CBH Ar2010

Annual Repor t 2010
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The peoples choice
The peoples choice

1 7 OUR GROUP IN BRIEF Quick facts Highlights 1 Group structure 2 Our footprint 3 Group at a glance 4 Directorate 6 8 15 OUR REVIEWS Chairmans report 10 CEOs and CFOs review 14 16 27 OPERATIONAL REVIEW Supreme Poultry 18 Nutri Feeds 22 Others 25 28 36 SUSTAINABILITY AND GOVERNANCE Sustainability report 30 Corporate governance report 33 37 124 FINANCIAL STATEMENTS Approval of annual financial statements 38 Statement by the board of directors 39 Certificate by the company secretary 39 Independent auditors report 40 Report by the audit committee 41 Directors report 42 Consolidated statement of financial position 44 Consolidated statement of comprehensive income 44 Consolidated statement of changes in equity 45 Consolidated statement of cash flows 46 Notes to the consolidated statement of cash flows 46 Accounting policies 47 Notes to the consolidated financial statements 63 Company statement of financial position 97 Company statement of comprehensive income 97 Company statement of changes in equity 98 Company statement of cash flows 99 Notes to the company statement of cash flows 99 Notes to the company financial statements 100 Analysis of ordinary shareholders 117 Notice of annual general meeting 119 General information 122 Form of proxy 123 Notes to the form of proxy 124
Profile Country Bird Holdings Limited (CBH) is an agricultural group comprising: Integrated poultry and stockfeed business operations in South Africa trading as Supreme and Nutri Feeds; Poultry breeding and stockfeed operations in the southern Africa region trading as Ross Africa and Master Farmer; A South African red meat abattoir and trading operation; and CBH currently operates in South Africa, Botswana, Namibia and Zambia. Vision CBH aspires to be the number one household name in the protein industry throughout southern Africa. We will be consumer led in providing quality protein products at affordable prices.
www.cbhltd.co.za
Country Bird Holdings Annual Report 2010
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HIGHLIGHTS
8,7% increase in revenue

Up from R2,24 billion in 2009
Revenue
30% 6% 10% -5% 5%
8,8% cost of sales increase

To R2,16 billion for the year
Operating profit
9%
R122,2 million operating profit

Down from R186,6 million in 2009
% change 9 (35) (63) 5 (64) (59) (36) (59) Financial results (Rm) 2010 2 434 122 47 383 23,71 23,65 30,52 7,88 2009 2 239 187 126 363 65,74 57,05 47,52 19,02 Revenue Operating profit
EBITDA
9%
21%
-1%
21%
Net profit after tax Shareholders equity Earnings per share (cents) Headline earnings per share (cents) Adjusted earnings per share (cents) Dividend per share (cents)
49%
77%
70%
Net assets
12% 2% -8%
Headline earnings
6% -11% 3% -11%
Employees
7% 18% 6%
3%
29%
64%
114%
65%
AFTER STRIPPING OUT THE EFFECTS OF THE SALE OF ELITE AND THE NET EFFECT OF THE FAIR VALUE ADJUSTMENTS OF SOVEREIGN IN 2009 AND 2010, THE REDUCTION IN OPERATING PROFIT IS 11,5% WHICH, GIVEN THE INDUSTRYS OVERALL MARKET CONDITIONS, IS SATISFACTORY. THE GROUPS GEARING RATIO IMPROVED SLIGHTLY TO 2,44 FROM 2,50 A YEAR AGO DUE MAINLY TO THE SALE OF THE FINANCIAL ASSETS, BEING THE SHARES IN SOVEREIGN FOOD INVESTMENTS.
Poultry South Africa
Animal Nutrition South Africa Animal Nutrition Other Africa
Poultry Other Africa
Beef
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Country Bird Holdings Annual Report 2010 010
GROUP STRUCTURE
SEGMENT
COMPANY
Poultry SA
Supreme Poultry (Pty) Limited

100%
Animal Feed SA
Nutri Feeds (Pty) Limited

100%
Ross Breeders Botswana (Pty) Limited Poultry Other Africa

60%
Oistins (Pty) Limited

100%
COUNTRY BIRD HOLDINGS LIMITED
Ross Breeders Zambia (Pty) Limited

100%
Master Farmer (Pty) Limited (Botswana) Animal Feed Other Africa

60%
Master Farmer Zambia (Pty) Limited

100%
Silver Blade Abattoir (Pty) Limited

37,5%
Beef
Long Iron Meats (Pty) Limited
We are going for chicken and beef
100%
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OUR FOOTPRINT
Making tracks into Africa: ZAMBIA Lusaka Ross Breeders Master Farmer BOTSWANA Gaborone Ross Breeders Master Farmer Francistown Oistins NAMIBIA Windhoek Ross Breeders Supreme Namibia SOUTH AFRICA Johannesburg CBH Limited head office
Zambia amb mbi bi

