Docstoc

T2ib02540 Astral FRONT.indd

Document Sample
T2ib02540 Astral FRONT.indd Powered By Docstoc
					                 ASTRAL
A leading Southern African integrated poultry producer
                                                                                       ASTRAL
                                                                      A leading Southern African integrated poultry producer


                                                                      Annual report 2010




Table of contents
Salient features                              2   Statement of directors’ responsibility                                 42
Financial highlights                          3   Independent auditors’ report                                           43
Group structure                               4   Directors’ report                                                      44
Synopsis of businesses                        5   Directors’ remuneration report                                         48
Group activities                              6   Segment report – Group                                                 51
Directorate                                   8   Accounting policies                                                    52
Overview                                     12   Statement of financial position                                         64
Chairman’s review                            14   Statement of comprehensive income                                      65
Chief Executive Officer’s review              18   Statement of changes in equity                                         66
Corporate governance                         22   Statement of cash flows                                                 67
Audit and Risk Management Committee report   27   Notes to the statement of cash flows                                    68
Definitions                                   28   Notes to the annual financial statements                                69
Ratios and statistics                        29   Analysis of ordinary shareholders                                      89
Sustainability report                        30   Notice of annual general meeting                                       90
Annual financial statements                   40   Shareholders’ diary                                                    94
Approval of the annual financial statements   41   Administration                                                         ibc
Certificate by company secretary              41   Form of proxy                                                   attached




                                                                                      www.astralfoods.com
Astral Foods Limited is a leading
         integrated
South African
poultry producer




                                    Astral Annual Report 2010 1
Salient features


Profile
Astral 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%




2 Astral Annual Report 2010
Financial highlights


Revenue (Rm)                                                                 Operating profit (Rm)
9 000                                                                        900


7 500                                                                        750


6 000                                                                        600


4 500                                                                        450


3 000                                                                        300


1 500                                                                        150


      0                                                                        0
           2002   2003    2004   2005    2006    2007   2008   2009   2010             2002    2003    2004    2005    2006    2007    2008    2009    2010




Headline earnings per share (cents)                                          Dividends per share (cents)
1 400                                                                        800



1 050                                                                        600



 700                                                                         400



 350                                                                         200



      0                                                                        0
           2002    2003   2004    2005    2006   2007   2008   2009   2010             2002    2003    2004    2005    2006    2007    2008    2009    2010




Cash generated from operating activities (Rm)                                Total assets (Rm)
800                                                                          3 500

700                                                                          3 000

600                                                                          2 500
500
                                                                             2 000
400
                                                                             1 500
300
                                                                             1 000
200

100                                                                           500

  0                                                                                0
          2002    2003    2004   2005    2006    2007   2008   2009   2010              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




                                                                                                                                Astral Annual Report 2010 3
Group structure




                                                     ASTRAL
                                    A leading Southern African integrated poultry producer




                                        100%
                                                                                                                        50%
100%
          National Chicks Limited
                                    Astral Operations Limited                                  NuTec SA (Pty) Limited


                                                       Earlybird
                                                                                                                        100%
 67%                                                                                            Africa Feeds Limited
           National Chicks
                                                                                                      (Zambia)
         Swaziland (Pty) Limited

                                                    County Fair                                                         100%
                                                                                                Progressive Poultry
                                                                                                 Limited (Zambia)

                                                National Chicks                                                         33%
                                                                                               Meaders Feeds Limited
                                                                                                    (Mauritius)

                                           Elite Breeding Farms




                                                Meadow Feeds



                                              Central Analytical
                                                Laboratories

                                                                                                           Feeds Operations

                                                                                                           Poultry Operations
                                                                                       100%
                                       Meadow Feeds (Eastern                                               Investment Holding
                                         Cape) (Pty) Limited
                                                                                                           Baking Operations


                                                                                         90%
                                               Ross Poultry
                                           Breeders (Pty) Limited



                                                                                         80%
                                         Meadow Moçambique
                                              Limitada



                                                                                         50%
                                                    East Balt SA
                                                    Partnership


4 Astral Annual Report 2010
Synopsis of businesses




Earlybird Farm
As 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 Fair
County 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 Chicks
National 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.



Ross
Ross 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.



Meadow
Meadow 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!



NuTec
NuTec’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 Laboratories
Central Analytical Laboratories offers a dedicated and diverse range of analyses to the Animal Feed industry. CAL’s qualified 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.




                                                                                                                Astral Annual Report 2010 5
Group activities


                              Poultry
                              Integrated broiler operations
                              We 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 million
                              Earlybird Olifantsfontein       1 285 million
                              County 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 filled products, ready to eat chicken products and a dedicated
                              range of emulsified products.




                              Day-old broiler and hatching egg supplier
                              The 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 genetics
                              Ross 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.




6 Astral Annual Report 2010
Feed
Feed Division
Eleven 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-mix
NuTec 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 Laboratories
Central Analytical Laboratories analyses animal feed and water samples for the agricultural sector.




Bakery
East Balt South Africa, a 50% joint venture, bakes hamburger buns, English muffins, 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.




                                                                                                          Astral Annual Report 2010 7
Directorate




                                                   6
                                              10
                                      4
                                                       2
                                  5   7       9
                              8           1        3




8 Astral Annual Report 2010
Independent non-executive directors           Executive directors
1. Jurie Johannes Geldenhuys (67)             7. Christiaan Ernst Schutte (50)

2. Thabang Charlotte Christine Mampane (52)   8. Daniel Dirk Ferreira (54)

3. Malcolm Macdonald (68)                     9. Theo Delport (50)

4. Nombasa Tsengwa (45)                       10. Obed Mooki Lukhele (35)
5. Theunis Eloff (55)

6. Izak Stephanus Fourie (63)



                                                                             Astral Annual Report 2010 9
Directorate                      (continued)




Independent non-executive directors                                 3. Malcolm Macdonald (68)
1. Jurie Johannes Geldenhuys (67)                                   Independent non-executive director
Independent non-executive director                                  BCom, CA(SA)
BSc (Eng Elec), BSc (Eng Mining), MBA                               Director of Companies
Director of companies                                               Appointed to the board on 14 November 2003
Appointed to the board on 24 May 2001                               Chairman of the Audit and Risk Management Committee

Chairman of the board, chairman of the Human Resources              Served as financial director of Iscor Limited (now ArcelorMittal
and Remuneration Committee, chairman of the Nominations             South Africa) and its international steel marketing company until
Committee and member of the Audit and Risk Management               retirement in 2004. Previously general manager of the Industrial
Committee until 1 October 2010.                                     Development Corporation and non-executive director of many of
                                                                    its associated companies in a variety of industries (engineering,
Previously served on the boards of Anglovaal Limited, Avmin         agriculture, chemicals, shipping, financial services, minerals
Limited and its various gold mines, and Iscor Limited (now          extraction and processing).
ArcelorMittal South Africa). Served as the Chamber of Mines
president (1993 – 1994) and on its Executive Council,               Currently serves on the boards and as chairman of the audit
Gold Producers’ Committee and various chamber-related               committees of the listed GijimaAST Group, ArcelorMittal South
board committees.                                                   Africa and unlisted Coris Capital.

Previously served on the Council of the Atomic Energy
Corporation and on the National Water Advisory Council. Retired
                                                                    4. Nombasa Tsengwa (45)
as managing director of Avgold Limited during 2001. Currently
                                                                    Independent non-executive director
a director of the listed Exxaro Resources Limited (chairman of
                                                                    BSc, MSc, PhD (Biotechnology). Executive General
the safety and sustainable development committee and member
                                                                    Manager: Safety and Sustainable Development,
of the transformation, remuneration, human resources and
                                                                    Exxaro Resources Limited
nomination committee).
                                                                    Appointed to the board on 8 May 2007
                                                                    Member of the Nominations Committee and the
                                                                    Human Resources and Remuneration Committee.
2. Thabang Charlotte Christine Mampane (52)
Independent non-executive director                                  Started career as Research Assistant, University of Transkei.
BA (Hons) (Public Administration), Masters in                       Previous positions include Lecturer: Department of Genetics,
Management                                                          University of Pretoria and Senior Co-ordinator: Agriculture and
Group Executive in the Group’s CEO’s office and Regions:             Agro-processing Sector within the National Research and
South African Broadcasting Corporation                              Technology Foresight Project. Appointed as Corporate
Appointed to the board on 14 November 2003                          Manager: Biotechnology and Innovation Futures at the
Member of the Human Resources and Remuneration                      Council of Scientific and Industrial Research in 1999 before
Committee and member of the Nominations Committee.                  being appointed as Deputy-Director General: Environmental
                                                                    Management at the National Department of Environmental
Started career at the SABC in 1983 as a junior announcer on         Affairs and Tourism in 2000.
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
                                                                    5. Theunis Eloff (55)
Manager of the Audio Visual Section in 1995 but returned to the
                                                                    Independent non-executive director
SABC in 1996 as General Manager of the portfolio of eight radio
                                                                    BJur (Econ), ThB, ThM, ThD. Vice-Chancellor of
stations, thereafter appointed as Chief Executive, Radio division
                                                                    North-West University
for three years. Head of Regions from 2002 to 2005 before
                                                                    Appointed to the board on 8 May 2007
being appointed to her current position as Group Executive in
                                                                    Member of the Audit and Risk Management Committee
the Group’s CEO’s office and Regions. Non-executive director of
                                                                    from 1 October 2010
National Film and Video Foundation.
                                                                    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 Classification”.
                                                                    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 Conflict 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.




10 Astral Annual Report 2010
6. Izak Stephanus Fourie (63)                                       9. Theo Delport (50)
Independent non-executive director                                  Dip. Sales Management
BCom, CA(SA)                                                        Managing Director: Poultry Division
Director of Companies                                               Appointed to the board on 23 March 2009
Appointed to the board on 1 July 2010
                                                                    Started his career in 1984 as sales representative with Todays
Member of the Audit and Risk Management Committee
                                                                    Frozen Foods and joined Spekenham in 1988 as sales manager
and Human Resources and Remuneration Committee
                                                                    marketing. He joined County Fair in 1992 as national sales
from 1 October 2010
                                                                    manager (retail) and was appointed managing director in 2001.
Retired as COO of PricewaterhouseCoopers in 2005. Served
                                                                    He resigned from County Fair in 2007 to become a partner
on the PricewaterhouseCoopers Global Board and before that
                                                                    in a private business venture but returned to Astral Foods
on the Coopers & Lybrand International Board. Also served
                                                                    in May 2008 as sales and marketing executive of the Poultry
on the Coopers & Lybrand International Audit and Accounting
                                                                    Division.
Standards Committee.
                                                                    He was appointed as managing director of the Poultry Division
Previously served as the chairman of Business Skills for South
                                                                    in March 2009.
Africa, a PricewaterhouseCoopers initiative with the National
African Federated Chamber of Commerce and Industry to train
emerging business people.
                                                                    10. Obed Mooki Lukhele (35)
                                                                    BVMCh, BSc (Hons) Entomology
                                                                    Group Veterinary Director
Executive directors
                                                                    Appointed to the board on 1 May 2009
7. Christiaan Ernst Schutte (50)
Chief executive officer                                              Started career at Virbac Animal Health in 2000 as a Poultry
Management Business Administration and Finance Dip.                 Technical Manager until mid-2002. Thereafter he held an Export
Chief Executive Officer with effect from 1 May 2009                  Managerial position at Pfizer Animal Health for four years
Appointed to the board on 18 August 2005                            responsible for various sub-Saharan African countries.
Joined Golden Lay Farms, a division of Tiger Brands, the leading    Joined Astral Operations Limited in May 2007 as the group
egg producing organisation in Southern Africa, in October 1984      technical manager for veterinary services. He co-authored three
as assistant farm manager. Spent 18 years with the group in         scientific papers in the field of entomology, veterinary anatomy
various positions including as sales director from 1996 to 2002.    and bovine infectious diseases.
Joined Astral Foods in May 2002 as manager of retail sales for
Meadow Feeds before being appointed as sales and marketing          He was appointed as Group Veterinary Director on 1 May 2009.
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 Officer on 1 May 2009.


8. Daniel Dirk Ferreira (54)
BCom, B Compt (Hons), CA(SA)
Financial Director
Appointed 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 financial
management, tax management, project management and as
group financial manager. He joined Genfood as group financial
manager for two years before joining Astral Foods in February
2001 as group financial manager.
He was appointed as Financial Director on 1 May 2009.




                                                                                                         Astral Annual Report 2010 11
Overview


Astral Foods is an integrated
poultry operator and we focus
     low cost producer
to be a
of poultry meat




12 Astral Annual Report 2010
Corporate office services




Gary Arnold                                                Maryna Eloff
Director Business Development                              Group Company Secretary
– Astral Operations




                                Len Hansen
                                Human Resources Director
                                – Astral Operations




Evert Potgieter                                            Anil Rambally
Audit and Risk Executive                                   Executive Manager: Sustainability and
                                                           Preferential Purchasing – Astral Operations


                                                                           Astral Annual Report 2010 13
Chairman’s review




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


Jurie Geldenhuys
Chairman
                               2010 retrospective
                               In 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 Officer, 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 review
                               During 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.


14 Astral Annual Report 2010
2011 2010 2010
                 Milestones
                 • An 8% profitability 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


                 Achievements
                 • Total dividend for the year up 9%
                 • On-farm efficiencies give rise to an 11,5% sales volume increase
                 • Poultry health status improvement in broiler operations encouraged
                   optimisation of genetic integrated production


                 Focus
                 • Future uncertain economic environment requires continuing focus on our
                   current efficiencies drive
                 • Coherent focus on medium-term operational actions and longer-term
                   strategic investment planning




Sustainability                                                        towards the end of the year when Mr Stefan Fourie, a Chartered
Sustainability for Astral in its broadest sense, entails on the one   Accountant, agreed to join our board and serve on the Audit and
hand, the management of all external inputs and influences, and        Risk Management Committee. Mr Fourie is a past COO of PWC
on the other hand, the impact of the company on its various           Southern Africa and eminently satisfied the three main criteria set
stakeholders. This entails, firstly, a wise balance by the board       by the Nominations Committee, namely competence, personality
and the executive regarding risk aversion and risk appetite and       and availability. I still attend Audit and Risk Management
the related rewards and/or punishment! Secondly, this requires        Committee meetings by invitation.
sound management of all stakeholder-related processes and
                                                                      In our opinion all critical King III requirements are met in the
impacts. The latter relates, amongst others, in particular to
                                                                      corporate governance framework of the company. Certain
the well-being of our employees and the communities and the
physical environment in which we operate.                             environmental issues are still being addressed.

Sustainability is an integral component of our management             We continue to co-operate fully with the Competition
philosophy as detailed in this annual report. The report reflects      Commission in its investigations and do not anticipate any
some of the outcomes of this approach.                                unfavourable developments.

The most relevant outstanding, safety, health, environmental and      2011 prospects
other responsibility issues have been formally addressed in the       Our South African economy cannot escape the global impact
past two years. We have recently engaged outside assistance           of the rather unhappy and uncertain economies of the USA
to conduct a carbon footprint assessment of the business units        and Europe. It is true that, as a substantial resource producer,
and subsidiaries, to establish our carbon emissions baseline, to      our economic destiny is substantially and favourably influenced
identify opportunities to reduce emissions and generally assist in    by the good fortunes of the Indian and Chinese economies.
formalising our emission management.                                  However, the latter countries’ GDP together, constitute about
                                                                      half of that of the USA, and are indeed interdependent on the
Corporate governance
                                                                      USA and European economies. We would therefore have to live
We remain fully committed to the principles of transparency,
                                                                      with at least another year of serious global uncertainty.
integrity and accountability. The primary responsibility for good
corporate governance rests with the full board and its chairman.      In South Africa foreign and local fixed direct investment will be
It is gratifying to report that this approach pervades the board’s    negatively affected by sentiments relating to political uncertainty
deliberations and decision-making processes.                          on unresolved issues such as nationalisation in the mining
                                                                      industry, media freedom, land redistribution and the mooted
Compliance with King III requirements places considerable
                                                                      centralisation of power. This will ultimately impact on consumer
demands on companies with small boards, especially in respect
                                                                      confidence and spending power.
of independent non-executive responsibilities. During most of
the financial year for instance, because of the composition and        Continuing job losses (275 000 during the most recent three
skills mix of the board, I also served as a member of the Audit       quarters) with unemployment formally estimated in excess of
and Risk Management Committee. This matter was rectified               25% will take its toll again in the form of reduced consumer


                                                                                                              Astral Annual Report 2010 15
Chairman’s review                                       (continued)




confidence and spending power. However, decreased interest
rates, some generous wage increases during this year and
                                                                      Astral is in a position to face
lower inflation may be offsetting factors. Regrettably the stronger
Rand, and the related higher imports of poultry products is likely
                                                                      another tough and uncertain
to further aggravate an already tough oversupply situation and
thus keep margins under pressure.                                     year with considerable
More specifically regarding market trends in the feeds industry,       confidence inspired by its success
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     during the past as a focused low
to a ban on exports of wheat from the Black Sea region, which
resulted in an 80% rise in international wheat prices between         cost broiler producer
June and August of 2010. This was further exacerbated by a
             ~
strong El Ni no phenomenon which led to adverse conditions in


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

200


175


150


125


100


 75


 50
      2007                                     2008                          2009                                    2010
             U.S. maize price   SA yellow maize price




the USA and a sharp drop in the estimated yield of the current        Raw materials are Astral’s major input cost and it should be
US maize crop. Consequently the international maize price             remembered that yellow maize, soybeans and soybean meal
also rose sharply by 80% from early July to October 2010.             are Dollar-based commodities. It is clear from the graph above
The result is that world food price inflation is again lagging world   that the local price of yellow maize has substantially lagged the
commodity prices. The question is for how long commodity              international price of maize since October 2007 partially as a
prices will outpace food inflation and the answer lies in world        result of a strong Rand and also because of the bumper local
economic growth prospects. World economic growth has                  maize crop last year which forced local prices down to export
recovered from the deep recession in the USA and Europe in            parity levels. It is however conceivable that this relative weakness
2009. Despite the risks posed by unemployment and high debt           in the local maize price is unsustainable.
levels, the world economy should grow at around over 4% in
                                                                      In short, this could be indicating the turning point in the very
2011, driven mainly by China and India. In all likelihood food
                                                                      favourable feed input cost environment from which we have
inflation will catch up with commodity prices which should lead
                                                                      benefited during the last year.
to higher food prices in the year ahead.




