique and Zambia. The greenfi eld broiler, breeder and hatchery operations in Zambia are also incorporated into this division.

Meadow Feeds, the primary brand in the Feed division, produces and supplies approximately 50% of its total volumes to our downstream poultry operations. Volumes for the reporting period increased by 1% to approximately 1,3 million tons. External sales volumes to the dairy, swine and poultry industry were slightly down on the previous year, with internal volumes up by 3% on the back of higher placements due to improved production performance.

Chief Executive Offi cer’s review (continued)

The incorporation of the new Ross 308 International genetic line has been implemented with positive indicators regards hatchability and feed conversion rates


Despite diffi cult market conditions, the Feed division performed well, with operating profi t up by 8% to R281 million (2009: R260 million). The division increased its operating margin to 6,8% (2009: 5,8%) as a result of tight cost controls and slightly higher volumes.

During the review period, a small speciality mill in Richmond KZN was decommissioned and incorporated into the mill in Pietermaritzburg.

The two African mills in Mozambique and Zambia experienced tough trading conditions, with high raw material input costs adversely affected by the weakening of the respective local currencies. The Zambian operation did however show signs of the improved trading conditions towards the end of the review period.

The second phase of the capital project at Tiger Chicks in Zambia was completed and the projected results of the Lohmann meat breed is satisfactory and currently, all day-old chicks produced are being sold into the Zambian market. Further expansion will be in line with market requirements and regional growth considerations.

The South African feed market is regarded as a mature environment, with growth prospects limited to poultry expansion. The Feed division is well-positioned to take advantage of future poultry expansion in Southern Africa. Planning towards the commissioning of a state-of-the-art feed mill in the Standerton area will commence during 2011, as the contractual obligation to source feed from a competitor will terminate early in 2014.

Production of consistently high quality feed, backed by substantive quality controls and monitoring systems, remains a core focus area of the division, reinforcing its strong market position. Meadow, regarded as the market leader in animal nutrition, is certifi ed with regard to ISO 22000/05, ISO 9001/08, Good Manufacturing Practice and Hazard Analysis and Critical Control Points at all of its major feed mills. This, together with the internationally accredited 20 Keys quality management discipline, provides us with a complete traceability process, in line with the European Union Feed Safety Standards.

The division’s relationship with Provimi Holding BV, a global player in animal nutrition, provides us with the ability to interact and benchmark against the world’s largest poultry players.

Services and Joint VenturesThis division, the third in our reporting structure, was established to better report on operations that do not fi t with either the poultry or feed operations.

The operating profi t for this division was R42 million, up 9% on 2009 mainly as a result of improved performance by East Balt SA.

CAL, the group’s in-house analytical laboratory, was repositioned to focus on feed and water analysis in order to ensure that all quality control and traceability measures are comparable to world-class standards.

NuTec SA, a 50% joint venture with Provimi Holding BV, a global leader in explicit nutrition, specialises in the formulation of customised feed premixes. NuTec supplies products to our feed mills and to various external markets across all commercially produced specie groups.

East Balt SA, a 50% joint venture with East Balt Inc, an international USA-based industrial bakery group focusing on products for Quick Service Restaurants, reported good results. A new state-of-the-art bakery was commissioned in the Western Cape to alleviate capacity constraints and caters for volume growth in this market segment.

In respect of Meaders Feeds Limited, we are in the fi nal stage of concluding an exit strategy as a shareholder in this Mauritian feed operation.

ConclusionOperational effi ciencies and meticulous focus on best practices across all integrated operations were key to our satisfactory results for the review period. The integration of ‘new’ genetic material shows evidence that will lead to improved production results and support the strategic focus of being a low cost integrated poultry producer.

The global outlook for the supply of key raw materials utilised in the production of animal feed for commercially farmed animals seems to be well-balanced but could however result in minor increases in input costs.

The imbalance in supply and demand for poultry products had a signifi cant impact on pricing levels throughout the period under review. It is not envisaged that poultry production or markets will change dramatically in the near future.

Astral and all of its integrated operations are currently well-positioned to address and manage challenges that can severely infl uence the sustainability of our results and businesses.

The staff turnover during this fi nancial year remained very stable, with no loss of senior executives.

AppreciationIn closing, I extend my gratitude to all our loyal customers for their continued support during the past year. We will continue to provide you with products of the highest quality.

To our suppliers and service providers, a big thank you for your contribution to our continued success.

Thank you to my colleagues in management and all the staff, for your loyalty and for working diligently in steering our group towards realising our goals.

I also wish to express my appreciation to the members of the Astral Foods board for your unfailing commitment and support during the year. A special word of thanks to our chairman, Jurie Geldenhuys, whose experience and strategic direction once again proved invaluable to the success of our company in the past year.

C E SCHUTTEChief Executive Offi cer

11 November 2010


Our approach to corporate governance is a keystone of our primary objective which is to create value for all our stakeholders. We also accept the rights of our shareholders as the true owners of the company and understand our own role as trustees on behalf of the shareholders. Corporate governance provides guidance and oversight as we seek to fi nd a balance between conformance with governance principles and superior levels of performance in terms of a sustainable return on shareholders’ investments. We are cognisant of the Public Investment Corporation’s corporate governance and proxy voting policy and have implemented measures to comply with its requirements as far as possible.

We believe that the group’s governance practices are sound and that we conform to the principles embodied within the King III Report (“King III”) on Corporate Governance and the Listings Requirements of the JSE Limited (“JSE”). We remain committed to ensure that these principles continue to be an integral part of the way in which our business is conducted.

The constitution and the operation of the board of directorsThe boardThe board operates in terms of a formally approved charter which sets out its role and responsibilities, the main elements of which are:

• the chairman of the board must be an independent, non-executive director;

• a formal orientation programme for new directors must be followed;

• specifi c policies, in line with King III, must exist with regard to confl icts of interest and the maintenance of a register of directors’ interests;

• the board must conduct an annual self-evaluation;• directors must have access to staff, records and the advice

and services of the company secretary;• succession planning for executive management must be in

place and must be updated regularly;• strategic plans and an approvals framework must be in place

and must be reviewed regularly;• policies to ensure the integrity of internal controls and risk

management must be in place;• social transformation, ethics, safety, health, human capital,

and environmental management policies and practices must be monitored and reported on regularly.

We have a unitary board structure, presently comprising ten directors, including six independent non-executive directors. The roles of chairman and chief executive are separate and distinct. The composition of the board ensures a balance of power and authority, and negates individual dominance in decision-making processes. It also reduces the possibility of confl icts of interest and promotes objectivity.

We believe that the non-executive directors are of suitable calibre and number for their views to carry signifi cant weight in the board’s decisions. An independent non-executive chairman leads the board. A schedule of benefi cial interests of directors appears on pages 48 to 50 of this report.

In August 2010, an evaluation of each of the non-executive director’s independence was conducted. With the exception of the chairman who has served on the board for nine years and who has been adjudged by the board to still be independent, none of the present independent non-executive directors

has served on the board for a period longer than nine years and neither are they disqualifi ed in terms of the criteria for independence as laid down by the JSE Listings Requirements or by King III.

Recognising the need to expand the fi nancial expertise of the board, Mr Stefan Fourie was appointed to the board as well as to the Audit and Risk Management Committee on 1 July 2010. Mr Fourie was previously the chief operating offi cer of PricewaterhouseCoopers Southern Africa until his retirement in 2005. On 1 October 2010, Dr T Eloff replaced Mr J J Geldenhuys as a member of the Audit and Risk Management Committee.

The chairman presides over meetings of the board, guiding the integrity and effectiveness of the board’s governance process. This includes ensuring that no individual dominates the discussion, that relevant discussion takes place, that the opinions of all directors relevant to the subject under discussion are solicited and freely expressed, and that board discussions lead to appropriate decisions.

On a quarterly basis, we actively solicit from directors details regarding their external shareholdings and directorships, which potentially could create confl icts of interest while they serve as directors on our board. The declarations received are closely scrutinised and are tabled at the beginning of each quarterly board meeting. When applicable, directors are requested to table their interests in material contracts and shareholdings in outside companies and if necessary are requested to recuse themselves from discussions in meetings when these confl icts may exist.

Operational management is the responsibility of the Chief Executive Offi cer, Mr Chris Schutte. His responsibilities include, amongst others: developing and recommending to the board a long-term strategy and vision that will generate satisfactory stakeholder value, developing and recommending to the board annual business plans and budgets that support the long-term strategy, and managing the affairs of the group in accordance with its values and objectives, as well as the general policies and specifi c decisions of the board. The CEO is not a member of the Human Resources and Remuneration, Audit and Risk Management and Nominations Committees, but attends same by invitation.

A complete list of board members appears on pages 8 to 11 of this report. In terms of our articles of association all new directors appointed during the year, as well as one-third of the existing directors, have to retire on a rotational basis each year, but they offer themselves for re-election.

The board accepts responsibility for the induction of new or inexperienced directors. As part of the company’s induction programme, a new director is briefed by the company secretary and provided with a comprehensive company information pack. Site visits are also arranged to enable new directors to familiarise themselves with all aspects of our business.

The directors are experienced business people and are required to exercise leadership, enterprise, integrity and judgement based on the principles of good governance. The board is committed to guiding and monitoring these high standards.

The board is aware that it is accountable for the actions of management and has retained full and effective control of the organisation over the past year. The board defi nes

Corporate governance


levels of materiality, reserving specifi c powers to itself, and delegates other matters with the necessary written authority to management. These matters are monitored and evaluated on a regular basis.

The board, in terms of its charter, is required to meet at least quarterly so as to monitor important issues and meet its objectives. Matters reviewed include: strategy, planning, operational performance, broad-based black economic empowerment compliance, acquisitions, disposals, shareholder communications and other material aspects pertaining to the achievement of the group’s objectives.

The board periodically reviews the mix of skills and experience available within the board. Procedures for appointment to the board are formal and transparent and are vested in the board.

The board conducts assessments annually based on several factors including: expertise, objectivity, judgement, understanding the group’s business, willingness to devote the time needed to prepare for and participate in committee deliberations and timely responses.

All directors have access to the advice of the company secretary and are entitled and authorised to seek independent and professional advice about affairs of the company at the company’s expense.

Attendance at meetings A minimum of four board meetings and one strategic planning session are scheduled per fi nancial year. Additional board meetings may be convened when necessary. Four board meetings and one strategic planning session were held during the past year. The accompanying table details the attendance by each director at board meetings held during the year under review:

Board:2009 2010

Director 12.11 11.217.3 and

18.3# 13.5 18.8

T Delport T Eloff D D Ferreira S Fourie * * * * J J Geldenhuys O Lukhele M Macdonald T C C Mampane A C E Schutte N Tsengwa A

# Strategic planning session Present

A Submitted apologies and was granted leave of absence

* Appointed to the board on 1 July 2010

Board committeesAudit and Risk Management CommitteeThe committee met three times in 2010. Attendance at meetings was as follows:

2009 2010

Director 9.10 11.11 12.5

M Macdonald

J Geldenhuys

I S Fourie * * *

Present * Appointed on 1 July 2010

Human Resources and Remuneration CommitteeThe committee met three times in 2010. Attendance at meetings was as follows: 2009 2010

Director 9.10 11.11 12.5

J Geldenhuys T C C Mampane N Tsengwa A

Present

A Submitted apologies and was granted a leave of absence in terms of

the company’s articles of association

Nominations CommitteeThe committee met twice during 2010. Attendance at meetings was as follows: 2010

Director 10.3 13.5

J J Geldenhuys T C C Mampane N Tsengwa A

Present

A Submitted apologies and granted leave of absence

Non-executive directors received the following fees during 2010:

Fixed feeper annum

2010R’000

Chairman of the board 350

Member of the board 175

Chairman of the Audit and Risk Management Committee 133

Member of the Audit and Risk Management Committee 70

Chairman of the Human Resources and Remuneration Committee 133

Member of the Human Resources and Remuneration Committee 70

The remuneration is paid quarterly in arrears, except for Mr Geldenhuys, who receives his fees on a monthly basis.

Board committeesTo enable the board to properly discharge its responsibilities and duties, certain responsibilities of the board have been delegated to board committees. The board is satisfi ed that all committees have met their respective responsibilities for the period under review. All board committees are chaired by an independent non-executive director. Particulars of the composition of the board of directors and committees appear on pages 8 to 11 of this report. Board committee charters are reviewed on an ongoing basis to ensure that the committees’ duties and responsibilities are aligned with the requirements of corporate governance and keep abreast of developments in this fi eld.

In view of the fact that the Audit and Risk Management Committee will become a statutory committee once the new Companies Act becomes law, and in terms of the recommendations set out in King III, shareholders will now be required to elect the members of this committee at the company’s next annual general meeting.

The board committees are as follows:

The Audit and Risk Management CommitteeThe Audit and Risk Management Committee consists of three members, all of whom are independent non-executive directors,


and meets at least twice a year with management, internal and external auditors as well as the group’s risk managers. Mr S Fourie was appointed as member of the committee on 1 July 2010. In line with the requirements of King III, Mr Geldenhuys resigned as a member of the committee on 1 October 2010 and Dr T Eloff was appointed in his stead.

The opportunity is created at each meeting for discussion with the external and internal auditors without the presence of management. We believe that the members of the committee are knowledgeable about the affairs of the company and have extensive expertise in fi nance, accounting and risk management practices.

The Audit and Risk Management Committee fulfi lls the responsibilities as set out in the Audit and Risk Management Committee Charter, which includes:

• overseeing the internal and external audit function;• assisting the board in the discharge of its duties relating to the

safeguarding of assets and operation of adequate systems and internal controls;

• the preparation of accurate fi nancial reporting and statements in compliance with all applicable legal requirements, corporate governance and accounting standards;

• providing support to the board on the risk profi le and risk management of the group;

• providing support to the board on information technology governance and risk.

Both the group audit and risk executive and the external auditors have unfettered access to the chief executive offi cer, the chairman of the board and the Audit and Risk Management Committee.

During the year the committee addressed the following additional responsibilities required by King III and the JSE Listings Requirements:

• evaluated and confi rmed the independence of the external audit function; and

• reviewed the expertise, resources and experience of the group fi nancial director.

Re-appointment of the independent auditorsAt the committee meeting held on 12 May 2010, the committee considered the independence of the external auditors, PricewaterhouseCoopers Incorporated in accordance with section 270A of the Corporate Laws Amendment Act. In assessing the independence of the external auditor, the committee satisfi ed itself that PricewaterhouseCoopers Incorporated:

• does not hold a fi nancial interest (either directly or indirectly) in Astral;

• considers each area of non-audit work that they undertake, in relation to the potential threats to their audit independence and the safeguards, if any, that they have to put in place;

• considers all other factors, which could impact upon, or be considered to impact upon, their independence.

Accordingly, the committee is satisfi ed that PricewaterhouseCoopers Incorporated is independent as contemplated by the South Africa Independence laws and the applicable rules of the International Federation of Accountants and nominated the re-appointment of PricewaterhouseCoopers Incorporated as registered auditor for the 2010/11 fi nancial year. On 13 May 2010, the board, subject to shareholder approval, re-appointed

PricewaterhouseCoopers Incorporated and Mr I Buys, the audit partner, as the independent registered auditor of Astral.

The committee also considered and satisfi ed itself that PricewaterhouseCoopers Incorporated, including their advisors, are accredited in terms of the JSE List of Accredited Auditors as contemplated in paragraph 3.86 of the JSE Listings Requirements.

Risk ManagementWe are committed to developing, implementing and maintaining the best possible strategies to minimise our risks and to ensure the growth of our company for the benefi t of our employees and shareholders.

To achieve this we are committed to creating safe and healthy working conditions to minimise the risk of injury or disease to our employees, to prevent the loss of property and to conserve the environment.

We are committed to the following action plan:

• identify the risks and exposures associated with each operation’s unique situation;

• identify and implement the most suitable methods in line with our business strategy to eliminate or mitigate risk exposures as far as reasonably practical;

• develop the best strategies and policies to protect our employees and assets where the threats cannot be removed;

• implement a plan to ensure the continual existence and growth of our operations;

• use secure insurance markets to insure against catastrophic incidents and other losses beyond our self insurance capacity; and

• attempt to optimise, in the long term, the total cost of risk to the group.

We apply an enterprise-wide risk management approach, involving all levels of management, with assistance of outside consultants for assessing insurable risks. Insurable risks are covered and uninsurable risks are mitigated as far as possible.

We are committed to the development of the optimum risk fi nancing strategy for the group based on each division’s particular risks and exposures. The group risk manager, in liaison with the divisional management and the risk fi nancing brokers, are responsible for the implementation of a comprehensive self-insurance funding and cost-effective insurance programme strategy.

The senior management at each operation is responsible for the development and implementation of a sound risk control programme based on the group risk control standards. The integrity of the risk control programme is regularly independently monitored by appointed risk analysts using internationally recognised auditing standards.

To mirror our commitment we expect each manager and each employee to participate in the risk management programme at their respective levels in the organisation.

Members of the Audit and Risk Management Committee are:

MemberIndependentnon-executive Period

M Macdonald (chairman) Yes May 2004 to dateJ J Geldenhuys Yes May 2008 to

October 2010I S Fourie Yes July 2010 to dateT Eloff Yes October 2010 to date

Corporate governance (continued)


To further enhance the effectiveness of the Audit and Risk Management Committee we also have semi-annual divisional audit committee meetings for each operation. As part of our enterprise-wide risk management programme, quarterly risk management meetings are held at operational and corporate level under the chairmanship of a risk control manager who reports to the group Audit and Risk Management Committee.

Internal auditWe have established an independent, objective and effective internal audit department governed by a charter approved by the board. The internal audit function reports to the chief executive offi cer and has unfettered access to the chairman of the board and the chairman of the Audit and Risk Management Committee.

The role of internal audit is to review compliance with internal controls, systems and procedures. The board is satisfi ed that the internal controls are adequate in safeguarding the assets, preventing and detecting errors and fraud, ensuring the accuracy and completeness of accounting records and preparing reliable fi nancial statements.

The independence of the internal audit function is reviewed by the Audit and Risk Management Committee and the committee is satisfi ed that the independence of the internal audit function has not been impaired in any way. The removal of the head of internal audit would be a matter for the Audit and Risk Management Committee in consultation with management.

For more information regarding the activities of the Audit and Risk Management Committee, please refer to the Audit and Risk Management Committee report commencing on page 27.

The internal audit department is staffed by qualifi ed and experienced internal auditors and operates within a charter approved by the board. The annual internal audit programme is approved by the committee and all signifi cant fi ndings, together with steps taken to rectify lapses in internal control are reported at every committee meeting. The internal audit function reports to the chief executive offi cer and has unfettered access to the chairman of the committee.

Information TechnologyA policy governs the use and safeguarding of information systems and networks.

The risks regarding the security, back-up, conversion and update of the information technology systems are continually assessed. Disaster recovery plans are regularly reviewed as disruptions to critical management information could have an impact on continuing operations.

The Nominations CommitteeThe Nominations Committee comprises three independent non-executive directors. The committee meets annually or more often at the committee’s discretion. The committee’s charter was formally adopted during the year under review. The primary purpose of the Nominations Committee is to ensure that the procedures for appointments to the board are formal and transparent, by making recommendations to the board on all new board appointments and reviewing succession planning for directors. The committee also has to evaluate all candidates for the position of director on the basis of skill and experience. Thorough background checks are conducted.

Members of the Nominations Committee are:


J J Geldenhuys (chairman) Yes May 2008 to dateT C C Mampane Yes May 2008 to dateN Tsengwa Yes May 2008 to date

The Human Resources and Remuneration CommitteeThe Human Resources and Remuneration Committee comprised three independent non-executive directors until 30 September 2010 at which date an additional non-executive director was appointed to strengthen the diversity of the committee. The committee meets at least three times per year and operates according to a board-approved charter.

Members of the Human Resources and Remuneration Committee are:


J J Geldenhuys (chairman) Yes May 2001 to dateT C C Mampane Yes August 2005 to dateN Tsengwa Yes May 2009 to dateI S Fourie Yes October 2010 to date

Consideration is given during meetings to succession planning, training and development, employment equity, broad-based black economic empowerment, human resources policies, provident funds, medical aid, wellness programmes and remuneration of management and executive and non-executive directors.

The remuneration policy focuses on market-related payments to management and directors with the objective to retain the services of capable individuals, The outline of remuneration to management and directors is as follows:

• fi xed portion of remuneration is paid on a cost to company basis;

• all employees are provided with a wellness programme, retirement fund, death, disability and funeral benefi ts, voluntary medical aid and various categories of leave provision;

• service contracts are in place for all employees. Top management has a notice period of two months and the rest of the staff one month. Non-executive directors have no contracts with the company; and

• incentive/retention schemes for management are in place. Previously, management participated in share option and share appreciation rights schemes. These schemes have been phased out and were replaced by a long-term management retention plan of which the following can be highlighted:

– allocation according to seniority; – an annual allocation to ensure retention of key staff; – payments after three years over a three-year period; – executives must meet performance conditions to earn 75%

of the allocated amount; and – the long-term management retention plan is only available

to key employees.

Management also participate in short-term management incentive schemes. Bonuses are paid if management meet certain fi nancial targets which relate to Economic Value Added (EVA) and Profi t Before Interest and Tax (PBIT).


Organisational integrity and ethicsWe maintain a Code of Ethics, which requires all employees, managers and directors to comply with the letter and spirit of the Code by observing the highest ethical standards and ensuring that all business practices are conducted in a manner which is beyond reproach.

The policy provides a guideline as to what constitutes fraud, theft, corruption, or associated internal irregularities, outlines our response to these, and details the procedures to be followed in order to report such incidents that are suspected or discovered.

We have a “zero tolerance” approach towards fraud and corruption and protect employees who raise concerns relating to fraud and corruption from victimisation.

We utilise the services of Deloitte & Touche to provide an independent “Tip- offs anonymous” hotline. All incidents reported are investigated and appropriate action taken in terms of the relevant policies and disciplinary procedures.

During the year under review, our ethics policy was revised and extended. Copies of the revised ethics policy are displayed on all notice boards, laminated abridged copies are handed to every employee and the chief operating offi cer of each business unit is tasked to act as champion for his business unit to ensure that the ethics policy is understood and adhered to by all his employees. The ethics policy forms a permanent part of every management agenda and external suppliers are required to adhere to the ethics policy.

The Code of Ethics deals with:

• compliance with laws, regulations and codes;• culture, ethics and values;• client service;• privacy and confi dentiality;• respect and dignity;• social responsibility;• gifts, entertainment and bribery;• integrity of fi nancial information;• confi dential information• protection and use of company property;• confl ict of interest; and• contravention of the Code.

