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Brought to you by Global Reports

1 Astral Foods A

The group experienced an

excellent trading year.

Good procurement

strategies, lower raw

material prices together

with imports benefitted

the Animal Feeds division.

Poultry experienced high

volume increases and best

ever production and

processing efficiencies.


Astral Foods Annual Report 2003


3 Astral Foods A

• Operating profit u

49% to R328 millio

• Headline earnings

by 49% to R208 m

• Dividend per share

55% to 168 cents

• Dividend cover

reduced

• Net cash inflow fo

the year R180 mill

01 02 0300

Operating profit (R million)

328

220

174

00 01 0302

203

Headline earnings (R million)

90

00 030201

117140

208

Operating cash flow (R million)

236

127

154

02 0301


CAPE

PROVICE

1 Paarl

2 Cape Town

3 Hermanus

EASTERN

CAPE

4 Port Elizabeth

KWA ZULU

NATAL

5 Pietermaritzburg

FREE STATE

6 Welkom

GAUTENG

PROVINCE

9 Pretoria

10 Pelindaba

11 Olifantsfontei

12 Randfontein

13 Meyer ton

MPUMALANGA

7 Delmas

8 Standerton

12

34

5

6

109

12 7

8

1113



5 Astral Foods A

Meadow Feeds - division* 100%

Earlybird Farms (Pty) Ltd 50%

Ross Poultry Breeders (Pty) Ltd 90%

Central Analytical Laboratories (Pty) Ltd 100%

National Chick - division* 100%

County Fair Holdings (Pty) Ltd 100%

29% Elite Breeding Farms 53%

County Fair Foods (Pty) Ltd 100%

National Chick Ltd 100%

National Chicks Botswana (Pty) Ltd 67%

National Veterinary Supplies (Pty) Ltd 100%

National Chicks Swaziland (Pty) Ltd 67%

Investment Holdings Poultry Operations Animal Feed Operations

Africa Feeds Ltd (Zambia) 80%

Meaders Feeds Ltd (Mauritius) 32%

NuTec SA (Pty) Ltd 50%

*Division of Astral Operations Limited


6

7

8

9

5

9


2

3

4


7 Astral Foods A

2 Jurie Johannes Geldenhuys (60) #

BSc (Eng Elec), BSc (Eng Mining), MBA

Chairman of the human resources and remuneration

committee

Director of companies

Appointed to the board on 24 May 2001

3 Evert Michiel Groeneweg (67) @

CA(SA) , PMD (Harvard)

Chairman of the audit and risk management

committee


Appointed to the board on 19 February 2001

4 Charles Gustav van Veyeren (69) #

BSc Agric



5 Thabang Charlotte Christine Mampane (44)

BA Honours (Public Administration)

Head of Regions: SABC

Appointed to the board on 14 November 2003

6 Malcolm Macdonald (61)

BCom, CA(SA), CIMA, AMP (Harvard)

Executive director, Finance: Iscor Limited

Appointed to the board on 14 November 2003

8 Thomas Pritchard (48)

BCom (Hons), CA(SA)

Financial Director and Company Secretary


9 Michael Andrew Kingston (52)

Chief Operating Officer poultry division


# Members of the human resources and remuneration

committee

@ Members of the audit and risk management

committee



The board is consistentlyreviewing acquisition andexpansion criteria and wouldhope to make some progressduring the coming year.

– further improvement in production efficiencies; and

– the continuing strengthening of the rand, with resultant lower

prices.

For the year under review, the group reported a headline earni

of 49%, from R140 million (2002) to R208 million (2003).

168 cents per share have been declared by the board, an incr

on the previous year’s 108 cents per share.

Market conditions. The industries in which the grou

experienced almost opposite trading conditions during the pas

The 2002 year was characterised by a sharp decline in the

rand against the US dollar. Commodity prices are dollar-bas

result that the price of maize over a short period increased

high of R1 801/ton during January 2002. During the period u

exactly the opposite occurred. The strong recovery of the

most currencies caught a number of industry players off guard

of maize reduced to its lowest level of R733/ton during April 2

The group did well during these turbulent conditions through

procurement strategies, including hedging and imports of maiz

prices were artificially high.

Imports of poultry meat entered the South African market on t

strong rand. The industry has applied, through the South Af

Association, to increase tariffs that have not been adjusted

The International Trade Administration Commission of South A

expected to decide on the level of future tariffs shortly.

Strategic focus. The group’s strategy, namely, "to grow the

selected food markets to become a better balanced le

commodity company", remains firm. The strong cash flow of th

resulted in a net cash surplus of R59 million (2002: ne

R103 million). Although the true cash situation is closer to a

level, the group is in a much stronger position to pur

opportunities. The board is consistently reviewing acquisition an

criteria and would hope to make some progress during the co


9 Astral Foods A

Corporate governance. The board is fully committed to the principles of

transparency, integrity and accountability, and recognises that the primary

responsibility for corporate governance in Astral Foods rests firmly with the

board and its chairman. The group complies, in all material aspects, with

the King Report on Corporate Governance for South Africa 2002.

Prospects. It is not expected that the decrease in raw material prices will

continue, as international commodity prices have already started to firm.

The rand is expected to remain strong, especially against the US dollar.

Overall, in spite of lower interest rates and higher disposable income, it is

not expected that the current margins will be maintained. Earnings for the

year ahead is nevertheless not expected to be lower than the past year.

Appreciation. I wish to record my thanks to the members of the board for

their support and contribution to the group’s success.

I also wish to thank the management and staff, under the able leadership

of our Chief Executive Officer, Nick Wentzel, for their dedication and hard

work.

Our achievements were possible due to our continued excellent working

relationship with our suppliers, which we acknowledge and appreciate.

A particular thank-you to our customers who supported us throughout the

year.

JAN VAN DEN BERG

Chairman

14 November 2003



Trading results summary. The group continued its good trading

performance with a strong 49% growth in headline earnings from

R140 million to R208 million. For the three years that the group has been

listed, the compounded annual headline earnings growth has been 32%.

Turnover for the year increased by 6,5% to R3 947 million

(2002: R3 692 million), whilst operating profit increased by 49% to

R328 million (2002: R220 million). Net operating margins improved from

5,9% to 8,3%.

The Animal Feeds division continued its good performance in uncertain

trading conditions. Operating profits increased by 18,4% to R153 million

(2002: R130 million), whilst operating margins improved from 4,8% to

5,7%. The Poultry division experienced a good year after the drastic

increase in raw material prices in 2002. This division increased operating

profits by 93% to R174 million (2002: R90 million) following a reduction of

feed prices. Poultry contributed 53% (2002: 41%) of group operating

profits.

The group’s balance sheet structure has strengthened with net asset value

per share increasing to R14,18 (2002: R10,79). Net cash inflow of

R180 million (2002: R28 million) resulted in a cash surplus situation for the

first time in the company’s short history. This ungeared position creates

new challenges for the group.

For the three years that group has been listed, thecompounded annual heaearnings growth has been


Investments. In accordance with the group’s strategic focus the following investments were made:

• a feed mill (Bulkop) in Patterson was acquired for R5 million. This business, together with the

current outdated facility at Humansdorp, will be consolidated into a single modern facility in Port

Elizabeth and will be commissioned shortly at an estimated cost of R35 million,

• County Fair has recently commissioned a 10-house broiler farm, which will increase production

by 55 000 broilers per week. The cost of this facility is R21 million, and

• County Fair is doubling its cold storage facilities at Epping at a cost of R6 million.

The group is continuously re-investing in its existing facilities to ensure they keep abreast with new

technology and are maintained in excellent working order. Furthermore, the group is well

positioned for further expansion and acquisition opportunities.

Appreciation. I would like to thank our clients for their support during the past twelve months. We

remain committed to excellent client service and providing products of the highest quality.

I also wish to thank our suppliers, service providers and other institutions for their involvement with

the group.

My sincere appreciation to our chairman and board of directors for their guidance and participation

in the group’s activities.

Finally, to my colleagues in management and our staff, thank you for your support and contribution

to the group during 2003.

NICK WENTZEL

Chief Executive Officer

14 November 2003

11



COUNTY FAIR’S NEW STATE OF THE ART BROILER FACILITY


13 Astral Foods A



positioned to take advantageof the volatile marketdevelopments during thepast year.

The 2003 year was characterised by the reduction of the

yellow maize price as reflected by the year-on-year Safex

prices from R1 484/ton to R910/ton at September 2003.

The strengthening of the rand against most currencies had

a direct impact on maize prices. Good rainfall in the maize

producing areas, as well as minimal exports to neighbouring

countries resulted in a record 2,8 million ton maize carry-

over to the new season.

of commodities in US dollars are on the incre

plantings of maize for the new season are exp

down on the previous year, mainly due to th

stock from the previous season and lower

Local weather conditions are critical in determin

of future maize prices.

Meadow Feeds, a wholly-owned division of the

market leader in the animal feed industry in So

operates from six strategically placed mills as

page 4.

Meadow Feeds was well positioned to take adva

volatile market developments during the past ye

turnover was static at R2,7 billion, whilst n

margins improved from 4,8% to 5,7%. Operat

the year amounted to R148 million (2002: R131

contributed 45% (2002: 60%) of group profits.

The group benefited from a good procurem

optimising benefits from the sharp reduction in

raw materials and in particular yellow maize

maize imports as well as efficiency improvem

contributed to this performance.

Central Analytical Laboratories recorded a stron

situation. NuTec SA (50% joint venture) contin

significant growth. National Veterinary Supp

developed as the national procurement arm of t

the products in its specialised range. The res

companies are included under Animal Feed (SA

The Animal Feed division should continue

reasonably. The acquisition of the Bulkop fe

internal broiler expansion will secure increased

addition, new products and markets are

developed to ensure growth. The latest devel

the launch of a game feed range of products f

drought in parts of the country.


Animal feed (Africa)

The group’s African operations recorded a R5 million

operating profit (2002: R1,2 million loss). The Zambian

operation experienced favourable trading conditions

resulting from a better maize harvest. Reduced maize

prices and an improved economy following firmer export

copper prices contributed to this good performance.

The Mauritius joint venture performed satisfactorily, with

results in line with expectations.

The group is committed to increasing its presence in Africa.


The broiler industry experienced a satisfactory trading year.

Strong demand for poultry meat as well as the closure of

Agrichicks during 2002 gave rise to a more balanced supply

and demand situation. The sharp reduction in the cost of

feed and increased consumer spending caused poultry

margins to increase. A relatively disease-free year was

experienced.

The strengthening of the rand has created a favourable

climate for importers. Large quantities of imported poultry

entered the South African market. The South African

poultry industry has made application to the International

Trade Administration Commission of South Africa (ITAC) to

increase the current tariff that was approved in 1997, in line

with the subsequent weakening of the exchange rate. A

decision on this application is expected shortly.

Looking ahead it is expected that feed costs will not

increase dramatically and this, coupled with increased

consumer demand, paves the way for another reasonable

poultry year.

The Poultry division’s revenue increased from R

R2,2 billion in 2003. Sales volumes increas

compared to 2002. Main reasons for the incre

• a full-year effect of 134 000 broilers per wee

Poultry following the long-term rental

effective from June 2002; and

• good production and processing efficienc

Earlybird and County Fair.

Average sales realisations increased by 8% on

Poultry operating margins recovered from a

during the second half of 2002 to 8,0% for the fu

(2002: 5,2%). Operating profits almost do

R90 million to R174 million, with both broile

recording record profits albeit off a very low bas

volumes, reduced raw material prices and goo

efficiencies led to this strong performance.