16 Astral Annual Report 2010
Poultry imports – volume (tons)
40 000

35 000

30 000

25 000

20 000

15 000

10 000

 5 000
         2003             2004              2005               2006         2007               2008              2009              2010




Turning to the poultry side of our business, similar conditions to    In summary, Astral is in a position to face another tough and
last year are likely to prevail. Local broiler production for 2010    uncertain year with considerable confidence inspired by its
grew by an estimated 4% compared to 2009. Total imports grew          success during the past as a focused low cost broiler producer.
by an equivalent 13% over the same period.
                                                                      Appreciation
Despite strong market growth an increase in per capita                On behalf of the board I wish to convey a heartfelt vote of
consumption was driven largely by lower selling prices.               gratitude to Chris Schutte and his colleagues for a magnificent
A downturn in market conditions linked to higher industry stock       team effort in an extremely difficult year. We have every reason to
levels for most of the year resulted in an extremely competitive      believe in their competence in dealing with what is likely to be an
sales environment. Gains achieved through production and              equally challenging year ahead.
cost efficiencies were largely passed on to consumers who
reacted positively to reduced selling prices compared to the          I am greatly indebted to my board colleagues, executive and
previous year.                                                        non-executive alike, for their dedicated enthusiastic and
                                                                      ever-professional contributions to the good governance of Astral.
2011 will in all likelihood see more of the same making it truly a
year of survival of the fittest.

Astral is however soundly placed regarding farm and abattoir
efficiencies, best management practices generally and a well-
motivated management team. Its route to the market is via             JURIE GELDENHUYS
a powerful base of independent and formal wholesale and               Chairman
retail consumers, who are serviced directly and via a long-
standing distribution agent.                                          11 November 2010




                                                                                                 Premier Helen Zille
                                                                                                 officiated at the
                                                                                                 grand opening of
                                                                                                 the state-of-the-art
                                                                                                 East Balt Western
                                                                                                 Cape bakery




                                                                                                            Astral Annual Report 2010 17
Chief Executive Officer’s review




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


Chris Schutte
Chief Executive Officer
                               Introduction
                               I present the year under review in this, Astral’s tenth integrated annual report, which reflects 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 financial 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 efficiencies,
                               has clearly differentiated us as a low cost producer.

                               Our results for the period under review are evidence of excellent poultry production efficiencies, 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, financial and industrial
                                 products and services; and
                               • Seaboard Corporation, a unique company with its roots in grain and agriculturally derived
                                 products.


18 Astral Annual Report 2010
2011 2010 2010
                 Milestones
                 • Group operating profit increased to R585 million, an improvement to 7% in
                   operating margin
                 • A significant 32% improvement in cash generated from operating activities



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



                 Focus
                 • Focus on sustainable wise risk aversion, risk appetite and working capital
                   management and related rewards of our results
                 • Focus on on-farm production efficiencies and best practices across all
                   integrated operations




We are in continuous contact with all these role players and             The Poultry division’s operating profit was down 7% to
obtain advice and guidance in a variety of areas which are               R262 million (2009: R282 million) as the business was not
beneficial to our group, such as poultry genetics, animal nutrition       able to fully capitalise on lower feed input costs, due to poultry
as well as the production and marketing of feed.                         realisations in the second half of the period reducing more
                                                                         than the benefits derived from the lower input cost. Production
Local alliances include CJA Strategic Risk Brokers, who
                                                                         efficiencies and improvements did however play a major role
provide our group with modelling and scenario planning on the
procurement of key raw materials for use in feed production.             towards the satisfactory performance of the division as a whole.

                                                                         The Feed division improved its profitability by 8% to
Financial results
                                                                         R281 million (2009: R261 million) on the back of both volume
Results for the year showed an 8% improvement in headline
                                                                         and margin increases. The African feed operations were however
earnings.
                                                                         negatively impacted by currency depreciations in both Zambia
After reporting satisfactory results for the first half of the financial   and Mozambique.
period, the growth on the comparative prior period did not
                                                                         The board has decided on an exit strategy from our minority
continue to the same extent, mainly as a result of continued
                                                                         (33%) investment in Meaders Feeds Limited, a feed producer in
depressed poultry selling prices and the reduced contribution
                                                                         Mauritius. The assets and liabilities previously consolidated are
from lower feed input costs, when compared to the first half of
                                                                         now disclosed as held for sale. The value of these assets were
the 2010 financial year.
                                                                         impaired by R7,2 million in order to reflect the market value of a
Revenue for the group decreased by 5,3% to R8,4 billion                  non-controlling interest in the equity of the company.
(2009: R8,8 billion) on the back of lower poultry selling prices
coupled with lower feed prices. However, operating profit                 Expansion capital expenditure for the year totalled
increased by 1,0% to R585 million (2009: R581 million) and the           R149 million (2009: R77 million) with the major single
operating margin of 7,0% showed an improvement from the                  expenditure items being:
prior period (2009: 6,6%).                                               • further expenditure on the greenfield poultry operation in
Despite challenging trading conditions, tainted by an oversupply           Zambia R11 million; and
of chicken products and the lower selling prices necessary to            • completion of the East Balt bakery in Cape Town R92 million.
maintain manageable stock levels, our focus on working capital           Replacement capital expenditure of R77 million was in line with
management resulted in a marked improvement in both cash
                                                                         the previous year’s level.
flow and net debt.
                                                                         Net asset turn of 4,3 times is lower than the prior year
Cash generated from operating activities could be regarded as a
                                                                         (2009: 4,8 times). The return on net assets of 30,1% remains at
significant achievement, with a 32% improvement to
                                                                         a similar level to the prior year.
R769 million (2009: R584 million), with net borrowings reducing
by R58 million to R129 million. The debt to equity ratio reduced         Return on equity of 25,8% was marginally down on the prior
to a more than satisfactory level of 9% (2009: 14%).                     year (2009: 26,0%).


                                                                                                               Astral Annual Report 2010 19
Chief Executive Officer’s review                                                       (continued)




Review of operations                                                   The incorporation of the new Ross
Our segmental reporting structure now comprises three distinct
divisions, namely Poultry, Feed, and Services and Joint Ventures.      308 International genetic line has
Although it was a tough trading period, all divisions achieved         been implemented with positive
satisfactory results.

Important factors having an impact on the group’s activities
                                                                       indicators regards hatchability
during the reporting period can be summarised as follows:              and feed conversion rates
• the strong performance of the currency versus the US Dollar,
                                                                       six months with additional costs of R27 million being incurred
  supporting higher levels of poultry imports;
• an overall poultry health status improvement throughout              in order to protect our people and assets and to maintain
  South Africa;                                                        uninterrupted production with a temporary labour force.
• oversupply of chicken due to prior expansion activities and          Management and non-striking staff went beyond the call of
  better production results;                                           duty to maintain production and avoid a catastrophe and are
• in order to balance stock levels, poultry price discounting in       complimented for their efforts.
  a depressed consumer market that was impacted by higher
                                                                       Day-old Chicks and Hatching Eggs
  unemployment levels and continued job shedding;
                                                                       National Chicks, the group’s commercial hatching egg and
• violent and extended industrial action that lasted six months
                                                                       day-old chick producer, focuses on external broiler production
  at our largest processing operation in Standerton; and
                                                                       markets and supplies these products to a wide spectrum of
• significant increases in electricity charges.
                                                                       poultry operations in Southern Africa. National Chicks also
However, despite this tough trading environment, all divisions         produces and supplies products to our own broiler operations
achieved satisfactory results.                                         in order to better utilise and enhance capacity utilisation across
                                                                       the group.
Poultry
The Poultry division comprises separate activities and                 National Chicks delivered satisfactory results, despite a decline
operations, namely:                                                    in sales volumes to external markets on the back of depressed
                                                                       market conditions. The improvement in production efficiencies
1. Broiler operations.
                                                                       within the group also resulted in lower intra-group demand for
2. Day-old chicks and hatching eggs.
                                                                       hatching eggs.
3. Breeder and broiler genetics.

Broiler Operations                                                     Breeder and Broiler Genetics
The integrated broiler operations are represented by three             Our poultry genetic operation, Ross Poultry Breeders (Pty)
similarly sized production and processing facilities, with Earlybird   Limited, operates in association with Aviagen Limited,
located in Gauteng and Mpumalanga and County Fair in the               a global leader in genetic development and improvement of key
Western Cape.                                                          production characteristics of commercially farmed chickens.

The overall average health status of the poultry industry was          With the introduction of the ‘new’ Ross 308 genetics that
encouraging and created a platform for the optimisation of the         commenced in May 2008, Ross Poultry has relinquished its
genetic potential of chicken production across all integrated          status as a great grandparent operator in South Africa, in line
activities.                                                            with Aviagen’s global strategy to retain primary genetic lines
                                                                       in-house.
As a primary focus area, on-farm production efficiencies and
best practices were identified by management for the period             It is estimated that the change-over and incorporation of the new
under review and significant progress and improved results              genetics, together with the phasing out of great grandparent
were achieved across all three operations with sales volumes up        stock, will be completed by April 2011.
11,5%, comprising 8,1% efficiency improvement, 2,6% stock
movement and 0,8% placements and yield.                                Feed
                                                                       The division comprises seven local feed mills in South Africa
The incorporation of the new Ross 308 International genetic
                                                                       and operations in Mozambique and Zambia. The greenfield
line was approximately 70% accomplished at close of the
                                                                       broiler, breeder and hatchery operations in Zambia are also
reporting period, with positive indicators regarding hatchability
and feed conversion rates. The integration process will be fully       incorporated into this division.
implemented towards the end of April 2011.                             Meadow Feeds, the primary brand in the Feed division,
The additional weight gains through efficiencies resulted in a          produces and supplies approximately 50% of its total volumes
major contribution towards countering lower market realisations.       to our downstream poultry operations. Volumes for the reporting
Focus and disciplines to further improve efficiency optimisation        period increased by 1% to approximately 1,3 million tons.
and embed our low cost culture continues. On the negative              External sales volumes to the dairy, swine and poultry industry
side, we experienced a lengthy and violent illegal industrial          were slightly down on the previous year, with internal
strike action at the Earlybird Standerton operation, at a level        volumes up by 3% on the back of higher placements due to
never previously experienced in the poultry industry. It lasted        improved production performance.


20 Astral Annual Report 2010
Despite difficult market conditions, the Feed division performed          East Balt SA, a 50% joint venture with East Balt Inc, an
well, with operating profit up by 8% to R281 million                      international USA-based industrial bakery group focusing on
(2009: R260 million). The division increased its operating margin        products for Quick Service Restaurants, reported good results.
to 6,8% (2009: 5,8%) as a result of tight cost controls and              A new state-of-the-art bakery was commissioned in the Western
slightly higher volumes.                                                 Cape to alleviate capacity constraints and caters for volume
During the review period, a small speciality mill in Richmond            growth in this market segment.
KZN was decommissioned and incorporated into the mill in                 In respect of Meaders Feeds Limited, we are in the final stage
Pietermaritzburg.
                                                                         of concluding an exit strategy as a shareholder in this Mauritian
The two African mills in Mozambique and Zambia experienced               feed operation.
tough trading conditions, with high raw material input costs
adversely affected by the weakening of the respective local              Conclusion
currencies. The Zambian operation did however show signs of              Operational efficiencies and meticulous focus on best practices
the improved trading conditions towards the end of the                   across all integrated operations were key to our satisfactory
review period.                                                           results for the review period. The integration of ‘new’ genetic
                                                                         material shows evidence that will lead to improved production
The second phase of the capital project at Tiger Chicks
                                                                         results and support the strategic focus of being a low cost
in Zambia was completed and the projected results of the
                                                                         integrated poultry producer.
Lohmann meat breed is satisfactory and currently, all day-old
chicks produced are being sold into the Zambian market.                  The global outlook for the supply of key raw materials utilised in
Further expansion will be in line with market requirements and           the production of animal feed for commercially farmed animals
regional growth considerations.                                          seems to be well-balanced but could however result in minor
The South African feed market is regarded as a mature                    increases in input costs.
environment, with growth prospects limited to poultry expansion.         The imbalance in supply and demand for poultry products had a
The Feed division is well-positioned to take advantage of future
                                                                         significant impact on pricing levels throughout the period under
poultry expansion in Southern Africa. Planning towards the
                                                                         review. It is not envisaged that poultry production or markets will
commissioning of a state-of-the-art feed mill in the Standerton
                                                                         change dramatically in the near future.
area will commence during 2011, as the contractual obligation
to source feed from a competitor will terminate early in 2014.           Astral and all of its integrated operations are currently well-
Production of consistently high quality feed, backed by                  positioned to address and manage challenges that can severely
substantive quality controls and monitoring systems, remains             influence the sustainability of our results and businesses.
a core focus area of the division, reinforcing its strong market         The staff turnover during this financial year remained very stable,
position. Meadow, regarded as the market leader in animal                with no loss of senior executives.
nutrition, is certified with regard to ISO 22000/05, ISO 9001/08,
Good Manufacturing Practice and Hazard Analysis and Critical             Appreciation
Control Points at all of its major feed mills. This, together with       In closing, I extend my gratitude to all our loyal customers for
the internationally accredited 20 Keys quality management                their continued support during the past year. We will continue to
discipline, provides us with a complete traceability process, in         provide you with products of the highest quality.
line with the European Union Feed Safety Standards.
                                                                         To our suppliers and service providers, a big thank you for your
The division’s relationship with Provimi Holding BV, a global
                                                                         contribution to our continued success.
player in animal nutrition, provides us with the ability to interact
and benchmark against the world’s largest poultry players.               Thank you to my colleagues in management and all the staff,
                                                                         for your loyalty and for working diligently in steering our group
Services and Joint Ventures                                              towards realising our goals.
This division, the third in our reporting structure, was established
to better report on operations that do not fit with either the            I also wish to express my appreciation to the members of the
poultry or feed operations.                                              Astral Foods board for your unfailing commitment and support
                                                                         during the year. A special word of thanks to our chairman,
The operating profit for this division was R42 million, up 9%
                                                                         Jurie Geldenhuys, whose experience and strategic direction
on 2009 mainly as a result of improved performance by
                                                                         once again proved invaluable to the success of our company
East Balt SA.
                                                                         in the past year.
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   C E SCHUTTE
customised feed premixes. NuTec supplies products to our feed            Chief Executive Officer
mills and to various external markets across all commercially
produced specie groups.                                                  11 November 2010