Lusaka
Namibia
Windhoek
Botswana
Francistown
Mafikeng Nutri Feeds operations Supreme operations Bloemfontein Supreme head office Nutri Feeds operations Supreme operations Potchefstroom Nutri Feeds head office Supreme branch office Viljoenskroon Nutri Feeds operations Klerksdorp Supreme operations Beef abattoir
Gaborone Johannesburg Mafikeng Potchefstroom Viljoenskroon Klerksdorp Bloemfontein
South S Africa
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GROUP AT A GLANCE
Supreme Poultry
Nutri Feeds
(Rm) Revenue EBITDA EBITDA margin (%)
2010 1 514 108 7,1
2009 1 513 141 9,3
% change 0 23,4 23,7
2010 927 32 3,5
2009 841 7 0,8
% change 10,2 357 337,5
49% contribution to
70% contribution to
30% contribution to
21% contribution to
group revenue
group revenue
group EBITDA
We continue to see great returns on our investments
Number of employees: 3 302
group EBITDA
Heading H Head He ea ad din ing 1

Heading 2 Heading 3 Heading 4
Ross
2010 335 14 4,2
2009 360 11 3,1
% change 6,9 27,3 35,5
11% contribution to
9% contribution to
group revenue
group EBITDA
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DIRECTORATE
Bryan Hugh Kent (65) Non-executive chairman BCom, CA(SA), FCMA, HDipTax, HDip Company Law Date appointed: 1 January 2007 Practised as a tax partner with PricewaterhouseCoopers for 13years from 1978 to 1991, before becoming self-employed. Currently provides financial consultancy services to numerous companies. Bryan is also a board member of Cadiz Holdings Limited; Set Point Technology Holdings Limited; Emira Property Fund Limited and Commercial Investment Corporation Holdings Limited. Geoffrey Philip Heath (57) Non-executive director BCom, CA (Z) Date appointed: 23 March 2005 Geoff qualified with PricewaterhouseCoopers in Zimbabwe in 1980. He held various senior financial and managerial positions with a listed packaging company for 10 years, reaching the position of business development director. Geoff joined Kevin James in 1994 to manage the financial affairs of his poultry enterprises. Geoff was part of the management team which acquired Country Bird and has previously had responsibility for all financial aspects of the group, including merger and acquisition activity. Geoff has participated in the Wits executive development programme and held the position of chairman of the Poultry Association of Zimbabwe. Jeffrey Donald Wright (52) Chief executive officer BAcc, CA(SA) Date appointed: 1 August 2008 Jeff commenced articles with Deloitte in 1976 after matriculating in 1975. He completed his BAcc degree in 1980 and qualified in 1981, whereafter he joined the army for two years of compulsory military y service. He returned to auditing g in mid-1984 as an audit manager where he remained till early 1987. Jeffrey left the profession to join the Barlow Brand Group where he held various financial positions until 1992. He joined the Tiger Oats Group in 1992 as general manager of Beacon Sweets Transvaal, later becoming managing director of Meadow Feeds and CEO of Tiger Agri and Poultry (currently Astral Food Limited). He joined Afgri Limited (previously OTK Limited) in August 2000 as deputy managing director and was appointed managing director in October 2002 where he served until his resignation in July 2008. Carl Dennis Stein (56) Non-executive director BCom, LLB, HDipTax Law (Wits) Date appointed: 3 March 2007 Carl was a partner in the commercial/corporate department of Werksmans for over 20 years, and was the chairman of Werksmans from 2000 to 2005. He joined one of South Africas largest law firms, Bowman Gilfillan in 2006, where he is now a director and practising attorney. He specialises in corporate transactions, merger and acquisitions and securities law, negotiating commercial and stock exchange transactions, corporate and structured finance, anddrafting complex documentation. He is lead attorney to a number of South African multinationals and has advised them over a number of years with regard to their numerous acquisitions in South Africa and abroad. Carl is also a non-executive director of a number of public listed companies, including Mvelaphanda Group Limited, Paracon Holdings Limited and Value Group Limited. Kevin William James (56) Executive director Date appointed: 23 March 2005 Kevin has significant poultry experience in Africa and has demonstrated an exceptional ability to identify new and existing business opportunities. He commenced his poultry career managing a small laying operation in Zimbabwe. He then, in the main, established Ross Breeders Zimbabwe (Pvt) Ltd and merged it with Crest Breeders International (Pvt) Ltd, and then reverse-listed the combined business through a merger with a leading listed company in the food sector in Zimbabwe, Consolidated Farming Investments Ltd. Simultaneously he established Ross Zambia. Under his leadership and vision, Country Bird was acquired and returned to profitability. Kevins significant achievements in the South African industry in a short space of time were recognised by the South African Poultry Association with a special award of Mover and Shaker in 2006. Kevin was the founder of CBH. Robert James Taylor (41) Group financial director BCom, CA (Z) Date appointed: 3 May 2008 Robbie qualified with Deloitte & Touche in Zimbabwe in 1995. He joined Kevin James in 1997 and became the group financial director of Crest Breeders International (Pvt) Ltd, a position he held until he emigrated to South Africa in 2002. Robbie then joined HL Hall and Sons Limited as their financial director with appointments on all of the subsidiary boards and later he was given an operational role as the exports director. Given CBHs propensity for growth and the subsequent need for financial skills and succession planning, Robbie was approached and he joined the group in 2006 as the group accountant. In May 2008 Robbie was promoted to group financial director. Ian Wilson Martin Isdale (60) Non-executive director BA LLB (Natal), EDP (Wits Business School) Date appointed: 10 February 2010 Born and educated in Zimbabwe at Chaplin School, Gweru. Attended University of Natal, Durban. Formerly magistrate, admitted advocate and legal practitioner in Zimbabwe. Has been company secretary and legal adviser for listed South African companies in the food and branded consumer products sectors for over 20 years. Group company secretary and legal adviser for Tiger Brands, vice president of the Corporate Lawyers Association of South Africa. Raymond Gibbison (56) Non-executive director Date appointed: 9 February 2010 Ray was born and educated in Zimbabwe. He has worked at Sasols Dyno Nobel plant in Bronkhorstspruit since 1984, starting as the Engineering Manager and moving up through the ranks to be appointed as the managing director of that business in 1999, a position he holds at present.
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Aspiring A spiring to to be be number number o one ne i in ns southern outhern A Africa fri ica
PROOF PROO PR OO OF 4 23 S SEPT EPT T 20 2010 10 0
CBH has set itself the goal to be the benchmark producer in the South African market. With this in mind we enter the next financial year invigorated by the challenges and opportunities that lie ahead for us.
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CHAIRMANS REPORT
This is Country Bird Holdings fourth year as a listed entity and it is with great pleasure that I present the groups annual report for the year to June 2010.
Operations and economic environment