In terms of accountability, all employees are required to:

• commit to individual conduct in accordance with the Code of Ethics;

• observe both the spirit and the letter of the law in their dealings on the group’s behalf;

• recognise the group’s responsibility to its shareholders, customers, employees, suppliers and to society;

• conduct themselves as responsible members of society, giving due regard to health, safety and environmental concerns, and human rights, in the operation of the group’s business; and

• report any suspected breach of the law or the Code of Ethics to the internal audit department or the board who will protect those who report violations in good faith.

The board has no reason to believe that there has been any material non-adherence to the Code of Ethics during the year under review.

Restrictions on share dealingsDirectors and employees are prohibited from dealing in Astral shares during price-sensitive periods. There is a formal clearance procedure in place with respect to directors dealing in Astral shares. Closed periods extend from 31 March and 30 September, being the commencement of the interim and year-end reporting dates, respectively, up to the date of announcement of interim and year-end results, and include any other period during which the company is trading under a cautionary announcement. All directors are required to obtain written permission from the chairman before dealing in any Astral shares in order to protect them against possible and unintentional contravention of the insider trading laws and stock exchange regulations.

Participants in our share incentive schemes are subject to the rules of the schemes and the provisions of the JSE Listings Requirements.

Management reportingWe have comprehensive management reporting disciplines, which include the preparation of strategic plans and annual budgets by all operations. Group strategic plans and budgets are considered and approved by the board. Results and the fi nancial status of the operations are reported monthly and compared with approved budgets and results of the previous year. Working capital requirements and borrowing levels are monitored on an ongoing basis and corrective or remedial action taken as appropriate.

Company secretaryThe company secretary is suitably qualifi ed and experienced and plays an important role in ensuring that the board procedures are followed correctly and reviewed regularly. The company secretary is responsible for the duties set out in section 268G of the Companies Act and is appropriately empowered by the board to fulfi ll these duties. The certifi cate required to be signed in terms of section 268G(d) of the Act appears on page 41.

The group company secretary is not a director of any of the Astral group’s operations and, accordingly, maintains an arm’s length relationship with the board and its directors.

Engagement with shareholders and investorsIn accordance with our commitment to ensure that the interests of our management are aligned with those of shareholders, we manage a dedicated programme to engage with analysts, investors and large individual shareholders. This includes, amongst others: timeous, relevant, honest and accessible announcements and circulars to shareholders in accordance with the JSE Listings Requirements.

When we are not in a closed period, there is ongoing interaction between the executive management team and a wide range of institutional investors and analysts. These interactions take the form of one-on-one meetings held mostly on request by the institutional investors and analysts. Twice a year our results are presented to the investor community in Johannesburg and Cape Town. The results are published on our website shortly after release on SENS.

Corporate governance (continued)


Audit and Risk Management Committee report

Our Audit and Risk Management Committee is a formally constituted sub-committee of the board and in addition to having specifi c statutory responsibilities to the shareholders in terms of the Companies Act, 61 of 1973, as amended (“the Act”), it assists the board by advising and making submissions on fi nancial reporting, oversight of the risk management process and internal fi nancial controls, external and internal audit functions and statutory and regulatory compliance.

Terms of referenceThe committee has adopted formal terms of reference that has been approved by the board and these terms of reference are regularly reviewed and updated where necessary. The committee has executed its duties during the past fi nancial year in accordance with terms of reference.

CompositionAt 30 September 2010, the committee comprised three independent non-executive directors, one being the chairman of the board. On 1 October 2010, Mr J J Geldenhuys, chairman of the board, resigned as member of the committee and Dr T Eloff was appointed in his stead.

MeetingsThe committee met three times during the year. Attendance of these meetings is shown in the table set out on page 23 of the annual report.

Statutory dutiesIn execution of its statutory duties, the committee:

• nominated the re-appointment of PricewaterhouseCoopers Inc. as external auditors and Mr I S Buys as the individual auditor, after satisfying ourselves through enquiry that PricewaterhouseCoopers Inc. are independent as defi ned in terms of the Act. This will be Mr Buys’ third year as designated auditor of the company;

• confi rmed that PricewaterhouseCoopers Inc. and the designated auditor, Mr I S Buys, are accredited by the JSE;

• at the end of each meeting during the year, met with the external auditors where management was not present. No matters of concern were raised;

• determined the fees to be paid to PricewaterhouseCoopers Inc. as disclosed in note 18 of the annual fi nancial statements on page 79 of the annual report and their terms of engagement;

• approved a non-audit services policy which determines the nature and extent of any non-audit services which PricewaterhouseCoopers Inc. may provide to the company;

• pre-approved any proposed contract with PricewaterhouseCoopers Inc. for the provision of non-audit services to the company;

• received no complaints relating to the accounting practices of the group, the content or auditing of its fi nancial statements, the internal fi nancial controls of the group, and other related matters;

• reviewed the draft audited fi nancial statements and annual report, the preliminary profi t announcement and interim statements;

• met with the external auditors to discuss the annual fi nancial statements prior to their approval by the board;

• reviewed the valuation of goodwill before recommending any impairment to the board for approval;

• made submissions to the board on matters concerning the group’s accounting policies, fi nancial control, records and reporting; and

• concurred that the adoption of a going concern premise in the preparation of the annual fi nancial statements is appropriate.

The objectives of the committee were met during the year under review. Where weaknesses in specifi c controls have been identifi ed, management undertook to implement appropriate corrective actions to mitigate the weakness so identifi ed.

Oversight of risk management The committee has:

• received assurances that the process and procedures followed in terms of risk management are adequate to ensure that fi nancial risks are identifi ed and monitored;

• satisfi ed itself that the following areas have been appropriately addressed:

– fi nancial reporting risks; – fi nancial control risks; – fraud risks as they relate to fi nancial reporting; and – information technology risks as they relate to fi nancial

reporting;

• reviewed tax and technology risks, in particularly how they are managed.

Internal fi nancial controlsThe committee has:

• reviewed the effectiveness of the group’s system of internal fi nancial controls including receiving assurance from management and external audit;

• reviewed signifi cant issues raised by the external auditors in their reports;

• reviewed policies and procedures for preventing and detecting fraud.

Based on the processes and assurances obtained, we believe that the signifi cant internal fi nancial controls are effective.

Regulatory complianceThe committee has complied with all applicable legal and regulatory responsibilities.

External auditBased on processes followed and assurances received, we have no concerns regarding the external auditor’s independence.

Description of fees R’000 Total

Audit fees 4 989 90%Non-audit fees 569 10%

Based on our satisfaction with the results of the activities outlined above, we have recommended the re-appointment of PricewaterhouseCoopers Inc. to the board and the shareholders.

Internal auditThe committee is responsible for overseeing internal audit, and in particular:

• determined the appropriateness of the internal auditor and adequate staffi ng issues;


• approved the internal audit plan, as well as the internal audit charter;

• ensured that the internal audit function is subject to an independent quality review, as and when the committee determines it appropriate; and

• reviewed the functioning of the internal audit programme and department, to ensure co-ordination between the internal and external auditors.

Financial function and fi nancial director reviewWe have reviewed the expertise, resources and experience of the company’s fi nance function and are satisfi ed that these requirements are adequate for the forthcoming year. The committee has also reviewed the performance, appropriateness and expertise of the fi nancial director, Mr D D Ferreira, and confi rms his suitability in terms of the JSE Listings Requirements.

Audit and Risk Management Committee report(continued)

Annual reportWe have evaluated the annual fi nancial statements of Astral Foods Limited and the group for the year ended 30 September 2010 and based on the information provided to the committee, consider that the group complies in all material respects with the requirements of the Act and International Financial Reporting Standards and we recommend the annual report to the board for approval.

On behalf of the Audit and Risk Management Committee

Malcolm MacdonaldAudit and Risk Management Committee Chairman

11 November 2010

Defi nitionsOperating profi t marginOperating profi t before interest and tax as a percentage of revenue.

EBITDAEarnings before interest, tax, depreciation and amortisation.

Net assetsTotal assets less total liabilities, excluding cash and cash equivalents, borrowings, normal and deferred tax, and shareholders for dividends.

Return on total assetsOperating profi t less fi nance costs as a percentage of average total assets.

Return on equityNet profi t attributable to ordinary shareholders as a percentage of average ordinary shareholders’ interest.

Return on net assets Operating profi t before interest and income tax as a percentage of average net assets.

Net asset turnRevenue divided by average net assets.

Basic earnings per shareNet profi t for the year divided by the weighted average number of ordinary shares in issue during the year.

Headline earnings per shareHeadline earnings divided by the weighted average number of ordinary shares in issue during the year.

Headline earningsNet profi t for the year adjusted for profi t or loss on sale of property, plant and equipment, and investments.

Dividend coverHeadline earnings per share divided by dividend per share declared out of earnings for the year.

Closing dividend yieldDividends per share as a percentage of market value per share at year-end.

Closing earnings yieldHeadline earnings per share as a percentage of market value per share at year-end.

Closing price : earnings ratioMarket value per share divided by headline earnings per share at year-end.


2010 2009 2008 2007 2006 2005 2004

Profi t informationRevenue R million 8 368 8 834 8 184 6 329 5 184 4 838 4 053 EBITDA R million 694 685 637 915 855 674 464 EBITDA margin % 8,3 7,8 7,8 14,5 16,5 13,9 11,4 Operating profi t R million 585 581 548 808 766 597 389 Operating profi t margin % 7,0 6,6 6,7 12,8 14,8 12,3 9,6 Profi t for the year R million 364 353 334 546 516 415 264 Headline earnings for the year R million 365 338 320 536 510 397 263

Financial position informationTotal assets R million 3 128 3 174 3 157 2 867 2 172 1 825 1 838 Total equity R million 1 446 1 366 1 328 1 308 1 121 983 765 Total liabilities R million 1 682 1 807 1 829 1 559 1 051 842 1 073 Net assets R million 1 950 1 918 1 791 1 663 1 240 1 126 1 133

Profi tability and asset managementReturn on total assets % 17,8 16,9 16,7 32,2 38,6 31,3 27,1Return on equity % 25,8 26,0 25,3 45,0 49,3 46,4 38,6 Return on net assets % 30,3 31,3 31,3 54,8 64,7 51,3 48,3 Net asset turn times 4,3 4,8 4,7 4,3 4,4 4,2 4,7

Shareholders’ ratiosEarnings per share cents 940 906 858 1 387 1 285 989 630 Headline earnings per share cents 960 890 840 1 381 1 286 958 631 Dividend per share cents 760 700 700 700 585 380 230 Dividend cover times 1,3 1,3 1,2 2,0 2,2 2,5 2,7

Stock exchange statisticsMarket value per share– At year-end cents 11 150 10 399 9 650 12 100 8 650 7 100 4 071– Highest cents 11 939 11 200 15 490 14 347 10 400 7 500 4 100– Lowest cents 9 400 7 380 7 300 8 600 6 580 4 020 2 385Closing dividend yield % 6,8 6,7 7,3 5,8 6,8 5,4 5,7Closing earnings yield (*) % 8,6 8,6 8,7 11,4 11,9 13,5 15,5Closing price : earnings ratio (*) times 11,6 11,7 11,5 8,8 6,7 7,4 6,5 Number of shares issued (#) ‘000 42 136 42 136 42 136 42 728 43 277 44 520 43 499 Number of transactions 20 613 13 439 17 492 15 030 8 809 6 807 5 401 Number of shares traded ‘000 18 873 18 411 23 646 25 027 22 317 19 530 21 783 Number of shares traded as a percentage of issued shares % 45 44 56 59 52 44 50 Value of shares traded R million 2 007 1 715 2 596 2 889 1 846 1 185 679 Closing market capitalisation R million 4 698 4 382 4 066 5 170 3 743 3 161 1 786

* Based on headline earnings per share

# Refer to note 10 of the annual fi nancial statements for the number of shares effectively in issue, net of treasury shares

Ratios and statistics


Sustainability report

Astral Foods regards sustainable development

as an integral and essential part of conducting

business. We endeavour at all times to

inform our stakeholders in terms of the three

pillars of sustainability, namely Social, Environmental and Economic


Milestones and Achievements

2011

Focus

• Five of our operations have been awarded the International Excellent Award in terms of the 20 Keys Total Workplace Improvement Programme

• Three farming operations have reached the requirements for the excellence award

We conduct business to make a profi t and return value to those who have

invested in us. However, we do so with people – staff, customers and

communities without whom we would achieve very little. We do so using

natural resources – land, water, energy, etc. all of which are fi nite and so have

to be managed with care

2010

Quick facts• Astral was listed on the JSE Limited on 9 April 2001

• We are a leading South African integrated poultry producer

• Rated in the Top 100 companies on the JSE Limited

• Our operations are primarily based in South Africa but we also have operations in Mauritius, Mozambique, Swaziland and Zambia

• Astral employs in excess of 10 000 people

• We are targeting a Level B-rating on our Black Economic Empowerment status by December 2010

• We are conducting a carbon footprint assessment which will allow senior management to identify and implement energy effi cient processes to energy usage

• We are actively researching various waste-to-energy opportunities• We are investigating opportunities to extract methane gas from poultry

manure and turning it into electricity and heat


Responsibility for sustainable developmentThe board accepts overall responsibility for the advancement of sustainable development with the assistance of the board sub-committees. Day-to-day responsibility is delegated to executive management.

Approach to data collection and reportingAs part of our commitment to improve non-fi nancial reporting, we are in the process of reviewing the aspects of the Global Reporting Initiative (GRI).

A group safety, health and environment (“SHE”) report is compiled and is reviewed by the Audit and Risk Management Committee on an annual basis. Underpinning our Enterprise Wide Risk Management Programme, are the following meetings which incorporate aspects of SHE:

• monthly Health and Safety meetings;• bi-monthly Corporate Risk Management meetings;• quarterly Operational Risk Management meetings;• semi-annual Audit Committee meetings; and• an annual Risk Management meeting.

AssuranceWe are committed to ensuring that the non-fi nancial information provided in this annual report is accurate. During the course of the year, systems and procedures were put in place to record the relevant data by way of a web-based data collection system for all divisions.

Governance, ethics and valuesGovernance, ethics and values are addressed in the Corporate governance section of this annual report on pages 22 to 26. Financial compliance is assured through internal structures and

controls and independent fi nancial audit. We also have our own internal set of values and ethics which guide all our activities and relationships, both individual and corporate.

Group risksExecutive, senior and local management continually review, assess and address the risks and challenges facing the group. This process requires detailed review at all levels of the organisation including regular review and update at all management, executive and board meetings. The internal audit function is charged with reviewing the adopted processes to ensure this risk management methodology is in place. Contingency plans and procedures are prepared to deal with unscheduled occurrences and stakeholder concerns. All operations have detailed business continuity as well as disaster recovery plans in place.

The management of operational risk is a line function, conducted in compliance with a comprehensive set of group policies and standards to cover all aspects of operational risk control. Performance is measured on a regular basis by means of both self-assessments and audits by independent consultants. In addition, the group promotes ongoing commitment to risk management and control by participating in externally organised risk management and safety systems.

Insurance cover on assets is based on current replacement values. Consistent with the high standard of risk management, a substantial portion of risk is self-insured, at costs below market premiums. All risks are adequately covered, except where the premium cost is excessive in relation to the probability and the extent of the loss.

Tersia King Learning Academy prize-giving 2010Astral’s Earlybird Farm Olifantsfontein has had a long-standing relationship with the Tersia King Learning Academy in Tembisa. The school is named after its founder and principal, Dr T J King, who is now 70 years old and still dedicated to the upliftment of the Tembisa community. Over the past 10 years, Earlybird Farm has donated fl oating trophies to 10 local high schools.

On 12 November 2010, the Tersia King Learning

Academy held their prize-giving ceremony and

Ms Nozipho Khoza, Earlybird Farm’s Human

Resources Offi cer, presented four well-deserved

prizes to learners from the Academy

Sustainability report (continued)


2010

Providers of capital

20,7%

Labour53,9%

Government13,0%

Reinvested12,5%

2009

Providers of capital

22,3%

Labour52,6%

Government12,3%

Reinvested12,7%

Economic sustainability practicesThe distribution of economic value generated for stakeholders is refl ected in the group’s value-added statement which is refl ected below:

Value-added statement

2010 2009

R’000 % R’000 %

Value added Sales of goods and services 8 367 874 8 833 638 Less: Cost of materials and services (6 852 505) (7 364 252)

Value-added from trading operations 1 515 369 99,20 1 469 386 99,10 Income from investments 12 201 0,80 12 802 0,90

Total value added 1 527 570 100,00 1 482 188 100,00

Value distributed To labour 822 852 53,90 780 068 52,60 To Government 199 219 13,00 182 607 12,30

Income tax 193 413 177 771 Skills development levies 5 806 4 836

To providers of capital 314 643 20,60 330 886 22,30

Dividends to shareholders 281 380 267 926 Interest on borrowings 33 263 62 960

Total distributions 1 336 714 87,50 1 293 561 87,30

Income retained in the business 190 856 12,50 188 627 12,70

Depreciation/amortisation 180 567 103 561 Retained profi t for the year 82 289 85 066

Total value distributed and reinvested 1 527 570 100,00 1 482 188 100,00


Social aspectsBroad-based black economic empowerment (BBBEE)We support and are committed to the concept of broad-based black economic empowerment and actively promote the empowerment of staff members and the communities in which we operate. Our Black Economic Empowerment status has been evaluated by EmpowerDEX, at a generic scorecard C-rating. We have a 100% score on enterprise development, mainly as a result of our strategy to endeavour to make use of contract growers with a Black ownership component. Our target for December 2010 is to achieve a Level B-rating.

EqualityWe are committed to gender equality and the removal of any discrimination based on gender, race, religion or disability.

EmployeesOur long-term success rest on our ability to attract, develop and retain globally competitive employees. We have strategies and initiatives in place, mainly through our 20 Keys Workplace Improvement Programme, to ensure value creation for employees and value creation by employees. This facilitates individual and collective wisdom within the operations, encourages employee participation and enables employees to share in the value created for stakeholders.

African, Indian, Coloured (“AIC”) vs White employees in South Africa

2010 2009

AIC White AIC White

Board 3 7 3 6 Executive 1 18 1 18Senior management 6 48 2 52Middle management 36 110 36 98Skilled upper/technical 457 357 169 347Semi-skilled/apprentice/trainee 1 802 212 1 257 204Labourers/unskilled 4 704 8 5 465 6

7 009 760 6 933 731

Note: Employee categories are defi ned using the Patterson grading methodology.

Number of employees at end of September – Group

Feed PoultryServices and

Ventures Total

2010 2009 2010 2009 2010 2009 2010 2009

Permanent 570 658 6 738 7 006 181 – 7 489 7 664 Contract 555 605 2 323 3 532 55 – 2 933 4 137

Total 1 125 1 263 9 061 10 538 236 – 10 422 11 801

Regional breakdown of number of employees – 2010

Within South Africa 10 422Outside South Africa 110

10 532

Value creation for employeesOur leadership within the group is inspirational. High but achievable standards are set and employees are motivated by realistic objectives and they are allowed to participate in setting those objectives.


We have a sound value system, based on integrity, openness honesty and accountability. Employees understand these values as management lead by example.

The benefi ts of employees are market related and all employees can benefi t from incentive schemes by meeting set targets. All vacancies within the group are advertised internally, as we believe that employees should have the fi rst opportunity to be promoted before we advertise externally.

Quite a number of Unions are recognised at our different business units. We conduct collective bargaining on an annual basis and in most instances the outcome is to the satisfaction of both parties. The normal media such as circulars and notice boards are used for basic communication with staff. Furthermore, road shows are held twice a year in the different regions to communicate the results of the company and two multi-level meetings per annum are held with staff to communicate important matters relevant to each business unit.

Health and safetyWe comply with the Occupational Health and Safety Act or similar legislation in other countries. At factories, safety, health and environment committees are in place to assess and reduce the impact on the environment of manufacturing activities and to ensure the safety of employees.

The disabling injury frequency rate is calculated by all business units. This provides for accurate benchmarking between business units and provides a measuring tool to compare current and past performances.

Disabling injury frequency rate 2010 2009

Farming operations 1.27 1.05Processing operations 2.21 2.39Milling operations 1.51 0.92Other – –

Disabling Injury Frequency Rate is calculated by taking the number of disabling injuries times 200 000 divided by the number of man hours worked by all employees.

Employment equityAll our operations comply with the Employment Equity Act, 55 of 1998, and annual reports are submitted to the Department of Labour. Employment equity committees have been established at every business unit to set and monitor progress. The different occupational levels below management level refl ect that between 36% and 99% of employees are from the designated groups. The fi gure on management level is 18%, refl ecting progress towards the target set by the Department of Trade and Industry of 25% to 30% within 10 years. We believe that no unfair discrimination exists in the workplace.

HIV/AIDS We recognise the implications of the pandemic on the family structure, the community and long-term issues of sustainability. The reality is that the prevalence of HIV/AIDS among our workforce is currently estimated to be about 21%. This fi gure was determined through a voluntary counseling and testing update. The indications are that we are slightly above the industry norm.


We have implemented a policy on HIV/AIDS focusing on:

• educational programmes at all operations;• voluntary testing;• counseling of affected employees;• training of peer educators.

72% of employees participated in the screening, 52% attended training and 61% participated in voluntary counseling and testing.

We introduced a wellness programme during 2009. The wellness programme focuses on:

• height and weight (body mass index);• blood pressure (hypertension);• cholesterol;• diabetes; and• voluntary counseling and testing for HIV/AIDS.

TrainingThe training and development of employees in all key areas is an integral part of the internationally recognised 20 Keys Workplace Improvement Programme referred to below. Each employee attends a number of training sessions in this regard. A learnership programme in supervision has been introduced at several workplaces.

Much emphasis is placed on the development of technical skills, including training under our technical agreements with Provimi Holding BV of Holland, a world leader in animal nutrition solutions.

Other training and development interventions that we focus on are:

• information technology skills;• supervisory skills;• sales;• quality systems; and• production and processing skills.

We are committed to the Skills Development Act. Our submission of skills development plans and our implementation against targets have ensured the maximum benefi t in this regard. We have appointed 30 apprentices (electricians, millwrights, fi tters and turners) with assistance from the Sectoral Training Authority for Agriculture.

We have a study loan policy providing employees with fi nancial assistance to further their academic qualifi cations in line with current and future job requirements.

Employee turnoverWe continuously evaluate our recruitment processes to ensure that high calibre talent is employed, taking cognisance of leadership capabilities, identifi ed competencies for positions and employment equity plans. Our approach is to attract the best people in the industry. In our employment process we also focus on the appointment of persons from the designated groups. Our staff turnover is below 4%, with the exception of County Fair in the Western Cape where the staff turnover is problematical due to societal circumstances. We have restructured one business unit in the past year, resulting in two retrenchments.