                                                                                                                Astral Annual Report 2010 21
Corporate governance


Our approach to corporate governance is a keystone of                has served on the board for a period longer than nine years
our primary objective which is to create value for all our           and neither are they disqualified in terms of the criteria for
stakeholders. We also accept the rights of our shareholders          independence as laid down by the JSE Listings Requirements
as the true owners of the company and understand our own             or by King III.
role as trustees on behalf of the shareholders. Corporate
                                                                     Recognising the need to expand the financial expertise of
governance provides guidance and oversight as we seek to find
                                                                     the board, Mr Stefan Fourie was appointed to the board as
a balance between conformance with governance principles and
                                                                     well as to the Audit and Risk Management Committee on
superior levels of performance in terms of a sustainable return
                                                                     1 July 2010. Mr Fourie was previously the chief operating
on shareholders’ investments. We are cognisant of the Public
                                                                     officer of PricewaterhouseCoopers Southern Africa until his
Investment Corporation’s corporate governance and proxy
                                                                     retirement in 2005. On 1 October 2010, Dr T Eloff replaced
voting policy and have implemented measures to comply with its
                                                                     Mr J J Geldenhuys as a member of the Audit and Risk
requirements as far as possible.
                                                                     Management Committee.
We believe that the group’s governance practices are sound
                                                                     The chairman presides over meetings of the board, guiding
and that we conform to the principles embodied within the King
                                                                     the integrity and effectiveness of the board’s governance
III Report (“King III”) on Corporate Governance and the Listings
                                                                     process. This includes ensuring that no individual dominates
Requirements of the JSE Limited (“JSE”). We remain committed
                                                                     the discussion, that relevant discussion takes place, that the
to ensure that these principles continue to be an integral part of
                                                                     opinions of all directors relevant to the subject under discussion
the way in which our business is conducted.
                                                                     are solicited and freely expressed, and that board discussions
The constitution and the operation of the                            lead to appropriate decisions.
board of directors                                                   On a quarterly basis, we actively solicit from directors details
The board                                                            regarding their external shareholdings and directorships, which
The board operates in terms of a formally approved charter           potentially could create conflicts of interest while they serve as
which sets out its role and responsibilities, the main elements of   directors on our board. The declarations received are closely
which are:                                                           scrutinised and are tabled at the beginning of each quarterly
• the chairman of the board must be an independent, non-             board meeting. When applicable, directors are requested to
  executive director;                                                table their interests in material contracts and shareholdings in
• a formal orientation programme for new directors must be           outside companies and if necessary are requested to recuse
  followed;                                                          themselves from discussions in meetings when these conflicts
• specific policies, in line with King III, must exist with regard    may exist.
  to conflicts of interest and the maintenance of a register of       Operational management is the responsibility of the Chief
  directors’ interests;                                              Executive Officer, Mr Chris Schutte. His responsibilities include,
• the board must conduct an annual self-evaluation;                  amongst others: developing and recommending to the board
• directors must have access to staff, records and the advice
                                                                     a long-term strategy and vision that will generate satisfactory
  and services of the company secretary;
                                                                     stakeholder value, developing and recommending to the board
• succession planning for executive management must be in
                                                                     annual business plans and budgets that support the long-term
  place and must be updated regularly;
                                                                     strategy, and managing the affairs of the group in accordance
• strategic plans and an approvals framework must be in place
                                                                     with its values and objectives, as well as the general policies
  and must be reviewed regularly;
                                                                     and specific decisions of the board. The CEO is not a member
• policies to ensure the integrity of internal controls and risk
                                                                     of the Human Resources and Remuneration, Audit and Risk
  management must be in place;
                                                                     Management and Nominations Committees, but attends same
• social transformation, ethics, safety, health, human capital,
                                                                     by invitation.
  and environmental management policies and practices must
  be monitored and reported on regularly.                            A complete list of board members appears on pages 8 to 11
                                                                     of this report. In terms of our articles of association all new
We have a unitary board structure, presently comprising
                                                                     directors appointed during the year, as well as one-third of the
ten directors, including six independent non-executive directors.
                                                                     existing directors, have to retire on a rotational basis each year,
The roles of chairman and chief executive are separate and
                                                                     but they offer themselves for re-election.
distinct. The composition of the board ensures a balance of
power and authority, and negates individual dominance in             The board accepts responsibility for the induction of new
decision-making processes. It also reduces the possibility of        or inexperienced directors. As part of the company’s induction
conflicts of interest and promotes objectivity.                       programme, a new director is briefed by the company secretary
                                                                     and provided with a comprehensive company information pack.
We believe that the non-executive directors are of suitable
                                                                     Site visits are also arranged to enable new directors to familiarise
calibre and number for their views to carry significant weight in
                                                                     themselves with all aspects of our business.
the board’s decisions. An independent non-executive chairman
leads the board. A schedule of beneficial interests of directors      The directors are experienced business people and are required
appears on pages 48 to 50 of this report.                            to exercise leadership, enterprise, integrity and judgement based
                                                                     on the principles of good governance. The board is committed
In August 2010, an evaluation of each of the non-executive
                                                                     to guiding and monitoring these high standards.
director’s independence was conducted. With the exception of
the chairman who has served on the board for nine years and          The board is aware that it is accountable for the actions
who has been adjudged by the board to still be independent,          of management and has retained full and effective control
none of the present independent non-executive directors              of the organisation over the past year. The board defines


22 Astral Annual Report 2010
levels of materiality, reserving specific powers to itself, and        Human Resources and Remuneration Committee
delegates other matters with the necessary written authority to       The committee met three times in 2010. Attendance at meetings
management. These matters are monitored and evaluated on a            was as follows:
regular basis.                                                                                        2009           2010
                                                                      Director                              9.10        11.11         12.5
The board, in terms of its charter, is required to meet at
least quarterly so as to monitor important issues and meet            J Geldenhuys                                                     
its objectives. Matters reviewed include: strategy, planning,         T C C Mampane                                                    
operational performance, broad-based black economic                   N Tsengwa                                 A                       
empowerment compliance, acquisitions, disposals, shareholder
                                                                       Present
communications and other material aspects pertaining to the           A Submitted apologies and was granted a leave of absence in terms of
achievement of the group’s objectives.                                  the company’s articles of association
The board periodically reviews the mix of skills and experience       Nominations Committee
available within the board. Procedures for appointment to             The committee met twice during 2010. Attendance at meetings
the board are formal and transparent and are vested in the board.     was as follows:
                                                                                                                    2010
The board conducts assessments annually based on
                                                                      Director                                           10.3         13.5
several factors including: expertise, objectivity, judgement,
understanding the group’s business, willingness to devote             J J Geldenhuys                                                    
the time needed to prepare for and participate in committee           T C C Mampane                                                     
deliberations and timely responses.                                   N Tsengwa                                                         A
                                                                       Present
All directors have access to the advice of the company
                                                                      A Submitted apologies and granted leave of absence
secretary and are entitled and authorised to seek independent
and professional advice about affairs of the company at the           Non-executive directors received the following fees during 2010:
company’s expense.                                                                                                               Fixed fee
                                                                                                                                per annum
Attendance at meetings
                                                                                                                                     2010
A minimum of four board meetings and one strategic planning                                                                         R’000
session are scheduled per financial year. Additional board
                                                                      Chairman of the board                                            350
meetings may be convened when necessary. Four board
meetings and one strategic planning session were held during          Member of the board                                              175
the past year. The accompanying table details the attendance          Chairman of the Audit and Risk Management
by each director at board meetings held during the year               Committee                                                        133
under review:                                                         Member of the Audit and Risk Management
                                                                      Committee                                                         70
Board:
                      2009                     2010                   Chairman of the Human Resources and
                                                                      Remuneration Committee                                           133
                                     17.3 and
                                                                      Member of the Human Resources and
Director             12.11      11.2     18.3#         13.5    18.8
                                                                      Remuneration Committee                                            70
T Delport                                                    
                                                                      The remuneration is paid quarterly in arrears, except for
T Eloff                                                      
                                                                      Mr Geldenhuys, who receives his fees on a monthly basis.
D D Ferreira                                                 
S Fourie                  *        *           *           *         Board committees
J J Geldenhuys                                                   To enable the board to properly discharge its responsibilities and
O Lukhele                                                        duties, certain responsibilities of the board have been delegated
M Macdonald                                                      to board committees. The board is satisfied that all committees
T C C Mampane                     A                               have met their respective responsibilities for the period under
C E Schutte                                                      review. All board committees are chaired by an independent
N Tsengwa                                               A         non-executive director. Particulars of the composition of the
# Strategic planning session  Present                                board of directors and committees appear on pages 8 to 11
A Submitted apologies and was granted leave of absence                of this report. Board committee charters are reviewed on
* Appointed to the board on 1 July 2010                               an ongoing basis to ensure that the committees’ duties and
                                                                      responsibilities are aligned with the requirements of corporate
Board committees                                                      governance and keep abreast of developments in this field.
Audit and Risk Management Committee
                                                                      In view of the fact that the Audit and Risk Management
The committee met three times in 2010. Attendance at meetings
                                                                      Committee will become a statutory committee once the
was as follows:
                                                                      new Companies Act becomes law, and in terms of the
                                   2009                2010           recommendations set out in King III, shareholders will now
                                                                      be required to elect the members of this committee at the
Director                            9.10           11.11       12.5   company’s next annual general meeting.
M Macdonald                                                        The board committees are as follows:
J Geldenhuys                                                   
                                                                      The Audit and Risk Management Committee
I S Fourie                                 *          *          *
                                                                      The Audit and Risk Management Committee consists of three
 Present    * Appointed on 1 July 2010                               members, all of whom are independent non-executive directors,


                                                                                                                Astral Annual Report 2010 23
Corporate governance                                               (continued)




and meets at least twice a year with management, internal and            PricewaterhouseCoopers Incorporated and Mr I Buys, the audit
external auditors as well as the group’s risk managers.                  partner, as the independent registered auditor of Astral.
Mr S Fourie was appointed as member of the committee on
                                                                         The committee also considered and satisfied itself that
1 July 2010. In line with the requirements of King III,
                                                                         PricewaterhouseCoopers Incorporated, including their advisors,
Mr Geldenhuys resigned as a member of the committee on
                                                                         are accredited in terms of the JSE List of Accredited Auditors
1 October 2010 and Dr T Eloff was appointed in his stead.
                                                                         as contemplated in paragraph 3.86 of the JSE Listings
The opportunity is created at each meeting for discussion                Requirements.
with the external and internal auditors without the presence of
                                                                         Risk Management
management. We believe that the members of the committee
                                                                         We are committed to developing, implementing and maintaining
are knowledgeable about the affairs of the company and have
                                                                         the best possible strategies to minimise our risks and to ensure
extensive expertise in finance, accounting and risk management
                                                                         the growth of our company for the benefit of our employees and
practices.
                                                                         shareholders.
The Audit and Risk Management Committee fulfills the
                                                                         To achieve this we are committed to creating safe and healthy
responsibilities as set out in the Audit and Risk Management
                                                                         working conditions to minimise the risk of injury or disease to our
Committee Charter, which includes:
                                                                         employees, to prevent the loss of property and to conserve the
• overseeing the internal and external audit function;                   environment.
• assisting the board in the discharge of its duties relating to the
                                                                         We are committed to the following action plan:
  safeguarding of assets and operation of adequate systems
  and internal controls;                                                 • identify the risks and exposures associated with each
• the preparation of accurate financial reporting and statements            operation’s unique situation;
  in compliance with all applicable legal requirements, corporate        • identify and implement the most suitable methods in line with
  governance and accounting standards;                                     our business strategy to eliminate or mitigate risk exposures
• providing support to the board on the risk profile and risk               as far as reasonably practical;
  management of the group;                                               • develop the best strategies and policies to protect our
• providing support to the board on information technology                 employees and assets where the threats cannot be removed;
  governance and risk.                                                   • implement a plan to ensure the continual existence and
                                                                           growth of our operations;
Both the group audit and risk executive and the external                 • use secure insurance markets to insure against catastrophic
auditors have unfettered access to the chief executive officer,             incidents and other losses beyond our self insurance capacity;
the chairman of the board and the Audit and Risk Management                and
Committee.                                                               • attempt to optimise, in the long term, the total cost of risk to
During the year the committee addressed the following                      the group.
additional responsibilities required by King III and the                 We apply an enterprise-wide risk management approach,
JSE Listings Requirements:                                               involving all levels of management, with assistance of outside
• evaluated and confirmed the independence of the external                consultants for assessing insurable risks. Insurable risks are
  audit function; and                                                    covered and uninsurable risks are mitigated as far as possible.
• reviewed the expertise, resources and experience of the group          We are committed to the development of the optimum risk
  financial director.                                                     financing strategy for the group based on each division’s
                                                                         particular risks and exposures. The group risk manager, in
Re-appointment of the independent auditors
                                                                         liaison with the divisional management and the risk financing
At the committee meeting held on 12 May 2010, the committee
                                                                         brokers, are responsible for the implementation of a
considered the independence of the external auditors,
                                                                         comprehensive self-insurance funding and cost-effective
PricewaterhouseCoopers Incorporated in accordance with
                                                                         insurance programme strategy.
section 270A of the Corporate Laws Amendment Act. In
assessing the independence of the external auditor, the                  The senior management at each operation is responsible for
committee satisfied itself that PricewaterhouseCoopers                    the development and implementation of a sound risk control
Incorporated:                                                            programme based on the group risk control standards.
                                                                         The integrity of the risk control programme is regularly
• does not hold a financial interest (either directly or indirectly) in
                                                                         independently monitored by appointed risk analysts using
  Astral;
                                                                         internationally recognised auditing standards.
• considers each area of non-audit work that they undertake,
  in relation to the potential threats to their audit independence       To mirror our commitment we expect each manager and each
  and the safeguards, if any, that they have to put in place;            employee to participate in the risk management programme
• considers all other factors, which could impact upon, or be            at their respective levels in the organisation.
  considered to impact upon, their independence.
                                                                         Members of the Audit and Risk Management Committee are:
Accordingly, the committee is satisfied that
                                                                                                     Independent
PricewaterhouseCoopers Incorporated is independent as                    Member                      non-executive                  Period
contemplated by the South Africa Independence laws and
the applicable rules of the International Federation of                  M Macdonald (chairman) Yes                     May 2004 to date
Accountants and nominated the re-appointment of                          J J Geldenhuys         Yes                           May 2008 to
                                                                                                                             October 2010
PricewaterhouseCoopers Incorporated as registered auditor
for the 2010/11 financial year. On 13 May 2010, the                       I S Fourie                  Yes                 July 2010 to date
board, subject to shareholder approval, re-appointed                     T Eloff                     Yes             October 2010 to date


24 Astral Annual Report 2010
To further enhance the effectiveness of the Audit and Risk            Members of the Nominations Committee are:
Management Committee we also have semi-annual divisional
                                                                                                    Independent
audit committee meetings for each operation. As part of our           Member                        non-executive                Period
enterprise-wide risk management programme, quarterly risk
management meetings are held at operational and corporate             J J Geldenhuys (chairman) Yes                   May 2008 to date
level under the chairmanship of a risk control manager who            T C C Mampane             Yes                   May 2008 to date
reports to the group Audit and Risk Management Committee.             N Tsengwa                 Yes                   May 2008 to date

Internal audit                                                        The Human Resources and Remuneration Committee
We have established an independent, objective and effective           The Human Resources and Remuneration Committee
internal audit department governed by a charter approved              comprised three independent non-executive directors until
by the board. The internal audit function reports to the chief        30 September 2010 at which date an additional non-executive
executive officer and has unfettered access to the chairman of         director was appointed to strengthen the diversity of the
the board and the chairman of the Audit and Risk Management           committee. The committee meets at least three times per year
Committee.                                                            and operates according to a board-approved charter.
The role of internal audit is to review compliance with internal      Members of the Human Resources and Remuneration
controls, systems and procedures. The board is satisfied that          Committee are:
the internal controls are adequate in safeguarding the assets,
                                                                                                   Independent
preventing and detecting errors and fraud, ensuring the accuracy
                                                                      Member                       non-executive                 Period
and completeness of accounting records and preparing reliable
financial statements.                                                  J J Geldenhuys (chairman)    Yes                May 2001 to date
                                                                      T C C Mampane                Yes              August 2005 to date
The independence of the internal audit function is reviewed by        N Tsengwa                    Yes                May 2009 to date
the Audit and Risk Management Committee and the committee             I S Fourie                   Yes             October 2010 to date
is satisfied that the independence of the internal audit function
has not been impaired in any way. The removal of the head             Consideration is given during meetings to succession planning,
of internal audit would be a matter for the Audit and Risk            training and development, employment equity, broad-based
Management Committee in consultation with management.                 black economic empowerment, human resources policies,
                                                                      provident funds, medical aid, wellness programmes and
For more information regarding the activities of the Audit and        remuneration of management and executive and non-executive
Risk Management Committee, please refer to the Audit and Risk         directors.
Management Committee report commencing on page 27.
                                                                      The remuneration policy focuses on market-related payments
The internal audit department is staffed by qualified and              to management and directors with the objective to retain the
experienced internal auditors and operates within a charter           services of capable individuals, The outline of remuneration to
approved by the board. The annual internal audit programme is         management and directors is as follows:
approved by the committee and all significant findings, together
                                                                      • fixed portion of remuneration is paid on a cost to company
with steps taken to rectify lapses in internal control are reported
                                                                        basis;
at every committee meeting. The internal audit function reports
                                                                      • all employees are provided with a wellness programme,
to the chief executive officer and has unfettered access to the
                                                                        retirement fund, death, disability and funeral benefits, voluntary
chairman of the committee.
                                                                        medical aid and various categories of leave provision;
Information Technology                                                • service contracts are in place for all employees. Top
A policy governs the use and safeguarding of information                management has a notice period of two months and the
systems and networks.                                                   rest of the staff one month. Non-executive directors have no
                                                                        contracts with the company; and
The risks regarding the security, back-up, conversion and
                                                                      • incentive/retention schemes for management are in place.
update of the information technology systems are continually
                                                                        Previously, management participated in share option and
assessed. Disaster recovery plans are regularly reviewed as
                                                                        share appreciation rights schemes. These schemes have been
disruptions to critical management information could have an
                                                                        phased out and were replaced by a long-term management
impact on continuing operations.
                                                                        retention plan of which the following can be highlighted:
The Nominations Committee
                                                                        – allocation according to seniority;
The Nominations Committee comprises three independent
                                                                        – an annual allocation to ensure retention of key staff;
non-executive directors. The committee meets annually or
                                                                        – payments after three years over a three-year period;
more often at the committee’s discretion. The committee’s
                                                                        – executives must meet performance conditions to earn 75%
charter was formally adopted during the year under review.
                                                                          of the allocated amount; and
The primary purpose of the Nominations Committee is to ensure
                                                                        – the long-term management retention plan is only available
that the procedures for appointments to the board are formal
                                                                          to key employees.
and transparent, by making recommendations to the board on
all new board appointments and reviewing succession planning          Management also participate in short-term management
for directors. The committee also has to evaluate all candidates      incentive schemes. Bonuses are paid if management meet
for the position of director on the basis of skill and experience.    certain financial targets which relate to Economic Value Added
Thorough background checks are conducted.                             (EVA) and Profit Before Interest and Tax (PBIT).