I am happy to report that during the financial year to 30 June 2010 the general trend of operational improvement retained the momentum gained during the previous year. While we were blessed with lower grain feed prices and healthy demand, I believe our management team deserves rich validation for its efforts to transform Country Bird Holdings into one of the benchmark producers in South Africa. In terms of operating performance, our Nutri Feeds and Supreme Poultry divisions have been regularly surpassing their productivity records and setting ever-higher standards for themselves. As poultry producers, we recognise there are certain extraneous factors beyond our control, such as interest rates, consumer spending levels and the prices of key inputs. Hence, managements job is to focus its attention on those factors that are within its control, such as operational efficiency, product quality, market segmentation and distribution channels. In this regard, I am pleased to report, your management team has acquitted itself well. As I reported in the previous chairmans report, the first part of 2008/09 was one of the most challenging trading periods in recent memory. Like all poultry producers, CBH found itself in the thick of the recession: consumer demand was fading, credit availability had dried up, and we had to contend with rising input costs and an unhealthy level of market oversupply. Fortunately, we
Bryan Hugh Kent Non-executive chairman
THE MAGNITUDE OF THE DOWNTURN IN THE 2009 FINANCIAL YEAR, AND ITS IMPACT ON THE BOTTOM LINE, FORCED US TO REVIEW EVERY ASPECT OF OUR BUSINESS, WITH A VIEW TO STRENGTHENING THOSE PARTS OF THE BUSINESS THAT WERE WORKING WELL, AND CORRECTING THOSE THAT WERENT.
exited the eye of this perfect storm in September 2009 as key economic and market indicators prefigured the start of a gentle recovery. The magnitude of the downturn in the 2009 financial year, and its impact on the bottom line, forced us to review every aspect of our business, with a view to strengthening those parts of the business that were working well, and correcting those that werent. With operating margins as low as 2%at the start of the previous financial year (down from 12,2% in 2008), we had to come up with more efficient ways of doing business. Such periods of adversity are a proving ground for management, and CBH has, since its inception, set itself the goal to be the benchmark producer in the South African market. The hundreds of improvements both big and small translate into an operating margin of 5,0%, an excellent result given the adverse conditions prevailing for much of the year under review, and a leaner, more efficient enterprise capable of withstanding the most trying of market conditions. The outlook for the global broiler industry remains variable, with major new production facilities announced or under construction in the US and Brazil, Russian markets closing then opening again to US imports, and some consolidation amongst the larger producers. Grain prices have softened over the last 12 months due to rising stock levels and better-than-expected crops and US farmers are planning larger grain plantings for the next crop year. This, combined with the increase
in grain stocks, suggests grain prices are headed down, according to the report. With more land planted and a good yield, there could be a harvest of nearly 14 million bushels of corn later this year in the US. If that happens by harvestthe price may touch a low of US$3 a bushel, (US$120or R924per metric ton) and average of only US$3,50 (US$140 or R1078) in Chicago next crop year. Though maize prices have fallen in the last 12 months, the benefits were not immediately apparent due to the time lag between lower Safex prices and reduced feed costs. The benefits were realised in the second half of the trading period and should continue into the new financial year. Higher crude oil prices are not having their usual effect on corn prices because of the increasing discount (in the US) of ethanol to gasoline and the size of the local crop being such that we are trading at export parity. The prospects for chicken meat prices worldwide in 2010 depend on the improving global economy and the availability of export markets for the US and Brazil. That said, there remains considerable concern over the sustainability of a global economic recovery. Figures from the UK for June 2010 reflect an ever-deepening recession after six successive quarters of negative growth, making this the worst recession experienced in that country since the Great Depression of the 1930s, and harsher even than the slump of the early 1980s. Likewise, the USeconomy is struggling to regain its form after
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CHAIRMANS REPORT (continued)

