Notes to the company financial statements for the year ended 30 June 2011

Transcription

1 Notes to the company financial statements 1. ACCOUNTING POLICIES The group and company apply the same accounting policies. These policies are to be found within the consolidated financial statements. 2. POPETY, PLANT AND EQUIPMENT Furniture and computers Vehicles Year ended 30 June Carrying value at the beginning of the year Cost price Accumulated depreciation (35 743) (59 167) (94 910) Additions Disposals (1 242) (1 242) Cost price (1 382) (1 382) Accumulated depreciation Depreciation ( ) ( ) ( ) Carrying value at the end of the year Cost price Accumulated depreciation ( ) ( ) ( ) Year ended 30 June Carrying value at the beginning of the year Cost price Accumulated depreciation ( ) ( ) ( ) Additions Disposals (7 179) (7 179) Cost price (40 797) (40 797) Accumulated depreciation Depreciation ( ) ( ) ( ) Carrying value at the end of the year Cost price Accumulated depreciation ( ) ( ) ( ) Depreciation expense of (: ) has been charged in other expenses (note 16). Lease rentals amounting to (: ) relating to the lease of machinery, property and office equipment, are included in the statement of comprehensive income (note 16). Total Country Bird Holdings Integrated Annual eport 119

2 Annual financial statements Notes to the company financial statements (continued) Brand name Total 3. INTANGIBLE ASSETS Year ended 30 June Carrying value at the beginning of the year Cost price Accumulated amortisation Acquisition of brand name Amortisation charge (23 941) (23 941) Carrying value at the end of the year Cost price Accumulated depreciation (23 941) (23 941) Year ended 30 June Carrying value at the beginning of the year Cost price Accumulated amortisation (23 941) (23 941) Amortisation charge (23 963) (23 963) Carrying value at the end of the year Cost price Accumulated depreciation (47 904) (47 904) Amortisation is included in other expenses in the statement of comprehensive income (note 16) INVESTMENTS IN SUBSIDIAIES Nutri Feeds (Pty) Limited oss Africa Limited Supreme Poultry (Pty) Limited Supreme Poultry (Namibia) (Pty) Limited oss Breeders (Namibia) (Pty) Limited Long Iron Meats (Pty) Limited The percentage shareholdings in the subsidiaries are as follows: % % Country Bird (Pty) Limited Webram Thirty Two (Pty) Limited Nutri Feeds (Pty) Limited Hollyberry Props 40 (Pty) Limited oss Africa Limited Supreme Poultry (Pty) Limited Silver Blade Imports (Pty) Limited Supreme Poultry (Namibia) (Pty) Limited oss Poultry Breeders (Namibia) (Pty) Limited Long Iron Meats (Pty) Limited Country Bird Holdings Integrated Annual eport