Human rightsHuman rights are central to our legitimacy and are addressed in our Code of Ethics, including:

• obey the law;• respect others;• fairness; and• honesty.

Breaches can be addressed through the applicable legal system, internal procedures and through “Tip-Offs Anonymous”. In addition, employees may use established grievance procedures, which prohibit victimisation and they may also seek union or industry assistance in this regard.

All incidents reported through “Tip-Offs Anonymous” are investigated by internal audit and appropriate action taken in terms of the relevant policies and disciplinary procedures.

“Tip-offs Anonymous” data 2010 2009

Number of calls received 68 64Number of reports generated 27 26Number of reports investigated 22 23Number of convictions 3 5

We apply a “zero tolerance” approach towards fraud and corruption and protect employees who raise concerns relating to fraud and corruption from victimisation.

It is not our policy to support political parties.

Workplace improvement programmeOver the past year we have continued with our drive for excellence through the implementation of the 20 Keys Total Workplace Improvement Programme, which aims to energise the workforce to work faster, cheaper and better. All employees at the various workplaces participate as teams to improve productivity and effi ciencies. We can claim that we have made the best progress in South Africa with the implementation of these concepts.

The International Excellence Award has been awarded to Meadow Feeds Paarl, Meadow Feeds Randfontein, Meadow Feeds Pietermaritzburg, Earlybird Standerton and NuTec Southern Africa, the only fi ve operations in South Africa to have achieved this.

Three farming operations, namely Earlybird Farm’s Kaalplaas, Ross Poultry Breeders’ Little Loch hatchery and Mount West hatchery, reached the requirements for the excellence award.

Stakeholder engagementWe believe that continuous, open and transparent communication with all stakeholders is essential to our legitimacy, core to our values and consistent with our sustainable value creation objective. Mutually benefi cial outcomes are sought at all times.

Being a listed entity, we comply with legal communication requirements. Furthermore, we believe in regular dialogue with stakeholders and the investor community as a whole. Numerous interviews with fi nancial analysts are conducted and regular sessions undertaken with investors.

Our website provides up-to-date information to stakeholders.


Key stakeholders Communication

Stakeholders and other providers of capital Website SENS announcements Trading updates Bi-annual results announcements Annual report Investor relations

Business partners and customers Face-to-face meetings Regular discussions

Local communities Projects which form part of corporate social investment

Industry Southern African Poultry Association Consumer Goods Council of South Africa South African Agricultural Processors’ Association Animal Feed Manufacturers Association

Staff and unions Confi dential hotline through “Tip-Offs Anonymous” Bi-annual road shows Intranet Management and union meetings

Suppliers Presentations to Procurement Committee Regular discussions


ConsumersOur branded chicken products reach consumers across the spectrum of society, offering affordable frozen secondary products as well as higher value fresh and prepared convenience products. The Goldi brand has maintained loyal support from the middle to lower income consumers, driven by consistent and trusted quality, availability and good value. County Fair and Festive brands on the other hand have developed strong equity in the middle to upper income consumer sectors where demand for prime products is stronger.

Business partnersOur key customers lie primarily in top end retail chains and wholesalers, mainly independently owned, and highly entrepreneurial by nature. Long-standing trading relationships are in place with the major retail groups, who have played a signifi cant role in building our brands over the years. Most of our independent wholesale customers have been partners for many years and have driven distribution of our chicken brands competently. We have a strong association with The Cold Chain who provide warehousing, distribution and merchandising to the retail and wholesale chains on our behalf.

Raw materialsRaw material availability is synonymous with two main risk areas, namely price and quality/supply. The agricultural commodity markets, as with other commodities, equities and currencies, have been extremely volatile over the past twelve months as a result of the fi nancial crisis, global recession, inclement weather, market sentiment and money fl ows. High volatility leads to increased price risk which is managed by having a conservative approach to market exposure, access to knowledgeable and respected advisors and suppliers. These risks are managed through an established process whereby the various conditions which infl uence commodity prices are monitored on a daily basis. Animal feed is an industry where raw material substitution is an essential skill to optimise feed quality and price. We are a major player in the South African arena but only use approximately 0,1% of the global maize and soya production.

Our skill in raw material substitution and access to suppliers with an international footprint will ensure that we will remain a reliable supplier of quality feed.

Preferential procurementThe procurement activities of the group are focused on the suppliers of goods and services who have made progress on their BBBEE scorecard and we continue to identify further opportunities in this regard.

Contract growersWe make use of contract growers at our Earlybird Farm operations and are continuously seeking opportunities to expand the number of contract growers, especially those that have a BBBEE component involved.

Contract growers 2010 2009

Total number of contract growers 72 72Number of BEE contract growers 7 7

Product responsibilityThe need for manufacturers to market products that meet the required food safety standards has resulted in a number of initiatives. In recent years the Food Safety Initiative was launched by the Consumer Goods Council of South Africa to which we subscribe. Reviews of various statute requirements and industry legislation have been implemented to better control product quality and food safety.

The promulgation of the Consumer Protection Act and Draft Labeling Regulations were foreseen by the company and a pro-active approach was taken to ensure all processing plants involved in the food chain are HACCP or ISO certifi ed in terms of Food Safety Management Systems. We follow the farm-to-fork approach, from control of animal feed quality, health of grandparents, parents and broilers as well as hygiene at the abattoirs, processing plants, cold chain facilities and distribution points to end users. Preventative medicine to control food-borne diseases is strictly practiced in line with legislation.


Health link programme

The Astral Foods Group is deeply committed to the well-being of its staff and, through the Astral Health Link programme, seeks to support employees to remain healthy, well and productive. The programme is managed by an outside consultancy, who operates the programme independently, with strong support from Astral.

The prevalence of HIV/AIDS among Astral’s workforce is currently 21%. Supporting those affected by this pandemic is important to Astral, given the implications of this disease on people, families and the communities in which Astral operates. An important achievement is the impact that regular screening and education have had on reducing the stigma around HIV/AIDS among Astral’s workforce and recognition by employees of the importance of Voluntary Counselling and Testing.

Since the launch of the Astral Health Link programme, over 13 300 health screenings have taken place. The following statistics apply:

• 1 713 HIV positive employees have been identifi ed through this testing process, of whom 1 257 are being managed by a patient management service;

• 3 203 employees with moderate to high risk readings for chronic conditions are being patient managed;

• of the 1 257 HIV positive employees, 82% are well, healthy and participating actively in the workplace, illustrating that HIV can be successfully managed;

• key sites have been identifi ed and negotiations with the Department of Health have resulted in treatment for uninsured employees and medication for HIV/AIDS, TB and other chronic conditions being made available on-site at certain locations, saving man hours and improving effi cacy of treatment;

• 7 388 employees have completed structured training on health topics such as HIV/AIDS and other chronic diseases; and

• 199 employees, a ratio of 1:50, have completed a three-day peer educator course.

The programme is holistic in that it provides clinical testing and treatment alongside emotional and mental support through counselling and patient management services that take socio-economic conditions of employees into account.

Astral’s Health Link programme was launched in 2009 and has been extremely successful in terms of screening, diagnosing and treating employees for a range of health matters, including HIV/AIDS, diabetes, hypertension, cholesterol, tuberculosis and obesity

The Health Link’s success can be attributed to strong buy-in from Astral management as well as solid support among employees across the group. At-risk employees with poor health risk readings receive ongoing advice and support to help them to maintain good health and to live fulfi lling and satisfying lives, despite any illness that may affect them.

The Astral Health Link programme includes the following: • on-site initiatives aimed at improving and maintaining health

and wellness;• education, training and communication interventions;• peer education, embarked upon to provide sustainable

capacity building and to build the programme into the fabric of the workplace;

• monitoring measures to assess illness, absenteeism, deaths, disabilities, etc; and

• Post-Exposure Prophylaxis treatment, used to prevent infection in the event of accidental exposure to HIV (rape, abuse, car accidents, needle pricks, etc).

The results of the programme are irrefutable:• absenteeism is down by over R1 million in days saved and

productivity has improved;• perhaps the most notable impact is evident on the company’s

provident fund for the 6 775 employees who participate: – death claims peaked in 2008 with a total of 103 death claims

amounting to R9 million; – a year later, claims had reduced to 72 at R6,6 million; – for the fi rst six months of the current period, claims have

reduced to 15 deaths and claims are down to R1,66 million; and

– this equates to an effective annual reduction of 71%, or a direct savings of R6,85 million.

Investment in the Astral Health Link has provided solid returns but the most important element is the improvement in employees’ health and wellness. This bodes well for Astral, for its staff, their families and their communities.


Monitoring for biological and chemical residues is done by reputable independent laboratories. A veterinary partnership exists with a leading fi rm of consultants in South Africa. All our abattoirs are HACCP certifi ed and consistently perform above 80% in the Department of Agriculture’s Hygiene Programme.

We emphasise the importance of traceability of fi nal product and are in a position to trace any emergency through the system from fi nal product to chicken growing. We are actively involved in a number of forums such as the South African Poultry Association, Codex Committees and Statute Committees.

Packaging and ingredient suppliersPackaging and ingredient suppliers have a major impact on the risk management of food quality and safety and are managed accordingly. We drive a policy to exclude dealings with suppliers that pose a threat to our product responsibility. Food Safety Certifi cation is a compulsory requirement for ingredient suppliers and continuous communication and controls have been established to prevent potential risks occurring such as the Melamine contamination in food in previous years.

Membership of industry organisationsAstral and its employees participate in the following organisations:

Organisation

Consumer Goods Council of South AfricaSouthern African Poultry Association South African Agricultural Processors AssociationAnimal Feed Manufacturers AssociationSouth African Veterinary CouncilHealth Professionals CouncilWorld Poultry Science AssociationSouth African Society for Animal Science

Regulators and complianceAs we are a participant in the food industry, we comply with the strictest standards and continuous monitoring by internal and external parties to verify adherence.

ISO ISO Operations HACCP 9001:2008 22000:2005

Earlybird – Olifantsfontein – Standerton County Fair – Hocroft – Epping # East Balt SA

Meadow – Randfontein

– Delmas # – Welkom # – Pietermaritzburg – Paarl

– Port Elizabeth #

HACCP – Hazard Analysis and Critical Control Point Systems

ISO 9001:2008 – Quality Management Systems Certifi cation

ISO 22000:2005 – Food Safety Management Systems Certifi cation

# – Comply but not certifi ed


CommunityWe play an active role in the communities in which we operate

through a social investment strategy which focuses on

education, HIV/AIDS and upliftment.

Corporate social investmentThe Wellness Programme is an initiative in Corporate Social

Investment and benefi ts not only our employees but extends into

the broader community.

Environmental sustainability practicesWe strive to use the best environmental practices on all the

land used for either farming, processing, milling or distribution

operations.

2010 2009 Land utilisation Hectares Hectares

Owned 5 260 5 260Leased 1 350 1 350Partners 339 339Dormant 1 145 1 145

6 950 6 950

Environmental risksOur underlying environmental policy philosophy is the adoption

of protective strategies to manage and control the impact of our

agricultural and manufacturing operations upon the environment,

at the same time as safeguarding our extensive assets and

human resources.

Environmental risk assessments are conducted and reported on

an annual basis as a component of our risk control programme.

Alexander Forbes Risk Services have been appointed to

conduct environmental risk assessments at selected Astral

Foods’ operations in order to assist in this regard.

During the period under review, environmental risk assessments

were conducted at the following operations:

• County Fair hatcheries 1, 2 and 3.

• County Fair Soetendal hatchery 4.

• Earlybird Farm Olifantsfontein.

• Earlybird Farm Standerton primary processing.

• County Fair – Farming services.

– Hocroft processing.

– Epping processing and Newmarket distribution.

• National Chicks – Umlaas Road hatchery.

These environmental risk assessments focus on the following

areas:

• Water quality.

• Waste management.

• Hazardous chemicals.

• Air quality.

• Site management.

• Land management.

• Legal requirements.


The following environmental risks have been identifi ed in our operations:

Environmental risks Risks mitigated by

Hazardous chemical, diesel and gas spillage

• Training programmes• Health and safety procedures• Bund walls• Annual independent grading

audits• Hazardous chemical stores• Environmental policy• Annual Independent

environmental audits

Ground and surface water pollution

• Environmental management programme

• Regular monitoring• Effl uent water treatment

programme

Waste disposal

• Registered waste companies for safe disposal of contaminated or hazardous waste

Odours from processing plants

• Environmental policy• Environmental management

programme• Weather and monitoring

stations

Energy usageElectricityIn all our operations energy effi cient lighting, heating and power correction systems have been implemented to reduce energy usage.

We recognise that in South Africa electricity is regarded as a scarce resource and we take all steps possible to ensure that our operations function as optimally as possible.

Gas and Coal

Consumption 2010 2009

Gas (‘000 tons) 17 13

Coal (‘000 tons) 41 38

We use coal fi red water boilers in the milling operations and Liquid Petroleum Gas (“LPG”) and coal fi red water boilers in the poultry operations. The predominant source of heat in the poultry houses is LPG. The majority of the poultry houses are fan-ventilated to move air more effi ciently and to reduce energy consumption.

Water usagePoor water quality and potential water shortages are signifi cant potential risks to the business and we are looking at ways of reducing the demand for water in all processes. Water effl uent is managed and every effort is made to recycle effl uent water.

Consumption 2010 2009

Water (megalitres) 3 996 3 823

Waste and recycled productsWe analyse all types of waste material generated for possible re-use. Waste is disposed of in the most environmentally friendly way possible.

Currently we use the following recycled products:

• wood shavings as bedding for the chicken houses;• sunfl ower husks as bedding for the chicken houses; and• high quality animal oil is produced by processing waste

material through our rendering plants which is then utilised as an additive in the production of bio-diesel.

Emissions to airWe recognise our responsibilities in terms of the Air Quality Act, 39 of 2004, and as such ensure that the animal matter reduction plants and coal-fi red boilers and their boiler stacks are well maintained and routinely inspected.

Environmental Impact Assessment (EIA)We conduct Environmental Impact Assessments as required by the Department of Agriculture and Environmental Affairs when considering investment in new or upgrading existing facilities. This process allows for comments and input from all stakeholders. An Environmental Management Plan (EMP) is established for the construction phase of these projects, to serve as a guide to assist in minimising the potential environmental impact of the project activities.

Carbon footprintBoth the Poultry and Feed divisions have appointed an independent company to assess their respective carbon footprints. High carbon intensity in most cases relates back directly to energy utilisation and associated operational costs. The carbon footprint assessment process will allow senior management to identify and implement energy effi cient processes related to energy usage.

Waste-to-energy opportunitiesThe Poultry division currently has three rendering facilities each of which convert lower value waste streams to higher value product. County Fair, in conjunction with an independent company, have been actively researching various waste-to-energy opportunities that were available to the group over the past three years.

Poultry manureAt County Fair alone, approximately 600 cubic metres of manure is generated daily and we are investigating opportunities to extract methane gas from it and turning it into electricity and heat. Theoretical calculations done by an independent company estimated that County Fair alone should be able to generate between 3,5 and 4,5 megawatt of electricity from the broiler poultry manure; virtually the same amount of electricity required to run the abattoir.

ConclusionWe believe that the sustainability of our business lies fi rmly in the hands of our employees, as they are the greatest source of our competitive advantage. We implement best practices in all areas of our operations in order to achieve meaningful improvement in the productivity of our people and in the quality of life for them and their communities.


Annual fi nancial statements

As a low cost producer of poultry meat we are acutely mindful of costs and equally prudent about expenditure


Approval of the annual fi nancial statements

The annual fi nancial statements and group annual fi nancial statements of Astral Foods Limited for the year ended 30 September 2010 set out on pages 42 to 89, were approved by the board of directors on 11 November 2010 and signed on its behalf by:

J J Geldenhuys C E SchutteChairman Chief Executive Offi cer

Pretoria11 November 2010

Certifi cate by company secretary

I certify in accordance with section 268G(d) of the Companies Act, 1973, that the company has lodged with the Registrar of Companies all such returns as are required by a Public Company in terms of this Act and that all such returns are true, correct and up to date.

M A EloffGroup Company Secretary

Pretoria11 November 2010


The directors are responsible for the preparation, integrity and fair presentation of the fi nancial statements of Astral Foods Limited and its subsidiaries. The fi nancial statements presented on pages 42 to 89 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), and in the manner required by the Companies Act of South Africa and include amounts based on judgements and estimates made by management.

The preparation of fi nancial statements in conformity with IFRSs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the fi nancial statements and the reported expenses during the reporting period. Actual results could differ from those estimates.

The directors consider that in preparing the fi nancial statements they have used the most appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all IFRS that they consider to be applicable have been followed. The directors are satisfi ed that the information contained in the fi nancial statements fairly presents the results of operations for the year and the fi nancial position of the company and the group at year-end.

The directors have responsibility for ensuring that accounting records are kept. The accounting records should disclose with reasonable accuracy the fi nancial position of the company and the group to enable the directors to ensure that the fi nancial statements comply with the relevant legislation.

Astral Foods Limited and its subsidiaries operated in an established control environment, which is well documented and regularly reviewed. This incorporates risk management and internal control procedures, which are designed to provide reasonable, but not absolute, assurance that assets are safeguarded and that the risks facing the business are being controlled.

The going concern basis has been adopted in preparing the fi nancial statements. The directors have no reason to believe that the company and the group will not be a going concern in the foreseeable future based on forecasts and available cash resources. These fi nancial statements support the viability of the company and the group.

The fi nancial statements have been audited by the independent auditors, PricewaterhouseCoopers Incorporated, who were given unrestricted access to all fi nancial records and related data, including minutes of all meetings of shareholders, the board of directors and committees of the board. The directors believe that all representations made to the independent auditors during their audit are valid and appropriate.

The independent auditors’ report of PricewaterhouseCoopers Incorporated is presented on page 43.

Statement of directors’ responsibility


Independent auditors’ report

To the members of Astral Foods LimitedWe have audited the group annual fi nancial statements and annual fi nancial statements of Astral Foods Limited, which comprise the consolidated and separate statements of fi nancial position as at 30 September 2010, and the consolidated and separate statements of comprehensive income, changes in equity and cash fl ows for the year then ended, and a summary of signifi cant accounting policies and other explanatory notes, and the directors’ report, as set out on pages 42 to 89.

Directors’ responsibility for the fi nancial statementsThe company’s directors are responsible for the preparation and fair presentation of these fi nancial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of fi nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the fi nancial statements present fairly, in all material respects, the consolidated and separate fi nancial position of Astral Foods Limited as at 30 September 2010, and its consolidated and separate fi nancial performance and its consolidated and separate cash fl ows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.

PricewaterhouseCoopers Inc Director: I BuysRegistered Auditor

Johannesburg11 November 2010


The directors’ report is presented, which forms part of the audited fi nancial statements of the company and the group for the year ended 30 September 2010.

1. Nature of businessThe company holds investments in subsidiary and joint venture companies, with its primary activities in animal feed pre-mixes, manufacturing of animal feeds, broiler genetics, the production and sale of day-old broiler chicks and hatching eggs, integrated breeder and broiler production operations, abattoirs and the sale and distribution of various key brands.

2. Listing informationAstral Foods Limited is listed on the Main Board of the JSE Limited under the share code: ARL. The company’s ISIN is ZAE000029757.

3. Registered addressThe company’s registered address is:92 Koranna Avenue, Doringkloof, Centurion, 0157. Postnet Suite 278, Private Bag X1028, Doringkloof, 0140.

4. Business reviewFinancial overviewHeadline earnings for the year increased by 8% to R365 million from last year’s R338 million, mainly as a result of lower fi nance charges.

Revenue decreased by 5% from R8 834 million to R8 368 million due to lower agricultural input costs and lower poultry realisations.

Poultry’s operating profi t was down 7% to R262 million (2009: R282 million), due to not being able to capitalise on lower feed input costs as a result of low poultry realisations. The Feed division however improved its profi tability by 8% from R261 million in 2009 to R281 million. The Services and Ventures segment, which consists mainly of NuTec and the East Balt bakery, improved its profi tability by 9% to R42 million (2009: R39 million).

The operating profi t margin for the group at 7% is a marginal improvement on the previous year’s 6,6%.

Net interest expense for the year of R21 million is well down on last year’s R50 million.

Cash generated from operating activities for the year of R769 million was an improvement of 32% on last year’s R584 million. The net debt to equity ratio reduced to 9% (2009: 14%).

The board has declared an increased fi nal dividend of 470 cents per share resulting in a total dividend for the year of 760 cents (2009: 700 cents). The distribution will be supported by the strong statement of fi nancial position and underlying cash fl ow generation capabilities.

Directors’ report


4. Business review (continued)Financial overview (continued)The fi nancial position of the group for the fi nancial year ended 30 September 2010 can be summarised as follows:

2010 2009R’000 R’000

Operating resultsRevenue 8 367 874 8 833 638

Operating profi t 585 377 580 921 Fair value adjustment of net investments in assets and liabilities held for sale (7 233) –Net fi nance costs (21 062) (50 158)

Profi t before income tax 557 082 530 763 Income tax expense (193 413) (177 771)

Profi t for the year 363 669 352 992

Attributable to: Equity holders of the company 357 637 344 564 Non-controlling interest 6 032 8 428


Financial positionNon-current assets 1 764 194 1 650 167 Current assets 1 337 176 1 523 473 Assets held for sale 26 928 –

Total assets 3 128 298 3 173 640

Total equity 1 446 197 1 366 449Non-current liabilities 522 117 471 856 Current liabilities 1 148 206 1 335 335 Liabilities held for sale 11 778 –

Total equity and liabilities 3 128 298 3 173 640

Segment analysisA segment analysis of the revenue, operating profi t and liabilities is set out on page 51 of the annual fi nancial statements.

AcquisitionsThe assets and operating activities of Vredebest Plase, a poultry farming and hatching operation in the Western Cape, was acquired for a consideration of R22 million.

5. Assets and liabilities held for saleA decision was taken to divest from Meaders Feeds Limited (Mauritius), a 33% proportionally consolidated joint venture. The group’s share of the assets and liabilities of Meaders Feeds Limited has been reclassifi ed as held for sale. The net value of these assets and liabilities held for sale have been impaired by R7,2 million.

6. Share capitalDetail of share capital is refl ected under note 10 of the annual fi nancial statements.

At the annual general meeting of shareholders held on 11 February 2010, shareholders passed a special resolution to authorise the company, or a subsidiary, to acquire the company’s own ordinary shares.

No special resolutions have been passed by subsidiaries during the year.

No shares were acquired in terms of the share purchase programme (2009: Nil).