a batch of disappointing data on manufacturing and employment. In South Africa, consumer price inflation in May stood at 4,6% year-on-year, within the Reserve Banks 3% to 6% target. The repo rate is sitting at a near 30-year low of 6,5%. One major concern for the country is the impact of administered prices on inflation, particularly with the call by public sector unions for above-inflation pay increases. This poses a potential risk to inflation unless brought under control, as it means the current dip in inflation may be short lived, unless backed by a concomitant increase in productivity. We endorse the Reserve Banks call for restraint in this regard, and trust that moderation and common sense will prevail. The rand appears to have consolidated its strong position within a fairly narrow range for the time being, and the Reserve Bank, correctly in my opinion, is resisting calls to interfere in the currency market through the interest rate mechanism. Our experience is that a stronger rand stimulates imports of poultry products and, while we accept this as an inevitable feature of the business environment, sustained levels of high imports tend to erode domestic margins and create difficulties for domestic producers. Chicken import volumes for the year ended June 2010 totalled 215 000 tons, which is an increase of 8,5% over the previous period, though still somewhat below the levels of two years ago. South African manufacturing output slowed to 7,9% for May 2010, as compared with the same month in 2009, which is slower than the 8,6% rise recorded in April this year. A somewhat alarming statistic is the fall in the purchasing managers index (PMI) to below 50 in June 2010, which reflects a worsening employment situation for the countrys manufacturing sector. Fortunately, poultry demand is relatively stable despite the vagaries of economic cycles, but unfortunately this volume stability comes at the expense of margin for the producers. Supply of poultry in South Africa, both imported and locally produced, grew by 4% in volume terms over the last 12 months, and CBH did slightly better than this with an 8,4% increase in volume sold. Poultry prices decreased by an average of 7,7% over the financial year following the depressed conditions prevailing for much of the calendar year. We enter the new financial year invigorated by the challenges and opportunities that lie in wait. The South African economy shows signs of recuperation and the groundwork has been put in place for sustained growth in the domestic poultry sector. supply. Operational efficiencies and improved procurement were effected across the production chain, following the refurbishment of the Bloemfontein and Mafikeng milling ventures in theprevious financial year. In pursuit of the goal to capture a larger share of the South African market (CBH currently supplies about 9% of the domestic market, making it the third-largest producer in the country) CBH acquired an effective 22,7% of Sovereign Foods, starting in December 2008. The intention was to make an outright bid for Sovereign and so increase CBHs critical mass and market share to roughly 16%, and provide the combined group with a stronger foothold in the Eastern Cape region. Afgri was concurrently in discussions with Sovereign over a possible rival acquisition, resulting in a three-way negotiation with the interested parties. We believed then, as we do now, that the acquisition by CBH was in the best interest of Sovereign but it wasnt to be. CBH sold its 22,7% interest to Old Mutual in January 2010. Though it has been a difficult year for our nonSouth African businesses, we remain committed to expanding our geographical footprint across the continent. The Botswana operations were adversely affected by a fire at that countrys major abattoir in 2009, which forced CBH to switch slaughtering to smaller abattoirs. The fire also had an adverse effect on the demand of day-old chicks from our Botswana breeding operations. On a more positive note, a new, state-of-the-art European Union-rated abattoir facility
Strategy
The group continued to fulfil its strategic ambitions as outlined in my previous chairmans statement. Major developments during the year included: The consolidation of CBHs 100% shareholding (previously 50%) in Nutri Feeds so as to realise the full benefits of our control over the groups feed
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will be commissioned in the new financial year in Botswana, which will enhance the marketing capability of our operations there. Our Zambian business suffered its first loss in 10 years, due to the entry of competition to that market with the resultant oversupply and price cutting. Thankfully the quality of our product has gained recognition and margins are returning. The feed mill in Zambia was commissioned in 2009 to augment our growing business in that country and it is running smoothly with positive contributions right from the outset. We continue to look at opportunities in other African countries, including Zimbabwe, which shows some signs of stabilising after years of political and economic turmoil. These developments are consistent with the groups strategic aim of improving overall quality of earnings. The group remains committed to reducing gearing to more acceptable levels while continuing to pay dividends and fund capital expenditure programmes. Gearing is currently sitting at 2,44, very slightly down from 2,50 last year. The group strategy is to reduce debt to more acceptable levels, and capital expenditure for the coming year will be restricted to essential projects. CBHs beef abattoir business continues to make good headway under new management, and the introduction of new products in the deboned market. This is currently a difficult industry in which to operate in terms of operating margins and meat availability, but we view this as a long-term opportunity that is complementary to our core poultry business.
The switch to the Arbor Acres genetics and feed range across the group has resulted in substantial improvements in all respects: food conversion ratios, live weights, kilograms per square metre, mortality rates and PEF (performance efficiency factor).
Ian has over 20 years experience with listed food and personal care companies as legal adviser and company secretary. Furthermore, Geoffrey Philip Heath has accepted an appointment as a non-executive director on the board, and thus tendered his resignation as an executive director, both effective from 9 February 2010. The board expresses its appreciation for his service and contribution to the company as an executive director.
Corporate governance
The groups corporate governance policies have been designed to comply with the principles set out in the King Code II, and the board is mindful of the imminent changes to corporate governance standards prefigured by King III. The directors have implemented mechanisms and policies which are aimed at ensuring full compliance with the King Code. The main board consists of eight directors, five of whom are non-executive. The subcommittees responsible for audit and risk controls report directly to the board. The recommendations of King II have been fully incorporated into CBHs risk management procedures and controls at all levels of the business.
Appreciation
A special word of thanks and appreciation goes to the staff and management of CBH for their ever-improving standards in a highly competitive market. The operational efficiencies they implemented over the last two years were critical to the financial performance achieved over the year under review. We owe them a huge debt of gratitude. I also want to thank our non-executive directors for their strategic insights and guidance over the past year. A word of thanks is also owed to our business clients for their continued support, feedback and encouragement. We look forward to deepening our relationships with all stakeholders over the coming year.
Changes to the board