Specific additional information, by company, is

Ross Poultry Breeders

Ross Poultry Breeders is responsible for

development of the South African 788 Ross Br

which is unique to South Africa. The compa

close association with its 10% shareholder Avia


17 Astral Foods A

THE IMPROVEMENT OF PRODUCTION EFFICIENCIES WAS A KEY

STRATEGY AND MAJOR SUCCESS WAS ACHIEVED IN BOTH THE

FARMS AND PROCESSING DEPARTMENTS



into Africa. The intention is to actively expand t

conjunction with Aviagen Limited, which co

territories. Exports will come from existing capa

improve utilisation.

The company has performed well financially in

stiff competition from a new entrant to the p

market. Further refurbishment of the facilities is

next year.

County Fair Foods

This wholly-owned operation is the leading bro

in the Western Cape and the third largest nation

benefit of the expansions during 2002 materia

the current year. Broiler production performa

first nine months of the year exceeded all pre

Sudden weather changes in the last quarte

resulted in a deterioration of performances.

have been initiated to remedy this situation.

turnaround has already been achieved.

The construction of a 10-house broiler farm

been completed. This state-of-the-art

accommodate 410 000 broilers. The fac

operational during October 2003 and will

increase of 55 000 broilers per week for sla

expansion in processing facilities is required a

the increased production as adequate capacity

Earlybird Farm (50% joint venture)

Earlybird is the second-largest broiler produc

Africa, with its abattoir facilities situated

(Gauteng) and Standerton (Mpumalanga).

The strong turnaround forecast in the 2002 a

materialised. The improvement of production

was a key strategy and major success was ach

ROSS THE LEADER IN

BROILER GENETICS


the farms and processing departments. In this regard, the

benefits derived from separate sexing became more

apparent and contributed significantly to lower cost and

improved product quality. Special emphasis was also

placed on the marketing and distribution functions to

improve service levels and increase realisations at the same

time. No major capacity expansions were undertaken

during the year. Capital expenditure was kept to a

minimum, with the focus on projects that would improve

performance and reduce costs.

National Chick

The Natchix group made a strong turnaround following an

extensive rationalisation programme. The depressed state

of the market in which this company operates, mainly as a

result of surplus incubator capacity, has made it extremely

difficult to regain lost volumes. Sales volumes have been

materially affected due to a contractual breach by certain

customers with regard to the supply of day old chicks.

Legal action has been instituted against the parties

concerned to recover damages.

As part of an ongoing rationalisation programme, the group

has disposed of its shareholding in the Lesotho operation.

Although much has been done to improve results, the

Natchix group requires additional volumes to deliver a good

financial performance. An aggressive sales drive to increase

volumes will continue to be pursued.

THE NATCHIX GROUP MADE A STRONG TURNAROUND

FOLLOWING AN EXTENSIVE RATIONALISATION PROGRAMME.



procurement strategies, cheaper raw material imports,

high poultry volume increase at marginal cost and best

ever poultry production and processing efficencies

following a disease free and weather friendly year, were the

main contributors to this fine performance.

Net funding costs reduced from R22 million to R15 million

following the strong cash inflow.

The group’s tax rate (inclusive of STC) of 32,7% was up on

the previous year’s 30,7% due to the utilisation of STC

credits during 2002.

For the year under review the group reports a headline

earnings increase of 49%, from R140 million to

R208 million.

Operating profit margin (%) 8,3

Return on equity (%) 35

Return on net assets (%) 51

Net asset turn (times) 6,1

Net cash/(debt) (Rm) 59

Interest cover (times) 21,5

Working capital days 21

Net asset value per share (cents) 1 418

300

Cash flow 2003

Interest paid 15Replacement capex 33

Working capital (12)

Cash generat

Tax paid 90

Dividend paid 51

Sep 03

Expansion capOther investin

(103)

(59)

0

(112)

250

200

150

100

50

-50

-100

Sep 02

R’m


21 Astral Foods A

are now materialising as reflected in the return on net assets

of 51%.

The group, following a net cash inflow of R180 million

(2002: R28 million) is in a net cash surplus situation of

R59 million (2002: borrowings at R103 million). Although the

more representative cash position at September 2003 is

closer to a break even due to contractual payments to a

certain creditor on 1 October 2003, the cash surplus

situation creates new challenges.

Dividends. The dividend cover has been reduced to

2,9 times (2002: 3,0 times). It is the stated intention of the

company to further reduce the cover over a planned period

but mindful not to pay lower dividends than the

corresponding prior year figure and prudent funding levels

retained.

Total dividends declared amount to 168 cents, a 55%

increase on the previous year’s 108 cents.

TOM PRITCHARD

Financial Director

14 November 2003



for South Africa 2002 (the King Report 2002 ).

The board believes that the group’s governance practices

are strong and that in all material respects, the group

conforms to the principles embodied within the King Code

2002 and is committed to ensuring that these principles

continue to be an integral part of the way in which the

group’s business is conducted.

The constitution and operation of the board of directors

The board. The group has a unitary board of directors that

comprises three executive and six independent non-

executive directors. An independent non-executive

chairman leads the board. A complete list of board

members, their respective qualifications, responsibilities,

and director status is available on Page 6 of this report.

There are no contracts of service between any of the non-

executive directors and the group. One third of the directors

retire each year in terms of the company’s Articles of

Association.

The directors are experienced businessmen who are

conscious of their duty to ensure that the group maintains a

high standard of corporate governance. The board is

committed to guiding and monitoring that high standard.

The board is aware that it is accountable for the actions of

management and has retained full and effective control of

the organisation over the last year. In addition, board

members, management and staff representatives from

across the group participated in a workshop in order to

identify opportunities within the group. Key opportunities

identified are in the process of being exploited. Not only did

valuable opportunities come from the workshop but the

downside of these opportunities also reconfirmed many of

the risks identified at the prior year’s risk management

workshop. These risks, together with other emerging risks,

are being monitored by the board through the audit and risk

management committee on an ongoing basis.

issues regarding technology and information sy

group.

Management has ensured that the information

board are well defined and regularly monitore

are provided with comprehensive board pack

prior to each scheduled meeting.

The non-executive directors meet regularly

unrestricted access to executive management.

Board charter. The board operates in terms

adopted in May 2003, which sets out its

responsibilities. In accordance with this charte

• The chairperson of the board is an indep

executive director.

• A formal orientation programme for new dire

• Specific clauses, in line with the requirem

Companies Act and King Code 2002, exis

to conflicts of interest. The company secreta

a register thereof. No conflicts of interest

recorded in the register of interests.

• Formal annual evaluations of the bo

committees, individual directors and the Ch

Officer are in the process of being impleme

• Directors have access to staff, records, the

services of the group secretary and may, in

circumstances, seek independent profess

on group-related affairs.

• Succession planning for the Chief Executive

executive management has been prepa

updated as appropriate.

• A strategic plan and approvals framew

business have been adopted and are regula

• Terms of reference for all board committee

formulated.


23 Astral Foods A

formulated.

• The nature and extent of social, transformation, ethical,

safety and health, human capital, and environmental

management policies and practices are monitored and

reported on.

The board is satisfied that, for the period under review, it has

effectively adhered to all duties and responsibilities as set

out in the charter. Furthermore, the board is not aware of

any cases of non-compliance with legislation and regulation

within the group during the period under review.

Board committees. The board has constituted two board

committees to address matters requiring specialised

attention. The board acknowledges its accountability to the

group’s shareholders for the actions of the board

committees and is satisfied that the committees have met

their respective responsibilities for the period under review.

The board committees are as follows:

• The audit and risk management committee. The

audit and risk management committee consists of three

appropriately qualified members, two of whom (including

the chairperson of the committee) are independent non-

executive directors, and meets at least twice a year with

management, internal and external audit.

The audit and risk management committee has terms of

reference, which were adopted and approved by the

board in November 2002. Responsibilities of the audit

and risk management committee, as per the terms of

reference, include:

• Oversee the internal and external audit function.

• Review with internal and external audit the adequacy

and effectiveness of internal controls, the quality of

financial information, compliance with the King Code

2002, the effectiveness of the risk management

• Oversee and monitor the risk management functions

in the group.

• Review and advise on the adequacy of insurance

cover.

Both the group internal audit manager and external

auditors have direct access to the chairman of the audit

and risk management committee.

To further enhance the effectiveness of the group’s audit

and risk management committee the group also has bi-

annual divisional audit committee meetings for each

operation. The group internal audit manager and

external auditor report at all divisional audit committee

meetings and these meetings are also attended by the

Chief Executive Officer and Financial Director. The

results of these meetings are tabled at the group audit

and risk management committee.

• The human resources committee. The human

resources committee consists of three independent

non-executive directors and one executive director and

meets at least twice a year.

The human resources committee has terms of reference,

which were adopted and approved by the board in

November 2002. Responsibilities of the human resources

committee, as per the terms of reference, include:

• Develop the group’s general policy on executive and

senior management remuneration.

• Determine remuneration packages for executive

directors.

• Measure the performance of executive directors.

• Employment equity and skills retention matters.

• Management succession planning.



13 Feb 20 May 21 May 21 Aug 14 Nov 20 May 13 Nov 12 May

JL van den Berg ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

JJ Geldenhuys ✓ ✓ ✓ ✓ ✓ Ø Ø ✓

EM Groeneweg ✓ ✓ ✓ ✓ ✓ ✓ ✓ Ø

CG van Veyeren ✓ ✓ ✓ ✓ ✓ Ø Ø ✓

M Macdonald Ø Ø Ø Ø ◊ Ø Ø Ø

TCC Mampane Ø Ø Ø Ø ◊ Ø Ø Ø

NC Wentzel ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

T Pritchard ✓ ✓ ✓ ✓ a Ø Ø Ø

MA Kingston ✓ a ✓ ✓ ✓ Ø Ø Ø

Key: ✓ – Present

Ø – Not a member

a – Apologies tendered

◊ – Appointed 14 November 2003

Remuneration policy and share incentive scheme

The group’s remuneration policy is to attract, retain and

incentivise management and personnel of the highest

calibre.

Executive directors, senior management and middle

management are eligible to participate in the group’s share

incentive scheme, which is designed to enable them to

participate in the growth which they helped to create for the

shareholders. Options are allocated at the market price ruling

at the date the option is granted, vest after stipulated periods,

and are exercisable up to a maximum of ten years from the

date of issue. Non-executive directors are not entitled to

options in terms of the group’s share option scheme.

Organisational integrity and ethics

The board believes that the group maintains a high standard

of ethical behaviour, which is effectively enforced throughout

the organisation by the board, executive and operational

management. The Chief Executive Officer has overall

responsibility for ethical behaviour within the group and

management throughout the organisation is responsible for

ensuring that the various operations are run ethically. The

audit and risk management committee also oversee the

overall standard of ethical behaviour.

The group has a code of ethics, which was ado

board in February 2003 and was distrib

employees in the form of a "pocket guide". A

are required to comply with the letter and spirit

by observing the highest ethical standards an

ensure that all business practices are cond

manner which is beyond reproach.

No director, officer or employee may deal eithe

indirectly in the group’s shares on the basis of pr

information or during any closed period. Closed

one month prior to interim and year-end and up

of announcement of interim and year-end financ

well as any other period during which the grou

under a cautionary announcement.