In terms of the group’s share incentive scheme, no options were exercised (2009: Nil).

The company’s authorised share capital remained unchanged during the year.


7. Subsidiaries and joint venturesDetails of the joint ventures and subsidiaries of Astral Foods Limited are set out in notes 30 and 31, respectively, of the annual fi nancial statements.

The attributable interest of the company in the profi ts and losses of its subsidiaries and joint ventures for the year ended 30 September 2010 is as follows:

2010 2009 R’000 R’000

Subsidiaries Total profi ts before tax 540 309 504 457 Total profi ts after tax 387 658 360 967 Total losses before tax 8 572 3 339Total losses after tax 13 151 3 855

Joint ventures Total profi ts before tax 37 071 32 152Total profi ts after tax 25 292 22 664

8. DividendsThe following ordinary dividends were declared:

2010 2009 R’000 R’000

Interim dividend (No. 19) of 290 cents per share (2009: 260 cents) 122 195 109 554Less: Dividends received on treasury shares held by a subsidiary (11 857) (10 630) Final dividend (No. 20) of 470 cents per share (declared post-year-end) (2009: 440 cents) 198 041 185 400 Less: Dividends receivable on treasury shares held by a subsidiary (19 216) (17 990)

Total dividend at 760 cents per share (2009: 700 cents) 289 163 266 334

9. Property, vehicles, plant and equipmentThere has been no major change in the nature of and policy relating to property, vehicles, plant and equipment.

Details of property, vehicles and equipment are set out in note 1 of the annual fi nancial statements.

Assets with a book value of R71 231 000 (2009: R44 007 000) are pledged as security for secured borrowings of R43 223 000(2009: R28 109 000).

Property with a value of R45 628 000 in respect of a property lease has been capitalised as a fi nance lease with a corresponding lease liability of R44 448 000.

10. Directors The names of the directors who currently hold offi ce are set out on pages 8 to 11 of this report. In terms of Article 13.2 of the company’s articles of association, Mr I S Fourie retires at the annual general meeting of shareholders and is eligible for re-election. In terms of Article 14 of the company’s articles of association, Dr T Eloff, Mr M Macdonald and Mrs T C C Mampane retire by rotation at the annual general meeting of shareholders and are eligible for re-election. No director holds more than 1% of the ordinary shares in the company. The directors benefi cially and non-benefi cially hold 231 100 (2009: 231 100) ordinary shares in the company – see Directors’ remuneration report on pages 48 to 50 for details. No changes in the directors’ shareholding occurred between year-end and the date of this report. Following the formal performance evaluation of the above directors, the chairman confi rms that these individuals’ performance continues to be effective and shows commitment to the role.

Mr I S Fourie was appointed as an independent non-executive director on 1 July 2010.

Particulars of the company secretary and her business and postal address appear on the inside back cover of this report.

No material contracts involving directors’ interests were entered into in the year. A register of directorships and interests is disclosed and circulated at every board meeting.

11. ResolutionsNo special resolutions, the nature of which might be signifi cant to members in their appreciation of the state of affairs of the group, were passed by any subsidiary companies during the period covered by this report.

Directors’ report (continued)


12. Share incentive schemeDuring the past year, no shares were put under the control of the directors by the shareholders for purposes of the company’s employee share incentive scheme.

As at 30 September 2010, options in respect of 699 500 shares remained outstanding, being 1,7% of issued share capital.

Details of the dates and prices at which the options were granted are given in note 11 of the annual fi nancial statements.

13. ShareholdersDetails of shareholders are set out on page 89 of the annual fi nancial statements.

14. Events subsequent to statement of fi nancial position dateNo events took place between year-end and the date of the report that would have a material effect on the annual fi nancial statements as disclosed.

15. LitigationA complaint was lodged against subsidiaries in the group at the Competition Commission regarding anti-competitive behaviour relating to an existing supply agreement of parent stock. The Competition Commission referred the matter to the Competition Tribunal for determination. The group has opposed a claim and it is not anticipated that any material liabilities will arise from a claim.

During September 2009, the Competition Commission initiated complaints against the following parties:

• South African Poultry Association (“SAPA”), all past and present members of SAPA and other players in the poultry industry involved in breeding stock and broiler production;

• Animal Feeds Manufacturers Association (“AFMA”), all past and present members of AFMA involved in the production of poultry feed and other players in the poultry feed industry; and

• SAPA, all past and present members of SAPA involved in the poultry products industry and other players involved in the poultry products industry.

Astral is not aware of any transgressions of the Competition Act within the group but will nonetheless offer all reasonable co-operation to the Commission in regard to the investigations and the summonses.

16. Date for authorisation for issue of annual fi nancial statementsThe annual fi nancial statements have been authorised for issue by the board of directors on 11 November 2010. No authority was given to anyone to amend the annual fi nancial statements after the date of issue.


Emoluments

Salary

Perfor-mance-related bonus

Retire-ment fund

contri-butions

Other benefi ts

and allow-ances

Total

2010Total2009

R’000 R’000 R’000 R’000 R’000 R’000

Executive directorsFor managerial servicesC E Schutte 2 526 519 461 213 3 719 2 663 T Delport$ 1 757 380 331 212 2 680 1 287 D D Ferreira$ 1 884 353 331 85 2 653 882 Dr O M Lukhele$ 864 180 174 172 1 390 505 N C Wentzel – – – – – 2 117 M A Kingston – – – – – 196

7 031 1 432 1 297 682 10 442 7 650

Non-executive directors’ feesFor services as directorsJ J Geldenhuys 565 508 Dr T Eloff** 175 162 M Macdonald 308 281 T C C Mampane 253 227 Dr N Tsengwa# 249 178 I S Fourie* 61 –C G van Veyeren – 113

1 611 1 469

Total paid to directors by the company and its subsidiaries 12 053 9 119

* Director’s fee from date of appointment$ Previous year remuneration from date of appointment

** Director’s fee paid to the North West University# Director’s fee paid to Exxaro Resources Limited

Summary of other benefi ts received 2010 2009

R’000 R’000

Share appreciation rights exercisedD D Ferreira 253 –C E Schutte – 896 N C Wentzel – 1 335

253 2 231

Outstanding leave paid on resignationN C Wentzel – 1 051 M A Kingston – 1 057

– 2 108

Directors’ remuneration reportfor the year ended 30 September 2010


Share incentive scheme interests

Share option schemeNumber of options

Options outstanding Grant date Exercise price 2010 2009

C E Schutte 54 800 54 800

28 August 2007 R122,00 33 600 33 600 15 May 2009 R97,00 21 200 21 200

T Delport 45 200 45 200

21 May 2008 R88,49 40 000 40 000 15 May 2009 R97,00 5 200 5 200

D D Ferreira 36 300 36 300

28 August 2007 R122,00 14 600 14 600 15 May 2009 R97,00 21 700 21 700

Dr O M Lukhele 18 300 18 300

28 August 2007 R122,00 11 200 11 200 15 May 2009 R97,00 7 100 7 100

154 600 154 600

The scheme provides the right to purchase shares in the company at the exercise price.

One-third of the options are exercisable per year after each of the third, fourth and fi fth year from date of granting the option.

Any balance not exercised after seven years from date of granting the option, will lapse.

None of the non-executive directors have share incentive scheme interests.

No share options were exercised during the year (2009: Nil).

Share appreciation right schemeNumber outstanding

Share appreciation rights outstanding Grant date Exercise price 2010 2009

D D Ferreira 15 July 2006 R77,75 – 7 200

Benefi t receivedShare appreciation rights exercised Number Average price R’000 R’000

D D Ferreira 7 200 R112,88 253 –C E Schutte 32 500 R97,89 – 896 N C Wentzel 45 000 R93,53 – 1 335

253 2 231

The scheme provides incentive remuneration based on the increase in the value of shares of the company.

The right to receive payment based on the options granted, vests after three years and lapses after fi ve years from the grant date.


Long-term retention bonus schemeThe executive directors participate in a long-term retention bonus scheme for executives in the group.

In terms of the scheme, 25% of the allocated amount is guaranteed and 75% is subject to certain performance conditions, measured over a three-year period, being met.

One-third of the amount vests and is paid after each of the third, fourth and fi fth year from date of allocation.

Issued share capital interestDirectly held

Number of sharesIndirectly held

Number of sharesAssociates

Number of shares

2010 2009 2010 2009 2010 2009

Benefi cial interestsNon-executive directorM Macdonald – – 60 000 60 000 – –

Executive directorsC E Schutte 16 100 16 100 – – – –D D Ferreira 155 000 155 000 – – – –

171 100 171 100 60 000 60 000 – –

Directors’ remuneration report (continued)for the year ended 30 September 2010


Segment report – Groupfor the year ended 30 September 2010

Revenue Operating profi t

2010 2009 2010 2009R’000 R’000 R’000 R’000

PoultrySouth Africa and Swaziland 5 350 966 5 465 922 262 248 281 607

Feed 4 224 542 4 753 792 281 159 260 796

– South Africa 4 089 104 4 552 243 280 791 247 974 – Other Africa 135 438 201 549 368 12 822

Services and Ventures 269 610 368 410 41 970 38 518 Sales between segments (1 477 244) (1 754 486)

– Feed to Poultry (1 408 987) (1 620 781)– Services and Ventures to Poultry and Feed (68 257) (133 705)

8 367 874 8 833 638 585 377 580 921

Operating profi t 585 377 580 921 Fair value adjustment of investment held for sale (7 233)Net fi nance expense (21 062) (50 158)

Profi t before income tax 557 082 530 763 Income tax expense (193 413) (177 771)


Assets Liabilities

Poultry South Africa and Swaziland 2 259 783 2 324 294 1 370 978 1 461 951

Feed 786 738 1 060 430 622 487 833 453

– South Africa 707 280 968 476 578 665 794 501 – Other Africa 79 458 91 954 43 822 38 952

Services and Ventures 465 815 340 365 87 824 63 236 Assets held for sale 26 928 11 778 Set-off of inter-group balances (410 966) (551 449) (410 966) (551 449)

3 128 298 3 173 640 1 682 101 1 807 191

Capital expenditure

Depreciation amortisation

and impairment

Poultry South Africa and Swaziland 85 393 103 472 79 845 73 978

Feed 43 708 44 131 19 542 20 885

– South Africa 32 014 20 456 16 942 18 445 – Other Africa 11 694 23 675 2 600 2 440

Services and Ventures 98 769 11 272 9 180 8 698

227 870 158 875 108 567 103 561

Revenue (R’000)

Poultry Feed Services and Ventures0

1 000

2 000

3 000

4 000

5 000

6 000

2009 2010

Operating profit (R’000)

Poultry Feed Services and Ventures0

50

100

150

200

250

300

2009 2010


The principal accounting policies applied in the preparation of these consolidated fi nancial statements are set out below:

1. Basis of preparationThe consolidated fi nancial statements of Astral Foods Limited group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and the requirements of the South African Companies Act, as amended.

The consolidated fi nancial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.

The basis of preparation is consistent with the prior year, unless otherwise stated.

The preparation of fi nancial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signifi cant to the consolidated fi nancial statements are disclosed in note 27 of the accounting policies.

2. New standards and interpretationsAccounting policy developments Accounting policy developments include new standards issued, amendments to standards, and interpretations issued on current standards. These developments resulted in the fi rst-time adoption of new standards and revised and additional disclosures required.

Standards, amendments and interpretations effective in 2010The following amendments and interpretations are effective for the fi rst time for the year ended September 2010:

Amendment to IFRS 2: Amendment to IFRS 2: Share-based Payment: Vesting Conditions and CancellationsThe amendment deals with two matters. It clarifi es that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. It also specifi es that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. This amendment had no effect on the fi nancial statements of the group or company.

IFRS 3: Business Combinations – RevisedThe new standard continues to apply the acquisition method to business combinations, with some signifi cant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with some contingent payments subsequently remeasured at fair value through income. Goodwill may be calculated based on the parent’s share of net assets or it may include goodwill related to the non-controlling interest. All transaction costs will be expensed. This amendment had no effect on the fi nancial statements of the group or company.

IFRS 8: Operating SegmentsIFRS 8 requires an entity to adopt the ‘management approach’ to reporting on the fi nancial performance of its operating segments. The standard sets out requirements for disclosure of information about an entity’s operating segments and also about the entity’s products and services, the geographical areas in which it operates, and its major customers. The disclosure should enable users of its fi nancial statements to evaluate the nature and fi nancial effects of the business activities in which it engages and the economic environments in which it operates. This amendment resulted in a reclassifi cation of segments in the segmental report.

IAS 1: Presentation of Financial Statements – RevisedThe changes made to IAS 1 are to require information in fi nancial statements to be aggregated on the basis of shared characteristics and to introduce a statement of comprehensive income. This will enable readers to analyse changes in a company’s equity resulting from transactions with owners in their capacity as owners separately from ‘non-owner’ changes. The revisions include changes in the titles of some of the fi nancial statements to refl ect their function more clearly. The new titles are not mandatory for use in fi nancial statements. The group complied with this amendment.

IAS 23: Borrowing Costs – RevisedThe main change from the previous version of IAS 23 is the removal of the option of immediately recognising as an expense borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale. This amendment had no effect on the fi nancial statements of the group or company.

IAS 27: Consolidated and Separate Financial Statements – RevisedIAS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control. They will no longer result in goodwill or gains or losses. The standard also specifi es the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value and a gain or loss is recognised in profi t or loss. This amendment had no effect on the fi nancial statements of the group or company.

Accounting policiesfor the year ended 30 September 2010


2. New standards and interpretations (continued)Standards, amendments and interpretations effective in 2010 (continued)Amendments to IAS 32 and IAS 1: Amendment to IAS 32: Financial Instruments: Presentation and IAS 1: Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on LiquidationThe amendments require entities to classify the following types of fi nancial instruments as equity, provided they have particular features and meet specifi c conditions: (a) puttable fi nancial instruments (for example, some shares issued by co-operative entities); and (b) instruments, or components of instruments, that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation (for example, some partnership interests and some shares issued by limited life entities). Additional disclosures are required about the instruments affected by the amendments. This amendment had no effect on the fi nancial statements of the group or company.

Amendments to IFRS 1 and IAS 27: Amendments to IFRS 1: First-Time Adoption of International Financial Reporting Standards and IAS 27: Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or AssociateThe amendments allow fi rst-time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate fi nancial statements. The amendment also removed the defi nition of the cost method from IAS 27 and replaced it with a requirement to present dividends as income in the separate fi nancial statements of the investor. This amendment had no effect on the fi nancial statements of the group or company.

Amendment to IFRS 7: Amendments to IFRS 7 – Financial Instruments Disclosures: Improving Disclosures about Financial InstrumentsThe amendment increases the disclosure requirements about fair value measurement and reinforces existing principles for disclosure about liquidity risk. The amendment introduces a three-level hierarchy for fair value measurement disclosure and requires some specifi c quantitative disclosures for fi nancial instruments in the lowest level in the hierarchy. In addition, the amendment clarifi es and enhances existing requirements for the disclosure of liquidity risk primarily requiring a separate liquidity risk analysis for derivative and non-derivative fi nancial liabilities. The group complied with this amendment.

Amendments to IAS 39: Financial Instruments: Recognition and Measurement Eligible Hedged ItemsThe amendment makes two signifi cant changes. It prohibits designating infl ation as a hedgeable component of a fi xed rate debt. It also prohibits including time value in the one-sided hedged risk when designating options as hedges. This amendment had no effect on the fi nancial statements of the group or company.

IFRIC 15: Agreements for the Construction of Real EstateIFRIC 15 addresses diversity in accounting for real estate sales. IFRIC 15 clarifi es how to determine whether an agreement is within the scope of IAS 11 – Construction Contracts or IAS 18 – Revenue, and when revenue from construction should be recognised. The guidance replaces example 9 in the appendix to IAS 18. This amendment had no effect on the fi nancial statements of the group or company.

IFRIC 17: Distributions of Non-cash Assets to OwnersIFRIC 17 applies to the accounting for distributions of non-cash assets (commonly referred to as dividends in specie) to the owners of the entity. The interpretation clarifi es that: a dividend payable should be recognised when the dividend is appropriately authorised and is no longer at the discretion of the entity; an entity should measure the dividend payable at the fair value of the net assets to be distributed; and an entity should recognise the difference between the dividend paid and the carrying amount of the net assets distributed in profi t or loss. This amendment had no effect on the fi nancial statements of the group or company.

IFRIC 18: Transfers of Assets from CustomersIFRIC 18 clarifi es the accounting treatment for transfers of property, plant and equipment received from customers. This interpretation applies to agreements with customers in which the entity receives cash from a customer when that amount of cash must be used only to construct or acquire an item of property, plant and equipment and the entity must then use the item of property, plant and equipment either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods and services, or to do both. This amendment had no effect on the fi nancial statements of the group or company.

Revised AC 503: Accounting for Black Economic Empowerment Transactions – RevisedThe Accounting Practices Committee has revisited AC 503 in light of the amendments to IFRS 2. As a result of these amendments, paragraphs 18 to 25 and the related Illustrative Examples and Basis for Conclusions of AC 503 have been revised to take into account the amended defi nition of vesting conditions and the accounting treatment of non-vesting conditions. This amendment had no effect on the fi nancial statements of the group or company.

AC 504: IAS 19 (AC 116) – The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction in the South African Pension Fund EnvironmentThe interpretation provides guidance on the application of IFRIC 14 (AC 447) in South Africa in relation to defi ned benefi t pension obligations (governed by the Pension Funds Act, 1956) within the scope of IAS 19 (AC 116). This amendment had no effect on the fi nancial statements of the group or company.


2. New standards and interpretations (continued)Standards, amendments and interpretations effective in 2010 (continued)The following accounting standards, amendments and interpretations are not mandatory for the year ended 30 September 2010 and have been published prior to the date of signature of this report. The group does not intend early-adopting any of these standards and interpretations:

Amendment to IFRS 2: Group Cash-settled Share-based Payment TransactionsThe amendment clarifi es the accounting for group cash-settled share-based payment transactions. The entity receiving the goods or services shall measure the share-based payment transaction as equity-settled only when the awards granted are its own equity instruments, or the entity has no obligation to settle the share-based payment transaction. The entity settling a share-based payment transaction when another entity in the group receives the goods or services recognises the transaction as equity-settled only if it is settled in its own equity instruments. In all other cases, the transaction is accounted for as cash-settled.

Amendment to IAS 32 – Classifi cation of Rights IssuesThe amendment clarifi es the accounting treatment when rights issues are denominated in a currency other than the functional currency of the issuer. The amendment states that if such rights are issued pro rata to an entity’s existing shareholders for a fi xed amount of currency, they should be classifi ed as equity, regardless of the currency in which the exercise price is denominated.

Amendment to IAS 24 – Related Party DisclosuresThis amendment provides partial relief from the requirement for Government-related entities to disclose details of all transactions with the Government and other Government-related entities. It also clarifi es and simplifi es the defi nition of a related party.

IFRS 9 – Financial InstrumentsThis IFRS is part of the IASB’s project to replace IAS 39. IFRS 9 addresses the classifi cation and measurement of fi nancial assets and replaces the multiple classifi cation and measurement models in IAS 39 with a single model that has only two classifi cation categories: amortised cost and fair value.

Amendment to IFRS 1 – Limited Exemption from Comparative IFRS 7 Disclosures for First-time AdoptersThe amendment to IFRS 1 provides First-time Adopters with the same transition provisions as included in the amendment to IFRS 7. The amendment is effective for annual periods beginning on or after 1 July 2010 with early adoption permitted.

IFRIC 19 (AC 452) Extinguishing Financial Liabilities with Equity InstrumentsThis IFRIC clarifi es the accounting when an entity renegotiates the terms of its debt with the result that the liability is extinguished through the debtor issuing its own equity instruments to the creditor. A gain or loss is recognised in the profi t or loss account based on the fair value of the equity instruments compared to the carrying amount of the debt.

Amendment to IFRIC 14 (AC 447)This amendment will have a limited impact as it applies only to companies that are required to make minimum funding contributions to a defi ned benefi t pension plan. It removes an unintended consequence of IFRIC 14 (AC 447) related to voluntary pension pre-payments when there is a minimum funding requirement.

AC 504: IAS 19 (AC 116) – The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction in the South African Pension Fund EnvironmentThe interpretation provides guidance on the application of IFRIC 14 (AC 447) in South Africa in relation to defi ned benefi t pension obligations (governed by the Pension Funds Act, 1956) within the scope of IAS 19 (AC 116).

Improvements to IFRS’sThe International improvements to IFRS’s is a collection of amendments to IFRS’s. These amendments are the result of conclusions the board reached on proposals made in its annual improvements project.

Unless otherwise specifi ed the amendments are effective for annual periods beginning on or after 30 June 2010, although entities are permitted to adopt them earlier:

• IFRS 2: Share-based Payment (amendment)• IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (amendment)• IFRS 8: Operating Segments (amendment)• IAS 1: Presentation of Financial Statements (amendment)• IAS 7: Statement of Cash Flows (amendment)• IAS 17: Leases (amendment)• IAS 18: Revenue (amendment)• IAS 36: Impairment of Assets (amendment)• IAS 38: Intangible Assets (amendment)• IAS 39: Financial Instruments: Recognition and Measurement (amendment)• IFRIC 9: Re-assessment of Embedded Derivatives (amendment)• IFRIC 16: Hedges of a Net Investment in a Foreign Operation (amendment)

Management is currently considering the effect of the changes.

Accounting policies (continued)for the year ended 30 September 2010


3. Interest in group entitiesSubsidiariesSubsidiaries are all entities (including special purpose entities) over which the group has the power to govern the fi nancial and operating policies generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree, either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to refl ect changes in consideration arising from contingent consideration amendments. Cost also includes directly attributable costs of investment.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the identifi able net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Joint venturesThe group’s interests in jointly controlled entities are accounted for by proportionate consolidation.

The group combines its share of the jointly controlled entities’ individual income or expense, asset, liability and cash fl ow items on a line-by-line basis with similar items in the group’s fi nancial statements.

The group recognises the portion of gains or losses on the sale of assets by the group to the joint venture that is attributable to the other ventures. The group does not recognise its share of profi ts or losses from the joint venture that result from the group’s purchase of assets from the joint venture until it resells the assets to an independent party. A loss on the transaction is recognised immediately if it provides evidence of a reduction in the net realisable value of current assets, or an impairment loss. Jointly controlled entities’ accounting policies have been changed where necessary to ensure consistency with the policies adopted by the group.

Transactions and non-controlling interestsThe group treats transactions with non-controlling interests as transactions with equity owners of the group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

When the group ceases to have control or signifi cant infl uence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profi t or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or fi nancial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassifi ed to profi t or loss.