Several changes to the board were announced over the financial year. I would like to welcome Raymond Gibbison as an independent non-executive director to the board of CBH, who joined with effect from 9 February 2010. Ray also serves as the managing director of Sasol Dyno Nobel (Pty) Limited. On 10 February 2010 we welcomed Ian Isdale as an independent non-executive director to the board.
Bryan Kent Non-executive chairman
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CEOS AND CFOS REVIEW

Financial
Revenue for the year under review increased by 8,7% to R2,43billion (2009: R2,24 billion) while cost of sales appreciated by 8,8% to R2,16 billion (2009: R1,99 billion). This helped lift gross profit by 8,0% to R274,3 million (2009: R253,9 million). Profit before tax fell 50,5% to R68,4 million (2009: R138,3million), though the prior year figure was distorted by the R18,5 million profit on sale of the groups joint venture with Astral Foods, as well as the write up of the Sovereign shareholding by R15,6 million. Included in the current year figure is the writedown of the Sovereign shareholding in the amount of R12,8 million. As covered in the chairmans statement, the group acquired 22,7% of Sovereign in 2009 with a view to increasing its share of the South African poultry market. It became clear in the early part of 2010 that our strategic plans in respect of Sovereign could not be realised at that time, and the decision was taken to dispose of this shareholding which took place in January 2010. The groups gearing ratio improved slightly to 2,44 from 2,50 a year ago due mainly to the sale of the financial assets (shares in Sovereign Food Investments). This gearing is within acceptable limits for the group, though the strategy remains to pay down debt in the current year through judicious control over capital expenditure. The intention remains that the group should identify expansion and acquisition opportunities and in so doing it recognises that there will be an opportunity to restructure the statement of financial position for optimum efficiency. Operating margins, at group level, came in at 5,0% versus 8,3% in the prior year. Capex for the year amounted to R73,8 million (2009: R62,1 million), most of which was expended on plant upgrades at Supreme Poultry and Nutri Feeds.
Jeff Wright Chief executive officer
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CBH IS JUST FIVE YEARS OLD AND IS NOW THE THIRD LARGEST POULTRY PRODUCER IN THE COUNTRY, AND THE LARGEST POULTRY EXPORTER.
Earnings per share for the year, due to the inclusion of the aforementioned non-operational distortions, fell 64% to 23,71 cents (2009: 65,74 cents) although adjusted earnings per share, calculated only using operating numbers, fell 36% to 30,52 cents (2009: 47,52 cents). It was a particularly good year for Nutri Feeds, now owned 100% by CBH. Volumes in Nutri Feeds grew more than 16% during the year under review, against average growth of less than 4,0% for the industry, while the business grew operating profit by 252% to R27,2million (2009: R10,8 million). It was a difficult year for Supreme Poultry due to extremely competitive pricing in the market. Supremes operating profit for the year amounted to R90,1 million, a substantial drop on the R155 million achieved in the prior year. Margins in the poultry sector came under extreme pressure due principally to low price realisations, and we do not expect this situation to alter materially until mid-2011. Supremes financial performance does not do justice to its outstanding operational performance in raising internal efficiencies, principally through the switch to Arbor Acres genetics, resulting in productivity gains across the board. It is now a benchmark producer in terms of food conversion ratios, on-farm mortalities, carcass yields and kilograms per square metre. At the same time the focus has been to improve animal welfare practices and we have been instrumental in assisting the setting of standards for certain key customers. These are achievements of which we are particularly proud, given the fact that CBH is just five years old and is now the third largest poultry producer in the country, and the largest poultry exporter. Without these efficiency gains, the financial performance would have been worse. The fall in realisations at Supreme was in part offset by slightly lower maize prices, helped by bumper crops and a stronger rand. The groups procurement strategy is to take advantage of lower commodity prices when these materialise, a strategy that paid off handsomely during the year. Net cash holdings at the end of the period under review amounted to negative R14,5 million as compared with a negative R6,95million in 2009. The cash drawdown was funded partly out of borrowings due to higher net financing costs, and was deployed to fund the groups capital expansion programmes, the writedown on the sale of the Sovereign shares, and higher cash payments to suppliers and employees. The group continues to diversify its exposure to the African protein market, and it is gratifying to report that the beef business grew revenue by 67,3% over the year under review, reflecting the change to more valueadded products, unfortunately that sector of the protein market is also under severe pressure and a small loss of R0,8million was suffered (2009: R3,23 million profit).
Capital expenditure
An amount of R10 million was expended on the upgrade of the Viljoenskroon abattoir in North West Province, and a further R12 million was spent on a spiral freezer in Bloemfontein. Upgrades to the Nutri Feeds broilers and the purchase of infrared equipment were completed during the year, resulting in greater pellet quality. For the coming year capex will be reduced to essential maintenance capex plus those projects which are required to meet the everimproving standards of our key customers. There is existing spare capacity in all areas of the operation to obviate the need for expansion capex in the current year.
Jeff Wright Chief executive officer
Robbie Taylor Chief financial officer
Robbie Taylor Chief financial officer
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Pursuing innovation to meet the markets changing needs
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OPERATIONAL REVIEW South African Poultry (Supreme Poultry)