The group has a zero-tolerance approach

behaviour. Any employee found to be acting u

subject to disciplinary proceedings, which c

dismissal.

With effect 1 May 2003 the group implemen

hotline.

The board has no reason to believe that there h

material non-adherence to the code of ethics.


25 Astral Foods A

management of identified risk issues.

The board has established a process that will regularly

evaluate the effectiveness of the risk management

processes throughout the group. The group strives to

identify, evaluate and manage all significant business and

financial risks. The board believes its focus on risk issues,

including those relating to information technology and

information systems, is appropriate for the requirements

and nature of the group and that the group has an adequate

system of internal control in place to mitigate significant

risks identified to an acceptable level. The systems of

internal control in place within the group also provide the

board with satisfaction in relation to the group’s operational

sustainability, the reliability of its reporting, safeguarding of

its assets, its behaviour towards all stakeholders and proper

planning for the mitigation of the identified risks.

In addition, the group also promotes ongoing commitment

to risk management and control by participating in

externally organised risk management and safety

programmess such as ISO 9001/2000, Good

Manufacturing Processes (GMP) and Hazard Analysis and

Critical Control Points (HACCP) at its various operations.

Meadow Feeds Randfontein recently became the first

animal feed mill in the southern hemisphere to be certified

by an international certification body for ISO 9001/2000,

GMP and HACCP. These quality systems are recognised

locally and internationally and will greatly assist our export

clients and also allow others to become exporters.

Meadow Feeds will continue to implement these integrated

quality systems at its other feed mills.

The risk management processes and systems of internal

control have been evaluated for the year under review and

up to the date of the approval of the annual report and

financial statements. The board also believes that it has

reasonable, but not absolute, assurance with regard to the

effectiveness and efficiency of the group’s operations,

protection of its assets and information, and regulatory and

legal compliance.

has unrestricted access to the chairman of the board,

chairman of the audit and risk management committee and

the Chief Executive Officer.

The scope of the internal audit function is to determine if the

group’s risk management, internal control and governance

processes are adequate, monthly reporting is accurate and

internal policies and approval frameworks are adhered to.

The audit and risk management committee approved the

annual internal audit plan.

External audit

The audit and risk management committee recommends to

the board the appointment of external auditors. The audit

and risk management committee also considers the

independence of the external auditors, and has set

principles for the use of external auditors to provide non-

audit services. Consultation and co-operation between

external auditors and internal auditors is encouraged by the

board.

Management reporting

The group has comprehensive management reporting

disciplines, which include the preparation of annual strategic

plans and budgets by all operations. Group strategic plans

and budgets are approved by the board. Results and the

financial status of operations are reported monthly against

approved budgets and compared to the previous year.

Working capital requirements and borrowing levels are

monitored on an ongoing basis and corrective or remedial

action taken as appropriate.

Communication

The board has ensured that communication with relevant

stakeholders has been both open and prompt throughout

the group. The group will continue communicating with its

stakeholders on a balanced, transparent and open basis.

The board believes that material matters of significant

interest and concern to shareholders and other

stakeholders are addressed in the company’s public

disclosure and communication. In this regard, the board

ensures that the group provides adequate transparency on

all pertinent financial and non-financial matters.



demonstrable changes and benefits resulting from the

adoption and implementation of such practices, and the

steps taken to ensure adherence in this area of business

activity. The board will also ensure that the non-financial

aspects of operations are subject to external validation in

the group’s annual report when appropriate.

Human capital development The board is committed to a

value system that strives towards excellence. To this end

the group is introducing programmes aimed at enabling it to

become a world-class organisation and preferred employer.

The group’s vision is therefore, to attract, develop and retain

individuals with relevant competencies to achieve the

group’s goals.

As a reinforcement of the group’s commitment to improving

productivity, the "one team" philosophy and

uncompromising professional approach to business, the

group continued its 20 Keys workplace improvement

programme. All employees who participate in the

programme receive training, which empowers them to apply

these best practices.

In addition, the group also has a study loan policy providing

employees with financial assistance to further their

academic qualifications in line with current or future job

requirements.

Employee participation The group has a variety of

participative structures to deal with issues that affect

employees directly and materially. These include structures

to drive productivity improvements, safety committees and

other participative forums. The group is committed to

creating a working environment in which all employees are

encouraged to become involved in its affairs and to obtain a

sound understanding of its activities. This is achieved

opportunities for all its employees. Measures ar

training programmes to be implemented

development plans have been submitted to

Sector Education and Training Authority

emphasise the development of our human reso

Training and education of employees occur on a

structured basis and are aimed at building

capital across the group and creating equal o

for all. The group successfully claimed back a

of its contributions paid over to the rele

Education and Training Authority.

The group has a five-year plan to address imba

past. Employment equity committees within

operations meet regularly to ensure that employ

and business plans are monitored and impleme

The geographical distribution of the group p

group with a richly diverse workforce and the gr

on recruiting local people into its operations.

Social impact The group recognises the

involved in social upliftment programmes

contributed towards several initiatives, including

1. Adult basic education and training (ABET)

2. AIDS awareness programmes and training

3. Various schools and old age homes are sup

4. Feed donated to drought stricken areas

HIV/AIDS The board recognises the impact th

may have on both its workforce and client base

related issues have been addressed at operatio

May 2003 the group also adopted a formal HIV

in order to address and manage the potenti

HIV/AIDS on the group and its stakeholders.


27 Astral Foods A

Limit the number of new infections among employees

and their families;

– Minimise the spread of the disease and its impact within

the group and the local community;

– Provide counselling and support services to employees

living with HIV/AIDS so as to improve the overall health of

all employees;

– Ensure that the rights of employees with HIV/AIDS are

protected and respected;

– Provide guidelines on managing the disease in the

workplace; and

– Seek to change the official standpoint of denial in order to

make it a reportable disease like tuberculosis.

The board acknowledges the need to develop a corporate

understanding of the challenges it faces in addressing

HIV/AIDS. The HIV/AIDS programme is driven by senior

management and progress reported annually to the human

resources committee.

Health and safety The group is committed to ensure a

safe, healthy and clean environment for all employees. In

order to ensure this, all operations are subjected to an

occupational health and safety audit annually.

Environmental impact Environmental awareness is an

integral element of the group’s operations and protection of

the environment is essential for the long-term survival of the

group. The group is therefore committed to the continuous

improvement of environmental performance at both a

corporate and an operational level. Our environmental

obligations include full compliance with current

environmental and regulatory requirements. Environmental

performance across the group continued to be sound,

were recorded during the year under review.



Headline earnings R 000 208 257 140 032 116 523 9

Balance sheet informationTotal assets R'000 1 300 560 1 371 755 1 019 879 98

Total shareholders' funds R'000 608 226 466 612 366 066 26

Total liabilities R'000 710 708 922 169 661 253 72

Net assets R'000 645 489 668 891 511 494 54

Profitability and asset managementReturn on total assets % 24,0 14,8 17,0

Return on equity % 34,8 30,0 31,2

Return on net assets % 50,7 32,8 39,7

Net asset turn times 6,1 5,5 5,5

Solvency and liquidityTotal assets to total liabilities % 183,0 148,8 154,2

Total liabilities to total assets % 54,7 67,2 64,8

Gross debt to total assets % 0,7 9,6 10,9

Gross debt to equity % 1,5 28,1 30,4

Net debt to equity % – 22,4 26,3

Net interest cover times 21,5 9,9 5,8

Cash interest cover times 26,0 12,6 7,1

Current ratio ratio 1,3 1,3 1,4

Cash flow to total debt % – 185,4 232,5

Shareholders' ratiosBasic earnings per share cents 487,8 322,8 265,9

Headline earnings per share cents 487,2 326,3 271,5

Dividend per share cents 168,0 108,0 90,0

Dividend cover times 2,9 3,0 3,0

Net asset value per share cents 1 418,3 1 078,7 852,7

Economic value added R'000 118 500 33 385 55 916 3

Stock exchange statisticsMarket value per share

– Upon listing cents – – 775

– At year end cents 2 395 1 310 1 185

– Highest cents 2 400 1 555 1 220

– Lowest cents 1 300 1 000 760

Closing dividend yield % 5,0 8,2 7,6

Closing earnings yield % 15,2 24,9 22,9

Closing price/earnings ratio times 6,5 4,0 4,4

Number of shares issued* '000 42 867 42 867 42 924

Number of transactions 2 793 4 760 5 564

Number of shares traded '000 15 158 20 178 32 663

Value of shares traded R'000 269 986 248 502 304 171

Closing market capitalisation R'000 1 026 659 561 555 508 649

*Refer to note 17 of the financial statements for the number of shares effectively in issue resulting from share buy-back.


29 Astral Foods Annual Re

Ratio of current assets excluding cash and cash equ

to current liabilities excluding short-term borrowings.

(Gives an indication of the ability to settle short-term lia

Cash flow to total debt

Cash generated from operations as percentage

interest-bearing liabilities.

(Indicates the ability to service total debt.)

Basic earnings per share

Net profit for the year divided by the weighted average

of ordinary shares in issue during the year.

Headline earnings per share

Headline earnings divided by the weighted average nu

ordinary shares in issue during the year.

Dividend cover

Headline earnings per share divided by dividend per s

Net asset value per share

Ordinary shareholders' equity divided by the nu

ordinary shares in issue at the end of the financial yea

Economic value added (EVA)

The difference between the net operating profit a

(nopat) as a percentage of net assets and the w

average cost of capital (wacc) percentage, multiplie

net assets. Income from and investment in assoc

included in nopat and net assets respectively.

(Measures the wealth created in excess of the cost o

invested in the business)

Closing dividend yield

Dividends per share as a percentage of market value p

at year end.

Closing earnings yield

Headline earnings per share as a percentage of mark

per share at year end.

Closing price/earnings ratio

Market value per share divided by headline earnings p

at year end.

Total tangible assets less total liabilities excluding cash and

cash equivalents, borrowings, normal and deferred tax,

shareholders for dividends and the carrying value of

investments.

(Indicates the level of net assets utilised.)

Return on total assets

Operating profit less finance costs as a percentage of total

tangible assets.

(Measures the effectiveness with which the total assets were

uitilised.)

Return on equity

Net profit attributable to ordinary shareholders as a

percentage of ordinary shareholders' interest.

(Measures the earning power of the suppliers of share capital.)

Return on net assets

Operating profit before interest and taxation as a percentage

of net assets.

(Measures the earning capacity of net assets.)

Net asset turn

Revenue divided by net assets.

Total assets to total liabilities

(Indicates to which degree liabilities are covered by assets.)

Total liabilities to total assets

(Measures the percentage of total funds supplied by creditors.)

Gross debt/equity ratio

Interest-bearing liabilities to total shareholders’ interest.

(Indicates to which degree total debt is covered by

shareholders' funds.)

Net debt/equity ratio

Interest-bearing liabilities less cash and cash equivalents to

total shareholders' interest.

(Indicates to which degree net debt is covered by

shareholders' funds.)