If the ownership interest in an associate is reduced but signifi cant infl uence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassifi ed to profi t or loss, where appropriate.

4. Segment reportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identifi ed as the steering committee that makes strategic decisions.

5. Foreign currenciesFunctional and presentation currencyItems included in the fi nancial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency’). The consolidated fi nancial statements are presented in Rand, which is the company’s functional and presentation currency.


5. Foreign currencies (continued)Transactions and balances of monetary itemsTransactions in a currency, other than the functional currency, are translated into the functional currency using the prevailing exchange rate at the date of the transaction.

Monetary assets or liabilities denominated in a currency, other than the functional currency, are translated at the exchange rate ruling at the reporting date.

Gains or losses resulting from the settlement of foreign currency transactions and from the translation at the year-end exchange rates of monetary assets or liabilities denominated in foreign currencies are recognised in the statement of comprehensive income, except when deferred in equity as a qualifying cash fl ow hedge.

Changes in the fair value of monetary securities denominated in foreign currency classifi ed as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security, and other changes in the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in profi t or loss, and other changes in carrying amount are recognised in equity. Translation differences on non-monetary fi nancial assets or liabilities are reported as part of the fair value gain or loss. Translation differences on non-monetary fi nancial assets or liabilities such as equities held at fair value through profi t or loss are recognised in profi t or loss as part of the fair value gain or loss. Translation differences on non-monetary fi nancial assets such as equities classifi ed as available-for-sale are included in the fair value reserve in equity.

Foreign operationsThe results and fi nancial position of all group entities (none of which has the currency of a hyperinfl ationary economy) that have a functional currency different to the company’s presentation currency, are translated into the presentation currency, as follows:

(i) Assets or liabilities at the closing exchange rate at the reporting date;(ii) Income or expense items are translated at the average exchange rates (unless this average is not a reasonable approximation

of the cumulative effect of the rates prevailing on the transaction dates, in which case income or expenses are translated at the dates of the transactions); and

(iii) Equity items are translated at the exchange rates ruling when they arose.

All resulting exchange differences are classifi ed as a foreign currency translation reserve and recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity.

On disposal of a foreign operation, exchange differences are recognised in the statement of comprehensive income as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets or liabilities of the foreign entity and translated at the closing rate.

6. Property, plant and equipmentLand and buildings comprise mainly factories, poultry farms and offi ces.

Land is not depreciated and is stated at historical cost.

All other property, plant and equipment (“PPE”) are stated at historical cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items and may also include transfers from equity of any gains or losses on qualifying cash fl ow hedges of foreign currency purchases of PPE.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefi ts associated with the item will fl ow to the group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the statement of comprehensive income during the fi nancial period in which they are incurred.

Depreciation on assets is calculated using the straight-line method to allocate the cost of each asset to its residual value over its estimated useful life, as follows:

• Buildings 50 years• Plant and machinery 8 – 25 years• Equipment and motor vehicles 5 – 10 years

Major renovations are depreciated over the remaining useful life of the related asset or to the date of the next major renovation, whichever is sooner.

Gains or losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive income under other gains or losses.



6. Property, plant and equipment (continued)Borrowing costs incurred for the construction of any qualifying assets are capitalised during the period of time that is required to complete and prepare the asset for its intended use.

The assets’ residual values and useful lives are reviewed annually and adjusted if appropriate, taking into account technology developments and maintenance programmes. Uniform depreciation and amortisation rates are established based on the straight-line method which may not represent the actual usage of the assets. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

7. Intangible assetsComputer softwareAcquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specifi c software. These costs are amortised over their estimated useful lives (3 – 5 years).

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred.

Costs that are directly associated with the production of identifi able and unique software products controlled by the group, are recognised as intangible assets if it is probable that these will generate economic benefi ts exceeding costs beyond one year. Direct costs include the costs of software development employees and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised over their estimated useful lives (3 – 5 years).

Research and developmentResearch expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success, considering its commercial and technological feasibility and costs can be measured reliably. Other development expenditures are recognised as an expense, as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Development costs that have a fi nite useful life and that have been capitalised are amortised from the commencement of the commercial production of the product on a straight-line basis over the period of its expected benefi t, not exceeding fi ve years.

8. GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net identifi able assets of the acquired subsidiary at the date of acquisition.

Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefi t from the business combination in which the goodwill arose.

Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

9. InventoriesInventories are stated at the lower of cost and net realisable value. Cost is determined on the fi rst-in, fi rst-out (FIFO) method. The cost of fi nished goods and work in progress comprises all purchase costs of raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) incurred in bringing the inventories to its present location and condition. Borrowing cost is excluded.

Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

10. Biological assetsLive broiler chicks and hatching eggs are assessed based on fair values less estimated point-of-sale costs at appropriate reporting dates. Gains or losses arising from changes in the fair values are recorded in net profi t or loss for the period in which they arise. The determination of fair value is based on active market values, where appropriate, or management’s assessment of the fair value based on available data and benchmark statistics.

Breeding stock includes grandparent breeding, parent rearing and laying stock. Breeding stock is capitalised at cost at the beginning of its productive cycle and is amortised on a straight-line method over the anticipated productive cycle, to its estimated net realisable value.

All the expenses incurred in establishing and maintaining the assets are recognised in the statement of comprehensive income. All costs incurred in acquiring biological assets are capitalised.


11. Impairment of non-fi nancial assetsAssets that have an indefi nite useful life are not subject to amortisation and are tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifi able cash fl ows (cash-generating units). Non-fi nancial assets, other than goodwill, that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

12. Financial assetsFinancial assets are recognised when there is an obligation to transfer benefi ts. Such assets consist of cash, a contractual right to receive cash or another fi nancial asset. Financial assets carried at reporting date include cash and bank balances, investments, loans, derivatives and receivables.

The group classifi es its fi nancial assets in the following categories:

• At fair value through profi t or loss;• Loans and receivables; and• Available-for-sale.

The classifi cations depend on the purpose for which the fi nancial assets were acquired. Management determines the classifi cation of its fi nancial assets at initial recognition.

At fair value through profi t or lossFinancial assets at fair value through profi t or loss are fi nancial assets so designated by management, or fi nancial assets “held for trading”.

A fi nancial asset is classifi ed as “held for trading” if acquired principally for the purpose of selling in the short term.

Derivatives are also classifi ed as “held for trading” unless they are designated as hedges.

Assets in this category are classifi ed as current if they are either held for trading or are expected to be realised within 12 months of the reporting date.

Financial assets carried at fair value through profi t or loss are initially recognised at fair value and transaction costs are expensed in the statement of comprehensive income. Subsequent measurement is at fair value with gains or losses recognised in profi t or loss.

Loans and receivablesLoans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market and include “short-term loans”, “trade and other receivables” and “cash and cash equivalents”.

They are included in current assets, except for maturities greater than 12 months after the statement of fi nancial position date which are classifi ed as non-current assets.

Loans and receivables are initially recognised at fair value plus transaction costs, and subsequently measured at amortised cost less impairment losses which are recognised in profi t or loss.

Available-for-sale fi nancial assetsAvailable-for-sale fi nancial assets are non-derivatives that are either designated in this category or not classifi ed in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date.

Available-for-sale fi nancial assets are initially recognised at fair value and are subsequently also measured at fair value through profi t or loss.

Regular purchases and sales of fi nancial assets are recognised on trade date – the date on which the group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash fl ows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.

13. Financial liabilitiesFinancial liabilities are recognised when there is an obligation to transfer benefi ts and that obligation is a contractual liability to deliver cash or another fi nancial asset or to exchange fi nancial instruments with another on potentially unfavourable terms.

The group classifi es its fi nancial liabilities in the following categories:

• At fair value through profi t or loss; and• Other.



13. Financial liabilities (continued)At fair value through profi t or lossFinancial liabilities at fair value through profi t or loss are initially recognised at fair value with transaction costs being expensed. Subsequent measurement is at fair value with changes recognised in profi t or loss.

OtherOther fi nancial liabilities are recognised at fair value plus transaction costs. Subsequent measurement is at amortised cost with changes recognised in profi t or loss.

14. Trade receivablesTrade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. No fair value adjustment is made for the effect of time value of money where trade receivables have a short-term profi le.

A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables and thereby represent a risk of non-payment. Signifi cant fi nancial diffi culties of the debtor, probability that the debtor will enter bankruptcy or fi nancial re-organisation and default or late payments are considered indicators that the trade receivable is impaired.

Adjustments in the provision for impairments are recognised in the statement of comprehensive income under administrative expenses. When a trade receivable is uncollectible it is written off in the statement of comprehensive income or when previously written off amounts are recovered it is credited in the statement of comprehensive income, both within other gains or losses.

15. Cash and cash equivalentsCash and cash equivalents includes cash on hand, deposits held on call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

Bank overdrafts are shown within borrowings in current liabilities on the statement of fi nancial position.

16. Trade payablesTrade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

17. BorrowingsBorrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method. Borrowings are classifi ed as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

18. Share capitalOrdinary shares are classifi ed as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any group company purchases the company’s equity share capital (treasury shares), the consideration paid, including any directly incremental costs, is deducted from equity attributable to the company’s equity holders until the shares are re-issued or disposed of.

Where such shares are subsequently sold or re-issued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company’s equity holders.

19. ProvisionsProvisions are recognised when the group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outfl ow of resources will be required to settle the obligation, and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outfl ow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outfl ow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligations using a pre-tax rate that refl ects current market assessments of the time value of money and the risks specifi c to the obligation.


20. Current and deferred taxThe charge for current tax is based on results for the year as adjusted for income that is exempt and expenses that are not deductible using tax rates that are applicable to the taxable income.

Deferred income tax is provided, using the liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the consolidated fi nancial statements. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profi t or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profi t will be available against which the temporary differences can be utilised.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference will not reverse in the foreseeable future.

21. Derivative fi nancial instruments The group uses derivative fi nancial instruments to manage its exposure to foreign exchange and commodity price risks arising from operational activities.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

Derivatives that do not qualify for hedge accountingCertain derivative instruments do not qualify for hedge accounting. Such derivatives are classifi ed as at fair value through profi t or loss, and changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately under other income or expenses in the statement of comprehensive income.

Over-the-Counter contractsThe group enters into over-the-counter (“OTC”) forward purchases for the purchase of commodities for own use. These contracts are settled by taking physical delivery in the normal course of business and are therefore not regarded as fi nancial instruments.

Fair value estimationThe fair value of fi nancial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for sale securities) is based on quoted market prices at the reporting date. The quoted market price used for fi nancial assets held by the group is the current bid price; the appropriate quoted market price for fi nancial liabilities is the current ask price.

The fair value of fi nancial instruments that are not traded in an active market (for example, OTC derivatives) is determined by using valuation techniques. The group uses a variety of methods and makes assumptions that are based on market conditions existing at each statement of fi nancial position date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash fl ows, are used to determine fair value for the remaining fi nancial instruments. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash fl ows. The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the reporting date.

The nominal value less estimated credit adjustments of trade receivables is assumed to approximate their fair values. The fair value of fi nancial liabilities for disclosure purposes is estimated by discounting the future contractual cash fl ows at the current market interest rate that is available to the group for similar fi nancial instruments.

22. Employee benefi tsPension obligationsThe group operates defi ned contribution retirement schemes.

A defi ned contribution scheme is a pension plan under which the group pays fi xed contributions into a separate entity.

The group has no legal or constructive obligations to pay further contributions if the fund does not hold suffi cient assets to pay all employees the benefi ts relating to employee service in the current and prior periods.

Other post-employment benefi t obligationsThe group provides post-retirement healthcare benefi ts to some of its retirees. The entitlement to these benefi ts is usually conditional on the employee remaining in service up to retirement age. The expected costs of these benefi ts are accrued over the period of employment using the same accounting methodology as used for defi ned benefi t pension plans.

Actuarial gains or losses arising from experience adjustments, and changes in actuarial assumptions, are charged or credited to income as they arise. These obligations are valued every year, and the assumptions are reviewed annually, by independent qualifi ed actuaries.



22. Employee benefi ts (continued)Termination benefi tsTermination benefi ts are payable when employment is terminated by the group before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefi ts. The group recognises termination benefi ts when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefi ts as a result of an offer made to encourage voluntary redundancy. Benefi ts falling due more than 12 months after the reporting date are discounted to present value.

Profi t-sharing and bonus plansThe group recognises a liability and an expense for bonuses and profi t-sharing, based on a formula that takes into consideration the profi t attributable to the company’s shareholders. These profi t-sharing and bonus plans are approved annually by the board.

The group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

Long-term retention bonus schemeThe group has a long-term retention bonus scheme for certain employees. In terms of the scheme, 25% of the allocated amount is guaranteed and 75% is subject to certain performance conditions measured over a three-year period being met.

One-third of the amount vests and is paid after each of the third, fourth and fi fth year from date of allocation.

The fair value of the employees’ service received in exchange for participation in the scheme, is recognised as an expense over the vesting period.

Share-based plansThe group’s management awards share options, from time to time, on a discretionary basis.

The share option scheme which is equity settled, provides the right to purchase shares in the company at the exercise price. The contractual life of options granted is between 7 and 10 years. The options vest one-third after each of the third, fourth and fi fth year of date of granting the option. No compensation cost is recognised for the fair value of the options granted before the effective date of accounting for share-based payments in terms of IFRS 2. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. The fair value of the employee service received in exchange for the grant of the options is recognised as an expense with a corresponding increase in equity. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market conditions. Non-market conditions are included in assumptions about the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income with a corresponding adjustment to equity.

The share appreciation option scheme which is cash settled, is recognised as an expense in the statement of comprehensive income with a corresponding liability on the statement of fi nancial position. The fair value is measured at grant date and expensed over the period during which the employees becomes unconditionally entitled to the instruments, using generally accepted valuation techniques, taking into account the terms and conditions upon which the instruments are granted, excluding the impact of non-marketing conditions. The fair value is revisited at reporting date and recognises the impact of revised estimates in the statement of comprehensive income with a corresponding adjustment to liabilities.

23. Non-current assets (or disposal groups) held for saleNon-current assets (or disposal groups) are classifi ed as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable.

24. Revenue recognitionRevenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the group.

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefi ts will fl ow to the entity and specifi c criteria have been met for each of the group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifi cs of each arrangement.

Revenue is recognised as follows:

Sales of goodsSales of goods are recognised when a group entity has delivered products to the customer, the customer has accepted the products; and collectability of the related receivables is reasonably assured.

Goods delivered to contract growers whereby the risk for quality and quantity of the product is carried by the contract grower, is recognised as revenue.


24. Revenue recognition (continued)Dividend incomeDividend income is recognised when the right to receive payment is established.

Interest incomeInterest income is recognised on a time : proportion basis using the effective interest method. When a receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash fl ow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

25. LeasesLeases of property, plant and equipment, where the group has substantially all the risks and rewards of ownership, are classifi ed as fi nance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and fi nance charges so as to achieve a constant rate on the fi nance balance outstanding. The corresponding rental obligations, net of fi nance charges, are included in other long-term payables. The interest element of the fi nance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under fi nance leases are depreciated over the shorter of the asset’s useful life and the lease term.

Leases where the lessor retains substantially all the risks and rewards of ownership are classifi ed as operating leases. Payments made under operating leases are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.

26. Dividend distributionDividend distribution to the company’s shareholders is recognised as a liability in the group’s fi nancial statements in the period in which the shareholders are entitled to the dividend.

27. Critical accounting estimates and judgementsThe preparation of the fi nancial statements in accordance with IFRS requires the use of certain critical accounting estimates. It requires management to exercise judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signifi cant to the fi nancial statements, are mainly the following:

Impairment of trade receivablesA provision for impairment is established when there is evidence of signifi cant fi nancial diffi culties of the debtor, probability that the debtor will enter bankruptcy or fi nancial re-organisation, and default or delinquency in payments.

Impairment of goodwillGoodwill is assessed for impairment at each reporting date. The recoverable amount of the relevant cash-generating units is determined based on value-in-use calculations. These calculations use cash fl ow projections per budgets and strategic plan forecasts. These plans are revisited every year and growth rates are determined after considering market conditions and the strategic positioning of the business units within the markets in which they operate.

Estimation of useful lives of property, plant and equipment and intangible assetsThe assets’ residual values and useful lives are reviewed annually and adjusted if appropriate, taking into account technology developments and maintenance programmes. Uniform depreciation and amortisation rates are established based on the straight-line method which may not represent the actual usage of the assets. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Fair value assessment of biological assetsThe determination of fair value is based on active market values, where appropriate, or management’s assessment of the fair value based on available industry data and benchmark statistics.

Fair value of retirement benefi ts The fair value calculation is based on the most recent relevant economic data available. The key estimates and assumptions relating to these areas are disclosed in the relevant note to the fi nancial statements.

Inventory net realisable valueInventory net realisable value is based on estimates of future market conditions and the ability to recover the cost of inventory.

Deferred tax assetsThe recoverability of deferred tax assets is based on the future forecasted profi tability of the relevant entity and the ability to generate future taxable income.



27. Critical accounting estimates and judgements (continued)Fair value of long-term retention bonus schemeThe determination of the fair value is based on the extent to which pre-set performance conditions are met, discounted to present value.

Share-based paymentsThe fair value of share options granted are based on market conditions, discount rates, share price volatility and estimated future forfeitures. These values may change from time to time and the eventual outcome may differ from the valuations.

Financial instrumentsFinancial instruments are fair valued at statement of fi nancial position date. The value of fi nancial instruments is subject to material fl uctuations and disclosed amounts may differ from values ultimately realised.

All estimates and underlying assumptions are based on historical experience and various other factors that management believes are reasonable under the circumstances. The results of these estimates form the basis of judgements about the carrying value of assets or liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and any affected future periods.


Group Company2010 2009 2010 2009

Notes R’000 R’000 R’000 R’000

AssetsNon-current assetsProperty, plant and equipment 1 1 625 473 1 504 338 – –Intangible assets 2 4 913 8 396 – –Goodwill 3 124 802 124 802 – –Investments and loans 4 8 838 11 973 240 037 279 296 Deferred tax asset 13 168 658 – –

1 764 194 1 650 167 240 037 279 296

Current assetsInventories 5 262 278 329 775 – –Biological assets 6 305 430 357 130 – –Trade and other receivables 8 626 698 685 116 – –Current tax asset 2 334 13 298 – –Derivative fi nancial instruments 7 196 309 – –Cash and cash equivalents 9 140 240 137 845 – –

1 337 176 1 523 473 – –

Assets held for sale 33 26 928 – – –

Total assets 3 128 298 3 173 640 240 037 279 296

Equity Capital and reserves attributable to equity holders

of the companyOrdinary shares 10 422 422 422 422 Share premium 10 314 314 314 314 Other reserves (5 281) (3 441) 13 272 9 543 Treasury shares (204 435) (204 435) – –Retained earnings 1 633 071 1 553 184 12 390 223 619

1 424 091 1 346 044 26 398 233 898 Non-controlling interest in equity 22 106 20 405 – –

Total equity 1 446 197 1 366 449 26 398 233 898

LiabilitiesNon-current liabilitiesBorrowings 12 80 545 29 057 – –Deferred tax liabilities 13 356 929 365 801 – –Retirement benefi t obligations 14 84 643 76 998 – –

522 117 471 856 – –

Current liabilitiesTrade and other payables 15 939 009 1 027 328 219 244 Loan from subsidiary 31 – – 165 251 22 722 Current income liabilities 19 556 10 722 – –Borrowings 12 188 668 296 184 47 196 21 331 Shareholders for dividend 973 1 101 973 1 101

1 148 206 1 335 335 213 639 45 398

Liabilities held for sale 33 11 778 – – –

Total liabilities 1 682 101 1 807 191 213 639 45 398

Total equity and liabilities 3 128 298 3 173 640 240 037 279 296

Statement of fi nancial positionat 30 September 2010


Statement of comprehensive incomefor the year ended 30 September 2010

Group Company2010 2009 2010 2009

Notes R’000 R’000 R’000 R’000

Revenue 17 8 367 874 8 833 638 – –Cost of sales (7 029 155) (7 603 534) – –

Gross profi t 1 338 719 1 230 104 – –Administrative expenses (314 421) (289 453) (1 938) (2 015)Distribution costs (349 214) (309 267) – –Marketing expenditure (108 000) (66 500) – –Other income 21 15 341 5 791 125 263 421 171 Other gains 22 2 952 10 246 – –

Operating profi t 585 377 580 921 123 325 419 156 Fair value adjustment of net investment in assets held for sale 33 (7 233) – – –Finance income 23 12 201 12 802 – 3 Finance expense 23 (33 263) (62 960) (2 555) (495)

Profi t before income tax 557 082 530 763 120 770 418 664 Tax expense 24 (193 413) (177 771) (24 404) (24 272)

Profi t for the year 363 669 352 992 96 366 394 392

Other comprehensive incomeForeign currency translation adjustments (6 401) (22 107) – –

Total comprehensive income 357 268 330 885 96 366 394 392

Profi t attributable to:Equity holders of the company 357 637 344 564 96 366 394 392 Non-controlling interest 6 032 8 428 – –

Profi t for the year 363 669 352 992 96 366 394 392

Comprehensive income attributable to:Equity holders of the company 352 068 323 912 96 366 394 392 Non-controlling interest 5 200 6 973 – –

Comprehensive income for the year 357 268 330 885 96 366 394 392

Cents Cents

Earnings per share for profi t attributable to the equity holders of the company during the year:– basic 25 940 906– diluted 25 939 905


Attributable to ordinary shareholders of Astral Foods Limited

Share capital

and premium

Currency translation

reserve

Equity compen-

sation reserve

Treasury shares

Retained earnings Total

Non-controlling

interestsTotal

equityR’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Group2009Balance at 1 October 2008 736 7 703 6 033 (204 435) 1 492 850 1 302 887 25 263 1 328 150 Acquisition of non-controlling interest – – – – (17 896) (17 896) (10 289) (28 185)Option value of share options granted – – 3 510 – – 3 510 15 3 525 Profi t for the year – – – – 344 564 344 564 8 428 352 992 Dividends declared – – – – (266 334) (266 334) (1 592) (267 926)Currency translation differences arising in the year – (22 142) – – – (22 142) 35 (22 107)Non-controlling interest in translation differences – 1 455 – – – 1 455 (1 455) –

Balance at 30 September 2009 736 (12 984) 9 543 (204 435) 1 553 184 1 346 044 20 405 1 366 449