                                                                                                            Astral Annual Report 2010 25
Corporate governance                                                 (continued)




Organisational integrity and ethics                                       Restrictions on share dealings
We maintain a Code of Ethics, which requires all employees,               Directors and employees are prohibited from dealing in
managers and directors to comply with the letter and spirit of the        Astral shares during price-sensitive periods. There is a formal
Code by observing the highest ethical standards and ensuring              clearance procedure in place with respect to directors dealing
that all business practices are conducted in a manner which is            in Astral shares. Closed periods extend from 31 March and
beyond reproach.                                                          30 September, being the commencement of the interim
The policy provides a guideline as to what constitutes fraud,             and year-end reporting dates, respectively, up to the date of
theft, corruption, or associated internal irregularities, outlines        announcement of interim and year-end results, and include
our response to these, and details the procedures to be                   any other period during which the company is trading under a
followed in order to report such incidents that are suspected             cautionary announcement. All directors are required to obtain
or discovered.                                                            written permission from the chairman before dealing in any Astral
                                                                          shares in order to protect them against possible and
We have a “zero tolerance” approach towards fraud and
                                                                          unintentional contravention of the insider trading laws and
corruption and protect employees who raise concerns relating
                                                                          stock exchange regulations.
to fraud and corruption from victimisation.
We utilise the services of Deloitte & Touche to provide an                Participants in our share incentive schemes are subject to
independent “Tip- offs anonymous” hotline. All incidents                  the rules of the schemes and the provisions of the JSE Listings
reported are investigated and appropriate action taken in                 Requirements.
terms of the relevant policies and disciplinary procedures.
                                                                          Management reporting
During the year under review, our ethics policy was revised and           We have comprehensive management reporting disciplines,
extended. Copies of the revised ethics policy are displayed on            which include the preparation of strategic plans and annual
all notice boards, laminated abridged copies are handed to                budgets by all operations. Group strategic plans and budgets
every employee and the chief operating officer of each business
                                                                          are considered and approved by the board. Results and the
unit is tasked to act as champion for his business unit to ensure
                                                                          financial status of the operations are reported monthly and
that the ethics policy is understood and adhered to by all his
                                                                          compared with approved budgets and results of the previous
employees. The ethics policy forms a permanent part of every
                                                                          year. Working capital requirements and borrowing levels are
management agenda and external suppliers are required to
                                                                          monitored on an ongoing basis and corrective or remedial action
adhere to the ethics policy.
                                                                          taken as appropriate.
The Code of Ethics deals with:
                                                                          Company secretary
•   compliance with laws, regulations and codes;
                                                                          The company secretary is suitably qualified and experienced and
•   culture, ethics and values;
                                                                          plays an important role in ensuring that the board procedures
•   client service;
•   privacy and confidentiality;                                           are followed correctly and reviewed regularly. The company
•   respect and dignity;                                                  secretary is responsible for the duties set out in section 268G
•   social responsibility;                                                of the Companies Act and is appropriately empowered by the
•   gifts, entertainment and bribery;                                     board to fulfill these duties. The certificate required to be signed
•   integrity of financial information;                                    in terms of section 268G(d) of the Act appears on page 41.
•   confidential information                                               The group company secretary is not a director of any of the
•   protection and use of company property;                               Astral group’s operations and, accordingly, maintains an arm’s
•   conflict of interest; and
                                                                          length relationship with the board and its directors.
•   contravention of the Code.
In terms of accountability, all employees are required to:                Engagement with shareholders and investors
                                                                          In accordance with our commitment to ensure that the interests
• commit to individual conduct in accordance with the Code
                                                                          of our management are aligned with those of shareholders,
  of Ethics;
                                                                          we manage a dedicated programme to engage with analysts,
• observe both the spirit and the letter of the law in their
                                                                          investors and large individual shareholders. This includes,
  dealings on the group’s behalf;
                                                                          amongst others: timeous, relevant, honest and accessible
• recognise the group’s responsibility to its shareholders,
                                                                          announcements and circulars to shareholders in accordance
  customers, employees, suppliers and to society;
                                                                          with the JSE Listings Requirements.
• conduct themselves as responsible members of society, giving
  due regard to health, safety and environmental concerns, and            When we are not in a closed period, there is ongoing interaction
  human rights, in the operation of the group’s business; and             between the executive management team and a wide range of
• report any suspected breach of the law or the Code of Ethics            institutional investors and analysts. These interactions take the
  to the internal audit department or the board who will protect          form of one-on-one meetings held mostly on request by the
  those who report violations in good faith.                              institutional investors and analysts. Twice a year our results are
The board has no reason to believe that there has been any                presented to the investor community in Johannesburg and
material non-adherence to the Code of Ethics during the year              Cape Town. The results are published on our website shortly
under review.                                                             after release on SENS.




26 Astral Annual Report 2010
Audit and Risk Management Committee report


Our Audit and Risk Management Committee is a formally                • made submissions to the board on matters concerning the
constituted sub-committee of the board and in addition to              group’s accounting policies, financial control, records and
having specific statutory responsibilities to the shareholders          reporting; and
in terms of the Companies Act, 61 of 1973, as amended                • concurred that the adoption of a going concern premise in the
(“the Act”), it assists the board by advising and making               preparation of the annual financial statements is appropriate.
submissions on financial reporting, oversight of the risk
management process and internal financial controls, external          The objectives of the committee were met during the year
and internal audit functions and statutory and regulatory            under review. Where weaknesses in specific controls have been
compliance.                                                          identified, management undertook to implement appropriate
                                                                     corrective actions to mitigate the weakness so identified.
Terms of reference
The committee has adopted formal terms of reference that             Oversight of risk management
has been approved by the board and these terms of reference          The committee has:
are regularly reviewed and updated where necessary. The              • received assurances that the process and procedures
committee has executed its duties during the past financial year        followed in terms of risk management are adequate to ensure
in accordance with terms of reference.                                 that financial risks are identified and monitored;
                                                                     • satisfied itself that the following areas have been appropriately
Composition
                                                                       addressed:
At 30 September 2010, the committee comprised three
independent non-executive directors, one being the chairman            –   financial reporting risks;
of the board. On 1 October 2010, Mr J J Geldenhuys, chairman           –   financial control risks;
of the board, resigned as member of the committee and                  –   fraud risks as they relate to financial reporting; and
Dr T Eloff was appointed in his stead.                                 –   information technology risks as they relate to financial
                                                                           reporting;
Meetings
The committee met three times during the year. Attendance of         • reviewed tax and technology risks, in particularly how they are
these meetings is shown in the table set out on page 23 of             managed.
the annual report.
                                                                     Internal financial controls
Statutory duties                                                     The committee has:
In execution of its statutory duties, the committee:
                                                                     • reviewed the effectiveness of the group’s system of internal
• nominated the re-appointment of PricewaterhouseCoopers               financial controls including receiving assurance from
  Inc. as external auditors and Mr I S Buys as the individual          management and external audit;
  auditor, after satisfying ourselves through enquiry that           • reviewed significant issues raised by the external auditors in
  PricewaterhouseCoopers Inc. are independent as defined in             their reports;
  terms of the Act. This will be Mr Buys’ third year as designated   • reviewed policies and procedures for preventing and
  auditor of the company;                                              detecting fraud.
• confirmed that PricewaterhouseCoopers Inc. and the
  designated auditor, Mr I S Buys, are accredited by the JSE;        Based on the processes and assurances obtained, we believe
• at the end of each meeting during the year, met with the           that the significant internal financial controls are effective.
  external auditors where management was not present. No
  matters of concern were raised;                                    Regulatory compliance
• determined the fees to be paid to PricewaterhouseCoopers           The committee has complied with all applicable legal and
  Inc. as disclosed in note 18 of the annual financial                regulatory responsibilities.
  statements on page 79 of the annual report and their terms
                                                                     External audit
  of engagement;
                                                                     Based on processes followed and assurances received, we have
• approved a non-audit services policy which determines
                                                                     no concerns regarding the external auditor’s independence.
  the nature and extent of any non-audit services which
  PricewaterhouseCoopers Inc. may provide to the company;            Description of fees                        R’000                Total
• pre-approved any proposed contract with
                                                                     Audit fees                                 4 989                90%
  PricewaterhouseCoopers Inc. for the provision of non-audit
                                                                     Non-audit fees                               569                10%
  services to the company;
• received no complaints relating to the accounting practices of
                                                                     Based on our satisfaction with the results of the activities
  the group, the content or auditing of its financial statements,
                                                                     outlined above, we have recommended the re-appointment
  the internal financial controls of the group, and other related
                                                                     of PricewaterhouseCoopers Inc. to the board and the
  matters;
                                                                     shareholders.
• reviewed the draft audited financial statements and annual
  report, the preliminary profit announcement and interim
                                                                     Internal audit
  statements;
                                                                     The committee is responsible for overseeing internal audit, and
• met with the external auditors to discuss the annual financial
                                                                     in particular:
  statements prior to their approval by the board;
• reviewed the valuation of goodwill before recommending any         • determined the appropriateness of the internal auditor and
  impairment to the board for approval;                                adequate staffing issues;


                                                                                                            Astral Annual Report 2010 27
Audit and Risk Management Committee report
(continued)



• approved the internal audit plan, as well as the internal              Annual report
  audit charter;                                                         We have evaluated the annual financial statements of
• ensured that the internal audit function is subject to an              Astral Foods Limited and the group for the year ended
  independent quality review, as and when the committee                  30 September 2010 and based on the information provided
  determines it appropriate; and                                         to the committee, consider that the group complies in all material
• reviewed the functioning of the internal audit programme and           respects with the requirements of the Act and International
  department, to ensure co-ordination between the internal               Financial Reporting Standards and we recommend the annual
  and external auditors.                                                 report to the board for approval.

Financial function and financial director                                 On behalf of the Audit and Risk Management Committee
review
We have reviewed the expertise, resources and experience
of the company’s finance function and are satisfied that these
requirements are adequate for the forthcoming year. The                  Malcolm Macdonald
committee has also reviewed the performance, appropriateness             Audit and Risk Management Committee Chairman
and expertise of the financial director, Mr D D Ferreira, and
confirms his suitability in terms of the JSE Listings Requirements.       11 November 2010




Definitions
Operating profit margin
Operating profit before interest and tax as a percentage of revenue.

EBITDA
Earnings before interest, tax, depreciation and amortisation.

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

Return on total assets
Operating profit less finance costs as a percentage of average total assets.

Return on equity
Net profit attributable to ordinary shareholders as a percentage of average ordinary shareholders’ interest.

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

Net asset turn
Revenue divided by average net assets.

Basic earnings per share
Net profit for the year divided by the weighted average number of ordinary shares in issue during the year.

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

Headline earnings
Net profit for the year adjusted for profit or loss on sale of property, plant and equipment, and investments.

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

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

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

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


28 Astral Annual Report 2010
Ratios and statistics


                                                                 2010          2009           2008          2007             2006        2005         2004
Profit information
Revenue                                        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 profit                                R million          585           581            548            808              766         597         389
Operating profit margin                                %            7,0           6,6            6,7          12,8             14,8        12,3         9,6
Profit 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 information
Total 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
Profitability and asset management
Return on total assets                               %           17,8           16,9           16,7          32,2             38,6        31,3         27,1
Return 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’ ratios
Earnings 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 statistics
Market 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        2 385
Closing dividend yield                               %            6,8            6,7           7,3            5,8            6,8          5,4          5,7
Closing earnings yield (*)                           %            8,6            8,6           8,7          11,4           11,9          13,5         15,5
Closing 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 financial statements for the number of shares effectively in issue, net of treasury shares




                                                                                                                                 Astral Annual Report 2010 29
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
                    Social,
pillars of sustainability, namely
Environmental and Economic




30 Astral Annual Report 2010
2010
       Milestones and Achievements
       • 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




       Focus
       • We are targeting a Level B-rating on our Black Economic Empowerment
2011




         status by December 2010
       • We are conducting a carbon footprint assessment which will allow senior
         management to identify and implement energy efficient 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




                          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 conduct business to make a profit 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 finite and so have
to be managed with care


                                                                                   Astral Annual Report 2010 31
Sustainability report                                        (continued)




Responsibility for sustainable development                                 controls and independent financial audit. We also have our own
The board accepts overall responsibility for the advancement of            internal set of values and ethics which guide all our activities and
sustainable development with the assistance of the board sub-              relationships, both individual and corporate.
committees. Day-to-day responsibility is delegated to executive
                                                                           Group risks
management.
                                                                           Executive, senior and local management continually review,
Approach to data collection and reporting                                  assess and address the risks and challenges facing the
As part of our commitment to improve non-financial reporting,               group. This process requires detailed review at all levels of
we are in the process of reviewing the aspects of the Global               the organisation including regular review and update at all
Reporting Initiative (GRI).                                                management, executive and board meetings. The internal audit
A group safety, health and environment (“SHE”) report is                   function is charged with reviewing the adopted processes
compiled and is reviewed by the Audit and Risk Management                  to ensure this risk management methodology is in place.
Committee on an annual basis. Underpinning our Enterprise                  Contingency plans and procedures are prepared to deal with
Wide Risk Management Programme, are the following meetings                 unscheduled occurrences and stakeholder concerns. All
which incorporate aspects of SHE:                                          operations have detailed business continuity as well as disaster
                                                                           recovery plans in place.
•   monthly Health and Safety meetings;
•   bi-monthly Corporate Risk Management meetings;                         The management of operational risk is a line function, conducted
•   quarterly Operational Risk Management meetings;                        in compliance with a comprehensive set of group policies
•   semi-annual Audit Committee meetings; and                              and standards to cover all aspects of operational risk control.
•   an annual Risk Management meeting.                                     Performance is measured on a regular basis by means of both
                                                                           self-assessments and audits by independent consultants. In
Assurance
We are committed to ensuring that the non-financial information             addition, the group promotes ongoing commitment to risk
provided in this annual report is accurate. During the course of           management and control by participating in externally organised
the year, systems and procedures were put in place to record               risk management and safety systems.
the relevant data by way of a web-based data collection system             Insurance cover on assets is based on current replacement
for all divisions.                                                         values. Consistent with the high standard of risk management,
Governance, ethics and values                                              a substantial portion of risk is self-insured, at costs below market
Governance, ethics and values are addressed in the Corporate               premiums. All risks are adequately covered, except where
governance section of this annual report on pages 22 to 26.                the premium cost is excessive in relation to the probability and
Financial compliance is assured through internal structures and            the extent of the loss.