The peoples choice!
Vision The Peoples Choice in Chicken To become the number one household name in the poultry industry in Africa. To be consumer led in providing quality poultry products at the lowest cost. This vision means: Affordability Quality Value for money Taste reliability Consistency Availability What does this vision say about Supreme Poultry? Supreme Poultry is customer driven The customer says its my decision You are part of the Supreme Poultry family The vision bodes well in the new South Africa That a collective association is implied It is straightforward and easy to understand Mission To develop and grow our poultry business throughout Africa and ensure that communities where we operate also benefit. We will achieve our vision of being the lowest cost producer in Africathrough: Full integration The right alliances Entrepreneurial acumen Izaak Breitenbach Managing director: Supreme Poultry
CBHs South African poultry operation, trading as Supreme, provides a complete range of fresh and frozen products which are distributed nationally, and employs over 3 300 people. The company is a fully integrated poultry operation with breeder facilities, hatcheries, broiler sites and processing plants. Operations are based in the Free State and North West provinces, supported by a diverse contract grower base. The company operates hatcheries in Bloemfontein and Mafikeng, and abattoirs in Bloemfontein, Mafikeng and Tigane. It slaughters between 1,2 million and 1,4million birds per week, with capacity to increase this to 1,8million per week without any capex spend. Existing facilities are therefore adequate to meet near-term increases in demand for poultry. South African poultry production increased 7,6% over the past year, while imports are up by 7,4% over the same period. Supreme has captured an estimated 9% of the South African poultry market, and its sales volume growth over the last year surpassed that of the industry as a whole. While the combination of cheap imports (from a strong rand) and the generally depressed economic conditions have tended to erode margins over the last year, Supreme mitigated the affect of these external factors through its focus on internal efficiencies and better procurement.
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Supremes head office is located in Bloemfontein, and its products are marketed and sold throughout South Africa under the Supreme brand. Since its inception five years ago, Supreme has become South Africas third largest poultry producer (and the fastest growing), and the countrys largest poultry exporter. It is also South Africas second largest supplier to the quick service restaurants (QSR) and food service markets. Supremes production operations comprise the following: As a breeding operation (at the Belgie, Ramatlabama and custom hatch facilities), Supreme currently produces 1,6 million eggs per week, with plans to expand this to 1,9 million per week.
Its broiler operations (supplied through contract growers and our own Botshabelo broiler farm) produce 1,4 million broilers per week, with plans to expand this to 1,85 million per week by 2014. Its abattoirs (Botshabelo, Tigane and Mafikeng) slaughter up to 1,4 million birds per week, with plans to expand this to 1,85 million per week. While the previous financial year was characterised by rising feed and fuel costs, these costs were largely static during the year under review. Producers were forced to focus on internal efficiencies to counter the effect of lower realisations on sales. Chicken, due to its relatively low pricing, continues to capture a greater share of the South African protein market.
Our other operations are as follows: Bloemfontein Broiler farm Abattoir Hatchery Breeder farm Parent stock farm Tigane Contract grower farms Abattoir Mafikeng Contract grower farms Abattoir Hatchery Breeder farm
SUPREME IS AN INTEGRATED POULTRY OPERATION COMPRISING BREEDER FARMS, HATCHERIES, A BROILER FARM, A WIDE BASE OF CONTRACT GROWERS, AND PROCESSING PLANTS.
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OPERATIONAL REVIEW South African Poultry (Supreme Poultry) (continued)