Income from investments – 0,0 4 823

Total value added 717 598 100,0 553 162

Value distributed

To labour 312 306 43,5 261 816

To government 111 107 15,5 70 454

Normal and deferred tax 102 076 62 061

Regional Service Council levies 7 177 6 604

Skills development levies 1 854 1 789

To providers of capital 66 348 9,2 65 510

Dividends to shareholders 51 130 43 353

Interest on borrowings 15 218 22 157

Total distributions 489 761 68,3 397 780

Income retained in the business 227 837 31,7 155 382

Depreciation 68 744 58 483

Retained profit for the year 157 385 95 178

Outside shareholders' interest in subsidiaries 1 708 1 721

Total value distributed and reinvested 717 598 100,0 553 162

Sales per permanent employee 727 756

Value added per permanent employee 132 113

Employee cost per permanent employee 58 54

Average number of employees Number Number

Management 207 169

Other employees 5 223 4 715

Total permanent employees 5 430 4 884

Contracted labour 617 355

Total 6 047 5 239

2003 2002

Labour 47%

Reinvested 28%

Government 13%

Providers of capita

Labour 44%

Reinvested 32%

Government 15%

Providers of capital 9%



(PO Box 1053, Johannesburg 2000)

SPONSOR

HSBC Investment Services (Africa) (Pty) Limited

HSBC Place

6 – 9 Riviera Road

Houghton 2198

LEGAL ADVISORS

Edward Nathan & Friedland (Pty) Limited

4th Floor

The Forum

2 Maude Street, Sandown

Sandton 2196

(PO Box 783347, Sandown 2146)

POSTAL ADDRESS

Postnet suite 329

Private bag X10

Elarduspark 0047

Telephone (012) 347-5077/8

Telefax (012) 347-5308

e-mail: [email protected]

WEBSITE ADDRESS

http://www.astralfoods.com

CORPORATE OFFICE

Group Financial Manager: D D Ferreira

Group Human Resources Manager: L W Hansen

Group Internal Audit Manager: A W Kruger

Assistant Company Secretary: S Vally-Kara

SENIOR MANAGEMENT

ANIMAL FEED

Managing Director – Meadow Northern Region: D G Hugo

Managing Director – Meadow Cape Region: L J Swanson

Managing Director – Meadow KwaZulu Natal Region: J D G Bestel

Managing Director – NuTec SA: A T MacGillivray

General Manager – Central Analytical Laboratories: D S Hattingh

General Manager – National Veterinary Supplies: G de Wet

Poultry

Managing Director – Earlybird Farm: C A du Toit

Managing Director – County Fair Foods: T Delport

Managing Director – National Chicks: M C van Deventer

Managing Director – Ross Poultry Breeders and

Elite Breeding Farms: D R Redpath


Accounting Policies 39

Income Statement 44

Balance Sheet 45

Statement of Changes in Equity 46

Cash Flow Statement 47

Notes to the Cash Flow Statement 48

Notes to the Annual Financial Statements 50

MEADOW RECENTLY LAUNCHED A GAME FEED RANGE OF

PRODUCTS.



14 November 2003

CERTIFICATE BY COMPANY SECRETARY

In my opinion as company secretary, I hereby confirm, in terms of the Companies Act, 1973, that for the yea

30 September 2003, the company has lodged with the Registrar of Companies all such returns as are required of a public c

in terms of this Act and that all such returns are true, correct and up to date.

T PRITCHARD

Company Secretary

Pretoria

14 November 2003

RESPONSIBILITY FOR ANNUAL FINANCIAL STATEMENTS

The directors are responsible for the preparation, integrity and fair presentation of the financial statements of Astral Foods

and its subsidiaries. The financial statements presented on pages 35 to 66 have been prepared in accordance with Statem

Generally Accepted Accounting Practice in South Africa, and include amounts based on judgments and estimates m

management. The directors also prepared the other information included in the annual report and are responsible for

accuracy and its consistency with the financial statements.

The going concern basis has been adopted in preparing the financial statements. The directors have no reason to believe

group or any company within the group will not be going concerns in the foreseeable future based on forecasts and availa

resources. These financial statements support the viability of the company and the group.

The financial statements have been audited by the independent accounting firm, PricewaterhouseCoopers Incorporated, wh

given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the

directors and committees of the board. The directors believe that all representations made by them to the independent

during their audit are valid and appropriate.



• examining, on a test basis, evidence supporting the amounts and disclosures in the annual financial statements;

• assessing the accounting principles used and significant estimates made by management; and

• evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

Audit opinion

In our opinion, the abovementioned annual financial statements fairly present, in all material respects, the financial positio

company and of the group at 30 September 2003, and the results of their operations and cash flows for the year then e

accordance with Statements of South African Generally Accepted Accounting Practice and in the manner required by the Co

Act in South Africa.

PRICEWATERHOUSECOOPERS INCORPORATED

Chartered Accountants (SA)

Registered Accountants and Auditors

Johannesburg

14 November 2003



For a review of the year's results, see the financial director's review on page 20.

A segmental analysis of the revenue, operating profit, assets and liabilities is set out on page 38 of the annual

statements.

The Bulkop feedmill was acquired with effect from 1 August 2003 at a total cost of R4 766 000. The effect of this ac

on the group was the consolidation of the following into the group's financial statements at 30 September 2003:

R'000

Revenue 13 400

Operating profit 580

Non-current assets 5 056

Current assets 12 788

Current liabilities 8 830

3. Share capital

Detail of the share capital is reflected under note 17 of the financial statements.

In terms of a share buy-back programme 605 877 shares were acquired by a subsidiary of Astral Foods Limited at a t

of R12 005 000.

4. Subsidiaries, joint ventures and associates

Details of the subsidiaries, joint ventures and associates of Astral Foods Limited are set out in notes 28, 27 and 12 res

of the annual financial statements.

The attributable interest of the company in the profits and losses of its subsidiaries, joint ventures and associates for

ended 30 September is as follows:

2003

R'000

Subsidiaries

Total profit after tax 164 484 12

Total loss 3 724

Joint ventures

Total profit after tax 53 588 2

Associated company

Total profit after tax –

5. Dividends

The following ordinary dividends were declared (net of share buy-back):

Interim dividend of 58 cents per share (2002: 47 cents per share) R24 807 163 R20 17

Final dividend of 110 cents per share (2002: 61 cents per share) R46 486 993 R26 14

Total dividend of 168 cents per share (2002: 108 cents per share) R71 294 156 R46 32



on page 35 for details.

No material contracts involving directors' interest were entered into in the year. A register on other directorships and int

disclosed and circulated at every board meeting.

8. Resolutions

No special resolutions, the nature of which might be significant to members in their appreciation of the state of affai

group, were passed by any subsidiary companies during the period covered by this report.

9. Share incentive scheme

The number of shares originally put under the control of the directors by the shareholders for purposes of the co

employee share incentive scheme was limited to 10% of the issued share capital of Astral Foods Limited from time to ti

directors have decided for the time being to limit this to about 7,5% of the issued shares.

At 30 September 2003, options in respect of 3 316 100 shares had been granted.

Details of the dates and prices at which the options were granted are given in note 17 to the financial statements.

10. Shareholders

Details of the shareholders are set out on page 67 of the annual financial statements.

11. Events subsequent to balance sheet date

No events took place between year-end and the date of the report that would have a material effect on the financial sta

as disclosed. There has also been no material change in the financial or trading position of the company and its sub

between year-end and the date of this report.

12. Litigation

The board is not aware of any legal or arbitration proceedings pending or threatening that may have or have had a mater

on the group’s financial position.



M A Kingston 990 525 254 131 1 900

T Pritchard # 798 425 163 172 1 558

6 499

Non-executive directors' fees

For services as directors

J L van den Berg 180

J J Geldenhuys 100

E M Groeneweg 100

C G van Veyeren 90

470

Total paid to directors by the company and its subsidiaries 6 969

# Service contracts which expire at 31 December 2003 were entered into in order to retain the services of the directors for

group.

Share incentive scheme interests

Exercise Number o

price per options outstan

Date granted share 2003

N C Wentzel 3 July 2001 R 7,75 1 022 500 1 02

M A Kingston 5 July 2001 R 7,75 100 000 10

T Pritchard 3 July 2001 R 7,75 408 800 40

1 531 300 1 53

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

One third of the options is exercisable per year after each of the third, fourth and fifth year from date of granting the option.

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

Issued share capital interest

Directly held Indirectly h

2003 2002 2003

No of shares No of shares No of shares No of

Beneficial interests

Non-executive directors

J L van den Berg 50 000 20 000 –

E M Groeneweg 2 645 2 645 218

Executive directors

N C Wentzel – – 10 000

52 645 22 645 10 218



, , ,

Intergroup revenue (901,9) (717,9)

3 947,0 3 692,1 327,5

Assets Liabilities

Animal Feed – South Africa 410,3 579,2 327,4

Animal Feed – Other Africa 39,9 65,5 14,8

Poultry – South Africa 875,9 820,4 394,2

Poultry – Other Africa 25,0 – 6,5

Set-off of intergroup balances (32,2) (76,3) (32,2)

1 318,9 1 388,8 710,7

Capital expenditure Depreciation

Animal Feed – South Africa 38,6 30,2 16,7

Animal Feed – Other Africa 3,9 1,4 1,7

Poultry – South Africa 37,9 75,2 47,0

Poultry – Other Africa – – 1,3

80,4 106,8 66,7

Revenue

3000

2500

2000

1500

1000

500

0

Animal FeedsSouth Africa

Animal FeedsAfrica

PoultrySouth Africa

Operating profit

200

150

100

50

0

Animal FeedsSouth Africa

Animal FeedsAfrica

PoultrySouth A

2002 2

R m

illio

n

R m

illio

n



Intergroup transactions, balances and unrealised surpluses and deficits on transactions between group companies ha

eliminated. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income st

from the effective date of the acquisition or up to the effective date of the disposal, as appropriate. The purchase m

accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair valu

assets given up. shares issued or liabilities undertaken at the date of acquisition, plus cost directly attributable to the acq

The excess of the cost over the fair value of the net assets is recorded as goodwill.

3. Interest in associated companies

Associated companies are those entities which are not subsidiaries, in which the group exercise significant influence, b

it does not control. These investments in associated undertakings are accounted for by the equity method of accountin

group annual financial statements. Provisions are recorded for long-term impairment in value.

Equity accounting involves recognising in the income statement the group’s share of the associates’ profit or loss for t

The group’s interest in associates is carried in the balance sheet at an amount that reflects its share of the net asse

associate and includes goodwill on the acquisition.

The company accounts for the investment in associated companies at cost.

4. Interest in joint ventures

Joint ventures are those entities that are not subsidiaries and in which the group exercises joint control. Joint vent

accounted for on the proportionate consolidation method. Under this method the group includes its share of the joint v

individual income and expenses, assets and liabilities in the relevant components of the financial statements on a lin

basis.

5. Foreign currencies

Subsidiaries

Income statements of foreign entities are translated into the group’s reporting currency at average exchange rates for

and the balance sheets are translated at the year-end exchange rates ruling on 30 September. Exchange difference

from the translation of the net investment in foreign subsidiaries and associated undertakings and of borrowings that hed

investments, are taken to “Translation reserve” in shareholders' equity. On disposal of the foreign entity, such tra

differences are recognised in the income statement as part of the gain or loss of sale.

The local currency financial statements of foreign entities operating in hyper-inflationary economies are restate

appropriate indices to current values at the balance sheet date before translation into the group’s reporting currency.

Foreign currency transactions in group companies are accounted for at the exchange rates prevailing at the dat

transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetar

and liabilities denominated in foreign currencies, are recognised in the income statement. Such balances are translated

end exchange rates.



6. Financial instruments

The group adopted AC133: Financial instruments: recognition and measurement at 1 October 2001.