2010Balance at 1 October 2009 736 (12 984) 9 543 (204 435) 1 553 184 1 346 044 20 405 1 366 449 Option value of share options granted – – 3 729 – – 3 729 28 3 757 Profi t for the year – – – – 357 637 357 637 6 032 363 669 Dividends declared – – – – (277 750) (277 750) (3 630) (281 380)Currency translation differences arising in the year – (6 401) – – – (6 401) – (6 401)Non-controlling interest in translation differences – 832 – – – 832 (832) –Contribution from non-controlling interest holder – – – – – – 103 103

Balance at 30 September 2010 736 (18 553) 13 272 (204 435) 1 633 071 1 424 091 22 106 1 446 197

Company2009Balance at 1 October 2008 736 – 6 033 – 124 181 130 950 Option value of share options granted – – 3 510 – – 3 510 Profi t for the year – – – – 394 392 394 392 Dividends declared – – – – (294 954) (294 954)

Balance at 30 September 2009 736 – 9 543 – 223 619 233 898

2010Balance at 1 October 2009 736 – 9 543 – 223 619 233 898 Option value of share options granted – – 3 729 – – 3 729 Profi t for the year – – – – 96 366 96 366 Dividends declared – – – – (307 595) (307 595)

Balance at 30 September 2010 736 – 13 272 – 12 390 26 398

Statement of changes in equityfor the year ended 30 September 2010


Statement of cash fl owsfor the year ended 30 September 2010

Group Company2010 2009 2010 2009

Notes R’000 R’000 R’000 R’000

Cash fl ows from operating activities:Cash operating profi t A 705 744 690 717 123 325 419 156 Changes in working capital B 62 990 (106 474) (25) (28)

Cash generated from operations 768 734 584 243 123 300 419 128 Income tax paid C (180 557) (91 359) (24 404) (24 198)

Cash generated from operating activities 588 177 492 884 98 896 394 930 Cash used in investing activities (208 202) (148 890) – 3

Purchase of property, plant and equipment to expand operations (149 112) (76 931) – –Purchase of property, plant and equipment to maintain operations (77 474) (80 707) – –

Total purchases (226 586) (157 638) – –Less: Interest capitalised 5 495 4 504 – –

Net purchases of property, plant and equipment (221 091) (153 134) – –Costs incurred on intangibles (1 281) (1 237) – –Proceeds on disposal of property, plant and equipment 966 10 157 – –Cost of non-controlling interest acquired E – (25 000) – –Cost of acquisition of subsidiary F (2 245) – – –Decrease in loans and investments 3 135 1 211 – –Investment income 12 201 12 802 – 3 Proceeds from derivative instruments – 6 620 – –Change in market value of derivative instruments 113 (309) – –

Cash generated for the year 379 975 343 994 98 896 394 933 Cash fl ows to fi nancing activities (250 783) (322 572) (124 761) (395 515)

Contribution from non-controlling interest holders 103 – – –Dividends paid to the company’s shareholders D (277 878) (266 189) (307 723) (294 809)Payments to non-controlling interest holders (3 630) (1 592) – –Movement in loan from subsidiaries – – 185 517 (100 211)Interest paid (38 758) (67 464) (2 555) (495)Increase in borrowings 69 380 12 673 – –

Loans received 84 248 12 673 – –Payment of long-term borrowings (14 868) – – –

Net decrease/(increase) in cash and cash equivalents 129 192 21 422 (25 865) (582)Effects of exchange rate changes (6 046) (12 186) – –Reclassifi cation to assets held for sale 795 – – –Cash and cash equivalents at the beginning of the year (152 935) (162 171) (21 331) (20 749)

Cash and cash equivalents at the end of the year 9 (28 994) (152 935) (47 196) (21 331)


Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

A. Cash operating profi tOperating profi t 585 377 580 921 123 325 419 156 Adjustments for:Depreciation and amortisation 108 567 103 561 – –Impairment of fi xed assets – 700 – –Profi t/(loss) on disposal of fi xed assets 597 (6 859) – –Increase in provision for retirement benefi t obligations 7 645 8 288 – –Fair value adjustment on derivative fi nancial instruments – 581 – –Other non-cash fl ow items 3 558 3 525 – –

Cash operating profi t 705 744 690 717 123 325 419 156

B. Changes in working capitalDecrease/(increase) in inventories 54 830 (29 651) – –Decrease/(increase) in biological assets 55 664 (38 912) – –Decrease in trade and other receivables 52 336 36 305 – –Decrease in trade and other payables (99 840) (74 216) (25) (28)

Total change in working capital 62 990 (106 474) (25) (28)

C. Income tax paidBalance at beginning of year 2 576 24 453 – 74 Normal income tax provision (172 962) (85 638) – –Secondary Tax on Companies provision (27 997) (26 793) (24 404) (24 272)Withholding tax (454) (1 704) – –Translation differences 799 899 – –Reclassifi cation to assets held for sale 259 – – –Net balance at the end of the year 17 222 (2 576) – –

Total income tax paid (180 557) (91 359) (24 404) (24 198)

D. Dividends paidBalance at the beginning of the year (1 101) (956) (1 101) (956)Per statement of changes in equity (277 750) (266 334) (307 595) (294 954)Balance at the end of the year 973 1 101 973 1 101

Total dividends paid (277 878) (266 189) (307 723) (294 809)

E. Non-controlling interest acquiredNon-controlling interest acquired – (10 289) – –Excess paid over net value acquired – (17 896) – –

Decrease in equity – (28 185) – –Trade and other payable – 1 706 – –Loan – (196) – –Deferred tax liability – 1 675 – –

Cash fl ow on acquisition – (25 000) – –

F. Acquisition of business unitProperty, plant and equipment and intangibles (18 921) – – –Biological assets (3 964) – – –Deferred tax liability 420 – – –

Net assets acquired (22 465) – – –Negative goodwill 199 – – –

Total purchase consideration for business unit (22 266) – – –Outstanding purchase consideration payable 20 021 – – –

Cash fl ow on acquisition (2 245) – – –

Notes to the statement of cash fl ows for the year ended 30 September 2010


Notes to the annual fi nancial statementsfor the year ended 30 September 2010

Land and Plant andbuildings equipment Vehicles Total

R’000 R’000 R’000 R’000

1. Property, plant and equipmentGroup2009Balance at 1 October 2008:

Cost 873 066 1 312 818 160 471 2 346 355Accumulated depreciation (245 292) (560 373) (78 326) (883 991)

Net book amount at 1 October 2008 627 774 752 445 82 145 1 462 364 Changes for the year ended 30 September 2009:Exchange translation changes (7 127) (4 709) (1 350) (13 186)Additions – Expansion 22 822 52 826 1 283 76 931 Additions – Replacement 5 275 55 948 19 484 80 707 Disposals (1 108) (820) (1 370) (3 298)Impairment – (700) – (700)Depreciation charge (16 146) (66 830) (15 504) (98 480)

Closing net book amount 631 490 788 160 84 688 1 504 338

Balance at 30 September 2009:Cost 892 116 1 404 378 171 354 2 467 848Accumulated depreciation (260 626) (616 218) (86 666) (963 510)


2010Net book amount at 1 October 2009 631 490 788 160 84 688 1 504 338 Changes for the year ended 30 September 2010:Exchange translation changes (2 323) (1 608) (356) (4 287)Additions – Expansion 68 301 80 120 691 149 112 Additions – Replacement 13 371 52 388 11 715 77 474 Acquisition/Disposal of business units 16 800 2 121 – 18 921 Reclassifi cation to assets held for sale – (14 491) – (14 491)Disposals – (428) (813) (1 241)Assets scrapped (81) (241) – (322)Depreciation charge (17 241) (73 046) (13 744) (104 031)


Balance at 30 September 2010:Cost 988 148 1 483 477 180 564 2 652 189 Accumulated depreciation (277 831) (650 502) (98 383) (1 026 716)


Details of the individual properties are contained in a register, which is open for inspection by members or their nominees at the registered offi ce of the company.

Assets with a book value of R71 231 000 (2009: R44 007 000) are pledged as security for secured loans of R43 223 000 (2009: R28 109 000) (refer note 12).

Land and buildings includes a carrying value of R45 628 000 (2009: Nil) in respect of a property lease being capitalised as a fi nance lease due to the specialised nature of the building as well as the length of the lease term. A corresponding liability has been raised with an outstanding value of R44 448 000 at 30 September 2010.


Notes to the annual fi nancial statements (continued)for the year ended 30 September 2010

Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

2. Intangible assets – softwareOpening net book amount 8 396 12 251 Changes for the year:Exchange translation changes (6) (11)Capitalisation of costs incurred 1 281 1 237 Reclassifi cation to assets held for sale (222) – Amortisation (4 536) (5 081)

Closing net book amount 4 913 8 396

Cost 27 805 26 748 Accumulated amortisation (22 892) (18 352)

Closing net book amount 4 913 8 396

3. GoodwillCost at beginning and end of year 124 802 124 802

Impairment test for goodwillGoodwill is allocated to the group’s cash-generating units identifi ed according to business segment.A summary of goodwill per segment is as follows:Poultry 112 328 112 328 Feed 11 220 11 220 Services and Ventures 1 254 1 254

124 802 124 802

Impairment tests were based on the following assumptions:– Average perpetuity growth rates 4,0% 5,0% – Discount rates of 12,5% (2009: 12,5%) 12,5% 12,5% – Period (years) 4 4

If the discount rate is increased by 1% there will be no impairment (2009: R2 million).

The accounting estimates and judgements on which the impairment tests are based are set out in note 27 of the accounting policies.

4. Investments and loansShares at cost:Subsidiaries – – 228 543 225 184 Joint ventures – – 11 494 11 455 Other unlisted 2 013 2 013 – –

Indebtedness:Subsidiaries – – – 42 657 Joint ventures 6 232 9 960 – – Other 593 – – –

8 838 11 973 240 037 279 296

Details of joint ventures and subsidiaries are given in notes 30 and 31, respectively.

The directors’ value of ‘Other’ unlisted investments is equal to its carrying value.

The loan to a joint venture has no fi xed repayment date and carries interest linked to the daily bank rate which is 9,5% at 30 September 2010.

Other loans have no fi xed repayment date and are interest free.


Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

5. Inventories Raw materials 97 712 123 299 Finished goods and merchandise 111 815 151 519 Consumable stores 52 751 54 957

262 278 329 775

Egg Breeding Broiler stock stock stock Total R’000 R’000 R’000 R’000

6. Biological assetsGroup2009Fair value at 1 October 2008 49 183 191 395 77 640 318 218 Increase due to established costs 251 917 504 925 1 322 576 2 079 418 Decrease due to harvest/sales (246 560) (481 584) (1 315 197) (2 043 341)Fair value adjustment (37) – 2 872 2 835

Fair value at 30 September 2009 54 503 214 736 87 891 357 130

2010Fair value at 1 October 2009 54 503 214 736 87 891 357 130 Increase due to established costs 243 141 462 741 1 244 241 1 950 123 Decrease due to harvest/sales (244 920) (497 424) (1 260 941) (2 003 285)Fair value adjustment 768 – 694 1 462

Fair value at 30 September 2010 53 492 180 053 71 885 305 430

Biological assets with a carrying value of R2 112 000 at a Zambian subsidiary were ceded as security for loans.

Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

7. Derivative fi nancial instrumentCurrency option contracts 196 309

These are contracts in underlying exchange rates.

Currency option contracts are mark-to-market on a daily basis and gains or losses are immediately settled in cash, and recognised in the statement of comprehensive income under gains and losses (note 22).

The fair value of these instruments is based on level 2 in the fair value measurement hierarchy, i.e based on inputs other than quoted prices included in level 1 of the hierarchy that are either directly or indirectly observable for the asset.

The current year’s net loss was R530 000 (2009: R57 000 gain).

These contracts are classifi ed as assets at fair value through profi t and loss.

8. Trade and other receivablesFinancial instrumentsTrade receivables 577 849 617 449 Provision for impairment (1 294) (5 585)

Trade receivables – net 576 555 611 864 Other receivables 14 784 15 657 Non-fi nancial instrumentsPre-payments 3 640 3 831 Other receivables 31 719 53 764

626 698 685 116


Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

8. Trade and other receivables (continued)Trade receivables with a book value of R5 615 000 (2009: R4 215 000) are ceded by a joint venture of the group as security for its available borrowing facilities (refer note 12).

The fair values of trade and other receivables approximate their carrying value.

Provision for impairment is made in respect of trade receivables which represent a risk of non-payment.

The carrying amounts of the group’s trade and other receivables are denominated in the following currencies:

SA Rand 620 022 674 195 Zambia Kwacha 3 854 1 744 Mozambique Meticais 2 822 2 510 Mauritius Rupees – 6 667

626 698 685 116

Trade receivables are categorised per the following industries:– Farming 202 401 196 414 – Retail 256 386 207 155 – Wholesale 107 455 203 872 – Other 11 607 10 008

577 849 617 449

Ageing profi le of trade receivables:– up to 30 days 576 562 610 250 – 30 to 60 days 354 603 – 60 days and longer 933 6 596

577 849 617 449

Provision for impairment:Balance at 1 October (5 585) (3 499)(Increase)/decrease charged (against)/to profi t and loss 1 229 (2 353)Impairment provision utilised against trade receivables 1 818 267 Disposal of joint venture 1 244 –

Balance at 30 September (1 294) (5 585)

Ageing profi le of provision for impairment:– up to 30 days (7) –– 30 days and longer (1 287) (5 585)

Collateral security held against trade receivables:– Bank guarantees 32 960 32 388 – Covering bonds over property 8 214 4 109 – Notarial bonds – 856 – Credit Guarantee Insurance Cover 182 882 82 846

224 056 120 199

9. Cash and cash equivalentsCash at bank and in hand 140 240 137 845

Cash and cash equivalents include the following for purposes of the statement of cash fl ows:Cash at bank and in hand 140 240 137 845 – – Bank overdrafts (note 12) (169 234) (290 780) (47 196) (21 331)

Cash and cash equivalents per the statement of cash fl ows (28 994) (152 935) (47 196) (21 331)



Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

10. Share capitalAuthorised share capital75 000 000 ordinary shares of 1 cent each(2009: 75 000 000 ordinary shares of 1 cent each) 750 750 750 750

Issued share capital42 136 285 ordinary shares of 1 cent each 422 422 422 422 (2009: 42 136 285 ordinary shares of 1 cent each)

Share premium 314 314 314 314

Total issued share capital and premium 736 736 736 736

All issued shares are fully paid.

Number of ordinary shares effectively in issueNumber of

sharesNumber of

sharesNumber of

sharesNumber of

shares

Issued shares 42 136 285 42 136 285 42 136 285 42 136 285 Treasury shares held by subsidiary (4 088 577) (4 088 577) – –

Shares at the end of the year 38 047 708 38 047 708 42 136 285 42 136 285

Treasury sharesTreasury shares are held by a wholly-owned subsidiary of the company.

Unissued share capitalThe number of shares available to be utilised for purposes of the share option scheme:Number of share options available at the beginning of the year 3 523 000 3 505 300 3 523 000 3 505 300 Number of share options allocated – (143 900) – (143 900)Number of share options forfeited 69 900 161 600 69 900 161 600

Number of share options available at the end of the year 3 592 900 3 523 000 3 592 900 3 523 000 The number of share options outstanding at the end of the year 699 500 769 400 699 500 769 400

Number of shares under the control of directors for the purpose of the share option scheme at the end of the year 4 292 400 4 292 400 4 292 400 4 292 400

Share options forfeited were in respect of employees who left the employment of the group.

11. Share-based paymentsThe group had two share-based payment arrangements during the year:

Share option schemeThe scheme, an equity settled incentive remuneration scheme, provides the right to purchase shares in the company at the exercise price.

The contractual life of options granted prior to 28 August 2007 is ten years. Options not taken up will lapse on the 10th anniversary of the option date.

The contractual life of options granted on or after 28 August 2007 is seven years. Options not taken up will lapse on the 7th anniversary of the option date.

The scheme allows one-third of the share options to be exercised per year after each of the third, fourth and fi fth year from date of granting the option.

The exercise price of the granted options is equal to the market price of the shares on date of the grant.


11. Share-based payments (continued)Movement during the year in the number of options is as follows:

Date

Exercise

price

Number

of options

outstanding at

the beginning

of the year

Number

of options

forfeited

during

the year

Number

of options

outstanding

at the end

of the year

Number

of options

exercisable

at the end

of the year

17 April 2001 R7,75 2 000 – 2 000 2 000 28 August 2007 R122,00 583 500 (69 900) 513 600 171 200 21 May 2008 R88,49 40 000 – 40 000 – 27 October 2008 R90,80 28 000 – 28 000 – 24 February 2009 R86,00 6 900 – 6 900 – 15 May 2009 R97,00 55 200 – 55 200 – 10 June 2009 R97,31 25 000 – 25 000 – 15 July 2009 R96,86 28 800 – 28 800 –

769 400 (69 900) 699 500 173 200

No options were allocated or exercised during the year.

Value of share options outstanding at the end of the year at the exercise price amounts to R79 927 000 (2009: R108 170 000).

No share options were granted during the year.

The service cost recognised in the current year in return for the cumulative share options granted to date to employees and directors amounts to R3 796 000 (2009: R3 525 000).

No compensation cost has been recognised for the fair value of the options granted before the effective date of accounting for share-based payments in terms of IFRS 2.

Share appreciation rights schemeThe scheme provides cash-settled incentive remuneration based on the increase in the value of shares of the company.

The rights are subject to a three-year service vesting condition, and their fair value is recognised as an expense in the statement of comprehensive income and a liability on the statement of fi nancial position.

The right to receive payment based on the options granted lapses after fi ve years from the grant date.

Movement during the year in the number of options is as follows:

Date Exercise

price

Number of rights

outstanding atthe beginning

of the year

Number of rights

exercised during

the year

Number of rights

exercisable at the end

of the year

18 July 2005 R63,87 50 500 (50 500) – 15 July 2006 R77,75 139 100 (76 500) 62 600

189 600 (127 000) 62 600

Share appreciation rights were exercised during the year at a weighted average share price of R108,05 (2009: R97,27).

All the outstanding rights have vested at 30 September 2010 and the outstanding liability has been based on the difference between the exercise price and the market value of the company’s shares calculated in terms of the scheme rules.

Group2010 2009

R’000 R’000

Closing balance of liability for share appreciation rights (disclosed as part of ‘Trade and other payables’) 2 009 5 424

Fair value (loss)/gain on cash-settled share-based payments to employees and directors recognised in the statement of comprehensive income (1 069) 2 100



Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

12. BorrowingsNon-currentSecured loans 43 223 28 109 Unsecured loans 12 308 6 352 Property lease capitalised as fi nance lease 44 448 –

99 979 34 461 Less: Portion payable within one year included in current

liabilities (19 434) (5 404)

80 545 29 057

CurrentBank overdrafts 169 234 290 780 47 196 21 331 Portion of non-current borrowings payable within one year 19 434 5 404 – –

188 668 296 184 47 196 21 331

Total borrowings 269 213 325 241 47 196 21 331

The carrying amounts of the group’s borrowings are denominated in the following currencies:SA Rand 238 957 302 571 47 196 21 331 US Dollar 8 851 4 381 – – Zambian Kwacha 21 405 17 085 – – Mauritian Rupees – 1 204 – –

269 213 325 241 47 196 21 331

All borrowing rates are variable.

The SA Rand borrowings are linked to a market-related interest rate that is 9,5% at 30 September 2010.

The US Dollar loans are linked to a market-related interest rate that is 4,3% at 30 September 2010.

The Zambia Kwacha borrowings are linked to market-related rates that vary between 8% for secured loans and 19% for general overdraft borrowings at 30 September 2010.

The carrying amounts of both the long-term and short-term borrowings approximate their fair value.

Assets with the following book values are pledged as security for secured loans:

Property 32 040 34 259 Finance lease liability in respect of property lease 45 628 – Plant and equipment 39 191 9 748 Biological assets 2 112 – Trade receivables 5 615 4 215

Contractual maturity of payments of non-current borrowingsNot later than one year 23 845 6 659 Between one year and fi ve years 62 682 27 300 Over fi ve years 76 161 10 586

162 688 44 545 Less: Finance charges (62 709) (10 084)

99 979 34 461

Borrowing facilitiesThe group has general borrowing facilities at fl oating interest rates 843 500 843 500

The facilities are denominated in SA Rand.

The borrowing facilities are reviewed on an annual basis.

Borrowing powersNo limit has been placed in the articles of association on the borrowing powers of the company.


Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

13. Deferred tax Deferred tax is calculated on all temporary differences under the liability method, using a principal tax rate of 28% (2009: 28%).

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities and when deferred taxes relate to the same fi scal authority.

Movement on the deferred tax asset account is as follows:At the beginning of the year 658 1 924 Charge to profi t and loss (2 570) (1 266)Transfer to deferred tax liability 2 080 –

At the end of the year 168 658

Analysis of deferred tax assets:Accelerated tax depreciation (276) (6 358)Other temporary differences 444 409 Assessed losses – 6 607

168 658

Movement on the deferred tax liability account is as follows:At the beginning of the year 365 801 301 756 Acquisition of business unit 420 1 675 Reclassifi cation to liabilities held for sale (786) – Transfer from deferred tax asset 2 080 – Exchange translation changes (16) – (Release from)/charge to profi t and loss (10 570) 62 370

At the end of the year 356 929 365 801

Analysis of deferred tax liabilities:Accelerated tax depreciation 326 436 306 889 Lower tax value for livestock and farming consumables 87 809 101 653 Assessed losses utilised to reduce deferred tax (8 161) (10 090)Other temporary differences (49 155) (32 651)

356 929 365 801

14. Retirement benefi t obligationsPost-employment medical benefi tsThe group provides post-retirement healthcare benefi ts to some of its retirees. Benefi ts paid and the movement in the provision are charged against profi ts in the current period.

Amounts recognised in the profi t and loss:Benefi ts paid 3 620 3 083 Increase in the provision for the liability 7 645 8 288

Provision for liability at reporting date 84 643 76 998 Estimated employer benefi ts payable during next 12 months 3 250 3 180

The liability recognised in the fi nancial statements was actuarially valued at 30 September 2010 (previous valuation date: 30 September 2009). The liability was valued using the projected unit credit method.

Discount rate 8,30% 9,25%Healthcare infl ation rate 7,10% 7,75%



Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

14. Retirement benefi t obligations (continued)Pre-retirement mortality rates as per SA85-90 ultimate table.

Post-retirement mortality rates as per PA(90) ultimate table rated down two years plus an improvement of 0,75% from a base year of 2006.