Revenue for the period was R1,51 billion, unchanged from the prior year. Operating profit for the year under review was R90,1 million, down from the R155 million achieved in the prior year. Margins in the poultry sector came under extreme pressure due principally to low price realisations, the average for the year under review was R11,61 per kilogram (2009:R12,57)which was almost a rand per kilogram cheaper than last year. On current production of 130 403 tons this equates to a reduction in sales of R125million. We do not expect this situation to alter materially until mid-2011. The business reported an 8% increase in volumes sold for the period, but there was an equal drop in realisations of 8%. There was a 7,5% drop in the feed price and a 4,3% improvement in food conversion ratios in the poultry division as well as a 1% reduction in other costs. Despite this, the margins slipped to 6,0% (2009: 10,3%). Indications are that farmers worldwide are planning to increase the acreage planted to corn, which aided by
the recent strength in the rand should exert further downward pressure on feed prices. Fuel prices were stable for most of the year, and should remain this way for much of the coming financial period. One area over which producers have very little control is that of administered prices, particularly Eskom electricity supply, which is rising well above the average rate of inflation, and is in fact a source of inflation at the producer gate. However, although the cost is significant in total, it reflects only 2% of the total cost ofproduction.
hit 1,8 million from 1,2 million a year ago, according to the South African Chamber of Commerce and Industry. Company liquidations are also on the rise, despite the relief of historically low interest rates. Inthis environment of weak demand, producers are obliged to renew their focus on cost containment and, where possible, seek out market share gains. Supreme has demonstrated over the last year that it is up to the task, and continues to push the efficiency benchmarks in the industry. Considerable attention was placed on stock and
Another concern is the rising unemployment rate, now above 25%, following the completion of largescale infrastructure projects such as the football stadia, Gautrain and roads. Domestic protein consumption is a function of employment, and there is little at this point to suggest that jobs lost over the last 12 months will be recovered any time soon. The number of unemployed and discouraged work seekers who have given up seeking work has now
working capital management during the year, resulting in improvements in creditors and debtors recoveries. Supreme is particularly proud of the fact that it is one of just two accredited suppliers to Kentucky Fried Chicken in South Africa, which is a validation of the groups quality standards and reliability. The group is pursuing a strategy of expanding and diversifying its market
page 21
channels, of which the KFC supply arrangement is one such example. Further such outlets are actively being sought, while the range of product being made available to the market is being expanded. As reported in the previous annual report, CBH is now fully converted to Arbor Acres genetics, which has demonstrated far greater efficiencies than the previous Ross genetics imposed on the group by the now defunct joint venture arrangement with Astral. The switch from Ross to Arbor Acres genetics in the groups various breeding operations continues to yield improved feed conversion, mortality rates, hatchability and breeding performance. It should be mentioned that CBH holds the agency for Ross genetics in the rest of Africa, but not in South Africa. Elsewhere in Africa our Ross agency makes use of the Ross 308 International breeding stock, which is a highly efficient stock suitable for African breeding conditions, and comparable in performance to the Arbor Acres stock now used by CBH in South Africa.
Looking forward, Supreme plans to substantially improve profitability through a variety of measures as outlined by the strategic plan which aims to achieve the following by 2014: increase slaughter volumes to 1,85million birds per week; expand the higher margin QSR business; to increase exports from 9% to 15%; develop new markets for low value products; further lower the costs of production; establish its own distribution and retail outlets; access value-added markets; and expand the number of owned farms. For much of the coming financial year, the poultry industry in South Africa will continue operating at reduced margins compared to previous years, with demand and realisations remaining under pressure. Input costs will remain steady, though imports are expected to pose a challenge.
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OPERATIONAL REVIEW Animal Nutrition (Nutri Feeds)