3 4.1. INVESTMENT IN SUBSIDIAIES (continued) The group is currently in a restructuring process in order to simplify the group structure and ensure that taxation is streamlined across the group. During the prior year, the assets and liabilities in Country Bird (Pty) Limited, Webram Thirty Two (Pty) Limited and Silver Blade Imports (Pty) Limited were transferred to Supreme Poultry (Pty) Limited in terms of section 47 of the Income Tax Act. The assets and liabilities in Hollyberry Props 40 (Pty) Limited were transferred to Nutri Feeds (Pty) Limited in terms of section 47 of the Income Tax Act. These companies are in the process of being liquidated and this has not been finalised by year-end. Since these companies are now dormant and in the process of liquidation, the investment in these subsidiaries was impaired during the prior financial year. efer to note 16 for the amount of the investment impaired in the prior year. The reserves available in these dormant companies have been declared as dividends during the prior year. efer to note 15 for the amount of the dividend received from the subsidiaries in the prior year OTHE FINANCIAL INSTUMENTS Loan accounts: oss Africa Limited Nutri Feeds (Pty) Limited Supreme Poultry (Pty) Limited Supreme Poultry (Namibia) (Pty) Limited Long Iron Meats (Pty) Limited Non-current loans have no set terms and are intended to provide the subsidiary with a long-term source of additional capital. As a result, the loans are considered to be an investment in the subsidiary companies. The loans are accounted for under IAS 27 and are carried at cost. Other loans bear interest at the South African prime rate. No fixed terms of repayment have been set and no security was provided for the repayment of the loans. The parent s intention, as communicated to the subsidiary, is that the loan is only recalled when the subsidiary has surplus cash and the parent requires the cash for other purposes, such as to make alternative investments. The parent does not expect any such events to occur in the foreseeable future. Changes in fair values of financial assets at fair value through profit or loss are recorded in Other income in the statement of comprehensive income (note 15). None of these financial assets are either past due or impaired. The maximum exposure to credit risk at the reporting date is the carrying value of the financial assets and other investments. During the year, it was considered necessary to impair part of the loan to Long Iron Meats (Pty) Limited. Due to some of the financial strain experienced by the company during the year, it was considered prudent to impair a portion of the loan. efer to note 16 for the amount of the loan which was impaired during the year. The loan to oss Africa Limited and Long Iron Meats Limited was subordinated to the value of and in favour of other payables of the company, both present and future. The fair value of all securities are based on their current bid prices in an active market. Country Bird Holdings Integrated Annual eport 121

4 Annual financial statements Notes to the company financial statements (continued) 5. INVESTMENTS IN ASSOCIATES Shares at cost Loans to associate Total investment in associates econciliation of carrying value: Total investment in associates Balance at the beginning of the year Loan advanced/(recovered) to/(from) associates The loan to Silver Blade Abattoir (Pty) Limited bears interest at the South African prime rate. No fixed terms of repayment have been set and no security was provided for the repayment of the loans. The loan was subordinated to the value of in favour of other payables of the company, both present and future. The group does not consider it necessary to impair the investment in associates since it is the group s intention to pursue 100% acquisition of this investment in future. Furthermore, the company shows positive cash flows in future. The company s share of the results of its principal associates, all of which are unlisted, and its share of the assets and liabilities, is as follows: Silver Blade Abattoir (Pty) Limited Assets Liabilities evenues Profit/(loss) ( ) ( ) Interest held (%) 37,5 37,5 Impairment tests for investments in associates The recoverable amount of the relevant cash-generating units is determined based on value-in-use calculations. These calculations use cash flow projections per budgets and strategic plan forecasts approved by management covering one financial year. These plans are revisited every year and are compiled after considering market conditions and the strategic positioning of the business units within the markets in which they operate. The recoverable amount for the 37,5% interest held is calculated without taking a minority discount into account. Key assumptions used for value-in-use calculations are as follows: % % Growth rate Discount rate 2 12,4 13,9 1 Weighted average growth rate used to extrapolate cash flows beyond the budget period. 2 Pre-tax discount rate applied to the cash flow projections. The investment in associate is not considered to be impaired based on the value-in-use calculations performed using the assumptions as described above. Management determined budgeted gross margin based on past performance and its expectations for the market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risks relating to the relevant segments. 122 Country Bird Holdings Integrated Annual eport

5 6a. FINANCIAL INSTUMENTS BY CATEGOY The accounting policies for financial instruments have been applied to the line items below: Loans and receivables Assets per statement of financial position Trade receivables Other financial assets Cash and cash equivalents Other financial liabilities at amortised cost Liabilities per statement of financial position Borrowings Trade payables excluding statutory liabilities b. CEDIT QUALITY OF FINANCIAL ASSETS The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or historical information. Credit quality is maintained by ensuring that most significant customers are adequately insured. Credit is only provided in terms of the ratings provided by the insurance. Furthermore, internal credit checks are performed to ensure that the credit quality can be relied upon. All defaults are monitored and followed up. Adequate payment arrangements are performed should the default be justified. Trade receivables Counterparties without external credit rating Group Group Total unimpaired trade receivables All defaults were fully recovered. None of the loans to related parties are past due but not impaired. Country Bird Holdings Integrated Annual eport 123