Present value of funded obligations per actuarial valuation at 30 September 2010:

Balance at the beginning of the year 76 998 68 710 Current service cost 1 405 1 404 Interest costs 6 967 6 203 Actuarial loss 2 453 3 311 Expected benefi ts payments (3 180) (2 630)

Balance at the end of the year 84 643 76 998

Sensitivity analysis Accrued

liability Change

Discount rate increases by 1% p.a. 73 941 (13%)Discount rate reduces by 1% p.a. 98 044 16%Subsidy infl ation increases by 1% p.a. 98 263 16%Subsidy infl ation reduces by 1% p.a 73 611 (13%)

The present value of the defi ned benefi t obligation and the experience adjustment were as follows: R’000

Experience adjustment

30 September 2010 84 643 (2,9%)30 September 2009 76 998 (4,3%)30 September 2008 68 710 0,6%30 September 2007 64 460 7,9%

Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

15. Trade and other payablesFinancial instrumentsTrade payables 608 994 772 106 – – Accruals and other payables 165 791 111 681 219 244

Non-fi nancial instrumentsOther payables 162 215 138 117 – – Provision for share-based payments 2 009 5 424 – –

939 009 1 027 328 219 244

The carrying amounts of the group’s trade and other payables are denominated in the following currencies:SA Rand 932 392 1 005 739 219 244 Zambian Kwacha 5 720 9 857 – – Mozambican Meticais 897 999 – – Mauritian Rupees – 10 733 – –

939 009 1 027 328 219 244

16. Contingencies and commitmentsCapital commitmentsCapital expenditure approved not contracted 120 124 93 956

Capital expenditure contracted but not recognised in the fi nancial statements 20 156 34 505

The capital commitments will be fi nanced by operating cash fl ow and borrowings well within the accepted gearing profi le of the group.


Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

16. Contingencies and commitments (continued)Operating lease commitmentsThe group leases various properties, plant and equipment and vehicles under non-cancellable operating leases. Future lease payments are as follows:Not later than 1 year 66 183 65 128 Later than 1 year and not later than 5 years 168 131 193 596 Later than 5 years 73 296 101 166

307 610 359 890

Leases are contracted for periods ranging from 36 to 120 months with no renewal options. Rental escalations vary from nil to prime interest rate linked escalations.

The lease expenditure charged to the statement of comprehensive income is disclosed in note 18.

Other commitmentsThe group has contracted its raw material requirements from various suppliers in terms of future supply agreements.

Contracted amounts not recognised in the statement of fi nancial position 758 349 797 797

The company guaranteed the payment obligations of its subsidiary, Astral Operations Limited, in respect of raw material purchases.

The group entered into a feed supply agreement whereby an agreed quantity of raw materials are procured from a supplier at market-related prices. The remaining period of the agreement is four years.

Contingent liabilitiesThe following contingent liabilities to be noted:– Contingent liability in respect of a guarantee given to a

third party. – 1 976

– A complaint was lodged against Astral Operations Limited, Elite Breeding Farms and Ross Poultry Breeders (Pty) Limited at the Competition Commission regarding anti-competitive behaviour relating to an existing supply agreement of parent stock. The Competition Commission referred the matter to the Competition Tribunal for determination. The group will oppose a claim and it is not anticipated that any material liabilities will arise from a claim.

Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

17. RevenueRevenue from the sale of goods:Revenue from South African operations 8 187 368 8 561 438 Revenue denominated in foreign functional currencies 180 506 272 200

8 367 874 8 833 638

External revenue comprises the net value of the sales of feed and poultry-related products from the following segments:Poultry 5 350 966 5 465 922 Feed 2 815 555 3 133 011 Services and Ventures and Other 201 353 234 705

8 367 874 8 833 638

The following inter-group revenue is excluded 1 904 598 2 169 218

– between business units within the Poultry segment 425 322 414 732 – between business units within the

Feed – Other Africa segment 2 032 – – from the Feed to the Poultry segment 1 408 987 1 620 781 – from the Other and Services segment to the Poultry

and Feed segments 68 257 133 705



Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

17. Revenue (continued)Revenue is disclosed net of value-added tax, normal discounts and rebates, and returns.

Revenue from the top fi ve customers are all from the Poultry segment.

Customer 1 873 707 1 017 215 Customer 2 622 244 577 932 Customer 3 439 100 338 200 Customer 4 283 082 256 800 Customer 5 262 811 249 032

18. Expenses by natureThe following expense items by nature have been included in arriving at operating profi t:Auditors’ remuneration 5 701 4 877 – –

Audit fees 4 989 4 656 – – Management consulting 451 – – – Taxation services 118 43 – – Expenses 143 178 – –

Fees paid for managerial, secretarial and technical services 5 980 11 468 118 110 Impairment of plant and equipment – 700 – – Amortisation of intangible assets 4 536 5 081 – – Depreciation on property, plant and equipment 104 031 98 480 – –

Buildings 17 241 16 146 – – Plant and equipment 73 046 66 830 – – Vehicles 13 744 15 504 – –

Operating lease payments 67 932 62 622 – –

Property 19 617 16 266 – – Plant and machinery 41 892 7 576 – – Vehicles 6 423 38 780 – –

Research and development expenditure 326 2 330 – – Biological assets – movement in fair value adjustment (1 388) 2 581 – – Directors’ remuneration (note 19) 12 053 9 119 1 094 1 053 Employee benefi t expense (note 20) 810 799 770 949 – – Loss/(gain) on fair value adjustment of cash-settled share-based payments to employees and directors 1 069 (2 100) – – Cost recognised for share options granted to employees and directors 3 729 3 525 – –


Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

19. Directors’ remuneration ExecutiveSalaries 7 031 5 658 Performance-related bonuses 1 432 387 Retirement fund contributions 1 297 1 051 Other benefi ts 682 554 Share appreciation rights exercised 253 2 231

10 695 9 881

Non-executiveFees 1 611 1 469

Total directors’ remuneration 12 306 11 350 Less: Share appreciation rights exercised (253) (2 231)

12 053 9 119 Less: Paid by subsidiary (10 959) (8 066)

1 094 1 053

No share options in terms of the share option scheme were granted to the executive directors of the company during the year (2009: 55 200).

No options in terms of the share appreciation option scheme were granted to the executive directors of the company during the year (2009: Nil).

Refer note 11 for details of the share-based payment schemes.

20. Employee benefi t expenseWages and salaries 628 469 617 561 Termination benefi ts 1 696 1 785 Retirement fund contributions 55 156 50 992 Post-retirement benefi ts 3 620 3 083

688 941 673 421 Cost contracted labour 121 858 97 528

810 799 770 949

Number of employees at 30 September:– Permanent employees 7 737 7 771 – Contracted labour 3 681 4 030

11 418 11 801

21. Other incomeDividends received 31 43 125 263 421 171 Scrap sold 744 448 – – Storage fee income 3 689 3 307 – – Insurance claims received 9 404 – – – Rental received 1 473 1 993 – –

15 341 5 791 125 263 421 171

22. Other gains/(losses)Foreign exchange forward contract losses – realised (288) (4 107)Foreign exchange forward contract gains – realised 167 1 205 Foreign exchange (losses)/gains on fi nancial instruments – realised (415) 533 (Loss)/profi t on sale of property, plant and equipment (418) 6 859 Fair value gains/(losses) on fi nancial instruments and raw material contracts in respect of procurement not qualifying as effective hedges 4 228 (2 003)Fair value adjustment on equity call options – (582)Net of other (losses)/gains (322) 8 341

2 952 10 246



Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

23. Finance expense and incomeInterest expenseBank borrowings 29 790 63 522 2 555 – Loans 7 535 2 248 – – Other 1 433 1 694 – 495

38 758 67 464 2 555 495 Less: Interest capitalised (5 495) (4 504) – –

33 263 62 960 2 555 495

Interest incomeBank surplus balances 10 011 9 818 – – Other 2 190 2 984 – 3

12 201 12 802 – 3

Net fi nance expense (21 062) (50 158) (2 555) (492)

Interest was capitalised at an average rate of 10,7% in respect of expenditure on assets which took a substantial period of time to get ready for its intended use.

24. Tax expenseCurrent tax 170 681 86 090 – – Deferred tax (7 504) 63 064 – –

163 177 149 154 – – Tax – prior year 2 281 (452) – – Deferred tax – prior year (496) 572 – – Withholding tax 454 1 704 – – Secondary Tax on Companies 27 997 26 793 24 404 24 272

193 413 177 771 24 404 24 272

The tax on the group’s profi t before tax differs from the theoretical amount that would arise using the basic tax rate of South Africa:Profi t before tax 557 082 530 763 120 770 418 664

Tax calculated at a tax rate of 28% (2009: 28%) 155 983 148 614 33 816 117 226 Effect of different tax rates in other countries 215 (37) – – Expenses not deductible for tax purposes 6 662 2 002 1 257 702 Tax losses not utilised against normal and tax provision 317 1 386 – – Adjustments to prior year’s normal tax provision 2 281 (452) – – Adjustments to prior year’s tax base of assets and provisions (496) 572 – – Income not subject to tax – (2 811) (35 073) (117 928)Withholding tax 454 1 704 – – Secondary Tax on Companies 27 997 26 793 24 404 24 272

Tax charge per statement of comprehensive income 193 413 177 771 24 404 24 272

Further information about deferred tax is presented in note 13.

25. Earnings per shareProfi t attributable to equity holders of the company used for calculating earnings per share and diluted earnings per share 357 637 344 564

Basic earnings per ordinary share (cents) 940 906Diluted earnings per share (cents) 939 905

Number of

shares Number of

shares

Weighted average number of ordinary shares in issue during the year for calculating earnings per share 38 047 708 38 047 708 Adjustments for share options 24 384 5 819

Weighted average number of ordinary shares for calculating diluted earnings per share 38 072 092 38 053 527


25. Earnings per share (continued)Basic earnings per shareBasic earnings per ordinary share is calculated by dividing the profi t attributable to equity holders of the company by the weighted average number of ordinary shares during the year, reduced by ordinary shares purchased and held as treasury shares.

Diluted earnings per shareDiluted earnings per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares from the exercise of share options. A calculation is done to determine the number of ordinary shares that could have been acquired at fair value (determined as the average annual market share price of the company’s ordinary shares) based on the monetary value of the subscription rights attached to the outstanding share options. The number of ordinary shares calculated is compared with the number of ordinary shares that would have been issued assuming the exercise of the share options. No adjustment is made where the issue of share options have no dilutive effect on the number of ordinary shares in issue.

Group Company2010 2009 2010 2009

R’000 R’000 R’000 R’000

26. Headline earningsNet profi t attributable to shareholders 357 637 344 564 Adjusted for:After-tax net loss/(profi t) on sale of property, plant and equipment 491 (6 576)Fair value adjustment of investment held for sale 7 233 – Negative goodwill (199) –Impairment of assets – 504

Headline earnings 365 162 338 492

Headline earnings per ordinary share (cents) 960 890 Diluted headline earnings per ordinary share (cents) 959 890

27. DividendsThe following dividends were declared in respect of the current year’s profi ts:Interim dividend (Dividend No. 19) declared on 13 May 2010 in respect of the year ended 30 September 2010 of 290 cents per share (2009: 260 cents per share) – net of treasury shares 110 338 98 924

Final dividend (Dividend No. 20) declared on 11 November 2010 in respect of the year ended 30 September 2010 of 470 cents per share (2009: 440 cents per share) – net of treasury shares 178 825 167 410

289 163 266 334

The current fi nancial statements do not include the fi nal dividend declared in respect of the fi nancial year ended 30 September 2010.

The dividends exclude any tax or withholding tax on dividends.

28. Financial instruments28.1 Financial instruments by categoryThe fi nancial instruments are classifi ed as follows:

Financial assetsAssets at fair value through profi t and loss:Derivatives 196 309 – –

Loans and receivablesLoans 6 825 9 960 – 42 657 Trade and other receivables 591 339 627 521 – – Cash and cash equivalents 140 240 137 845 – –

Available-for-sale 2 013 2 013 – –

740 613 777 648 – 42 657

Financial liabilitiesOtherAccounts payable 774 785 883 787 219 244 Loan from subsidiary – – 165 251 22 722 Shareholders for dividend 973 1 101 973 1 101 Bank overdrafts 169 234 290 780 47 196 21 331 Borrowings 99 979 34 461 – –

1 044 971 1 210 129 213 639 45 398



28. Financial instruments (continued)28.1 Financial instruments by category (continued)All fi nancial instruments are initially recognised at fair value, and subsequently measured as follows:– Assets at fair value through profi t and loss, at fair value.– Loans and receivables at amortised costs.– Other fi nancial liabilities at amortised costs.At 30 September 2010 the carrying amounts of loans and receivables and fi nancial liabilities approximated their fair values.

28.2 Financial Risk ManagementThe group is exposed to the following major fi nancial risks:A. Market risk Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will have on the value

of fi nancial instruments at year-end and the resulting effect on the group’s income.

(i) Interest rate risk The group’s risk is limited to surplus funds on cash deposits, loan liabilities and funds borrowed on bank overdrafts.

Interest are at variable rates which are linked to the bank prime lending rate. Cash fl ow exposure from interest rate fl uctuations is hedged by entering into interest swap agreements when management regards it prudent.

The group’s main income and operating cash fl ows are substantially independent of changes in the market interest rates.

Based on the fi nancial instruments as at 30 September 2010, the after-tax effect of a 1% movement in the interest rates on the statement of comprehensive income will be R686 000 (2009: R1 349 000).

(ii) Foreign currency risk The group enters from time to time into transactions in currencies which are different from the functional currencies in which it

conducts its business activities, and is as a result exposed to foreign exchange rate fl uctuations.

Exposure to exchange rate fl uctuations is managed by utilising forward exchange contracts and currency option contracts when management regards it prudent. Forward exchange contracts entered into are related to specifi c statement of fi nancial position items.

– The following Rand value items reported in the fi nancial statements are exposed to foreign exchange rate fl uctuations at 30 September:

GroupBritishPound Euro US Dollar Total

2010 R’000 R’000 R’000 R’000

Financial assets 1 17 1 683 1 701 Financial liabilities (1) (3 299) (10 002) (13 302)

– (3 282) (8 319) (11 601)

2009Financial assets 2 595 3 108 3 705 Financial liabilities – (5 615) (7 545) (13 160)

2 (5 020) (4 437) (9 455)

A 10% movement in the Rand against the relevant foreign currencies will result in a R835 000 after-tax effect in the profi ts of the group (2009: R681 000). A weakening of the Rand will result in lower profi ts and a corresponding reduction in net asset value in the event of net foreign exposed liabilities.

There were no open foreign exchange contracts at 30 September 2010 (2009: Nil).

Currency option contracts at 30 September 2010 2010 2009 2009Group Euro US Dollar Euro US Dollar

Fair value (R’000) 2 195 716 2 501 2 474 Foreign currency value (‘000) 225 100 225 325

A 10% movement in the yield against the foreign currency will result in a R210 000 (2009: R383 000) after-tax effect in the profi ts of the group. A weakening of the yield will result in increased profi ts and a corresponding increase in the net asset value.

The company had no exposure to foreign currency risk for both the current and previous year.


28. Financial instruments (continued)28.2 Financial Risk Management (continued)(iii) Commodity price risk The prices of commodities used by the group can fl uctuate widely and in a competitive market it is not always possible to

recover material commodity price increases from broiler customers. This can impact on the group’s profi tability. The group may suffer fi nancial loss when a fl uctuating price contract obligation is entered into and the commodity prices increase or when a fi xed price agreement is entered into and commodity prices fall. Commodity price fl uctuations are normally caused by factors such as supply conditions, weather, exchange rate fl uctuations and other economic conditions.

These risks are managed through an established process whereby the various conditions which infl uenced commodity prices are monitored on a daily basis. Decisions on the procurement of raw materials as well as the utilisation of derivative instruments to hedge against these risks are taken by executive management within board approved mandates given. Detailed statements of raw material contracts and hedging positions are prepared and submitted on a monthly basis to the chief executive offi cer.

B. Credit risk Credit risk is the risk of fi nancial loss to the group if a counterparty to a fi nancial instrument fails to meet its contractual

obligations. Credit risk for the group arise on cash and cash equivalents, derivatives and trade receivables. Credit risk is managed on a group basis.

Dealings with counterparties arising from money market and derivative instruments are limited to well-established fi nancial institutions of high credit standing.

The group’s main credit risk is concentrated in the aggregate balance of trade receivables on statement of fi nancial position date. Exposure to trade receivables comprise a large, widespread customer base. These risks are controlled by the application of credit limits and credit controlling procedures. The largest single credit risk amounts to R104 million. The group does not consider there to be any signifi cant concentration of credit risk that has not been adequately provided for at 30 September 2010.

Collateral is held as security in respect of those trade receivables which are regarded by management as high risk.

Details of the carrying amounts of trade receivables, their classifi cations into different risk profi les, impairments recognised as well as collateral security held are contained in note 8.

The group does not consider there be any signifi cant risks regarding loans as it is with related parties.

Cash at bank represent surplus funds on the current bank accounts. These funds are held by fi nancial institutions of high quality and standing. These fi nancial institutions’ Fitch credit rating ranges from F1 to F2.

C. Liquidity risks Liquidity risks is the risk that the group will not be able to meet its fi nancial obligations as they fall due.

The group’s liquidity risk consists mainly of the amounts borrowed on long term to fund specifi c capital expenditure items, trade payables and amounts borrowed on general bank facilities. The expected cash fl ows are well within the confi rmed facilities available to the group. The details of borrowings and undrawn facilities are disclosed in note 12. In terms of the articles of association, the group’s borrowing powers are unlimited.

The liquidity risk is managed through the management of working capital, by monitoring the daily borrowing levels and by conducting cash fl ow forecasts at regular intervals, in order to maintain suffi cient funds to fund the business activities from cash generated by operations and funds available from committed credit facilities.

The maturity profi le of the fi nancial liabilities is analysed below.

The amounts disclosed are undiscounted cash fl ows.

Within 1 year

Between 1 year and

5 yearsMore than

5 years TotalR’000 R’000 R’000 R’000

Group2010Borrowings 23 845 62 682 76 161 162 688 Trade and other payables 774 785 – – 774 785 Shareholders for dividend – 973 – 973 Bank* 169 234 – – 169 234

967 864 63 655 76 161 1 107 680

2009Borrowings 6 659 27 300 10 586 44 545 Trade and other payables 883 787 – – 883 787 Shareholders for dividend – 1 101 – 1 101 Bank* 290 780 – – 290 780

1 181 226 28 401 10 586 1 220 213

* Bank facilities are reviewed on an annual basis.



Within 1 year

Between 1 year and

5 yearsMore than

5 years TotalR’000 R’000 R’000 R’000

28. Financial instruments (continued)28.2 Financial Risk Management (continued)C. Liquidity risks (continued)Company2010Trade and other payables 219 – – 219 Loans from subsidiary 165 251 – – 165 251 Shareholders for dividend – 973 – 973 Bank* 47 196 – – 47 196

212 666 973 – 213 639

2009Trade and other payables 244 – – 244 Loans from subsidiary 22 722 – – 22 722 Shareholders for dividend – 1 101 – 1 101 Bank* 21 331 – – 21 331

44 297 1 101 – 45 398

* Bank facilities are reviewed on an annual basis.

The company intends to fi nance its fi nancial liabilities with dividend income.

28.3 Capital Risk ManagementThe group manages its capital to maintain a sound net debt position and to provide adequate return on capital employed. This is taken into account in deciding on the dividends to be paid to shareholders as well as to the extent capital is returned to shareholders by way of share repurchases.

The group continuously monitors its net debt to equity ratio. Net debt is calculated as total debt less cash and cash equivalents. Equity comprises all components of equity as disclosed in the statement of fi nancial position.

The net debt to equity ratio as at 30 September 2010 was as follows:Group

2010 2009R’000 R’000

Total debt 269 213 325 241 Less: Cash and cash equivalents (140 240) (137 845)

Net debt 128 973 187 396

Total equity 1 446 197 1 366 449

Net debt to equity ratio 8,9% 13,7%

The company manages its capital structure with dividend income from subsidiaries.

29. Related party transactionsThe group entered into transactions and has balances with related parties as listed below. These include joint ventures, entities under common control and directors. Transactions that are eliminated on consolidation are not included. Transactions with related parties are affected at arm’s length.

Sales of goods and servicesSales to joint ventures 149 3 086 Purchases from joint ventures 125 992 134 776

Outstanding balances at year-end:Receivables from joint ventures 3 836 4 176 Trade payables to joint ventures 11 402 11 242

Directors’ remuneration Details of directors’ remuneration is given on pages 48 to 50. Executive directors are eligible for an annual performance-related

bonus payment linked to appropriate group targets. The structure and payments of bonuses is decided by the Human Resources and Remuneration Committee.

Details of share options granted to directors are given in the Directors’ remuneration report.


29. Related party transactions (continued) Key management Employees fulfi lling the role of key management are all appointed to the board of directors.

Principal joint ventures and subsidiary undertakings Details of joint ventures and subsidiaries are set out in notes 30 and 31 of the annual fi nancial statements.

Cross-guarantees Cross-deed of suretyship in respect of borrowings has been given by Astral Foods Limited, Astral Operations Limited,

County Fair Foods (Pty) Limited, Ross Poultry Breeders (Pty) Limited, National Veterinary Supplies (Pty) Limited, Meadow Feeds (Eastern Cape) (Pty) Limited and Central Analytical Laboratories (Pty) Limited in respect of borrowings.

Group2010 2009

Notes % %

30. Interests in joint venturesThe principal joint ventures of the group are:NuTec Southern Africa (Pty) Limited f 50 50 East Balt South Africa partnership g 50 50 Meaders Feeds Limited (Mauritius) c – 33

The following amounts represent the group’s share of assets and liabilities, revenue and expenses and cash fl ows of the joint ventures, and are included in the consolidated fi nancial statements:

R’000 R’000

Assets and liabilitiesNon-current assets 105 903 45 677 Current assets 51 568 77 382

Total assets 157 471 123 059

Non-current liabilitiesInterest bearing 70 078 15 972 Current liabilities 40 177 41 763

Interest bearing 11 463 303 Non-interest bearing 28 714 41 460

Deferred income tax liability 6 004 2 039

Total liabilities 116 259 59 774

Net assets 41 212 63 285

Revenue and expensesRevenue 216 413 281 754

Profi t before tax 37 071 32 152 Income taxes (11 779) (9 488)

Profi t after tax 25 292 22 664

Cash fl owsCash fl ow from operating activities 36 865 32 212 Investing cash fl ows (97 662) (10 900)Financing cash fl ows 68 543 (684)Profi t distribution/Dividend paid (13 800) (10 566)

Net cash fl ows (6 054) 10 062

Capital commitmentsCapital expenditure approved not contracted – 27 874 Capital expenditure contracted but not recognised in the fi nancial statements 2 171 10 022



31. Interests in subsidiary companiesDetails of the principal subsidiary companies of Astral Foods Limited are as follows:

Issued ordinary capital

Effective percentage

holding

Company’s interest

Equity Loans to/(from)2010 2009 2010 2009 2010 2009 2010 2009

Notes R’000 R’000 % % R’000 R’000 R’000 R’000

Unlisted investmentsDirectly held:Astral Operations Limited a 12 12 100 100 164 391 161 151 (165 251) (22 722)National Chicks Limited b 23 720 23 720 100 100 63 993 63 993 – 42 657 Africa Feeds Limited (Zambia)^ c 24 24 100 100 159 40 – –

228 543 225 184

Indirectly held:Meadow Eastern Cape (Pty) Limited c – – 100 100 Meadow Moçambique LDA* c 4 393 4 393 80 80 Ross Poultry Breeders (Pty) Limited d 1 1 90 90 National Chicks Swaziland (Pty) Limited # e 1 1 67 67

^ Incorporated in Zambia

* Incorporated in Mozambique# Incorporated in Swaziland

The directors’ valuation of the investments in subsidiary companies is not less than their respective carrying values.