Measurement

Financial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial recognitio

instruments are measured as set out below:

Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. An

of the impairment provision is based on a review of all outstanding amounts at the year-end. The impairment provisio

difference between the carrying amount and the recoverable amount, being the present value of expected cas

discounted at the market rate of similar borrowers. Bad debts are written off during the year in which they are identifie

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, c

cash equivalents comprise cash in hand, deposits held on call with banks, and investments in money market instrum

the balance sheet, bank overdrafts are included in borrowings in current liabilities.

Trade and other liabilities originated by the group are stated at amortised cost.

Borrowings are reported at amortised cost, namely original debt less principal repayments.

Investments in associate companies and subsidiaries are shown at cost in the holding company's financial stat

Provisions are made for a permanent diminution in the value. Other investments are carried at amortised cost less impa

Derivative financial instruments

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that are highly effec

recognised in equity. Where the forecasted transaction or firm commitment results in the recognition of an asset or of a

the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of

of the asset or liability. Otherwise, amounts deferred in equity are transferred to the income statement and classified as

or expense in the same periods during which the hedged firm commitment or forecasted transactions affects the

statement (for example, when the forecasted sales take place).

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accountin

AC 133, any cumulative gain or loss existing in equity at that time remains in equity and is recognised, when the comm

forecasted transaction ultimately is recognised in the income statement. However, if a committed or forecasted trans

no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the

statement.

The fair value of publicly traded derivatives and trading and available-for-sale securities is based on quoted market price

balance sheet date. The fair value of forward foreign exchange contracts is determined using forward exchange market

the balance sheet date.



as an intangible asset and is amortised using the straight line method over its estimated useful life, generally over 10 ye

carrying amount of goodwill is reviewed annually and written down for impairment where it is considered necessary.

Where the net asset value of an acquired subsidiary/associated undertaking at date of acquisition exceeds the cost o

acquired, the excess is treated as a non-distributable reserve.

8. Research, development and related expenditure

Research expenditure is charged to operating income in the year in which it is incurred. Development expenditure

charged to operating income in the year in which it is incurred, unless the viability of the future product is assured, in wh

it is capitalised and amortised from the commencement of commercial production of the product. Technology, royalty a

costs, which are disclosed separately from research and development expenditure, are charged to operating inc

incurred. These costs include technical licence fees and royalties paid to third parties where the payments are consider

a contribution to the research and development activities of those parties.

9. Property, plant and equipment

All property, plant and equipment is initially recorded at cost and subsequently shown at historical cost less depreciation

subject to finance lease agreements are capitalised at their fair value and the corresponding liabilities raised. Deprec

calculated on the straight-line method to write off the cost of each asset to their residual values over their estimated u

as follows:

Buildings 5%

Plant, machinery and equipment 20%

Vehicles 20 – 25%

Land is not depreciated, as it is deemed to have an indefinite life.

The carrying values of property, plant and equipment are reviewed for impairment losses whenever events or cha

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the am

which the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset's net selling p

value in use.

Interest costs on borrowings to finance the construction of qualifying property, plant and equipment are capitalised, du

period of time that is required to complete and prepare the property for its intended use, as part of the cost of the ass

10. Inventories

Inventories are stated at the lower of cost or net realisable value. Cost is determined by the first-in, first-out (FIFO) meth

cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related pro

overheads, but excludes interest expense. Net realisable value is the estimate of the selling price in the ordinary c

business, less the costs of completion and selling expenses.



employees. A provision is made for the estimated liability for annual leave and long service awards as a result of

rendered by employees up to the balance sheet date.

A provision is raised for profit-sharing bonuses where an agreement enforceable by law exists and an accurate estima

liability can be made.

Long-term employee benefits retirement obligations

It is the group's policy to provide retirement benefits for its employees. A number of defined contribution and defined

pension schemes are operated by the group in accordance with local regulations. The contributions by group companie

obligations for the payment of retirement benefits are charged against income in the year they become payable. Where

shortfalls arise in defined benefit funds they are met by group companies through lump sum payments or increase

contributions. The full accrued liability for post retirement medical aid obligations are recognised. Valuations of these ob

are carried out by independent qualified actuaries.

Equity compensation benefits

Share options are granted to management and key employees. Options are granted at the market price of the share

date of grant and are exercisable at that price. The share option scheme allows one third of the share options to be e

per year after each of the third, fourth and fifth year from date of granting the option. A compensation cost is not recog

these financial statements for the fair value of options granted.

13. Deferred income tax

Deferred income tax is provided, using the liability method, for all temporary differences arising between the tax bases o

and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to de

deferred income tax. The principal temporary differences arise from depreciation on property, plant and equipment, reva

of certain non-current assets, provisions for pensions and other post-retirement benefits and tax losses carried

Deferred tax assets relating to the carry forward of unused tax losses are recognised to the extent that it is probable th

taxable profit will be available against which the unused tax losses can be utilised.

Provision for taxes, mainly withholding taxes, which could arise on the remittance of retained earnings principally re

foreign subsidiaries is only made when there is a current intention to remit such earnings.

14. Revenue recognition

Revenue comprises the invoiced value for the sale of goods net of value-added tax, rebates and discounts, and after eli

sales within the group. Revenue from the sale of goods is recognised when significant risks and rewards of ownersh

goods are transferred to the buyer.

Other revenues earned by the group are recognised on the following basis:

– interest income: as it accrues unless collectability is doubtful

– dividend income: when the shareholder’s right to receive payment is established.



period of the lease.

16. Borrowing costs

Borrowing costs are charged to the income statement, except as noted in the policy for property, plant and equipmen

17. Segmental reporting

Business segments provide products or services that are subject to risks and returns that are different from those

business segments.

The group operates in the poultry and animal feed businesses. Income and expenditure directly related to segm

allocated specifically to the segments.

18. Dividends

Dividends are recorded in the annual financial statements in the period in which they are approved by the directors.



Distribution costs (122 768) (107 760) –

Marketing expenditure (36 913) (29 984) –

Other operating income 27 717 17 152 –

Operating profit 2 327 517 219 647 (1 341)

Share of results of associates 12 – 4 823 –

Dividends received from subsidiary – – 77 722 3

Net finance costs 5 (15 218) (22 157) (99)

Profit before tax 312 299 202 313 76 282 3

Taxation 6 (102 076) (62 061) (686)

Profit from ordinary activities 210 223 140 252 75 596 3

Minority interests (1 708) (1 721) –

Net profit for the year 208 515 138 531 75 596 3

Headline earnings for the year 7 208 257 140 032

Basic earnings per share (cents) 7

Earnings per share 487,8 322,8

Headline earnings per share 487,2 326,3

Diluted earnings per share (cents) 7



Dividends per share (cents) 8 168,0 108,0



Interests in subsidiaries and joint ventures 11 – – 313 864 28

Investment in associate 12 – – –

Other investments 13 7 526 4 159 –

Deferred tax 19 2 857 – 2 857

504 753 490 180 316 721 28

Current assets

Inventories 14 274 426 358 089 –

Receivables and prepayments 15 471 675 512 038 49

Cash and cash equivalents 16 68 080 28 474 1 996

814 181 898 601 2 045

Total assets 1 318 934 1 388 781 318 766 29

Equity and liabilities

Capital and reserves

Ordinary shares 17 423 429 429

Share premium 17 261 032 264 777 264 777 26

Reserves 337 940 197 211 53 062 2

599 395 462 417 318 268 29

Minority interest 8 831 4 195 –

Total equity 608 226 466 612 318 268 29

Non-current liabilities

Interest-bearing borrowings 18 2 742 14 856 –

Deferred tax liabilities 19 74 916 80 012 –

Retirement benefit obligations 20 51 699 45 689 –

129 357 140 557 –

Current liabilities

Trade and other payables 21 524 909 624 542 12

Current tax liabilities 49 659 40 624 –

Current portion of borrowings 18 6 297 116 446 –

Shareholders for dividend 486 – 486

581 351 781 612 498

Total liabilities 710 708 922 169 498

Total equity and liabilities 1 318 934 1 388 781 318 766 29



– Shares issued – 483 – –

– Buy-back of shares – (1 311) – –

– Share issue expenses – (4) – –

Changes not recognised in

income statement – – 2 051 –

– Currency differences arising in year – – 2 223 –

– Gain on cash flow hedge – – (172) –

Net profit – – – 138 531 13

Dividends declared – – – (43 353) (4

Balance at 30 September 2002 429 264 777 3 363 193 848 46

Changes during the year:

Buy-back of shares 17 (6) (3 745) – (8 254) (1

Changes not recognised in

income statement – – (8 402) –

– Currency differences arising in year – – (7 547) –

– Disposal of subsidiary – – (840) –

– Minority interest in other reserves

movement – – (108) –

– Cash flow hedge realised – – 93 –

Net profit – – – 208 515 20


Balance at 30 September 2003 423 261 032 (5 039) 342 979 59

Company

Balance at 30 September 2001 429 265 609 – 40 471 30


Net movement from odd-lot offer – (832) – –

Net profit – – – 31 359 3




Net profit – – – 75 596 7





Cash generated from/(utilised in) operations 392 180 243 479 5 378

Interest received 5 510 6 517 –

Interest paid (20 728) (28 674) (99)

Dividends received – – 77 722 3

Tax paid C (90 415) (50 910) (3 627)

Cash available from operations 286 547 170 412 79 374 2

Dividends paid D (50 644) (43 376) (50 525) (

Net cash inflow from/(utilised in) operating activities 235 903 127 036 28 849 (

Cash flows from investing activities

Purchase of property, plant and equipment (47 382) (54 137) –

Proceeds on disposal of property, plant and equipment 4 877 7 078 –

Cost of acquisition of businesses E (4 753) (44 659) –

Investment in subsidiaries – – – (

Disposal of subsidiary F (3 118) – –

Research, development and related expenditure (4 593) (8 436) –

Loans (advanced)/repaid (6 095) 1 501 –

Proceeds on disposal of an interest in a subsidiary 5 250 – –

Loans to subsidiaries – – (27 440) 6

Net cash (outflow)/inflow from investing activities (55 814) (98 653) (27 440) 2

Net cash inflow for the year 180 089 28 383 1 409

Cash outflow to financing activities (133 687) (14 710) –

Net movement in share capital from odd-lot offer – (832) –

Buy back of shares (12 005) – –

Decrease in borrowings (121 682) (13 878) –

Loans received 3 058 1 568 –

Proceeds from finance lease liabilities 569 1 677 –

Payment of capital element of long–term borrowings (34 760) (2 411) –

Payment of capital element of finance lease liabilities (1 152) (735) –

Decrease in bank overdrafts (89 397) (13 977) –

Net increase in cash and cash equivalents 46 402 13 673 1 409

Effects of exchange rate changes (6 796) 105 –

Cash and cash equivalents at beginning of year 28 474 14 696 587

Cash and cash equivalents at end of year 68 080 28 474 1 996



Increase in provision for retirement benefit obligations 6 010 – –

Increase in provision against loans 6 066 2 941 –

Other non–cash flow items (323) (2 092) –

408 014 278 979 (1 341)

Research, development and related expenditure 4 593 8 436 –

Cash operating profit/(loss) 412 607 287 415 (1 341)

B. Changes in working capital

Decrease/(increase) in inventories 77 260 (98 975) –

Decrease/(increase) in receivables and prepayments 40 641 (68 893) 6 892

(Decrease)/increase in trade and other payables (105 330) 176 581 (173)

Total change in working capital 12 571 8 713 6 719

C. Tax paid

Balance payable at beginning of year (40 624) (37 384) (70)