6 Annual financial statements Notes to the company financial statements (continued) 7. DEFEED TAX Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The offset amounts are as follows: Deferred income tax assets (net) Deferred income tax assets Deferred tax asset to be recovered after more than 12 months Deferred tax asset to be recovered within 12 months Deferred income tax liabilities (9 304) (11 121) Deferred tax liability to be recovered after more than 12 months (9 304) (11 121) Deferred tax liability to be recovered within 12 months Deferred income taxes are calculated on all temporary differences under the liability method using a principal tax rate of 28% (: 28%). The movements on the deferred tax account are as follows: Closing net deferred tax asset/(liability) At the beginning of the year Charged to statement of comprehensive income ( ) Capital allowances Provisions ( ) Estimated tax losses ( ) Other The deferred tax assets and liabilities are attributable to the following items: Deferred tax assets and liabilities Capital allowances (9 304) (11 121) Provisions Estimated tax losses Other Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through the future taxable profits is probable. The probability of the future tax profits is based on certain plans and strategies which management has put into place in order to utilise these assessed losses. 124 Country Bird Holdings Integrated Annual eport

7 8. TADE AND OTHE ECEIVABLES Trade receivables Provision for impairment of trade receivables Trade receivables net Prepayments Other receivables The time value of money was taken into consideration for trade receivables where extended credit terms (on average 30 to 45 days) were granted. The carrying amounts of trade and other receivables approximate their fair values. As at statement of financial position date, trade receivables of (: ) were fully performing. Trade receivables that are less than three months past due are not considered impaired. As at statement of financial position date, trade receivables of nil (: ) were past due but not impaired. These relate to a number of independent customers for whom there are no recent history of default or with whom specific repayment plans had been entered into. The ageing analysis of these trade receivables is as follows: Up to 3 months to 6 months Longer than 6 months As at statement of financial position date, trade and other receivables do not contain impaired receivables. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The company does not hold any collateral as security. 9. CASH AND CASH EQUIVALENTS Cash on hand Cash and cash equivalents include the following for the purposes of the cash flow statement: Cash and cash equivalents per cash flow ( ) ( ) Cash and cash equivalents Bank overdrafts (note 12) ( ) ( ) The general bank facility of the company is secured by a cession of loan account with Supreme Poultry (Pty) Limited, subordination of the loan account with Supreme Poultry (Pty) Limited, unlimited surety by Country Bird (Pty) Limited and Webram Thirty Two (Pty) Limited and cession of their loan accounts, limited surety for by Nutri Feeds (Pty) Limited and cession of the loan account, unlimited surety by Supreme Poultry (Pty) Limited and a negative pledge over assets. Country Bird Holdings Integrated Annual eport 125

8 Annual financial statements Notes to the company financial statements (continued) 10. SHAE CAPITAL AND SHAE PEMIUM Authorised shares ordinary shares of 1 cent per share Ordinary shares ordinary shares of 1 cent per share Share options exercised by employees Shares issued to share incentive trust Treasury shares held by CBH Share Trust ( ) Issued share capital is fully paid up. Share premium At the end of the year At the beginning of the year Capital distribution (note 22) ( ) ( ) Share options exercised by employees Share issue and listing expenses (29 032) Shares issued to share incentive trust Treasury shares held by CBH Share Trust ( ) The group issued shares during the prior year to the CBH Share Incentive Scheme at 1 per share. The shares are held as treasury shares. During the year, shares were issued to employees within the group at 1 per share as a result of share options which were exercised during the period. These shares were held by the CBH Share Incentive Scheme in the prior year. 11. OTHE ESEVES Share-based payment reserve At the end of the year Opening balance Employee share scheme Share options Share options are granted to selected directors and employees. The exercise price of the granted option is equal to 1 each. Options are conditional on the employee completing three year s service (the vesting period). The options are exercisable starting three years from the grant date and have a contractual option term of four years. The group has no legal or constructive obligation to repurchase or settle the options in cash. 126 Country Bird Holdings Integrated Annual eport