    Tersia King Learning Academy prize-giving 2010
    Astral’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 floating 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 Officer, presented four well-deserved
                                               prizes to learners from the Academy


32 Astral Annual Report 2010
Economic sustainability practices
The distribution of economic value generated for stakeholders is reflected in the group’s value-added statement which is reflected 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 profit for the year                                                  82 289                           85 066

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



    2010                                                                  2009
                                             Providers                                                              Providers
                                             of capital                                                             of capital
                                              20,7%                                                                  22,3%




                                                   Government                                                             Government
                                                     13,0%                                                                  12,3%

           Labour                                                                Labour
           53,9%                                                                 52,6%
                                           Reinvested                                                             Reinvested
                                             12,5%                                                                  12,7%




                                                                                                            Astral Annual Report 2010 33
Sustainability report                                              (continued)




Social aspects                                                                We have a sound value system, based on integrity, openness
Broad-based black economic empowerment                                        honesty and accountability. Employees understand these values
(BBBEE)                                                                       as management lead by example.
We support and are committed to the concept of broad-
                                                                              The benefits of employees are market related and all employees
based black economic empowerment and actively promote
the empowerment of staff members and the communities in                       can benefit from incentive schemes by meeting set targets.
which we operate. Our Black Economic Empowerment status                       All vacancies within the group are advertised internally, as we
has been evaluated by EmpowerDEX, at a generic scorecard                      believe that employees should have the first opportunity to be
C-rating. We have a 100% score on enterprise development,                     promoted before we advertise externally.
mainly as a result of our strategy to endeavour to make use of
                                                                              Quite a number of Unions are recognised at our different
contract growers with a Black ownership component. Our target
                                                                              business units. We conduct collective bargaining on an
for December 2010 is to achieve a Level B-rating.
                                                                              annual basis and in most instances the outcome is to the
Equality                                                                      satisfaction of both parties. The normal media such as circulars
We are committed to gender equality and the removal of any                    and notice boards are used for basic communication with
discrimination based on gender, race, religion or disability.                 staff. Furthermore, road shows are held twice a year in the
Employees                                                                     different regions to communicate the results of the company
Our long-term success rest on our ability to attract, develop                 and two multi-level meetings per annum are held with staff to
and retain globally competitive employees. We have strategies                 communicate important matters relevant to each business unit.
and initiatives in place, mainly through our 20 Keys Workplace
                                                                              Health and safety
Improvement Programme, to ensure value creation for
                                                                              We comply with the Occupational Health and Safety Act or
employees and value creation by employees. This facilitates
individual and collective wisdom within the operations,                       similar legislation in other countries. At factories, safety, health
encourages employee participation and enables employees to                    and environment committees are in place to assess and reduce
share in the value created for stakeholders.                                  the impact on the environment of manufacturing activities and to
                                                                              ensure the safety of employees.
African, Indian, Coloured (“AIC”) vs White employees
in South Africa                                                               The disabling injury frequency rate is calculated by all business
                              2010             2009                           units. This provides for accurate benchmarking between
                                 AIC       White          AIC      White      business units and provides a measuring tool to compare
                                                                              current and past performances.
Board                              3          7             3             6
Executive                          1         18             1            18   Disabling injury frequency rate               2010            2009
Senior management                  6         48             2            52
                                                                              Farming operations                             1.27           1.05
Middle management                 36        110            36            98
Skilled upper/technical          457        357           169           347   Processing operations                          2.21           2.39
Semi-skilled/apprentice/                                                      Milling operations                             1.51           0.92
trainee                        1 802        212      1 257              204   Other                                             –              –
Labourers/unskilled            4 704          8      5 465                6
                                                                              Disabling Injury Frequency Rate is calculated by taking the
                               7 009        760      6 933              731   number of disabling injuries times 200 000 divided by the
Note: Employee categories are defined using the Patterson                      number of man hours worked by all employees.
grading methodology.
                                                                              Employment equity
Number of employees at end of September – Group                               All our operations comply with the Employment Equity Act,
                                           Services and                       55 of 1998, and annual reports are submitted to the
                Feed           Poultry       Ventures           Total         Department of Labour. Employment equity committees have
              2010   2009   2010    2009    2010   2009     2010    2009
                                                                              been established at every business unit to set and monitor
                                                                              progress. The different occupational levels below management
Permanent      570     658 6 738 7 006       181      – 7 489       7 664
                                                                              level reflect that between 36% and 99% of employees are from
Contract       555     605 2 323 3 532        55      – 2 933       4 137
                                                                              the designated groups. The figure on management level is 18%,
Total        1 125 1 263 9 061 10 538        236      – 10 422 11 801         reflecting progress towards the target set by the Department of
Regional breakdown of number of employees – 2010                              Trade and Industry of 25% to 30% within 10 years. We believe
                                                                              that no unfair discrimination exists in the workplace.
Within South Africa                                             10 422
Outside South Africa                                               110        HIV/AIDS
                                                                              We recognise the implications of the pandemic on the family
                                                                10 532
                                                                              structure, the community and long-term issues of sustainability.
Value creation for employees                                                  The reality is that the prevalence of HIV/AIDS among our
Our leadership within the group is inspirational. High but                    workforce is currently estimated to be about 21%. This figure
achievable standards are set and employees are motivated by                   was determined through a voluntary counseling and testing
realistic objectives and they are allowed to participate in setting           update. The indications are that we are slightly above the
those objectives.                                                             industry norm.


34 Astral Annual Report 2010
We have implemented a policy on HIV/AIDS focusing on:               Human rights
                                                                    Human rights are central to our legitimacy and are addressed in
•   educational programmes at all operations;
                                                                    our Code of Ethics, including:
•   voluntary testing;
•   counseling of affected employees;                               •   obey the law;
•   training of peer educators.                                     •   respect others;
                                                                    •   fairness; and
72% of employees participated in the screening, 52% attended
                                                                    •   honesty.
training and 61% participated in voluntary counseling and
testing.                                                            Breaches can be addressed through the applicable legal system,
                                                                    internal procedures and through “Tip-Offs Anonymous”. In
We introduced a wellness programme during 2009.                     addition, employees may use established grievance procedures,
The wellness programme focuses on:                                  which prohibit victimisation and they may also seek union or
•   height and weight (body mass index);                            industry assistance in this regard.
•   blood pressure (hypertension);                                  All incidents reported through “Tip-Offs Anonymous” are
•   cholesterol;                                                    investigated by internal audit and appropriate action taken in
•   diabetes; and                                                   terms of the relevant policies and disciplinary procedures.
•   voluntary counseling and testing for HIV/AIDS.
                                                                    “Tip-offs Anonymous” data                        2010        2009
Training
The training and development of employees in all key areas          Number of calls received                             68          64
is an integral part of the internationally recognised 20 Keys       Number of reports generated                          27          26
Workplace Improvement Programme referred to below. Each             Number of reports investigated                       22          23
employee attends a number of training sessions in this regard.      Number of convictions                                 3           5
A learnership programme in supervision has been introduced at
                                                                    We apply a “zero tolerance” approach towards fraud and
several workplaces.
                                                                    corruption and protect employees who raise concerns relating to
Much emphasis is placed on the development of technical             fraud and corruption from victimisation.
skills, including training under our technical agreements with
                                                                    It is not our policy to support political parties.
Provimi Holding BV of Holland, a world leader in animal nutrition
solutions.                                                          Workplace improvement programme
                                                                    Over the past year we have continued with our drive for
Other training and development interventions that we focus          excellence through the implementation of the 20 Keys Total
on are:                                                             Workplace Improvement Programme, which aims to energise
•   information technology skills;                                  the workforce to work faster, cheaper and better. All employees
•   supervisory skills;                                             at the various workplaces participate as teams to improve
•   sales;                                                          productivity and efficiencies. We can claim that we have made
•   quality systems; and                                            the best progress in South Africa with the implementation of
                                                                    these concepts.
•   production and processing skills.
                                                                    The International Excellence Award has been awarded to
We are committed to the Skills Development Act. Our
                                                                    Meadow Feeds Paarl, Meadow Feeds Randfontein, Meadow
submission of skills development plans and our implementation
                                                                    Feeds Pietermaritzburg, Earlybird Standerton and NuTec
against targets have ensured the maximum benefit in this regard.
                                                                    Southern Africa, the only five operations in South Africa to have
We have appointed 30 apprentices (electricians, millwrights,
                                                                    achieved this.
fitters and turners) with assistance from the Sectoral Training
Authority for Agriculture.                                          Three farming operations, namely Earlybird Farm’s Kaalplaas,
                                                                    Ross Poultry Breeders’ Little Loch hatchery and Mount West
We have a study loan policy providing employees with financial
                                                                    hatchery, reached the requirements for the excellence award.
assistance to further their academic qualifications in line with
current and future job requirements.                                Stakeholder engagement
                                                                    We believe that continuous, open and transparent
Employee turnover                                                   communication with all stakeholders is essential to our
We continuously evaluate our recruitment processes to ensure        legitimacy, core to our values and consistent with our sustainable
that high calibre talent is employed, taking cognisance of          value creation objective. Mutually beneficial outcomes are
leadership capabilities, identified competencies for positions and   sought at all times.
employment equity plans. Our approach is to attract the best
people in the industry. In our employment process we also focus     Being a listed entity, we comply with legal communication
                                                                    requirements. Furthermore, we believe in regular dialogue with
on the appointment of persons from the designated groups.
                                                                    stakeholders and the investor community as a whole. Numerous
Our staff turnover is below 4%, with the exception of County Fair
                                                                    interviews with financial analysts are conducted and regular
in the Western Cape where the staff turnover is problematical
                                                                    sessions undertaken with investors.
due to societal circumstances. We have restructured one
business unit in the past year, resulting in two retrenchments.     Our website provides up-to-date information to stakeholders.


                                                                                                             Astral Annual Report 2010 35
Sustainability report                                      (continued)




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                                                      Confidential hotline through “Tip-Offs Anonymous”
                                                                      Bi-annual road shows
                                                                      Intranet
                                                                      Management and union meetings
Suppliers                                                             Presentations to Procurement Committee
                                                                      Regular discussions

Consumers
                                                                      Our skill in raw material substitution and access to suppliers with
Our branded chicken products reach consumers across the
                                                                      an international footprint will ensure that we will remain a reliable
spectrum of society, offering affordable frozen secondary
                                                                      supplier of quality feed.
products as well as higher value fresh and prepared convenience
products. The Goldi brand has maintained loyal support from           Preferential procurement
the middle to lower income consumers, driven by consistent            The procurement activities of the group are focused on the
and trusted quality, availability and good value. County Fair and     suppliers of goods and services who have made progress
Festive brands on the other hand have developed strong equity         on their BBBEE scorecard and we continue to identify further
in the middle to upper income consumer sectors where demand           opportunities in this regard.
for prime products is stronger.
                                                                      Contract growers
Business partners                                                     We make use of contract growers at our Earlybird Farm
Our key customers lie primarily in top end retail chains              operations and are continuously seeking opportunities to expand
and wholesalers, mainly independently owned, and highly               the number of contract growers, especially those that have a
entrepreneurial by nature. Long-standing trading relationships        BBBEE component involved.
are in place with the major retail groups, who have played a
                                                                      Contract growers                                 2010         2009
significant role in building our brands over the years. Most of
our independent wholesale customers have been partners for            Total number of contract growers                    72           72
many years and have driven distribution of our chicken brands         Number of BEE contract growers                       7            7
competently. We have a strong association with The Cold Chain
who provide warehousing, distribution and merchandising to the        Product responsibility
retail and wholesale chains on our behalf.                            The need for manufacturers to market products that meet the
                                                                      required food safety standards has resulted in a number of
Raw materials
                                                                      initiatives. In recent years the Food Safety Initiative was
Raw material availability is synonymous with two main risk areas,
                                                                      launched by the Consumer Goods Council of South Africa to
namely price and quality/supply. The agricultural commodity
                                                                      which we subscribe. Reviews of various statute requirements
markets, as with other commodities, equities and currencies,
                                                                      and industry legislation have been implemented to better
have been extremely volatile over the past twelve months as a
                                                                      control product quality and food safety.
result of the financial crisis, global recession, inclement weather,
market sentiment and money flows. High volatility leads to             The promulgation of the Consumer Protection Act and Draft
increased price risk which is managed by having a conservative        Labeling Regulations were foreseen by the company and a
approach to market exposure, access to knowledgeable and              pro-active approach was taken to ensure all processing plants
respected advisors and suppliers. These risks are managed             involved in the food chain are HACCP or ISO certified in terms
through an established process whereby the various conditions         of Food Safety Management Systems. We follow the farm-to-
which influence commodity prices are monitored on a daily              fork approach, from control of animal feed quality, health of
basis. Animal feed is an industry where raw material substitution     grandparents, parents and broilers as well as hygiene at the
is an essential skill to optimise feed quality and price. We          abattoirs, processing plants, cold chain facilities and distribution
are a major player in the South African arena but only use            points to end users. Preventative medicine to control food-
approximately 0,1% of the global maize and soya production.           borne diseases is strictly practiced in line with legislation.


36 Astral Annual Report 2010
Health link programme
The Astral Foods Group is deeply committed to the well-being of        The Health Link’s success can be attributed to strong buy-in
its staff and, through the Astral Health Link programme, seeks         from Astral management as well as solid support among
to support employees to remain healthy, well and productive.           employees across the group. At-risk employees with poor health
The programme is managed by an outside consultancy, who                risk readings receive ongoing advice and support to help them
operates the programme independently, with strong support              to maintain good health and to live fulfilling and satisfying lives,
from Astral.                                                           despite any illness that may affect them.

The prevalence of HIV/AIDS among Astral’s workforce is                 The Astral Health Link programme includes the following:
currently 21%. Supporting those affected by this pandemic is           • on-site initiatives aimed at improving and maintaining health
important to Astral, given the implications of this disease on           and wellness;
people, families and the communities in which Astral operates.         • education, training and communication interventions;
An important achievement is the impact that regular screening          • peer education, embarked upon to provide sustainable
and education have had on reducing the stigma around                     capacity building and to build the programme into the fabric of
HIV/AIDS among Astral’s workforce and recognition by                     the workplace;
employees of the importance of Voluntary Counselling                   • monitoring measures to assess illness, absenteeism, deaths,
and Testing.                                                             disabilities, etc; and
                                                                       • Post-Exposure Prophylaxis treatment, used to prevent
Since the launch of the Astral Health Link programme, over
                                                                         infection in the event of accidental exposure to HIV (rape,
13 300 health screenings have taken place. The following
                                                                         abuse, car accidents, needle pricks, etc).
statistics apply:
                                                                       The results of the programme are irrefutable:
• 1 713 HIV positive employees have been identified through
                                                                       • absenteeism is down by over R1 million in days saved and
  this testing process, of whom 1 257 are being managed by a
                                                                         productivity has improved;
  patient management service;
                                                                       • perhaps the most notable impact is evident on the company’s
• 3 203 employees with moderate to high risk readings for
                                                                         provident fund for the 6 775 employees who participate:
  chronic conditions are being patient managed;
                                                                         – death claims peaked in 2008 with a total of 103 death claims
• of the 1 257 HIV positive employees, 82% are well, healthy
                                                                           amounting to R9 million;
  and participating actively in the workplace, illustrating that HIV
                                                                         – a year later, claims had reduced to 72 at R6,6 million;
  can be successfully managed;
                                                                         – for the first six months of the current period, claims have
• key sites have been identified and negotiations with the
                                                                           reduced to 15 deaths and claims are down to R1,66 million;
  Department of Health have resulted in treatment for uninsured
                                                                           and
  employees and medication for HIV/AIDS, TB and other chronic
                                                                         – this equates to an effective annual reduction of 71%, or a
  conditions being made available on-site at certain locations,
                                                                           direct savings of R6,85 million.
  saving man hours and improving efficacy of treatment;
• 7 388 employees have completed structured training on health         Investment in the Astral Health Link has provided solid
  topics such as HIV/AIDS and other chronic diseases; and              returns but the most important element is the improvement in
• 199 employees, a ratio of 1:50, have completed a three-day           employees’ health and wellness. This bodes well for Astral, for
  peer educator course.                                                its staff, their families and their communities.

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


                                                                                                             Astral Annual Report 2010 37
Sustainability report                                         (continued)




Monitoring for biological and chemical residues is done by               Community
reputable independent laboratories. A veterinary partnership             We play an active role in the communities in which we operate
exists with a leading firm of consultants in South Africa. All our        through a social investment strategy which focuses on
abattoirs are HACCP certified and consistently perform above              education, HIV/AIDS and upliftment.
80% in the Department of Agriculture’s Hygiene Programme.
                                                                         Corporate social investment
We emphasise the importance of traceability of final product              The Wellness Programme is an initiative in Corporate Social
and are in a position to trace any emergency through the                 Investment and benefits not only our employees but extends into
system from final product to chicken growing. We are actively             the broader community.
involved in a number of forums such as the South African Poultry
Association, Codex Committees and Statute Committees.                    Environmental sustainability practices
                                                                         We strive to use the best environmental practices on all the
Packaging and ingredient suppliers
                                                                         land used for either farming, processing, milling or distribution
Packaging and ingredient suppliers have a major impact on the
                                                                         operations.
risk management of food quality and safety and are managed
accordingly. We drive a policy to exclude dealings with suppliers                                                   2010             2009
that pose a threat to our product responsibility. Food Safety            Land utilisation                       Hectares          Hectares
Certification is a compulsory requirement for ingredient suppliers        Owned                                      5 260             5 260
and continuous communication and controls have been                      Leased                                     1 350             1 350
established to prevent potential risks occurring such as the             Partners                                     339               339
Melamine contamination in food in previous years.                        Dormant                                    1 145             1 145
Membership of industry organisations                                                                                6 950             6 950
Astral and its employees participate in the following organisations:
                                                                         Environmental risks
Organisation                                                             Our underlying environmental policy philosophy is the adoption
Consumer Goods Council of South Africa                                   of protective strategies to manage and control the impact of our
Southern African Poultry Association                                     agricultural and manufacturing operations upon the environment,
South African Agricultural Processors Association                        at the same time as safeguarding our extensive assets and
Animal Feed Manufacturers Association                                    human resources.
South African Veterinary Council
                                                                         Environmental risk assessments are conducted and reported on
Health Professionals Council
World Poultry Science Association                                        an annual basis as a component of our risk control programme.
South African Society for Animal Science                                 Alexander Forbes Risk Services have been appointed to
                                                                         conduct environmental risk assessments at selected Astral
Regulators and compliance                                                Foods’ operations in order to assist in this regard.
As we are a participant in the food industry, we comply with the
                                                                         During the period under review, environmental risk assessments
strictest standards and continuous monitoring by internal and
                                                                         were conducted at the following operations:
external parties to verify adherence.
                                                                         • County Fair hatcheries 1, 2 and 3.
                                             ISO        ISO
                                                                         • County Fair Soetendal hatchery 4.
Operations                       HACCP 9001:2008 22000:2005
                                                                         • Earlybird Farm Olifantsfontein.
Earlybird   – Olifantsfontein                                           • Earlybird Farm Standerton primary processing.
            – Standerton                                                • County Fair – Farming services.
County Fair – Hocroft                                                                  – Hocroft processing.
            – Epping                   #
                                                                                        – Epping processing and Newmarket distribution.
East Balt SA                           
                                                                         • National Chicks – Umlaas Road hatchery.
Meadow      – Randfontein                                          
                                                                         These environmental risk assessments focus on the following
            – Delmas                                               #
            – Welkom                                               #    areas:
            – Pietermaritzburg                                         •   Water quality.
            – Paarl                                                    •   Waste management.
            – Port Elizabeth                                       #
                                                                         •   Hazardous chemicals.
HACCP             – Hazard Analysis and Critical Control Point Systems   •   Air quality.
ISO 9001:2008     – Quality Management Systems Certification              •   Site management.
ISO 22000:2005    – Food Safety Management Systems Certification          •   Land management.
#                 – Comply but not certified                              •   Legal requirements.