Provision for the year (109 731) (50 089) (3 543)

Disposal/(acquisition) of subsidiaries 545 (4 061) –

Provision relating to pre-acquisition period 9 736 – –

Amounts payable at end of year 49 659 40 624 (14)

Total tax paid (90 415) (50 910) (3 627)

D. Dividends paid

Amounts payable at beginning of year – (23) –

Per statement of changes in equity (51 130) (43 353) (51 011) (4

Amounts payable at end of year 486 – 486

Total dividends paid (50 644) (43 376) (50 525) (4



Deferred tax provision (118) 22 167 –

Trade and other payables 6 788 43 654 –

Tax liabilities – 4 061 –

Borrowings – 33 863 –

Cash and cash equivalents (13) (5 976) –

Net assets acquired (1 418) (65 263) –

Acquisition of outside shareholders’ interests – (2 274) –

Less:

Carrying value of investment in subsidiaries previously

held as investment in associate – 21 963 –

Goodwill on acquisition of subsidiaries (3 348) (3 851) –

Goodwill on acquisition of minorities – (1 210) –

Total purchase consideration for subsidiaries

and minority interests (4 766) (50 635) –

Cash and cash equivalents 13 5 976 –

Cash flow on acquisition, net of cash acquired (4 753) (44 659) –

F. Disposal of subsidiary

Receivables 2 696 – –

Trade and other payables (1 091) – –

Provision for tax (545) – –

Loan account (4 178) – –

Cash and cash equivalents 3 118 – –

Net assets disposed – – –

Cash and cash equivalents (3 118) – –

Cash flow on disposal, net of cash disposed (3 118) – –



3 947 030 3 692 129 –

Revenue, net of value-added tax, normal

discounts and rebates excludes:

Share of revenue of associated company – 56 852 –

Intergroup revenue 901 913 717 924 –

2. Operating profit

The following items have been charged in arriving

at operating profit:

Auditors' remuneration 2 346 1 966 –

Audit fees 1 986 1 696 –

Management consulting services 286 187 –

Taxation services 5 30 –

Expenses 69 53 –

Fees paid for managerial, secretarial and technical services 6 628 7 323 230

Amortisation of goodwill 2 000 1 200 –

Depreciation on property, plant and equipment 66 744 57 283 –

Land and buildings 15 623 13 310 –

Plant and equipment 44 517 37 441 –

Vehicles 6 224 6 151

Leased assets under finance leases 380 381 –

Profit on disposal of property 532 23 –

Taxation effect – – –

Profit on sale of plant, equipment and vehicles 804 2 069 –

Research and development expenditure 4 593 8 436 –

Profit on sale of interests in subsidiaries 2 726 – –

Foreign exchange (losses)/gains (3 358) 1 147 –

Realised profits on financial instruments and contracts in

respect of procurement not qualifying as effective hedges 18 145 – –

Operating lease payments 20 333 12 295 –

Property 10 115 6 864 –

Plant and machinery 4 048 2 176 –

Vehicles 6 170 3 255 –

Directors' remuneration (note 3) 6 969 5 889 350

Cost of employees (note 4) 305 337 255 927 –



Other benefits 477

Non-executive directors 6 499

Fees 470

Total directors' remuneration 6 969

Less paid by subsidiary (6 619)

350

No share options were granted to the directors of the

company during the year (2002: nil).

Details of the directors’ remuneration is given on page 37.

4. Cost of employees

Wages and salaries 257 735 220 096 –

Termination benefits 3 979 2 294 –

Social security costs 14 025 11 855 –

Pension costs – defined contribution plans 22 650 16 960 –

Pension costs – defined benefit plans 3 416 3 554 –

Post-retirement benefits 3 532 1 168 –

305 337 255 927 –

Average number of employees

– Permanent employees: 5 430 (2002: 4 884)

– Contracted labour: 617 (2002: 355)

5. Finance costs

Bank borrowings 18 445 26 108 99

Finance leases 260 144 –

Loans 1 093 1 495 –

Creditors and other 930 927 –

Interest expenses 20 728 28 674 99

Interest income (5 510) (6 517) –

Net finance cost 15 218 22 157 99



102 076 60 548 686

Share of tax of associates (note 12) – 1 513 –

102 076 62 061 686

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 312 299 202 313 76 282 3

Tax calculated at a tax rate of 30% (2002: 30%) 93 690 60 694 22 885

Adjustment to prior year's tax provision (331) (2 060) 481

Effect of different tax rates in other countries (1 357) (287) –

Income not subject to tax (1 212) (735) (23 317)

Expenses not deductible for tax purposes 4 567 4 323 432

Current tax losses not utilised 849 771 –

Utilisation of previous year's tax losses (369) (1 186) –

Secondary tax on companies 6 239 541 892

Tax charge 102 076 62 061 1 373

Further information about deferred tax is presented in note 19.

7. Earnings per share

Basic earnings

Net profit for the year 208 515 138 531

Headline earnings for the year 208 257 140 032

Weighted average number of ordinary shares in

issue (net of share buy-back) 42 742 565 42 916 475



Diluted earnings

Net profit used to determine diluted

earnings per share 210 495 142 369

Headline earnings used to determine

diluted earnings per share 210 237 143 870

Weighted average number of ordinary shares

for diluted earnings per share 46 063 665 46 268 075

Weighted average number of ordinary shares in

issue (net of share buy-back) 42 747 565 42 916 475

Adjusted for unexercised share options 3 316 100 3 351 600

Diluted earnings per share 457,0 307,7

Diluted headline earnings per share 456,1 310,9



Amortisation of goodwill 2 000 1 200

Write off of loans 2 048 2 393

Profit on sale of interest in subsidiaries (2 726) –

208 257 140 032

8. Dividends per share

An interim dividend in respect of the year ended 30 September 2003 of 58 cents per share (2002: 47 cents pe

amounting to a total of R24 807 163 (net of share buy-back) (2002: R20 174 280) was declared on 21 May 2003.

A final dividend in respect of the year ended September 2003 of 110 cents per share (2002: 61 cents per share) amo

to a total of R46 486 993 (net of share buy-back) (2002: R26 148 736) was declared on 14 November 2003.

Land and Plant, and Capitalised

buildings equipment Vehicles leased assets

R'000 R'000 R'000 R'000

9. Property, plant and equipment

Group

Balance at 30 September 2001

Cost 254 668 344 810 54 290 1 020 65

Accumulated depreciation (72 147) (204 268) (44 073) (109) (32

Carrying amount 182 521 140 542 10 217 911 33

Changes for the year ended

30 September 2002

Exchange differences 8 2 507 17 –

Additions – Expansion 12 523 37 422 2 595 1 597 5

Additions – Replacement 9 504 40 103 3 534 – 5

Subsidiary acquired 59 055 23 563 5 132 – 8

Disposals (840) (3 541) (539) (553)

Depreciation charge (13 310) (37 441) (6 151) (381) (

Closing carrying amount 249 461 203 155 14 805 1 574 46



y g

Changes for the year ended

30 September 2003

Exchange differences (52) (1 382) (78)

Additions – Expansion 13 028 33 024 1 061 269 4

Additions – Replacement 5 052 25 835 2 111 – 3

Subsidiary acquired – 1 727 41 –

Disposals (5 177) (1 320) (300) (94)

Depreciation charge (15 623) (44 517) (6 224) (380) (6

Closing carrying amount 246 689 216 522 11 416 1 369 47

Balance at 30 September 2003

Cost 350 548 512 281 67 892 1 918 93

Accumulated depreciation (103 859) (295 759) (56 476) (549) (45

Carrying amount 246 689 216 522 11 416 1 369 47

Details of the individual properties are contained in a register, which is open for inspection by members or their nominee

registered office of the company.

Assets with a book value of R5 815 000 (2002: R47 724 000) are pledged as security for secured borrowings of R6

(2002: R35 608 000) (refer note 18).

Group Compan

2003 2002 2003

R'000 R'000 R'000

10. Intangible assets

At beginning of year 17 026 7 440 –

Goodwill resulting from fair value adjustments to

pre-acquisition net asset value of subsidiaries – 5 725 –

Goodwill resulting from cost being in excess of the

net asset value of subsidiaries acquired 3 348 5 061 –

Amortisation charge (2 000) (1 200) –

At end of year 18 374 17 026 –

Balance at 30 September

Cost 22 814 19 466 –

Accumulated amortisation (4 440) (2 440) –

Carrying amount 18 374 17 026 –



By subsidiaries 90 962 6

By joint ventures 5 500

Total 313 864 28

The amount due by the subsidiaries has been ceded as

security for bank overdrafts.

Details of joint ventures and subsidiaries are given in

notes 27 and 28 respectively.

12. Investment in associate

Unlisted

Opening carrying amount at cost – 19 498 –

Net share of post-acquisition results of associate – 2 465

Share of results before taxation – 4 823

Share of taxation – (1 513)

Share of minority interest – (845)

– 21 963 –

Transferred to investment in subsidiaries – (21 963) – (

Closing carrying amount – – –

Summarised financial information regarding

National Chicks Limited for the six months ended

30 March 2002 is as follows:

Revenue – 162 901

Operating profit – 19 001

Net profit – 8 468

13. Other investments

Unlisted

Loans and advances 7 526 4 159 –

14. Inventories

Raw materials 91 828 166 069 –

Finished goods and merchandise 27 105 34 027 –

Consumable stores 22 693 24 152 –

Livestock and sundries 132 800 133 841 –

274 426 358 089 –

Previous year's inventories with a book value of

R13 485 000 was pledged as security for bank overdrafts.



471 675 512 038 49

Trade receivables with a book value of

R101 443 000 (2002: R275 625 000)

have been ceded as security for available

bank facilities (refer note 18).

16. Cash and cash equivalents

Cash at hand and in bank 42 080 20 474 1 996

Short-term bank deposits 26 000 8 000 –

68 080 28 474 1 996

17. Ordinary shares and share premium

17.1 Authorised share capital

75 000 000 ordinary shares of 1 cent each

(2002: 75 000 000 ordinary shares of 1 cent each) 750 750 750

17.2 Issued share capital

42 866 780 ordinary shares of 1 cent each 429 429 429

(2002: 42 866 780 ordinary shares of 1 cent each)

605 877 ordinary shares held by subsidiary in holding

company (share buy-back) (6) –

423 429 429

Share premium 261 032 264 777 264 777 26

– Share premium 265 448 265 448 265 448 26

– Share issue expenses (671) (671) (671)

– Premium on shares held by subsidiary

in holding company (share buy-back) (3 745) – –

Total issued share capital and premium 261 455 265 206 265 206 26

All issued shares are fully paid.

Buy-back of shares

In terms of a decision taken by the board of directors, a wholly owned subsidiary of Astral Foods Limited has pu

605 877 shares for R12 004 601 at an average cost of R19,81 per share. The number of shares to be bought

not to exceed 10% of the total number of shares issued.

The shares purchased by the subsidiary will not be cancelled nor will the stock exchange listing of those sh

terminated.



– Number of shares at end of year 42 260 903 42 866 780

17.3 Un-issued share capital Number of shares Number of sh

Number of shares under the control of directors

for the purpose of the Astral Foods Limited

Employee Share Trust 2001 4 292 400 4 292 400 4 292 400 4 29

17.4 Share incentive scheme

The number of shares available to be utilised

for purposes of the scheme, were as follows:

At beginning of year 940 800 928 900 940 800 92

Granted (175 000) (102 600) (175 000) (1

Lapsed 210 500 114 500 210 500 1

At end of year 976 300 940 800 976 300 94

Share options lapsed were in respect of employees

who left the employment of the group.