Nature of business

Notes:a Animal feed and pre-mix production, broiler operations, production and sale of day-old broilers and hatching eggs, retailer of

animal health products and analytical services.b Investment holding.c Animal feed production.d Broiler genetics and broiler breeding production.e Production and sale of day-old broilers and hatching eggs.f Animal feed pre-mixes.g Manufacturer of baking products.


Group2010 2009

R’000 R’000

32. Business combinationThe group entered into an agreement during the year to acquire the assets and operating activities of Vredebest Plase, a poultry farming and hatching operation in the Western Cape. Vredebest’s revenue was generated mainly from sales to the group prior to the acquisition.

Payment of the purchase consideration will be made on transfer of the properties in the name of Astral and will be funded from available cash resources.

The group assumed control of the activities at Vredebest on 29 September 2010 with no impact on the group’s results, except for the negative goodwill recognised in profi t.

If the acquisition had occurred on 1 October 2009, there would have been no material impact on the group’s results as all of Vredebest’s production was sold into the group.

Details of net assets acquired and the cost of the investment are as follows:Purchase consideration 22 266 –Fair value of interest acquired 22 465 –

Negative goodwill (199) –

Refer to note F of the statement of cash fl ows for details of the assets and liabilities acquired.

The carrying amounts of the assets and liabilities acquired, determined in accordance with IFRS, equals the fair value of the interest acquired. The purchase allocation has been performed and is considered fi nal.

33. Assets and liabilities held for saleA decision has been taken during May 2010 to divest from Meaders Feeds Limited (Mauritius), a 33% held joint venture.

The assets and liabilities of Meaders Feeds Limited are excluded from the consolidated statement of fi nancial position at 30 September 2010 and is represented by the carrying amount disclosed under assets held for sale and liabilities held for sale.

The net value of the group’s share of Meaders Feeds Limited’s assets and liabilities included in the consolidated results up to May 2010, was impaired by R7 233 000 in order to refl ect the fair value of the number of shares held by the group in Meaders Feeds Limited.

The value of the shares in Meaders Feeds Limited is at a discount compared to the fair value of the assets of the company, due to the limited market for a non-controlling interest in an unlisted company in Mauritius.



Analysis of ordinary shareholdersat 30 September 2010

Number of Number of shareholders % shares %

Shareholder spread1 – 1 000 shares 3 766 71,94 1 383 113 3,28 1 001 – 10 000 shares 1 171 22,37 3 479 275 8,26 10 001 – 100 000 shares 233 4,45 7 659 007 18,18 100 001 – 1 000 000 shares 61 1,16 17 347 498 41,17 1 000 001 shares and over 4 0,08 12 267 392 29,11

5 235 100,00 42 136 285 100,00

Number of Number ofshareholdings % shares %

Distribution of shareholdersBanks 60 1,15 1 608 506 3,82 Close Corporations 72 1,37 96 785 0,23 Endowment funds 42 0,80 145 070 0,34 Individuals 3 714 70,94 3 640 225 8,64 Insurance companies 39 0,74 3 680 884 8,73 Investment companies 26 0,50 678 654 1,61 Medical schemes 4 0,08 159 139 0,38 Mutual funds 146 2,79 11 360 297 26,96 Nominees and trusts 809 15,45 1 538 368 3,65 Other corporations 33 0,63 19 530 0,05 Own holdings 1 0,02 4 088 577 9,70 Private companies 145 2,77 1 175 222 2,79 Public companies 5 0,10 7 484 0,02 Retirement funds 137 2,62 13 862 532 32,90 Share trust 2 0,04 75 012 0,18

5 235 100,00 42 136 285 100,00

Number of Number of shareholdings % shares %

Non-public/Public shareholdersNon-public shareholders 5 0,10 9 702 305 23,03

Directors and associates of the company 2 0,04 171 100 0,40 Own holdings 1 0,02 4 088 577 9,70 Strategic holdings 1 0,02 5 369 564 12,74 Share incentive scheme 1 0,02 73 064 0,17

Public shareholders 5 230 99,90 32 433 980 76,97

5 235 100,00 42 136 285 100,00

Number ofshares %

Benefi cial shareholders holding 3% or moreGovernment Employees Pension Fund 7 495 408 17,79 Old Mutual 5 515 461 13,09 Astral Operations Limited 4 088 577 9,70 Metal & Engineering Industries 2 742 509 6,51 Nedbank Group 1 664 371 3,95 Investment Solutions 1 385 995 3,29

22 892 321 54,33


Notice of annual general meeting

Tenth annual general meetingNotice is hereby given that the tenth annual general meeting of members of Astral Foods Limited will be held in the Boardroom, 92 Koranna Avenue, Doringkloof, Centurion on Thursday, 10 February 2011 at 08:00, to transact the following business:

Ordinary business:Consideration of annual fi nancial statementsOrdinary resolution no. 1To receive and consider the annual fi nancial statements for the company and the group for the year ended 30 September 2010, together with the directors’ and auditor’s reports.

Re-election of directorsOrdinary resolution no. 2To note that, in terms of article 13.2 of the company’s articles of association, Mr I S Fourie retires at the annual general meeting but, being eligible, has offered himself for re-election.

Ordinary resolution no. 3To note that, in terms of article 14 of the company’s articles of association, Dr T Eloff, Mr M Macdonald and Mrs T C C Mampane retire by rotation at the annual general meeting but, being eligible, have offered themselves for re-election.

It is proposed that any vacancies that occur as a result of the above directors not being available for re-election, will not be fi lled at the annual general meeting and the normal nomination and selection processes as laid down by the company’s Nominations Committee will be followed for the appointment of new directors.

Brief particulars of the qualifi cations and experience of the above are available on pages 10 and 11 of this annual report.

Non-executive directors’ feesOrdinary resolution no. 4To approve that, in terms of article 13.5 of the company’s articles of association, with effect from 1 October 2010, the remuneration of the directors who hold offi ce from time to time (other than those in the employ of the company) be determined as follows:

Proposedannual

retainer2011

Proposedattendance

fee permeeting

2011

Fixed feeper

annum2010

R’000 R’000 R’000

Chairman of the board 280 23 350Member of the board 140 12 175Chairman of the Audit and Risk Management Committee 106 12 133Member of the Audit and Risk Management Committee 56 6 70Chairman of the Human Resources, Remuneration and Nominations Committee 106 12 133Member of the Human Resources, Remuneration and Nominations Committee 56 6 70

Ordinary resolution no. 5To re-appoint PricewaterhouseCoopers Incorporated, on the recommendation of the current Audit and Risk Management Committee, as independent registered auditor of the company (with Mr I S Buys as the individual designated auditor) for the 2011 fi nancial year.

Ordinary resolution no. 6That the authority of the Audit and Risk Management Committee to determine the remuneration of the auditors, be confi rmed.

Special business:To consider and, if deemed fi t, to pass, with or without modifi cation, the following ordinary and special resolutions in the manner required by the Companies Act, 61 of 1973, as amended (“the Act”), and subject to the Listings Requirements of the JSE Limited (“JSE”):

General authority to repurchase sharesSpecial resolution no. 1Resolved, that the company may, as a general approval in terms of section 85(2) of the Act, acquire from time to time, such of its securities at such price or prices and on such other terms and conditions as the directors may from time to time determine, but subject to the following requirements from time to time of the JSE:

• the repurchase of securities shall be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the company and the counter-party;

• the repurchase of securities is authorised by the company’s articles of association;• the authority shall be valid only until the next annual general meeting of the company or for 15 months from the date on which this

special resolution is passed, whichever is the shorter;


• repurchases may not be made at a price more than 10% above the weighted average of the market value for the securities for the fi ve business days immediately preceding the date on which the transaction is effected;

• at any one point in time, the company may only appoint one agent to effect any repurchase(s) on the company’s behalf;• the company may only undertake a repurchase of the securities if, after such repurchase, it still complies with the JSE Listings

Requirements concerning shareholder spread requirements; and• the company or its subsidiaries may not repurchase the company’s shares during a prohibited period, as defi ned in the JSE Listings

Requirements.

The reason and effect of special resolution number 1 is to generally approve, in terms of section 85(2) of the Act, the acquisition by the company of securities issued by it, subject to the JSE Listings Requirements. The directors intend to utilise this authority at such time or times, in respect of such number of securities, at such price and on such terms as they may consider appropriate in the circumstances from time to time, provided that any repurchase of securities should not, in the aggregate, in this fi nancial year, exceed 10% of the company’s issued securities of the class concerned. Accordingly, the method by which the company intends to acquire its securities, the maximum number of securities which will be acquired and the price(s) and date(s) at which the acquisition(s) is/(are) to take place are not presently known. In considering whether or not to act in terms of this general authority, the directors will ensure, for a period of 12 months after the date of the notice of this annual general meeting, that:

• the company and its subsidiaries (the group) will be able, in the ordinary course of business, to pay its debts;• the assets of the company and the group will be in excess of the liabilities of the company and the group. For this purpose, the assets

and liabilities will be recognised and measured in accordance with the accounting policies used in the latest audited group annual fi nancial statements;

• the company and the group will have adequate capital and reserves;• the working capital of the company and the group will be adequate for ordinary business purposes.

When the company has cumulatively repurchased 3% of the initial number of the relevant class of securities and for each 3% in aggregate of the initial number of that class acquired thereafter, the company will publish an announcement giving details thereof in accordance with Rule 11.27 of the JSE Listings Requirements. The company undertakes that it will not enter the market to repurchase the company’s securities in terms of this general authority until such time as the company’s sponsor has provided written confi rmation to the JSE regarding the adequacy of the company’s working capital in accordance with Schedule 25 of the JSE Listings Requirements.

Directors’ responsibility statementThe directors, collectively and individually, accept full responsibility for the accuracy of the information given in the annual fi nancial statements and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make the statement false or misleading.

Material changeThere has been no material change in the fi nancial or trading position of the company and its subsidiaries since the date of publication of the company’s annual results on 15 November 2010.

LitigationThe company and its subsidiaries are not, and have not in the twelve months preceding the date of this notice of annual general meeting been involved in any legal or arbitration proceedings which may have or have had a material effect on the fi nancial position of the company and its subsidiaries, nor is the company aware of any such proceedings that are pending or threatened.

The general information regarding the company, referred to in paragraph 11.26(b) of the JSE Listings Requirements, is contained elsewhere in this annual report, as follows:

Directors of the company and of material subsidiaries, on pages 10 and 11.Major shareholders, on page 89.Material change since year-end, on page 47.Directors’ interests in the company’s shares, on pages 48 to 50.Company’s share capital, on page 73.Directors’ responsibility statement, on page 42.Litigation, on page 47.


Notice of annual general meeting (continued)

Voting and proxiesOn a show of hands a member of the company present in person or by proxy shall have only one vote irrespective of the number of shares he holds or represents, provided that a proxy shall irrespective of the number of members he represents have only one vote. On a poll a member who is present in person or represented by proxy shall be entitled to that proportion of the total votes in the company which the aggregate amount of the nominal value of the shares held by him bears to the aggregate amount of the nominal value of all the shares issued by the company.

A member entitled to attend, speak and vote at the annual general meeting is entitled to appoint a proxy or proxies to attend, speak and vote in place of that member. A proxy need not be a member of the company.

Registered holders of certifi cated Astral shares and holders of dematerialised Astral shares in their own name and who are unable to attend the annual general meeting and who wish to be represented at the annual general meeting, must complete and return the attached form of proxy in accordance with the instructions contained in the form of proxy, so as to be received by the share registrars, Computershare Investor Services (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by no later than 08:00 on Wednesday, 9 February 2011.

Holders of Astral shares (whether certifi cated or dematerialised) through a nominee should timeously make the necessary arrangements with that nominee or, if applicable, Central Securities Depository Participant or broker to enable them to attend and vote at the annual general meeting or to enable their votes in respect of their Astral shares to be cast at the annual general meeting by that nominee or a proxy or a representative.

By order of the board

M A EloffCompany Secretary

Pretoria 11 November 2010


Annual general meeting – explanatory notes:1. Annual fi nancial statements

At the annual general meeting, the directors must present the annual fi nancial statements for the year ended 30 September 2010 to shareholders, together with the reports of the directors and the auditors. There are contained within the integrated annual report.

2. Re-election of directors In terms of article 13.2, all newly appointed directors have to retire at the fi rst annual general meeting after their appointment and may offer themselves for re-election. Mr I S Fourie was appointed as director of the company on 1 July 2010.

In accordance with the company’s articles of association, one-third of the directors are required to retire at each annual general meeting and may offer themselves for re-election. Dr T Eloff, Mr M Macdonald and Mrs T C C Mampane retire from the board in accordance with article 14 of the company’s articles of association.

Brief particulars of the qualifi cations and experience of the above are available on pages 10 and 11 of this annual report.

The board of directors of the company has reviewed the composition of the board against corporate governance and transformation requirements and has recommended the re-election of the directors listed above. It is the view of the board that the re-election of the candidates referred to above would enable the company to:

• responsibly maintain a mixture of business skills and experience relevant to the company and balance the requirements of transformation, continuity and succession planning;

• comply with corporate governance requirements in respect of matters such as the balance of executive, non-executive and independent non-executive directors on the board.

Accordingly, the board recommends to shareholders the re-election of each of the retiring directors referred to in ordinary resolutions numbers 2 and 3.

3. Non-executive directors’ feesIn line with corporate governance requirements, the board recommends the payment of an annual retainer plus an attendance fee per meeting. After due deliberation by the Human Resources and Remuneration Committee, a recommendation to the structure of the fees due to non-executive directors was made to the board and was duly accepted by the board.

Our Human Resources and Remuneration Committee is satisfi ed that these fees are relative to the median fees paid to non-executive directors of other similar sized public-listed companies in South Africa.

4. Re-appointment of independent auditorPricewaterhouseCoopers Incorporated has communicated its willingness to continue in offi ce and ordinary resolution number 5 proposes the re-appointment of that fi rm as the company’s external auditor until the next annual general meeting.

The Audit and Risk Management Committee has satisfi ed itself that PricewaterhouseCoopers Incorporated is independent as contemplated by the South African Independence laws and the applicable rules of the International Federation of Accountants and has, in terms of the JSE Listings Requirements, considered and satisfi ed itself that PricewaterhouseCoopers Incorporated are accredited to appear on the JSE List of Accredited Auditors.

5. Determination of auditors’ remunerationIn terms of the Audit and Risk Management Committee’s Charter the committee is responsible for the approval of the terms of engagement and remuneration for the external audit engagement.

6. General authority to repurchase sharesThe reason for and effect of special resolution number 1 is to approve the acquisition by the company of securities issued by it, subject to the JSE Listings Requirements. The directors intend to only utilise this authority as and when they may consider it appropriate to acquire such shares.

The directors are of the opinion that it would be in the best interests of the company to extend such general authority and thereby allow the company or any of its subsidiaries to be in a position to repurchase the securities issued by the company through the order book of the JSE, should the market conditions, tax dispensation and price justify such an action.


Shareholders’ diary

Annual general meeting Thursday, 10 February 2011

Reports and accountsInterim report for the six months ending 31 March 2011 May 2011

Announcement of annual results for the year ending 30 September 2011 November 2011

Annual report December 2011

DividendsOrdinary dividend No. 20

(470 cents per ordinary share)Last date to trade cum dividend Friday, 14 January 2011Shares commence trading ex dividend Monday, 17 January 2011Record date Friday, 21 January 2011Payment of dividend Monday, 24 January 2011

Interim dividend No. 21 – March 2011Declaration May 2011Payment June 2011

Final dividend No. 22 – September 2011Declaration November 2011Payment January 2012

Astral Annual Report 2010

Form of proxy

Astral Foods Limited(Incorporated in the Republic of South Africa)(Registration number 1978/003194/06)Share code: ARLISIN: ZAE000029757

Form of proxy for the use of shareholders, registered as such and who have not dematerialised their shares or hold

own name dematerialised shares, at the tenth annual general meeting of the company to be held at 92 Koranna Avenue,

Doringkloof, Centurion on Thursday, 10 February 2011 at 08:00.

Shareholders who have dematerialised their shares must inform their Central Securities Depository Participant (“CSDP”) or broker of their intention to attend the annual general meeting and request their CSDP or broker to issue them with the necessary authorisation to attend or provide their CSDP or broker with their voting instructions should they not wish to attend the annual general meeting in

person. Such shareholders must not return this form of proxy to the transfer secretaries.

I/We

of (address)

being the holder(s) of shares in the company, do hereby appoint (see note 1):

1. or failing him,

2. or failing him,

3. the chairman of the annual general meeting,

as my/our proxy to vote for me/us on my/our behalf at the tenth annual general meeting of the company to be held on Thursday, 10 February 2011 at 08:00 and at any adjournment thereof.

Signed this day of

Signature

*In favour *Against *Abstain

Ordinary business

1. To adopt the annual fi nancial statements for the year ended 30 September 2010

2. (a) To re-elect Mr I S Fourie as director

(b) To re-elect Dr T Eloff as director

(c) To re-elect Mr M Macdonald as director

(d) To re-elect Mrs T C C Mampane as director

3. To approve the remuneration of the non-executive directors

4. To re-appoint PricewaterhouseCoopers Incorporated as auditors for the 2011 fi nancial year

5. To confi rm the authority of the Astral Audit and Risk Management Committee to determine the remuneration of the auditors

Special business

6. Special resolution No. 1

To approve the acquisition of shares issued by the company

*Indicate instructions to proxy by way of a cross in the space provided above.

Unless otherwise instructed, my/our proxy may vote as he thinks fi t or abstain from voting.

Please refer to the notes on the reverse side of this form of proxy.


Astral Annual Report 2010

Notes

1. A shareholder may insert the name or the names of two alternative proxies of his choice in the space provided, with or without deleting “the chairman of the annual general meeting”. The person whose name stands fi rst on this form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow. Any such proxy, who need not be a shareholder of the company, is entitled to attend, speak and vote on behalf of the shareholder.

2. A proxy is entitled to one vote on a show of hands and, on a poll, one vote for each share held. A shareholder’s instructions to the proxy must be indicated in the appropriate space.

3. If a shareholder does not indicate on this instrument that the proxy is to vote in favour of or against any resolution or to abstain from voting or gives contradictory instructions, or should any further resolution/(s) or any amendment/(s) which may be properly put before the annual general meeting be proposed, the proxy shall be entitled to vote as he thinks fi t.

4. This form of proxy must be received by the transfer secretaries, Computershare Investor Services (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by no later than 08:00 on Wednesday, 9 February 2011.

5. Documentary evidence establishing the authority of the person signing this form of proxy in a representative capacity must be attached hereto unless previously recorded by the company’s transfer secretaries.

6. The completion and lodging of this form of proxy will not preclude a shareholder from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms of this form of proxy.

7. Any alteration or correction made to this form of proxy must be initialled by the signatory/(ies).

8. The chairman of the annual general meeting may accept or reject any form of proxy, which is completed and/or received, other than in accordance with these notes.

9. Shareholders who have dematerialised their shares must inform their CSDP or broker of their intention to attend the annual general meeting and request their CSDP or broker to issue them with the necessary authorisation to attend the annual general meeting or provide their CSDP or broker with their voting instructions should they not wish to attend the annual general meeting in person but wish to be represented thereat. This must be done by the cut-off time as requested by the CSDP or broker.

Administration

Astral Foods LimitedRegistration No. 1978/003194/06Share code: ARLISIN: ZAE000029757

Registered offi ce92 Koranna AvenueDoringkloofCenturion0157

Company secretaryM A Eloff

Postal addressPostnet Suite 278Private Bag X1028Doringkloof, 0140Telephone +27(0) 12 667 5468Telefax +27(0) 12 667 6665e-mail: [email protected]

Website addresshttp:/www.astralfoods.com

AuditorsPricewaterhouseCoopers Incorporated

Principal bankerNedcor Bank Limited

SponsorJPMorgan Chase Bank, NA(Johannesburg Branch)1 Fricker Road, corner Hurlingham RoadIllovo, Johannesburg, 2196Private Bag X9936, Sandton, 2146Telephone +27(0) 11 507 0430

Transfer secretariesComputershare Investor Services (Pty) Limited70 Marshall StreetJohannesburg, 2001PO Box 61051, Marshalltown, 2107

Major subsidiaries and joint venturesAstral Operations LimitedRegistration No. 1947/027453/06Directors: C E Schutte T Delport D D Ferreira L W Hansen R J Steenkamp Africa Feeds Limited (Zambia)Registration No. 36327Directors: T D Banda* N R Mwanyungwi* D A R Phiri* C L Sexton R J Steenkamp* Zambian

Meadow Feeds Eastern Cape (Pty) LimitedRegistration No. 2003/021458/07Directors: C E Schutte D D Ferreira C L Sexton Ross Poultry Breeders (Pty) LimitedRegistration No. 1999/027125/07Directors: C E Schutte T Delport T A Exley* C P Lea** British

NuTec Southern Africa (Pty) LimitedRegistration No. 1996/002008/07Directors: C E Schutte D D Ferreira Y M Knoop* G J Scholman** Dutch

Meadow Moçambique LimitadaRegistration No. 5710/MP/G/2001Directors: R J Steenkamp H Buys J R Tinga* C A Sexton S Jager* Mozambican

National Chicks SwazilandRegistration No. 94/63894/07Directors: R W Packard* D A Stock* Swazi

Meaders Feeds LimitedRegistration No. 10746Directors: C E Schutte J H M De Marasse Enouf * R J B Montocchio* J B Wiehe* M J Schmitz J How Hong* S Jager (Alt.)* Mauritian

www.astralfoods.com


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