38 Astral Annual Report 2010
The following environmental risks have been identified in our        Waste and recycled products
operations:                                                         We analyse all types of waste material generated for possible
                                                                    re-use. Waste is disposed of in the most environmentally friendly
Environmental risks            Risks mitigated by
                                                                    way possible.
Hazardous chemical,            • Training programmes
                                                                    Currently we use the following recycled products:
diesel and gas spillage        • Health and safety procedures
                               • Bund walls                         • wood shavings as bedding for the chicken houses;
                               • Annual independent grading         • sunflower husks as bedding for the chicken houses; and
                                 audits                             • high quality animal oil is produced by processing waste
                               • Hazardous chemical stores            material through our rendering plants which is then utilised as
                               • Environmental policy                 an additive in the production of bio-diesel.
                               • Annual Independent
                                                                    Emissions to air
                                 environmental audits
                                                                    We recognise our responsibilities in terms of the Air Quality Act,
Ground and surface water       • Environmental management           39 of 2004, and as such ensure that the animal matter
pollution                        programme                          reduction plants and coal-fired boilers and their boiler stacks
                               • Regular monitoring                 are well maintained and routinely inspected.
                               • Effluent water treatment
                                                                    Environmental Impact Assessment (EIA)
                                 programme
                                                                    We conduct Environmental Impact Assessments as required
Waste disposal                 • Registered waste companies for     by the Department of Agriculture and Environmental Affairs
                                 safe disposal of contaminated      when considering investment in new or upgrading existing
                                 or hazardous waste                 facilities. This process allows for comments and input from all
                                                                    stakeholders. An Environmental Management Plan (EMP) is
Odours from                    • Environmental policy
                                                                    established for the construction phase of these projects, to serve
processing plants              • Environmental management
                                                                    as a guide to assist in minimising the potential environmental
                                 programme
                                                                    impact of the project activities.
                               • Weather and monitoring
                                 stations                           Carbon footprint
                                                                    Both the Poultry and Feed divisions have appointed an
Energy usage                                                        independent company to assess their respective carbon
Electricity                                                         footprints. High carbon intensity in most cases relates back
In all our operations energy efficient lighting, heating and power   directly to energy utilisation and associated operational costs.
correction systems have been implemented to reduce energy           The carbon footprint assessment process will allow senior
usage.                                                              management to identify and implement energy efficient
                                                                    processes related to energy usage.
We recognise that in South Africa electricity is regarded as a
scarce resource and we take all steps possible to ensure that       Waste-to-energy opportunities
our operations function as optimally as possible.                   The Poultry division currently has three rendering facilities
                                                                    each of which convert lower value waste streams to higher
Gas and Coal
                                                                    value product. County Fair, in conjunction with an independent
Consumption                                    2010         2009    company, have been actively researching various waste-to-
                                                                    energy opportunities that were available to the group over the
Gas (‘000 tons)                                   17           13   past three years.
Coal (‘000 tons)                                  41           38   Poultry manure
                                                                    At County Fair alone, approximately 600 cubic metres of manure
We use coal fired water boilers in the milling operations and
                                                                    is generated daily and we are investigating opportunities to
Liquid Petroleum Gas (“LPG”) and coal fired water boilers in
                                                                    extract methane gas from it and turning it into electricity and
the poultry operations. The predominant source of heat in the
                                                                    heat. Theoretical calculations done by an independent company
poultry houses is LPG. The majority of the poultry houses are
                                                                    estimated that County Fair alone should be able to generate
fan-ventilated to move air more efficiently and to reduce energy
                                                                    between 3,5 and 4,5 megawatt of electricity from the broiler
consumption.
                                                                    poultry manure; virtually the same amount of electricity required
Water usage                                                         to run the abattoir.
Poor water quality and potential water shortages are significant
potential risks to the business and we are looking at ways of       Conclusion
reducing the demand for water in all processes. Water effluent is    We believe that the sustainability of our business lies firmly in the
                                                                    hands of our employees, as they are the greatest source of our
managed and every effort is made to recycle effluent water.
                                                                    competitive advantage. We implement best practices in all areas
Consumption                                    2010         2009    of our operations in order to achieve meaningful improvement in
                                                                    the productivity of our people and in the quality of life for them
Water (megalitres)                            3 996        3 823
                                                                    and their communities.




                                                                                                           Astral Annual Report 2010 39
Annual financial statements



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




40 Astral Annual Report 2010
Approval of the annual financial statements

The annual financial statements and group annual financial 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 Schutte
Chairman                                                        Chief Executive Officer

Pretoria
11 November 2010




Certificate 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 Eloff
Group Company Secretary

Pretoria
11 November 2010




                                                                                                          Astral Annual Report 2010 41
Statement of directors’ responsibility

The directors are responsible for the preparation, integrity and fair presentation of the financial statements of Astral Foods Limited and
its subsidiaries. The financial 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 financial 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 financial statements and the reported expenses during the reporting
period. Actual results could differ from those estimates.

The directors consider that in preparing the financial 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 satisfied that the information contained in the financial statements fairly presents the results of
operations for the year and the financial 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 financial position of the company and the group to enable the directors to ensure that the financial 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 financial 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 financial statements support the viability of the company and the group.

The financial statements have been audited by the independent auditors, PricewaterhouseCoopers Incorporated, who were given
unrestricted access to all financial 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.




42 Astral Annual Report 2010
Independent auditors’ report

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

Directors’ responsibility for the financial statements
The company’s directors are responsible for the preparation and fair presentation of these financial 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 financial
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 responsibility
Our responsibility is to express an opinion on these financial 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial 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 financial 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 financial statements.

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

Opinion
In our opinion, the financial statements present fairly, in all material respects, the consolidated and separate financial position of
Astral Foods Limited as at 30 September 2010, and its consolidated and separate financial performance and its consolidated and
separate cash flows 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 Buys
Registered Auditor

Johannesburg
11 November 2010




                                                                                                               Astral Annual Report 2010 43
Directors’ report

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

1.    Nature of business
      The 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 information
      Astral 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 address
      The company’s registered address is:
      92 Koranna Avenue, Doringkloof, Centurion, 0157. Postnet Suite 278, Private Bag X1028, Doringkloof, 0140.

4.    Business review
      Financial overview
      Headline earnings for the year increased by 8% to R365 million from last year’s R338 million, mainly as a result of lower finance
      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 profit 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 profitability 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 profitability by 9% to R42 million (2009: R39 million).

      The operating profit 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 final 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 financial position and underlying cash flow
      generation capabilities.




44 Astral Annual Report 2010
4.   Business review (continued)
     Financial overview (continued)
     The financial position of the group for the financial year ended 30 September 2010 can be summarised as follows:

                                                                                                                 2010               2009
                                                                                                                R’000              R’000
     Operating results
     Revenue                                                                                                8 367 874        8 833 638
     Operating profit                                                                                          585 377          580 921
     Fair value adjustment of net investments in assets and liabilities held for sale                          (7 233)                –
     Net finance costs                                                                                         (21 062)          (50 158)
     Profit before income tax                                                                                  557 082          530 763
     Income tax expense                                                                                      (193 413)        (177 771)
     Profit 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
     Profit for the year                                                                                       363 669          352 992
     Financial position
     Non-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        1 366 449
     Non-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 analysis
     A segment analysis of the revenue, operating profit and liabilities is set out on page 51 of the annual financial statements.

     Acquisitions
     The 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 sale
     A 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 reclassified as held for sale. The net value
     of these assets and liabilities held for sale have been impaired by R7,2 million.

6.   Share capital
     Detail of share capital is reflected under note 10 of the annual financial 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.




                                                                                                             Astral Annual Report 2010 45
Directors’ report                                (continued)



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

      The attributable interest of the company in the profits 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 profits before tax                                                                                     540 309           504 457
      Total profits after tax                                                                                      387 658           360 967
      Total losses before tax                                                                                       8 572             3 339
      Total losses after tax                                                                                       13 151             3 855
      Joint ventures
      Total profits before tax                                                                                       37 071           32 152
      Total profits after tax                                                                                        25 292           22 664


8.    Dividends
      The 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           109 554
      Less: 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 equipment
      There 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 financial 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 finance lease with a corresponding
      lease liability of R44 448 000.

10. Directors
      The names of the directors who currently hold office 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 beneficially and non-beneficially 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 confirms 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. Resolutions
      No special resolutions, the nature of which might be significant 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.




46 Astral Annual Report 2010
12. Share incentive scheme
    During 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 financial statements.

13. Shareholders
    Details of shareholders are set out on page 89 of the annual financial statements.

14. Events subsequent to statement of financial position date
    No events took place between year-end and the date of the report that would have a material effect on the annual financial
    statements as disclosed.

15. Litigation
    A 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 financial statements
    The annual financial 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 financial statements after the date of issue.




                                                                                                            Astral Annual Report 2010 47
Directors’ remuneration report
for the year ended 30 September 2010


Emoluments
                                                                              Retire-     Other
                                                                   Perfor-     ment     benefits
                                                                   mance-       fund        and
                                                                   related    contri-    allow-    Total    Total
                                                          Salary    bonus    butions     ances     2010     2009
                                                          R’000     R’000     R’000      R’000    R’000    R’000
Executive directors
For managerial services
C 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’ fees
For services as directors
J 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 benefits received
                                                                                                   2010     2009
                                                                                                  R’000    R’000
Share appreciation rights exercised
D D Ferreira                                                                                        253        –
C E Schutte                                                                                           –      896
N C Wentzel                                                                                           –    1 335
                                                                                                    253    2 231
Outstanding leave paid on resignation
N C Wentzel                                                                                            –   1 051
M A Kingston                                                                                           –   1 057
                                                                                                       –   2 108




48 Astral Annual Report 2010
Share incentive scheme interests

Share option scheme
                                                                                                                     Number 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 fifth 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 scheme
                                                                                                                    Number outstanding
Share appreciation rights outstanding                                   Grant date          Exercise price          2010         2009
D D Ferreira                                                         15 July 2006                 R77,75                 –            7 200
                                                                                                                      Benefit received
Share 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 five years from the grant date.




                                                                                                                 Astral Annual Report 2010 49
Directors’ remuneration report                                                             (continued)
for the year ended 30 September 2010


Long-term retention bonus scheme
The 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 fifth year from date of allocation.

Issued share capital interest
                                                   Directly held                    Indirectly held                  Associates
                                                 Number of shares                  Number of shares                Number of shares
                                                2010             2009             2010              2009           2010        2009
Beneficial interests
Non-executive director
M Macdonald                                         –                –          60 000            60 000              –            –
Executive directors
C E Schutte                                   16 100           16 100                  –                –             –            –
D D Ferreira                                 155 000          155 000                  –                –             –            –
                                             171 100          171 100           60 000            60 000              –            –




50 Astral Annual Report 2010
Segment report – Group
for the year ended 30 September 2010


                                                                                             Revenue                            Operating profit
                                                                                    2010                  2009                2010                2009
                                                                                   R’000                 R’000               R’000               R’000
Poultry
South 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 profit                                                                                                          585 377               580 921
Fair value adjustment of investment held for sale                                                                         (7 233)
Net finance expense                                                                                                       (21 062)              (50 158)
Profit before income tax                                                                                                  557 082               530 763
Income tax expense                                                                                                      (193 413)             (177 771)
Profit for the year                                                                                                       363 669               352 992

                                                                                             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

                                                                                                                                Depreciation
                                                                                         Capital                                amortisation
                                                                                       expenditure                             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)                                                            Operating profit (R’000)
6 000                                                                      300


5 000                                                                      250


4 000                                                                      200


3 000                                                                      150


2 000                                                                      100


1 000                                                                       50


    0                                                                        0
                 Poultry             Feed          Services and Ventures                     Poultry                  Feed           Services and Ventures
                              2009          2010                                                               2009           2010



                                                                                                                        Astral Annual Report 2010 51
Accounting policies
for the year ended 30 September 2010


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

1.    Basis of preparation
      The consolidated financial 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 financial 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 financial 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 significant to the consolidated financial
      statements are disclosed in note 27 of the accounting policies.

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

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

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

      IFRS 3: Business Combinations – Revised
      The new standard continues to apply the acquisition method to business combinations, with some significant 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 financial statements of the group or company.

      IFRS 8: Operating Segments
      IFRS 8 requires an entity to adopt the ‘management approach’ to reporting on the financial 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 financial statements to evaluate the nature and financial effects of the business activities in which it
      engages and the economic environments in which it operates. This amendment resulted in a reclassification of segments in the
      segmental report.

      IAS 1: Presentation of Financial Statements – Revised
      The changes made to IAS 1 are to require information in financial 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 financial statements to reflect their function more clearly. The new titles
      are not mandatory for use in financial statements. The group complied with this amendment.

      IAS 23: Borrowing Costs – Revised
      The 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 financial statements of the group or company.

      IAS 27: Consolidated and Separate Financial Statements – Revised
      IAS 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 specifies 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 profit or loss. This amendment
      had no effect on the financial statements of the group or company.




52 Astral Annual Report 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 Liquidation
     The amendments require entities to classify the following types of financial instruments as equity, provided they have particular
     features and meet specific conditions: (a) puttable financial 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 financial 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 Associate
     The amendments allow first-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 financial statements. The amendment also removed the definition of the cost method from IAS 27 and replaced it with
     a requirement to present dividends as income in the separate financial statements of the investor. This amendment had no effect
     on the financial statements of the group or company.

     Amendment to IFRS 7: Amendments to IFRS 7 – Financial Instruments Disclosures: Improving Disclosures about
     Financial Instruments
     The 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 specific quantitative disclosures for financial instruments in the lowest level in the hierarchy. In addition, the
     amendment clarifies and enhances existing requirements for the disclosure of liquidity risk primarily requiring a separate liquidity
     risk analysis for derivative and non-derivative financial liabilities. The group complied with this amendment.

     Amendments to IAS 39: Financial Instruments: Recognition and Measurement Eligible Hedged Items
     The amendment makes two significant changes. It prohibits designating inflation as a hedgeable component of a fixed 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 financial statements of the group or company.

     IFRIC 15: Agreements for the Construction of Real Estate
     IFRIC 15 addresses diversity in accounting for real estate sales. IFRIC 15 clarifies 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 financial
     statements of the group or company.

     IFRIC 17: Distributions of Non-cash Assets to Owners
     IFRIC 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 clarifies 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 profit or loss. This amendment had no effect on the financial statements of the group or company.

     IFRIC 18: Transfers of Assets from Customers
     IFRIC 18 clarifies 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 financial statements of the group
     or company.

     Revised AC 503: Accounting for Black Economic Empowerment Transactions – Revised
     The 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 definition of vesting conditions and the accounting treatment of non-vesting conditions.
     This amendment had no effect on the financial statements of the group or company.

     AC 504: IAS 19 (AC 116) – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
     in the South African Pension Fund Environment
     The interpretation provides guidance on the application of IFRIC 14 (AC 447) in South Africa in relation to defined benefit pension
     obligations (governed by the Pension Funds Act, 1956) within the scope of IAS 19 (AC 116). This amendment had no effect on
     the financial statements of the group or company.


                                                                                                              Astral Annual Report 2010 53
Accounting policies                                    (continued)
for the year ended 30 September 2010



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 Transactions
      The amendment clarifies 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 – Classification of Rights Issues
      The amendment clarifies 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 fixed
      amount of currency, they should be classified as equity, regardless of the currency in which the exercise price is denominated.

      Amendment to IAS 24 – Related Party Disclosures
      This 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 clarifies and simplifies the definition of a related party.

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

      Amendment to IFRS 1 – Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters
      The 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 Instruments
      This IFRIC clarifies 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 profit 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 defined benefit 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 Defined Benefit Asset, Minimum Funding Requirements and their Interaction
      in the South African Pension Fund Environment
      The interpretation provides guidance on the application of IFRIC 14 (AC 447) in South Africa in relation to defined benefit pension
      obligations (governed by the Pension Funds Act, 1956) within the scope of IAS 19 (AC 116).

      Improvements to IFRS’s
      The 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 specified 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.


54 Astral Annual Report 2010
3.   Interest in group entities
     Subsidiaries
     Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial
     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. Identifiable 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 reflect 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 identifiable 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 ventures
     The 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 flow items on
     a line-by-line basis with similar items in the group’s financial 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 profits 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 interests
     The 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 significant influence, any retained interest in the entity is remeasured to its fair value,
     with the change in carrying amount recognised in profit 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 financial 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 reclassified to profit or loss.

     If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts
     previously recognised in other comprehensive income are reclassified to profit or loss, where appropriate.

4.   Segment reporting
     Operating 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 identified as the steering committee that makes strategic decisions.