9 Exercise price in per share Options 11. OTHE ESEVES (continued) Movements in the number of share options outstanding and their related exercise prices are as follows: Expiry date At 1 July Granted At 30 June At 1 July Granted At 30 June Share options outstanding at the end of the year have the following expiry dates and exercise prices: 1 July At 30 June July At 30 June On 26 March 2009, share options were granted to directors and employees with an exercise price of 1 per share. Share options outstanding have an expiry date of 1 July. On 23 November 2009, share options were granted to directors with an exercise price of 1 per share. Share options outstanding have an expiry date of 1 July. The weighted average fair value of options granted during the period as determined using the binomial tree option valuation model was 0,97 (: 1,03) per option. The significant inputs into the model were: The volatility was measured at the standard deviation of continuously compounded share returns as based on analysis of the daily share price over the three months. See note 19 for the total expense recognised in the statement of other comprehensive income for share options granted to directors and employees. Country Bird Holdings Integrated Annual eport 127

10 Annual financial statements Notes to the company financial statements (continued) 12. BOOWINGS Secured loans Bank borrowings Other short-term borrowings Bank overdraft Unsecured loans Other borrowings Total borrowings Current portion of borrowings Bank borrowings Bank overdraft Non-current portion of borrowings Bank borrowings Bank borrowings bear interest at the South African prime rate (9%). The general bank facility of the company is secured by a cession of loan account with Supreme Poultry (Pty) Limited, subordination of the loan account with Supreme Poultry (Pty) Limited, unlimited surety by Country Bird (Pty) Limited and Webram Thirty Two (Pty) Limited and cession of their loan accounts, limited surety for by Nutri Feeds (Pty) Limited and cession of the loan account, unlimited surety by Supreme Poultry and a negative pledge over assets. Furthermore, certain loans are subject to certain financial covenants with regard to the debt/ebitda ratios and interest cover ratio being within certain stated parameters. Other borrowings Other borrowings consist of borrowings from Synapp International Limited, Country Bird (Pty) Limited, Webram Thirty Two (Pty) Limited and Hollyberry Props 40 (Pty) Limited. The loan from Synapp International Limited was provided at the South African prime interest rate (9%). The loans from Country Bird (Pty) Limited, Webram Thirty Two (Pty) Limited and Hollyberry Props 40 (Pty) Limited bear no interest. Other borrowings do not have specified repayment dates but are not required to be repaid within the next financial year. No guarantees were given on other borrowings. The fair value of borrowings equals their carrying amount, as the impact of discounting is not significant. The fair values are based on cash flows discounted using a rate based on the borrowing rate of 9% (: 10%). No limit has been placed in the memorandum of incorporation on the borrowing powers of the company. 128 Country Bird Holdings Integrated Annual eport

11 13. EMPLOYEE SHAE SCHEME LIABILITY Cash-settled share-based compensation plan The scheme referred to in note 11 will come to an end once all the options are exercised during the 2012 financial year. The group has therefore decided to commence a Phantom Share Scheme. This scheme will replace the scheme detailed in note 11. Phantom share options are granted to selected directors and employees who are eligible for participation in the scheme. Awards of phantom shares may result in the payment of bonuses in cash. The scheme is merely a mechanism to calculate a cash bonus and does not equate to equity in the company. The exercise price of the options granted is equal to the fair market value of the share price on the award date. Options are conditional on the employee completing three year s service (the vesting period). The options are exercisable over three tranches, starting three years from the award date. The exercise period is a period of 90 days immediately following the release date for that tranche and have a contractual option term of five years. The release date is the date that the group results are released. The cash bonus payable is paid by the employer company in relation to each employee. Movements in the number of share options outstanding and their related exercise prices are as follows: Exercise price Expiry date in per share (average) Phantom options At 1 July Granted 3, Granted 2, Forfeited Exercised Expired At 30 June Share options outstanding at the end of the year have the following expiry dates and exercise prices: 25 August , August , August , August , August , August , At 30 June The weighted average fair value of options granted during the period as determined using the binomial tree option valuation model was 1,57 and 2,33 per option. The significant inputs into the model were: The volatility was measured at the standard deviation of continuously compounded share returns as based on analysis of the daily share price over the 12 months. See note 19 for the total expense recognised in the statement of comprehensive income for share options granted to directors and employees. Country Bird Holdings Integrated Annual eport 129