Number of Exercise

Date options price

Share options were granted to employees at the

following date and exercise price during the year: 22-May-03 175 000 R 15,00

No share options were exercised during the year, and

detail of the options still outstanding at the end of

the year is as follows: 17-Apr-01 2 901 100 R 7,75 2

1-Jul-01 20 000 R11,60

9-Jul-01 87 400 R11,45

1-Sep-01 30 000 R11,65

10-Nov-01 30 000 R 13,55

2-Jan-02 15 000 R 13,70

2-May-02 25 000 R 11,80

13-Aug-02 32 600 R 11,50

22-May-03 175 000 R 15,00

3 316 100 2

The share option scheme allows one third of the share options to be exercised per year after each of the third,

and fifth year from date of granting the option.

A compensation cost is not recognised in these financial statements for the fair value of share options granted.



Total 6 141 35 608 –

Less: Portion payable within one year (3 399) (20 752) –

2 742 14 856 –

Short-term

Bank overdrafts 2 898 95 694 –

Portion of long–term borrowings payable within one year 3 399 20 752 –

6 297 116 446 –

Total borrowings 9 039 131 302 –

All borrowings are linked to the bank prime overdraft rate.

Liabilities are secured over assets with the following

book values (refer note 9):

Capitalised finance leases 1 493 1 596 –

Secured loans 4 648 46 128 –

The previous year's bank overdrafts of

R74 423 000 were secured over trade receivables

with a book value of R275 625 000.

Maturity of long-term borrowings:

Less than 1 year

Capitalised finance leases 457 416 –


Between 1 and 5 years

Capitalised finance leases 1 036 1 203 –


After 5 years

Secured loans – 10 155 –

6 141 35 608 –

Borrowing facilities

The group has the following undrawn borrowing facilities

at floating interest rates: 362 750 313 622 –

Borrowing powers

No limit has been placed in the articles of association on the borrowing powers of the company.



A deferred tax asset has been recognised in respect

of available STC credits.

The movement on the net deferred

tax account is as follows:

At beginning of year 80 012 47 139 –

Exchange differences (180) 247 –

Subsidiary acquired (118) 22 167 –

Deferred tax on STC credit (2 857) – (2 857)

Income statement (credit)/charge (note 6) (4 798) 10 459 –

At end of year 72 059 80 012 (2 857)

Deferred tax assets and liabilities

Deferred tax assets and liabilities are offset when

the income taxes relate to the same fiscal

authority and there is a legal right to offset

at settlement. The following amounts are

shown in the consolidated balance sheet:

Deferred tax asset

STC credit 2 857 – 2 857

Deferred tax liabilities

Accelerated tax depreciation 77 592 79 910 –

Lower tax value for livestock and farming consumables 42 065 42 974 –

Provisions (46 787) (42 048) –

Other temporary differences 2 046 (824) –

74 916 80 012 –



both defined contribution and defined benefit funds

covering the majority of the employees. The funds are

governed by the Pension Funds Act of 1956. The defined

benefit funds are valued at regular intervals and the financial

positions of the funds are set out below:

The last actuarial valuations were carried out at 1 April

2003. No assets is recognised in respect of surpluses as

the apportionment of surpluses still needs to be calculated

and approved by the Registrar of Pension Funds in terms of

the Pension Fund Second Amendment Act, 39 of 2001.

The next valuation is due in April 2006.

Actuarial valuation of pension fund

Balance at the end of year

Present value of funded obligations (16 626) (6 572)

Fair value of plan assets 23 204 13 796

Net asset 6 578 7 224

Unrecognised asset (6 578) (7 224)

Liability at balance sheet date – –

Actuarial valuation of retirement fund

Balance at the end of year

Present value of funded obligations (17 552) (9 559)

Fair value of plan assets 15 779 10 554

Net (liability)/asset (1 773) 995

Unrecognised asset – (995)

Liability at balance sheet date (1 773) –

The principal actuarial assumptions used for

accounting purposes were:

Discount rate/(investment rate) 12% 12%

Salary inflation 10 – 16% 10%

Pension inflation 8% 10%



The liability recognised in the financial statements

was actuarially valued at 1 April 2003 and the same

actuarial assumptions still apply in assessing the

current liability. The liability was valued using the

projected unit credit method.

Present value of funded obligations 51 699 45 689

Liability at beginning of year 45 689 41 192

Acquisition of subsidiary – 3 418

Current service cost 5 167 –

Notional interest cost 4 773 4 652

Contributions paid (3 930) (3 573)

Liability at end of year 51 699 45 689

Investment return 12% 12%

Healthcare inflation rate 10% 10%

21. Trade and other payables

Trade payables 351 347 442 290 –

Accruals and other payables 173 562 182 252 12

524 909 624 542 12

22. Commitments

Capital commitments

Capital expenditure approved not contracted 6 406 255 –

Capital expenditure contracted but not recognised

in the financial statements: 39 111 7 204 –

The capital commitments will be financed by net cash flow

from operating activities and the utilisation of cash and

borrowings within the accepted gearing profile of the group.



Not later than 1 year 20 257 19 174 –

Later than I year and not later than 5 years 71 056 66 928 –

Later than 5 years 51 156 54 422 –

142 469 140 524 –

Leases are contracted for periods ranging from

42 to 120 months with no renewal options.

Rental escalations vary from nil to prime

interest rate linked escalations.

Other commitments

The group has contracted its raw-material

requirements from various suppliers for the

2004 financial year in terms of future supply

agreements.

Contracted amounts not recognised in the

balance sheet are as follows: 276 349 509 470 –

The company guaranteed the payment obligations

of its subsidiary, Astral Operations Limited, in respect

of raw material purchases.

23. Contingencies

Two broiler farms were disposed of to an independent third party purchaser during 1997. The institution providing the

to the purchaser has, in terms of a put and call agreement, the right to put the farms to the group in the event of a b

the purchaser of certain conditions. As a result the group has a contingent asset in the form of the call option and a co

liability to the institution providing the finance for the exercise price of the option (being a maximum of R7 700 000).



Maximum number of Exchange rate range 2003

months to settlement date Rx = 1 foreign currency R'000

US dollar 3 8,32 – 7,62 1 168

Euro 1 9,14 – 8,40 347

Pound sterling 1 14,60 – 11,62 1 028

Commodity price risk

This represents the risk the group may suffer financial loss when a fluctuating price contract obligation is entered into

commodity prices increase or when a fixed price agreement is entered into and commodity prices fall. The fair value

commodity positions included in trade and other receivables at 30 September 2003 amounts to R1,2 million and h

accounted for in the income statement.

Interest rate risks

All interest payable on long- and short-term borrowings is at variable rates, which are linked to the bank prime lend

Cash flow exposure from interest rate fluctuations is hedged by entering into interest swap agreements. As the

operating with a small gearing ratio, interest rate risk on borrowings is minimised.

Credit risk

The group's main credit risk is concentrated in the aggregate balance of amounts receivable. Trade receivables comprise

widespread customer base. These risks are controlled by the application of credit limits and credit controlling procedu

largest single credit risk amounts to R98,7 million, however the group does not consider there to be any significant conce

of credit risk that has not been adequately provided for at 30 September.

Liquidity risks

The group's liquidity risk consists mainly of the amount borrowed. The details of borrowings and undrawn facilities are d

in note 18. In terms of the articles of association, the group's borrowing powers are unlimited. The liquidity risk is man

monitoring the daily borrowing levels and by conducting cash flow forecasts at regular intervals.

Fair value of financial instruments

At 30 September 2003 the carrying amounts of cash and short-term deposits, trade receivables, trade payables,

expenses and short-term borrowings approximated their fair values due to the short-term maturities of these ass

liabilities.

Group

2003

R'000

Derivatives have been re-measured to fair value and the impact on

shareholders' equity at 30 September is as follows:

Cash flow hedges –



Sales to joint ventures 239 044 20

Purchases from joint ventures 101 566 4

Sales of goods to related parties are effected at arm's length.

Outstanding balances at year end:

Included in receivables and prepayments 32 901 1

Included in trade and other payables (3 387)

Cross guarantees

Cross deed of suretyship was given by Astral Foods Limited, Astral Operations Limited, County Fair Holdings (Pty)

County Fair Foods (Pty) Limited, Ross Poultry Breeders (Pty) Limited, National Veterinary Supplies (Pty) Limited and

Analytical Laboratories (Pty) Limited in respect of borrowings.

Directors' remuneration

Details of directors' remuneration are given on page 37. Executive directors are eligible for an annual performance relate

payment linked to appropriate group targets. The structure and payments of bonuses is decided by the human resou

remuneration committee.

Details of share options granted to directors are given on page 37.

Principal joint ventures and subsidiary undertakings

Details of subsidiaries are set out in note 27 and 28 to the financial statements

26. Discontinued operation

The plant and equipment of Meadow Feeds Limited (Malawi) were sold during 2002 and the operation is report

discontinuing operation.

The relevant income statement and balance sheet related information is as follows ;

Group

2003

R'000

Revenue – 4

Operating loss –

Property, plant and equipment –

Current assets(excluding cash) –

Current liabilities –



Elite Breeding Farms – partnership Grand parent breeding and hatching 82

The following amounts represent the group's share of assets and liabilities, revenue and expenses and cash flows of

ventures, and are included in the consolidated financial statements:

R'000

Assets and liabilities

Property, plant and equipment and investments 152 983 15

Current assets 275 498 23

Total assets 428 481 38

Non-current liabilities 6 929

– Interest bearing 923

– Non-interest bearing 6 006

Current liabilities 195 919 17

– Interest bearing 3 564

– Non-interest bearing 192 355 17

Deferred tax liability 42 448 3

Total liabilities 245 296 2

Net assets 183 185 17

Revenue and expenses

Revenue 1 017 738 88

Profit before tax 92 689 3

Income taxes (39 101)

Profit after tax 53 588 2

Cash flows

Operating cash flows 71 522 2

Dividend paid (47 722)

Investing cash flows (3 590)

Financing cash flows 2 806

Total cash flows 23 016

Proportionate interest in joint venture commitments –



Unlisted investments

Directly held:

Astral Operations Limited a 12 12 100 100 152 750 152 750 36 108 1

National Chick Limited b 23 720 23 720 100 100 63 993 63 993 –

County Fair Holdings (Pty) Limited b 20 20 100 100 29 29 54 854 5

Meadow Feeds Limited (Malawi) * c 20 20 100 100 589 589 –

Africa Feeds Limited (Zambia) ^ e 24 24 80 80 – – –

Indirectly held:

Ross Poultry Breeders (Pty) Limited a 1 1 90 100

County Fair Foods (Pty) Limited f – – 100 100

National Chick Holdings (Pty) Limited c – – 100 100

National Chicks Swaziland

(Pty) Limited# a 1 1 67 67

National Chicks Botswana

(Pty) Limited@ a 625 625 67 67

National Veterinary Supplies

(Pty) Limited g – – 100 100

Central Analytical Laboratories

(Pty) Limited d 133 133 100 90

Boston Breeders (Pty) Limited c 2 050 2 050 100 100

National Chick Management

Services (Pty) Limited c – – 100 100

Less: provision (10 986) (10 986) –

206 375 206 375 90 962 6

The directors' valuation of the investments in subsidiary companies is not less than their respective carrying values.