5.   Foreign currencies
     Functional and presentation currency
     Items included in the financial 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 financial statements are presented in Rand,
     which is the company’s functional and presentation currency.


                                                                                                                 Astral Annual Report 2010 55
Accounting policies                                    (continued)
for the year ended 30 September 2010



5.    Foreign currencies (continued)
      Transactions and balances of monetary items
      Transactions 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 flow hedge.

      Changes in the fair value of monetary securities denominated in foreign currency classified 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 profit or loss, and other
      changes in carrying amount are recognised in equity. Translation differences on non-monetary financial assets or liabilities are
      reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets or liabilities such as equities
      held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences
      on non-monetary financial assets such as equities classified as available-for-sale are included in the fair value reserve in equity.

      Foreign operations
      The results and financial position of all group entities (none of which has the currency of a hyperinflationary 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 classified 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 equipment
      Land and buildings comprise mainly factories, poultry farms and offices.

      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 flow 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 benefits associated with the item will flow 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
      financial 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.




56 Astral Annual Report 2010
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 assets
     Computer software
     Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific
     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 identifiable and unique software products controlled by the group, are
     recognised as intangible assets if it is probable that these will generate economic benefits 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 development
     Research 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 finite 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 benefit, not exceeding five years.

8.   Goodwill
     Goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net identifiable 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 benefit
     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.   Inventories
     Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out (FIFO) method.
     The cost of finished 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 assets
     Live 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 profit 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.




                                                                                                               Astral Annual Report 2010 57
Accounting policies                                     (continued)
for the year ended 30 September 2010



11. Impairment of non-financial assets
      Assets that have an indefinite 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 identifiable cash flows (cash-
      generating units). Non-financial assets, other than goodwill, that suffered impairment are reviewed for possible reversal of the
      impairment at each reporting date.

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

      The group classifies its financial assets in the following categories:

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

      The classifications depend on the purpose for which the financial assets were acquired. Management determines the
      classification of its financial assets at initial recognition.

      At fair value through profit or loss
      Financial assets at fair value through profit or loss are financial assets so designated by management, or financial assets “held
      for trading”.

      A financial asset is classified as “held for trading” if acquired principally for the purpose of selling in the short term.

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

      Assets in this category are classified 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 profit 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 profit
      or loss.

      Loans and receivables
      Loans and receivables are non-derivative financial assets with fixed 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 financial position date
      which are classified 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 profit or loss.

      Available-for-sale financial assets
      Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified 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 financial assets are initially recognised at fair value and are subsequently also measured at fair value through
      profit or loss.

      Regular purchases and sales of financial 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 flows from the investments have expired or have been
      transferred and the group has transferred substantially all risks and rewards of ownership.

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

      The group classifies its financial liabilities in the following categories:

      • At fair value through profit or loss; and
      • Other.


58 Astral Annual Report 2010
13. Financial liabilities (continued)
    At fair value through profit or loss
     Financial liabilities at fair value through profit or loss are initially recognised at fair value with transaction costs being expensed.
     Subsequent measurement is at fair value with changes recognised in profit or loss.

     Other
     Other financial liabilities are recognised at fair value plus transaction costs. Subsequent measurement is at amortised cost with
     changes recognised in profit or loss.

14. Trade receivables
     Trade 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 profile.

     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. Significant
     financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial 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 equivalents
     Cash 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 financial position.

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

17. Borrowings
     Borrowings 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
     classified 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 capital
     Ordinary shares are classified 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. Provisions
     Provisions 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 outflow 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 outflow 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
     outflow 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 reflects current market assessments of the time value of money and the risks specific to the obligation.




                                                                                                                   Astral Annual Report 2010 59
Accounting policies                                   (continued)
for the year ended 30 September 2010



20. Current and deferred tax
      The 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 financial 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 profit 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 profit 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 financial instruments
      The group uses derivative financial 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 accounting
      Certain derivative instruments do not qualify for hedge accounting. Such derivatives are classified as at fair value through profit
      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 contracts
      The 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 financial instruments.

      Fair value estimation
      The fair value of financial 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 financial assets held by
      the group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

      The fair value of financial 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 financial position date. Quoted market prices or dealer quotes for similar instruments are used for long-term
      debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial
      instruments. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash flows. 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 financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current
      market interest rate that is available to the group for similar financial instruments.

22. Employee benefits
    Pension obligations
      The group operates defined contribution retirement schemes.

      A defined contribution scheme is a pension plan under which the group pays fixed contributions into a separate entity.

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

      Other post-employment benefit obligations
      The group provides post-retirement healthcare benefits to some of its retirees. The entitlement to these benefits is usually
      conditional on the employee remaining in service up to retirement age. The expected costs of these benefits are accrued over the
      period of employment using the same accounting methodology as used for defined benefit 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
      qualified actuaries.




60 Astral Annual Report 2010
22. Employee benefits (continued)
    Termination benefits
    Termination benefits 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 benefits. The group recognises termination benefits 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 benefits as a result of an offer made to encourage voluntary redundancy.
    Benefits falling due more than 12 months after the reporting date are discounted to present value.

    Profit-sharing and bonus plans
    The group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration
    the profit attributable to the company’s shareholders. These profit-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 scheme
    The 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 fifth 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 plans
    The 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
    fifth 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 financial 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 sale
    Non-current assets (or disposal groups) are classified 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 recognition
    Revenue 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 benefits
    will flow to the entity and specific 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 specifics
    of each arrangement.

    Revenue is recognised as follows:

    Sales of goods
    Sales 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.


                                                                                                               Astral Annual Report 2010 61
Accounting policies                                    (continued)
for the year ended 30 September 2010



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

      Interest income
      Interest 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 flow 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. Leases
      Leases of property, plant and equipment, where the group has substantially all the risks and rewards of ownership, are classified
      as finance 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 finance charges so
      as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges,
      are included in other long-term payables. The interest element of the finance 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 finance 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 classified 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 distribution
      Dividend distribution to the company’s shareholders is recognised as a liability in the group’s financial statements in the period in
      which the shareholders are entitled to the dividend.

27. Critical accounting estimates and judgements
      The preparation of the financial 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 significant to the financial statements,
      are mainly the following:

      Impairment of trade receivables
      A provision for impairment is established when there is evidence of significant financial difficulties of the debtor, probability that the
      debtor will enter bankruptcy or financial re-organisation, and default or delinquency in payments.

      Impairment of goodwill
      Goodwill 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 flow 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 assets
      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.

      Fair value assessment of biological assets
      The 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 benefits
      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 financial statements.

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

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




62 Astral Annual Report 2010
27. Critical accounting estimates and judgements (continued)
    Fair value of long-term retention bonus scheme
      The determination of the fair value is based on the extent to which pre-set performance conditions are met, discounted to
      present value.

      Share-based payments
      The 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 instruments
      Financial instruments are fair valued at statement of financial position date. The value of financial instruments is subject to material
      fluctuations 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.




                                                                                                                Astral Annual Report 2010 63
Statement of financial position
at 30 September 2010


                                                                           Group                     Company
                                                                  2010              2009     2010           2009
                                                      Notes      R’000             R’000    R’000          R’000

Assets
Non-current assets
Property, 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 assets
Inventories                                              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 financial 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 company
Ordinary 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

Liabilities
Non-current liabilities
Borrowings                                              12      80 545          29 057           –              –
Deferred tax liabilities                                13     356 929         365 801           –              –
Retirement benefit obligations                           14      84 643          76 998           –              –
                                                               522 117         471 856           –              –
Current liabilities
Trade 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




64 Astral Annual Report 2010
Statement of comprehensive income
for the year ended 30 September 2010


                                                                                        Group                       Company
                                                                               2010              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 profit                                                               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 profit                                                             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)
Profit before income tax                                                     557 082         530 763     120 770          418 664
Tax expense                                                         24     (193 413)       (177 771)    (24 404)          (24 272)
Profit for the year                                                          363 669         352 992       96 366         394 392
Other comprehensive income
Foreign currency translation adjustments                                      (6 401)        (22 107)           –                –
Total comprehensive income                                                  357 268         330 885       96 366         394 392
Profit attributable to:
Equity holders of the company                                               357 637         344 564       96 366         394 392
Non-controlling interest                                                      6 032           8 428            –               –
Profit 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 profit attributable to the equity
holders of the company during the year:
– basic                                                             25          940              906
– diluted                                                           25          939              905




                                                                                                        Astral Annual Report 2010 65
Statement of changes in equity
for the year ended 30 September 2010


                                            Attributable to ordinary shareholders of Astral Foods Limited
                                              Share                    Equity
                                             capital     Currency    compen-                                            Non-
                                                and    translation     sation   Treasury    Retained               controlling       Total
                                           premium        reserve     reserve     shares    earnings         Total  interests       equity
                                              R’000        R’000       R’000      R’000       R’000         R’000      R’000        R’000

Group
2009
Balance 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
Profit 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

2010
Balance 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
Profit 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

Company
2009
Balance at 1 October 2008                       736             –      6 033           –     124 181      130 950
Option value of share options granted             –             –      3 510           –           –        3 510
Profit 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

2010
Balance at 1 October 2009                       736             –      9 543           –     223 619      233 898
Option value of share options granted             –             –      3 729           –           –        3 729
Profit 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




66 Astral Annual Report 2010
Statement of cash flows
for the year ended 30 September 2010


                                                                             Group                        Company
                                                                    2010              2009        2010             2009
                                                         Notes     R’000             R’000       R’000            R’000
Cash flows from operating activities:
Cash operating profit                                        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 flows to financing 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)           –                –
Reclassification 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)




                                                                                              Astral Annual Report 2010 67
Notes to the statement of cash flows
for the year ended 30 September 2010


                                                                             Group                      Company
                                                                    2010              2009      2010           2009
                                                                   R’000             R’000     R’000          R’000

A.    Cash operating profit
      Operating profit                                            585 377         580 921     123 325         419 156
      Adjustments for:
      Depreciation and amortisation                              108 567         103 561            –               –
      Impairment of fixed assets                                        –              700           –               –
      Profit/(loss) on disposal of fixed assets                        597           (6 859)          –               –
      Increase in provision for retirement benefit obligations      7 645            8 288           –               –
      Fair value adjustment on derivative financial instruments         –              581           –               –
      Other non-cash flow items                                     3 558            3 525           –               –
      Cash operating profit                                       705 744         690 717     123 325         419 156

B.    Changes in working capital
      Decrease/(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 paid
      Balance 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           –              –
      Reclassification 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 paid
      Balance 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 acquired
      Non-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 flow on acquisition                                           –        (25 000)           –               –

F.    Acquisition of business unit
      Property, 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 flow on acquisition                                      (2 245)               –          –               –




68 Astral Annual Report 2010
Notes to the annual financial statements
for the year ended 30 September 2010


                                                                            Land and         Plant and
                                                                            buildings       equipment           Vehicles            Total
                                                                               R’000            R’000             R’000            R’000

1.   Property, plant and equipment
     Group
     2009
     Balance at 1 October 2008:
     Cost                                                                     873 066        1 312 818         160 471        2 346 355
     Accumulated 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        2 467 848
     Accumulated depreciation                                                (260 626)       (616 218)          (86 666)       (963 510)
     Closing net book amount                                                 631 490          788 160            84 688       1 504 338
     2010
     Net 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
     Reclassification 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)
     Closing net book amount                                                 710 317          832 975            82 181       1 625 473
     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)
     Closing net book amount                                                 710 317          832 975            82 181       1 625 473

     Details of the individual properties are contained in a register, which is open for inspection by members or their nominees at the
     registered office 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 finance 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.




                                                                                                               Astral Annual Report 2010 69
Notes to the annual financial statements                                                                           (continued)
for the year ended 30 September 2010


                                                                                             Group                        Company
                                                                                   2010               2009        2010            2009
                                                                                  R’000              R’000       R’000           R’000

2.    Intangible assets – software
      Opening net book amount                                                     8 396              12 251
      Changes for the year:
      Exchange translation changes                                                   (6)                 (11)
      Capitalisation of costs incurred                                            1 281               1 237
      Reclassification 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.    Goodwill
      Cost at beginning and end of year                                        124 802           124 802
      Impairment test for goodwill
      Goodwill is allocated to the group’s cash-generating units
      identified 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 loans
      Shares 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 fixed repayment date and carries interest linked to the daily bank rate which is 9,5%
      at 30 September 2010.
      Other loans have no fixed repayment date and are interest free.




70 Astral Annual Report 2010
                                                                                        Group                           Company
                                                                              2010               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 assets
     Group
     2009
     Fair 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

     2010
     Fair 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                           Company
                                                                              2010               2009          2010             2009
                                                                             R’000              R’000         R’000            R’000

7.   Derivative financial instrument
     Currency 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 classified as assets at fair value through
     profit and loss.
8.   Trade and other receivables
     Financial instruments
     Trade 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-financial instruments
     Pre-payments                                                            3 640               3 831
     Other receivables                                                      31 719              53 764
                                                                           626 698          685 116




                                                                                                           Astral Annual Report 2010 71
Notes to the annual financial statements                                                                     (continued)
for the year ended 30 September 2010


                                                                                        Group                      Company
                                                                               2010              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 profile 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 profit 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 profile 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 equivalents
      Cash at bank and in hand                                              140 240         137 845
      Cash and cash equivalents include the following for purposes
      of the statement of cash flows:
      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 flows               (28 994)      (152 935)      (47 196)      (21 331)




72 Astral Annual Report 2010
                                                                                        Group                         Company
                                                                                2010             2009             2010        2009
                                                                               R’000            R’000            R’000       R’000

10. Share capital
    Authorised share capital
    75 000 000 ordinary shares of 1 cent each
    (2009: 75 000 000 ordinary shares of 1 cent each)                             750             750             750              750
    Issued share capital
    42 136 285 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         Number of      Number of        Number of
    Number of ordinary shares effectively in issue                          shares            shares         shares           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 shares
    Treasury shares are held by a wholly-owned subsidiary of
    the company.
    Unissued share capital
    The 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 payments
    The group had two share-based payment arrangements during the year:

    Share option scheme
    The 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 fifth 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.




                                                                                                            Astral Annual Report 2010 73
Notes to the annual financial statements                                                                            (continued)
for the year ended 30 September 2010



11. Share-based payments (continued)
      Movement during the year in the number of options is as follows:

                                                                     Number                Number            Number             Number
                                                                   of options            of options       of options         of options
                                                               outstanding at             forfeited      outstanding        exercisable
                                                      Exercise the beginning                 during       at the end         at the end
      Date                                               price    of the year              the year       of the year        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 scheme
      The 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 financial position.

      The right to receive payment based on the options granted lapses after five years from the grant date.

      Movement during the year in the number of options is as follows:

                                                                                         Number             Number              Number
                                                                                         of rights          of rights           of rights
                                                                                   outstanding at          exercised        exercisable
                                                                          Exercise the beginning              during         at the end
      Date                                                                   price    of the year           the year         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.

                                                                                                                           Group
                                                                                                                   2010             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




74 Astral Annual Report 2010
                                                                                     Group                        Company
                                                                            2010              2009         2010             2009
                                                                           R’000             R’000        R’000            R’000
12. Borrowings
    Non-current
    Secured loans                                                         43 223             28 109
    Unsecured loans                                                       12 308              6 352
    Property lease capitalised as finance 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
    Current
    Bank 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
    borrowings
    Not later than one year                                               23 845              6 659
    Between one year and five years                                        62 682             27 300
    Over five years                                                        76 161             10 586
                                                                         162 688           44 545
    Less: Finance charges                                                (62 709)         (10 084)
                                                                          99 979             34 461
    Borrowing facilities
    The group has general borrowing facilities at floating
    interest rates                                                       843 500          843 500
    The facilities are denominated in SA Rand.
    The borrowing facilities are reviewed on an annual basis.
    Borrowing powers
    No limit has been placed in the articles of association on the borrowing powers of the company.



                                                                                                       Astral Annual Report 2010 75
Notes to the annual financial statements                                                              (continued)
for the year ended 30 September 2010


                                                                                   Group                     Company
                                                                          2010              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 fiscal authority.
      Movement on the deferred tax asset account is
      as follows:
      At the beginning of the year                                          658             1 924
      Charge to profit 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
      Reclassification to liabilities held for sale                         (786)             –
      Transfer from deferred tax asset                                    2 080              –
      Exchange translation changes                                          (16)             –
      (Release from)/charge to profit 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 benefit obligations
      Post-employment medical benefits
      The group provides post-retirement healthcare benefits to
      some of its retirees. Benefits paid and the movement in the
      provision are charged against profits in the current period.
      Amounts recognised in the profit and loss:
      Benefits 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 benefits payable during next 12 months            3 250             3 180
      The liability recognised in the financial 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 inflation rate                                           7,10%             7,75%




76 Astral Annual Report 2010
                                                                                   Group                           Company
                                                                          2010               2009          2010             2009
                                                                         R’000              R’000         R’000            R’000
14. Retirement benefit 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 benefits payments                                            (3 180)            (2 630)
    Balance at the end of the year                                       84 643            76 998
                                                                      Accrued
    Sensitivity analysis                                               liability       Change
    Discount rate increases by 1% p.a.                                   73 941             (13%)
    Discount rate reduces by 1% p.a.                                     98 044              16%
    Subsidy inflation increases by 1% p.a.                                98 263              16%
    Subsidy inflation reduces by 1% p.a                                   73 611             (13%)
    The present value of the defined benefit obligation and the                       Experience
    experience adjustment were as follows:                               R’000      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                           Company
                                                                          2010               2009          2010             2009
                                                                         R’000              R’000         R’000            R’000
15. Trade and other payables
    Financial instruments
    Trade payables                                                     608 994         772 106                –                 –
    Accruals and other payables                                        165 791         111 681              219               244
    Non-financial instruments
    Other 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 commitments
    Capital commitments
    Capital expenditure approved not contracted                        120 124             93 956
    Capital expenditure contracted but not recognised in the
    financial statements                                                  20 156            34 505
    The capital commitments will be financed by operating cash flow and borrowings well within the accepted gearing profile of
    the group.