12 Annual financial statements Notes to the company financial statements (continued) 14. TADE AND OTHE PAYABLES Trade payables Accrued expenses Other payables The time value of money was taken into consideration for trade payables where extended credit terms (on average 30 days) were received and adjustments were made against other expenses (note 16). The carrying amounts of trade and other payables approximate their fair values. 15. OTHE INCOME Loss from sale of fixed assets (161) Profit/(loss) from sale of investment ( ) Fair value gains/(loss) on financial assets at fair value through profit or loss ( ) Foreign exchange gain/(loss) (554) Dividend received Sundry income EXPENSES BY NATUE Total cost of sales and other expenses Auditors remuneration Depreciation, amortisation and impairment costs Directors remuneration Employee benefit expense Legal fees Listing related expenses Maintenance Travel, accommodation and entertainment Operating leases Consulting fees Impairment of investments Other expenses FINANCE INCOME AND COSTS Finance income Bank Investment income Finance costs ( ) ( ) Long-term loans ( ) ( ) Bank loans, medium-term loan and overdrafts ( ) ( ) Other (1 898) Net finance costs ( ) ( ) 130 Country Bird Holdings Integrated Annual eport

13 18. INCOME TAX EXPENSE ( ) Current tax ( ) Capital gains tax ( ) Deferred tax (note 7) ( ) The tax on the company s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits on the consolidated entities as follows: % % Effective rate of taxation 4,5 6,5 Standard rate of taxation applicable to profits in the respective countries 28,0 28,0 Adjusted for: Dividend received (26,6) 380,8 Non-taxable and non-deductible items 3,1 (403,1) Capital gains tax 0,8 The weighted average applicable tax rate was 28% (: 28%). Estimated assessable losses for set-off against future taxable income is nil (: ). 19. EMPLOYEE BENEFIT EXPENSE Salaries and wages Share options granted to directors and employees Other employee benefits Other employee benefits consist inter alia of the following expenses: motor allowances, motor running costs, staff catering and protective clothing DIECTOS EMUNEATION Executive directors Salaries Fringe benefits Performance bonus Other Share option expense Non-executive directors fees Directors fulfil the role of key management. 21. AUDITOS EMUNEATION Audit fees Other Country Bird Holdings Integrated Annual eport 131

14 Annual financial statements Notes to the company financial statements (continued) 22. CAPITAL DISTIBUTION TO SHAEHOLDES The capital repayment paid in was (12,57 cents per share). In a capital distribution of (15,93 cents per share) was paid. A capital repayment of 10,84 cents per share was declared by the board of directors on 23 August. The total capital repayment of will be paid on 21 November. These financial statements do not reflect the capital repayment payable. 23. ELATED PATY TANSACTIONS Common directors a Interest in subsidiaries b Management fees from related parties c Interest received/(paid) from/(by) related parties d Loans to/(from) related parties e Loans to/(from) shareholders f Key management compensation g (a) Common directors/related to director KW James Synapp International Limited GP Heath Synapp International Limited KW James (related to director) Arbor Acres South Africa (Pty) Limited GP Heath Arbor Acres South Africa (Pty) Limited (b) Interest in subsidiaries efer to note 4 Investment in subsidiaries (c) Management fees from related parties Management fees received: Supreme Poultry (Pty) Limited Nutri Feeds (Pty) Limited Outstanding balances arising from expenses redistributed and management fees: Supreme Poultry (Pty) Limited Nutri Feeds (Pty) Limited Arbor Acres South Africa (Pty) Limited Long Iron Meats (Pty) Limited Country Bird Holdings Integrated Annual eport