* Incorporated in Malawi

^ Incorporated in Zambia

# Incorporated in Swaziland

@ Incorporated in Botswana

Nature of business

a-Animal feed and pre-mix production, broiler genetics, broiler breeding , production and sale of day old broilers, and

hatching of eggs

b-Investment holding

c-Dormant

d- Analytical services

e-Animal feed production

f- Broiler operations

g- Retailer of animal health products



– Shares held by directors 3 0,1 62 863

3 250 100,0 42 866 780

Type of shareholders

Shareh

Mutual funds

Investment companies

Pension funds

Private investors

Insurance companies

Other

Major shareholders

Shareholders with a beneficial interest of 5% or more of the company's listed securities as at 30 September 2003

% o

shareh

Old Mutual Asset Management (SA)

Investec Asset Management (SA)

RMB Asset Management (SA)

Allan Gray Limited (SA)

African Harvest Fund managers

Prudential M&G Funds



Dividends

Interim dividend

Declaration May

Payment July

Final dividend

Declaration November

Payment January



Charles Gustav van Veyeren (69)

Academic qualifications: BSc Agric

Occupation: Director of Companies

Experience: Chairman of Onderberg Processing Co-Operative Limited, Malelane Citrus Co-Operative

Malelane Irrigation Board and Crocodile River Major Irrigation Board. Previously an e

member of the South African Agricultural Union and served on the boards of the Land & Ag

Bank of South Africa, Agricultural Research Council and Citrus Industry Trust. Also serve

Tariffs/Marketing Development Committee, National Water Advisory Committee and as a

Member of Eskom. Appointed a Director of Astral Foods Limited on 19 February 2001.

Michael Andrew Kingston (52)

Occupation: Chief Operating Officer: Poultry Division

Experience: Has extensive experience in the poultry industry having been with Rainbow Chicken for

and prior to that at the commercial farming operations of Illovo Sugar. Joined Country Bird

and returned the operations to profitability, thereafter taking up a managerial position at Cou

being responsible for all aspects of parent breeding including sales, marketing and

Managed Elite Breeding Farms for a period.

Has served on the South African Poultry Association for the past 17 years and is a past c

of the Broiler Organisation Committee. Awarded "Poultry Man of the Year" in 1999. App

Director of Astral Foods Limited on 19 February 2001.

3. To elect T C C Mampane and M Macdonald, appointed 14 November 2003 and who retire in accordance with the co

articles of association and, being eligible, offer themselves for re-election. Abbreviated CV’s of the above are as follow

Thabang Charlotte Christine Mampane (44)

Academic qualifications: BA Honours (Public Administration)

Occupation: Head of Regions: SABC

Experience: Started career at the SABC in 1983 as a junior announcer on Radio Setswana and remaine

position until 1988 when promoted into the role of announcer, and in 1989 senior an

Promoted to Manager: Drama, Culture and Language in 1991. Joined Telkom as Manag

Audio Visual Section in 1995, and subsequently moved to the Independent Broadcasting A

as the special assistant to the Chief Executive Officer. Returned to the SABC in 1996 as

Manager of the portfolio of eight radio stations, thereafter appointed as Chief Executive

Division for three years before moving into current position as Head of Regions.

Previously chaired the NCRO Board and currently serves on the NEMISA and the National

Video Foundation boards. Appointed a Director of Astral Foods Limited on 14 November 2



Holdings BV. Also Chairman of the Iscor Pension Fund Board of Trustees as well as a me

the Top Organisations Network of SAICA.

Previously chairman of Foskor, NDH and Sapekoe. Also served on the boards of ADE,

Forge, Ferrovorm, Natal Oil and Soap Industries, North East Cape Forests, Safmarine,

Sasol 2 and 3, Strategic Energy Fund, Ticor and Volkskas Industrial Bank. Appointed a Di

Astral Foods Limited on 14 November 2003.

4. To consider and, if deemed fit, to pass, with or without modification, the following resolutions in the manner require

Companies Act, 61 of 1973, as amended ("the Act") and subject to the Listings Requirements of the JSE Securities E

South Africa ("the JSE"):

4.1 Ordinary Resolution No 1

"Resolved that the ordinary shares of the company (excluding for this purpose those ordinary shares which have sp

been placed under the control of the directors for allotment and issue in terms of the Astral Foods Share Incentive S

be placed under the control of the directors as a general authority in terms of section 221(2) of the Act, subje

provisions of the Act and the rules and regulations of the JSE, until the next annual general meeting of the comp

the allotment and issue to such persons and on such conditions as the directors deem fit."

4.2 Ordinary Resolution No 2

"Resolved that, subject to the renewal of the general authority proposed in terms of ordinary resolution No 1 abov

terms of the Listings Requirements of the JSE, the directors be granted a general authority to issue ordinary s

1 cent each for cash as and when suitable situations arise, subject to the following limitations:

(i) that this authority shall not extend beyond 15 (fifteen) months from the date of this annual general meeting;

(ii) that a paid press announcement giving full details, including the impact on net asset value and earnings pe

will be published at the time of any issue representing, on a cumulative basis within one year, 5% or mo

number of shares of that class in issue prior to the issues;

(iii) that issues in the aggregate in any one financial year will not exceed 15% of the number of shares of any cla

company’s issued share capital, including instruments which are compulsorily convertible into shares of tha

(iv) that, in determining the price at which an issue of shares will be made in terms of this authority, the m

discount permitted will be 10% of the average traded price of the shares in question, as determined over the

prior to the date that the price of this issue is determined;

(v) that the shares will be issued to the public and not to related parties; and

(vi) that the shares to be issued will be of a class already listed, or where this is not the case, will be limited to suc

or rights that are convertible into a class that is already in issue.”

The approval of a 75% majority of the votes cast by shareholders present or represented by proxy at this me

required for this ordinary resolution No 2 to become effective.



4.4 Special Resolution No 1

"Resolved that the directors be and are hereby authorised to approve and implement the acquisition by the com

a subsidiary of the company), of shares issued by the company, by way of a general authority which shall only be v

the company’s next annual general meeting, unless it is then renewed, provided it shall not extend beyond 15

months from the date of this annual general meeting, in terms of the Act and the Listings Requirements of the JS

provide, inter alia, that the company may only make a general repurchase of its shares subject to:

(i) the acquisition being implemented on the open market of the JSE;

(ii) the company being authorised thereto by its articles of association;

(iii) acquisitions may not be made at a price greater than 10% above the weighted average of the market valu

shares for the five business days immediately preceding the date on which the transaction was agreed;

(iv) a paid press announcement being published as soon as the company has acquired shares constituti

cumulative basis, 3% of the number of shares in issue prior to the acquisition pursuant to which the 3% thre

reached, containing full details of such acquisitions;

(v) the appointment by the company, at any point in time, of only one agent, to effect any acquisition(s) on the co

behalf;

(vi) the company complying with the shareholders’ spread requirements in terms of the JSE Listings Requireme

(vii) acquisitions not being undertaken by the company or its subsidiaries during a prohibited period, as define

JSE Listings Requirements; and

(viii) acquisitions not exceeding 10% in aggregate of the company’s issued ordinary share capital in any one financ

The directors, having considered the effects of the acquisition of the maximum number of shares in terms of the afo

authority, are of the opinion that for a period of 12 months after the date of the notice of the annual general meet

(i) the company or the group will be able, in the ordinary course of business, to pay its debts;

(ii) the consolidated assets of the company or the group, fairly valued in accordance with generally accepted ac

practice, will exceed the consolidated liabilities of the company or the group; and

(iii) the company’s or the group’s ordinary capital reserves and working capital will be adequate.

It is the intention of the directors to utilise this authority if the circumstances are appropriate. A working capital st

will be submitted to the JSE prior to the company entering into a general repurchase of its shares.

The company’s sponsor will provide a working capital sign off to the JSE before the company commences an

repurchase in terms of the general authority being sought here.

The reason for and effect of special resolution No 1 is to grant the directors of the company a general authority

of the Act and the Listings Requirements of the JSE, for the acquisition by the company (or a subsidiary of the co

of its own shares on the terms set out above.



for the accuracy of the information given and certify that to the best of their knowledge and belief there are no fa

have been omitted which would make any statement false or misleading, and that all reasonable enquiries to a

such facts have been made and that the annual report contains all information required by Section 11.26 of

Listings Requirements pertaining to this special resolution.

Voting

Any shareholder who holds certificated ordinary shares in the company or who holds dematerialised ordinary shares in the c

through a Central Securities Depository Participant ("CSDP") and who has selected "own name" registration, may attend, sp

vote at the annual general meeting or may appoint any other person or persons (none of whom need be a shareholder) as

or proxies, to attend, speak and vote at the annual general meeting in such shareholder’s stead.

Should any shareholder who holds dematerialised ordinary shares in the company and has not selected "own name" reg

wish to attend, speak and vote at the annual general meeting, such shareholder should timeously inform his CSDP for the p

of obtaining the necessary letter of representation from such shareholder’s CSDP or broker to attend the annual general me

timeously provide such shareholder’s CSDP or broker with such shareholder’s voting instruction in order for the CSDP or b

vote on such shareholder’s behalf at the annual general meeting.

A proxy form is enclosed for use by shareholders holding certificated ordinary shares in the company or dematerialised

shares in the company through a CSDP or broker and who has selected "own name" registration. Such proxy form, duly co

should be forwarded to reach the transfer secretaries of the company, by no later than 09:30 on Tuesday, 10 February 20

completion of a proxy form will not preclude a member from attending the meeting.

By order of the board

T PRITCHARD

Company Secretary

Pretoria

14 November 2003

Printed by Ince (Pty) Ltd


Astral Foods Annual Re

meeting and request their CSDP or broker to issue them with the necessary authorisation to attend or provide their CSDP o

with their voting instructions should they not wish to attend the annual general meeting in person. Such shareholders must n

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

or failing him/her

or failing him/her

the chairman of the meeting, as my/our proxy to vote for me/us on my/our behalf at the third annual general meeting of the

company to be held on Thursday, 12 February 2004 at 09:30 and at any adjournment thereof.

Signed this day of

Signature

(*Indicate instructions to proxy by way of a cross in the space provided below.)

Unless otherwise instructed, my/our proxy may vote as he/she thinks fit or abstain from voting.

*In favour of *Against * Absta

1. To receive, approve and adopt annual financial statements

2. Re-election of directors who retire by rotation

3. Re-election of new directors appointed during the year

4.1 To place ordinary shares under the control of the directors

4.2 To authorise the issuing of shares for cash

4.3 To approve remuneration payable to directors

4.4 To approve the acquisition of shares issued by the company



4. This form of proxy must be received by the transfer secretaries, Computershare Limited, Ground Floor, 70 Marsha

Johannesburg, 2001 (P O Box 1053, Johannesburg 2000) by no later than 09:30 on Tuesday, 10 February 2004.

5. Documentary evidence establishing the authority of the person signing the proxy in a representative capacity must be a

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 mee

speaking and voting in person thereat to the exclusion of any proxy appointed in terms of this proxy form.

7. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.

8. The Chairman of the meeting may accept or reject any form of proxy, which is completed and/or received other

accordance with these notes.

9. Shareholders who have dematerialised their shares other than with "own name" registration, must inform their CSDP o

of their intention to attend the annual general meeting and request their CSDP or broker to issue them with the ne

authorisation to attend the annual general meeting or provide their CSDP or broker with their voting instructions should

wish to attend the annual general meeting in person.


astral - morningstar, inc

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