                                                                                                       Astral Annual Report 2010 77
Notes to the annual financial statements                                                                      (continued)
for the year ended 30 September 2010


                                                                                     Group                          Company
                                                                             2010             2009           2010             2009
                                                                            R’000            R’000          R’000            R’000
16. Contingencies and commitments (continued)
      Operating lease commitments
      The 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 commitments
      The group has contracted its raw material requirements from
      various suppliers in terms of future supply agreements.
      Contracted amounts not recognised in the statement of
      financial 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 liabilities
      The 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                          Company
                                                                             2010             2009           2010             2009
                                                                            R’000            R’000          R’000            R’000
17. Revenue
      Revenue 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




78 Astral Annual Report 2010
                                                                               Group                         Company
                                                                      2010              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 five 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 nature
    The following expense items by nature have been included in
    arriving at operating profit:
    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 benefit 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            –                –




                                                                                                 Astral Annual Report 2010 79
Notes to the annual financial statements                                                               (continued)
for the year ended 30 September 2010


                                                                                  Group                       Company
                                                                         2010              2009       2010            2009
                                                                        R’000             R’000      R’000           R’000

19. Directors’ remuneration
      Executive
      Salaries                                                                                        7 031          5 658
      Performance-related bonuses                                                                     1 432            387
      Retirement fund contributions                                                                   1 297          1 051
      Other benefits                                                                                     682            554
      Share appreciation rights exercised                                                               253          2 231
                                                                                                     10 695          9 881
      Non-executive
      Fees                                                                                            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 benefit expense
      Wages and salaries                                               628 469        617 561
      Termination benefits                                                1 696          1 785
      Retirement fund contributions                                     55 156         50 992
      Post-retirement benefits                                            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 income
      Dividends 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 financial instruments
      – realised                                                          (415)              533
      (Loss)/profit on sale of property, plant and equipment               (418)            6 859
      Fair value gains/(losses) on financial 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


80 Astral Annual Report 2010
                                                                                    Group                          Company
                                                                           2010               2009         2010             2009
                                                                          R’000              R’000        R’000            R’000

23. Finance expense and income
    Interest expense
    Bank 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 income
    Bank surplus balances                                                10 011              9 818             –                –
    Other                                                                 2 190              2 984             –                3
                                                                         12 201             12 802             –                3
    Net finance 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 expense
    Current 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 profit before tax differs from the
    theoretical amount that would arise using the basic tax rate of
    South Africa:
    Profit 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 share
    Profit 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                906
    Diluted earnings per share (cents)                                      939                905
                                                                      Number of       Number of
                                                                         shares          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



                                                                                                       Astral Annual Report 2010 81
Notes to the annual financial statements                                                                          (continued)
for the year ended 30 September 2010


25. Earnings per share (continued)
      Basic earnings per share
      Basic earnings per ordinary share is calculated by dividing the profit 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 share
      Diluted 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                            Company
                                                                                2010             2009            2010             2009
                                                                               R’000            R’000           R’000            R’000
26. Headline earnings
      Net profit attributable to shareholders                                357 637          344 564
      Adjusted for:
      After-tax net loss/(profit) 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. Dividends
      The following dividends were declared in respect of the
      current year’s profits:
      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 financial statements do not include the
      final dividend declared in respect of the financial year
      ended 30 September 2010.
      The dividends exclude any tax or withholding tax on dividends.
28. Financial instruments
    28.1 Financial instruments by category
      The financial instruments are classified as follows:
      Financial assets
      Assets at fair value through profit and loss:
      Derivatives                                                                196              309                –                –
      Loans and receivables
      Loans                                                                   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 liabilities
      Other
      Accounts 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


82 Astral Annual Report 2010
28. Financial instruments (continued)
    28.1 Financial instruments by category (continued)
    All financial instruments are initially recognised at fair value, and subsequently measured as follows:
    – Assets at fair value through profit and loss, at fair value.
    – Loans and receivables at amortised costs.
    – Other financial liabilities at amortised costs.
    At 30 September 2010 the carrying amounts of loans and receivables and financial liabilities approximated their
    fair values.
    28.2      Financial Risk Management
    The group is exposed to the following major financial 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 financial 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 flow exposure from interest rate
          fluctuations is hedged by entering into interest swap agreements when management regards it prudent.
          The group’s main income and operating cash flows are substantially independent of changes in the market interest rates.
          Based on the financial 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 fluctuations.
          Exposure to exchange rate fluctuations is managed by utilising forward exchange contracts and currency option contracts
          when management regards it prudent. Forward exchange contracts entered into are related to specific statement of financial
          position items.
    – The following Rand value items reported in the financial statements are exposed to foreign exchange rate fluctuations at
      30 September:
                                                                           British
    Group                                                                  Pound             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)
    2009
    Financial 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 profits of
    the group (2009: R681 000). A weakening of the Rand will result in lower profits 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              2009
    Group                                                                       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 profits
    of the group. A weakening of the yield will result in increased profits 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.




                                                                                                              Astral Annual Report 2010 83
Notes to the annual financial statements                                                                                   (continued)
for the year ended 30 September 2010



28. Financial instruments (continued)
    28.2 Financial Risk Management (continued)
      (iii) Commodity price risk
            The prices of commodities used by the group can fluctuate 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 profitability. The group
            may suffer financial loss when a fluctuating price contract obligation is entered into and the commodity prices increase or
            when a fixed price agreement is entered into and commodity prices fall. Commodity price fluctuations are normally caused
            by factors such as supply conditions, weather, exchange rate fluctuations and other economic conditions.
          These risks are managed through an established process whereby the various conditions which influenced 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 officer.
      B. Credit risk
         Credit risk is the risk of financial loss to the group if a counterparty to a financial 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 financial
          institutions of high credit standing.
          The group’s main credit risk is concentrated in the aggregate balance of trade receivables on statement of financial 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 significant 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 classifications into different risk profiles, impairments recognised as
          well as collateral security held are contained in note 8.
          The group does not consider there be any significant 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 financial institutions of high
          quality and standing. These financial 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 financial obligations as they fall due.
          The group’s liquidity risk consists mainly of the amounts borrowed on long term to fund specific capital expenditure items,
          trade payables and amounts borrowed on general bank facilities. The expected cash flows are well within the confirmed
          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 flow forecasts at regular intervals, in order to maintain sufficient funds to fund the business activities from
          cash generated by operations and funds available from committed credit facilities.
          The maturity profile of the financial liabilities is analysed below.
          The amounts disclosed are undiscounted cash flows.
                                                                                                 Between
                                                                                  Within       1 year and        More than
                                                                                  1 year          5 years          5 years            Total
                                                                                  R’000             R’000            R’000           R’000
          Group
          2010
          Borrowings                                                             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
          2009
          Borrowings                                                              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.


84 Astral Annual Report 2010
                                                                                              Between
                                                                               Within       1 year and       More than
                                                                               1 year          5 years         5 years               Total
                                                                               R’000             R’000           R’000              R’000
28.   Financial instruments (continued)
      28.2 Financial Risk Management (continued)
      C. Liquidity risks (continued)
      Company
      2010
      Trade 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
      2009
      Trade 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 finance its financial liabilities with dividend income.
      28.3 Capital Risk Management
      The 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 financial position.
      The net debt to equity ratio as at 30 September 2010 was as follows:
                                                                                                                            Group
                                                                                                                   2010              2009
                                                                                                                  R’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 transactions
      The 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 services
      Sales 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.



                                                                                                               Astral Annual Report 2010 85
Notes to the annual financial statements                                                                              (continued)
for the year ended 30 September 2010



29. Related party transactions (continued)
      Key management
      Employees fulfilling 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 financial 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.

                                                                                                                             Group
                                                                                                                     2010              2009
                                                                                                 Notes                 %                 %

30. Interests in joint ventures
      The 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 flows of the joint ventures, and are included in the
      consolidated financial statements:
                                                                                                                 R’000                R’000
      Assets and liabilities
      Non-current assets                                                                                       105 903               45 677
      Current assets                                                                                            51 568               77 382
      Total assets                                                                                             157 471           123 059
      Non-current liabilities
      Interest 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 expenses
      Revenue                                                                                                  216 413           281 754
      Profit before tax                                                                                           37 071              32 152
      Income taxes                                                                                              (11 779)              (9 488)
      Profit after tax                                                                                           25 292               22 664
      Cash flows
      Cash flow from operating activities                                                                         36 865           32 212
      Investing cash flows                                                                                       (97 662)         (10 900)
      Financing cash flows                                                                                        68 543             (684)
      Profit distribution/Dividend paid                                                                          (13 800)         (10 566)
      Net cash flows                                                                                              (6 054)             10 062
      Capital commitments
      Capital expenditure approved not contracted                                                                        –           27 874
      Capital expenditure contracted but not recognised in the financial statements                                   2 171           10 022




86 Astral Annual Report 2010
31. Interests in subsidiary companies
    Details of the principal subsidiary companies of Astral Foods Limited are as follows:
                                                   Issued                 Effective                     Company’s interest
                                                  ordinary               percentage
                                                   capital                 holding                 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 investments
    Directly 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.




                                                                                                             Astral Annual Report 2010 87
Notes to the annual financial statements                                                                           (continued)
for the year ended 30 September 2010


                                                                                                                           Group
                                                                                                                  2010              2009
                                                                                                                 R’000             R’000

32. Business combination
      The 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 profit.
      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 flows 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 final.

33. Assets and liabilities held for sale
      A 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 financial 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 reflect 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.




88 Astral Annual Report 2010
Analysis of ordinary shareholders
at 30 September 2010


                                              Number of              Number of
                                            shareholders        %       shares                %

Shareholder spread
1 – 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 of
                                            shareholdings       %       shares                %

Distribution of shareholders
Banks                                                 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 shareholders
Non-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 of
                                                                        shares                %

Beneficial shareholders holding 3% or more
Government 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




                                                                       Astral Annual Report 2010 89
Notice of annual general meeting

Tenth annual general meeting
Notice 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 financial statements
Ordinary resolution no. 1
To receive and consider the annual financial 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 directors
Ordinary resolution no. 2
To 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. 3
To 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 filled 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 qualifications and experience of the above are available on pages 10 and 11 of this annual report.

Non-executive directors’ fees
Ordinary resolution no. 4
To 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 office from time to time (other than those in the employ of the company) be determined as follows:

                                                                                                                 Proposed
                                                                                               Proposed        attendance          Fixed fee
                                                                                                  annual           fee per               per
                                                                                                 retainer         meeting            annum
                                                                                                    2011              2011             2010
                                                                                                   R’000             R’000            R’000
Chairman of the board                                                                                  280               23              350
Member of the board                                                                                    140               12              175
Chairman of the Audit and Risk Management Committee                                                    106               12              133
Member of the Audit and Risk Management Committee                                                       56                6               70
Chairman of the Human Resources, Remuneration and Nominations Committee                                106               12              133
Member of the Human Resources, Remuneration and Nominations Committee                                   56                6               70

Ordinary resolution no. 5
To 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 financial year.

Ordinary resolution no. 6
That the authority of the Audit and Risk Management Committee to determine the remuneration of the auditors, be confirmed.

Special business:
To consider and, if deemed fit, to pass, with or without modification, 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 shares
Special resolution no. 1
Resolved, 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;




90 Astral Annual Report 2010
• repurchases may not be made at a price more than 10% above the weighted average of the market value for the securities for the
  five 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 defined 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 financial 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
  financial 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 confirmation
to the JSE regarding the adequacy of the company’s working capital in accordance with Schedule 25 of the JSE Listings Requirements.

Directors’ responsibility statement
The directors, collectively and individually, accept full responsibility for the accuracy of the information given in the annual financial
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 change
There has been no material change in the financial or trading position of the company and its subsidiaries since the date of publication
of the company’s annual results on 15 November 2010.

Litigation
The 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 financial 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.




                                                                                                                Astral Annual Report 2010 91
Notice of annual general meeting                                                            (continued)



Voting and proxies
On 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 certificated 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 certificated 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 Eloff
Company Secretary

Pretoria
11 November 2010




92 Astral Annual Report 2010
Annual general meeting – explanatory notes:
1.  Annual financial statements
     At the annual general meeting, the directors must present the annual financial 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 first 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 qualifications 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’ fees
     In 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 satisfied 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 auditor
     PricewaterhouseCoopers Incorporated has communicated its willingness to continue in office and ordinary resolution number 5
     proposes the re-appointment of that firm as the company’s external auditor until the next annual general meeting.

     The Audit and Risk Management Committee has satisfied 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 satisfied itself that PricewaterhouseCoopers Incorporated are
     accredited to appear on the JSE List of Accredited Auditors.

5.   Determination of auditors’ remuneration
     In 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 shares
     The 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.




                                                                                                               Astral Annual Report 2010 93
Shareholders’ diary

Annual general meeting                                                 Thursday, 10 February 2011

Reports and accounts
Interim 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

Dividends
Ordinary dividend No. 20
(470 cents per ordinary share)
Last date to trade cum dividend                                        Friday, 14 January 2011
Shares commence trading ex dividend                                    Monday, 17 January 2011
Record date                                                            Friday, 21 January 2011
Payment of dividend                                                    Monday, 24 January 2011


Interim dividend No. 21 – March 2011
Declaration                                                            May 2011
Payment                                                                June 2011

Final dividend No. 22 – September 2011
Declaration                                                            November 2011
Payment                                                                January 2012




94 Astral Annual Report 2010
Form of proxy

Astral Foods Limited
(Incorporated in the Republic of South Africa)
(Registration number 1978/003194/06)
Share code: ARL                                                                                                              ASTRAL
                                                                                                            A leading Southern African integrated poultry producer
ISIN: 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 financial 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
    financial year
 5. To confirm 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 fit 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 first 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 fit.

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.




Astral Annual Report 2010
Administration

Astral Foods Limited                            Major subsidiaries and joint ventures
Registration No. 1978/003194/06                 Astral Operations Limited
Share code: ARL                                 Registration No. 1947/027453/06
ISIN: ZAE000029757                              Directors:   C E Schutte
                                                             T Delport
                                                             D D Ferreira
Registered office
                                                             L W Hansen
92 Koranna Avenue
                                                             R J Steenkamp
Doringkloof
Centurion                                       Africa Feeds Limited (Zambia)
0157                                            Registration No. 36327
                                                Directors:   T D Banda*
Company secretary                                            N R Mwanyungwi*
M A Eloff                                                    D A R Phiri*
                                                             C L Sexton
Postal address                                               R J Steenkamp
Postnet Suite 278                               * Zambian
Private Bag X1028
Doringkloof, 0140                               Meadow Feeds Eastern Cape (Pty) Limited
                                                Registration No. 2003/021458/07
Telephone +27(0) 12 667 5468
                                                Directors:   C E Schutte
Telefax +27(0) 12 667 6665
                                                             D D Ferreira
e-mail: contactus@astralfoods.com
                                                             C L Sexton

Website address                                 Ross Poultry Breeders (Pty) Limited
http:/www.astralfoods.com                       Registration No. 1999/027125/07
                                                Directors:   C E Schutte
Auditors                                                     T Delport
PricewaterhouseCoopers Incorporated                          T A Exley*
                                                             C P Lea*
Principal banker                                * British
Nedcor Bank Limited
                                                NuTec Southern Africa (Pty) Limited
                                                Registration No. 1996/002008/07
Sponsor
                                                Directors:   C E Schutte
JPMorgan Chase Bank, NA
                                                             D D Ferreira
(Johannesburg Branch)
                                                             Y M Knoop*
1 Fricker Road, corner Hurlingham Road                       G J Scholman*
Illovo, Johannesburg, 2196                      * Dutch
Private Bag X9936, Sandton, 2146
Telephone +27(0) 11 507 0430                    Meadow Moçambique Limitada
                                                Registration No. 5710/MP/G/2001
Transfer secretaries                            Directors:   R J Steenkamp
Computershare Investor Services (Pty) Limited                H Buys
70 Marshall Street                                           J R Tinga*
Johannesburg, 2001                                           C A Sexton
PO Box 61051, Marshalltown, 2107                             S Jager
                                                * Mozambican

                                                National Chicks Swaziland
                                                Registration No. 94/63894/07
                                                Directors:   R W Packard*
                                                             D A Stock
                                                * Swazi

                                                Meaders Feeds Limited
                                                Registration No. 10746
                                                Directors:   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
                 ASTRAL
A leading Southern African integrated poultry producer


www.astralfoods.com

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:15
posted:1/21/2011
language:English
pages:100