15 23. ELATED PATY TANSACTIONS (continued) (d) Interest received/(paid) from/(by) related parties Finance income received: Supreme Poultry (Pty) Limited Nutri Feeds (Pty) Limited Supreme Poultry (Namibia) (Pty) Limited oss Africa Limited Long Iron Meats (Pty) Limited Silver Blade Abattoir (Pty) Limited Finance costs paid: Arbor Acres South Africa (Pty) Limited Synapp International Limited (e) Loans to/(from) related parties Loans to related parties: oss Africa Limited At the beginning of the year Loans advanced/(repaid) during the year Interest accrued on loan account Silver Blade Imports (Pty) Limited At the beginning of the year Loans advanced/(repaid) during the year ( ) Nutri Feeds (Pty) Limited At the beginning of the year Loans advanced/(repaid) during the year ( ) Interest accrued on loan account Supreme Poultry (Pty) Limited At the beginning of the year Loans advanced/(repaid) during the year ( ) Interest accrued on loan account Supreme Poultry (Namibia) (Pty) Limited At the beginning of the year Loans advanced/(repaid) during the year Interest accrued on loan account Country Bird Holdings Integrated Annual eport 133

16 Annual financial statements Notes to the company financial statements (continued) 23. ELATED PATY TANSACTIONS (continued) Long Iron Meats (Pty) Limited At the beginning of the year Loans advanced/(repaid) during the year Interest accrued on loan account Impairment of loan ( ) Silver Blade Abattoir (Pty) Limited At the beginning of the year Interest accrued on loan account Loans from related parties: Arbor Acres South Africa (Pty) Limited At the beginning of the year ( ) Loans repaid/(advanced) during the year Interest accrued on loan account ( ) (33 932) Long Iron Meats (Pty) Limited ( ) ( ) At the beginning of the year ( ) ( ) Loans repaid/(advanced) during the year Webram Thirty Two (Pty) Limited (100) (100) At the beginning of the year (100) Loans repaid/(advanced) during the year (100) Country Bird (Pty) Limited ( ) ( ) At the beginning of the year ( ) Loans advanced/(repaid) during the year ( ) Hollyberry Props 40 (Pty) Limited (100) (100) At the beginning of the year (100) Loans advanced/(repaid) during the year ( ) The loans to and from Country Bird Holdings Limited bear interest at rates linked to the South African prime rate. No fixed terms of repayment have been set and no security was provided for the repayment of the loan. (f) Loans to/(from) shareholders Synapp International Limited ( ) ( ) At the beginning of the year ( ) ( ) Loans repaid/(advanced) during the year Interest accrued on loan account ( ) ( ) The loan from Synapp International Limited bears interest at the South African prime rate per annum. No fixed terms of repayment have been set and no security was provided for the repayment of the loan. (g) Key management compensation Directors fulfil the role of key management. efer to note 20 Directors remuneration. 134 Country Bird Holdings Integrated Annual eport

17 24. COMMITMENTS Lease commitments The company leases various office equipment under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The lease expenditure charged to the statement of comprehensive income for the year is disclosed under note 16. Within 2 to 5 years After 5 years Within 1 year Year ended 30 June : Minimum lease payments with regard to: Land and buildings and other equipment Year ended 30 June : Minimum lease payments with regard to: Land and buildings and other equipment CONTINGENT LIABILITY When the company listed on the JSE during 2007, the company claimed value-added tax on certain listing and restructuring expenses. The South African evenue Service is currently conducting an investigation on the value-added tax claimed during the listing process. The outcome of the amount of value-added tax that needs to repaid plus interest and penalties is still uncertain at 30 June. Country Bird Holdings Integrated Annual eport 135