The formula for success!
Vision To be the leading manufacturer of affordable animal feed solutions for the enduring benefit of our customers. Strategy Mutual success through precision formulation and superior technological customer support. Mission To manufacture, distribute and support superior animal feed to enable our customers to be the lowest-cost producers of animal protein.
We strive to be the leading feed manufacturer in South Africa, and a global roleplayer in the animal feed industry. Effectively, to be the preferred supplier of animal feed through reliability, flexibility and responsiveness to your needs.
This division comprises feed mills at Viljoenskroon (with a monthly capacity of 32 000 tons per month), Bloemfontein (with capacity of 6 000 tons per month) and Mafikeng (capacity of 8 000 tons per month). Nutri Feeds produces a complete range of animal feed products for chickens, turkeys, pigs, ostriches, horses, game, dairy cattle, beef cattle, sheep and animal licks. These products are distributed through 280 outlets in South Africa and exported to Botswana, Lesotho and Namibia. The company also provides high-level expertise in animal nutrition to the industry. It is one of the first animal feed manufacturers in the world to achieve both ISO 9001 and ISO 22000 certification from two independent certification bodies QMI and DQS. It is also the first animal feed producer in South Africa to achieve OHSAS 18001 certification. The conclusion of the Nutri Feeds acquisition during the prior year augments the groups feed capacity, and presents the group with a powerful competitive platform from which to manage the procurement and formulation of its raw materials and feed. Feed is supplied to Supreme and other customers at market-related prices, and profits from Nutri Feeds are now fully consolidated into the groups financial results.
Mario le Roux Managing director: Nutri Feeds
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Operating profit from external customers for the year under review was R27,2 million, a 153% improvement on the R10,8 million achieved in 2009. Revenue for the period was R927,2 million, slightly above the R840,5 million achieved in the prior year. Operating margins were 2,7% for the year, up from 1,2% in 2009. As was promised in the previous annual report, new management was appointed to steer the company back towards expected levels of profitability and this has been achieved. This was effected through a range of productivity enhancements, quality programmes and marketing initiatives. Sales volumes grew by a creditable 16,2% over the prior year, due to increased supplies to Supreme, as well as
independent customers. National feed production in South Africa is estimated to be 9,59 million tons a year, growing at an annual rate of 4,48%, versus the 16,2% growth achieved by Nutri Feeds, which continues to make impressive market share gains. Considerable emphasis was placed on stock management during the year, resulting in stock levels reducing to R38 million from R53 million in the prior year. This was achieved despite higher sales volumes. Operating margins improved substantially over the year due to the aforementioned increases in productivity and efficiency. Feed performance, analysed independently by customers, for most of the year outperformed competitors in terms of price, production, service and quality. The companys procurement strategy paid off as maize prices on Safex
Our products At Nutri Feeds we dont think any animals are standard. However, different animal groups do have some specific nutritional requirements that must be met. Our delivery of tried and proven products, consistent high quality and excellent customer service has earned us an enviable reputation worldwide. Nutri Feeds recognises that all farming situations are not the same and therefore we offer unique services and products. Our product offering includes: Broiler Layer Beef Dairy Milk calf/heifer Sheep Swine Other Ruminants Lick Tub
THE COMPANYS FOCUS IS NOT ONLY ON MANUFACTURING OF ANIMAL FEED OF WORLD-CLASS STANDARDS. NUTRI FEEDS HAS AT ITS DISPOSAL EXCELLENT TECHNICAL KNOWLEDGE AND STRIVES FOR TECHNOLOGICALLY INNOVATIVE SOLUTIONS TO BRING YOU EVEN BETTER PRODUCTS AND SERVICES. WEUNDERSTAND OUR CLIENTS BUSINESS AND TO PROVIDE THEIR EXACT NEEDSIS OF UTMOST IMPORTANCE TO US.
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OPERATIONAL REVIEW Animal Nutrition (Nutri Feeds) (continued)
softened for most of the year, helped by a strong rand. This allowed Nutri Feeds to follow the market down as the maize price softened. Overall, world corn stocks remain high and current US plantings are the highest they have been in many years, with favourable weather conditions pointing towards an abundance of supply in the coming season. The expectations are that this will keep maize prices down. Last year we reported plans to increase capacity utilisation at the Nutri Feeds plant to 70%, or 35 000 tons per month, and we are happy to report that this has been achieved. The outlook for the coming financial year is for steady to slightly improved operating margins.
Inflationary expectations for the year ahead are low, reducing the prospect of substantial price adjustments. Competitive pressures will remain intense, aggravated by a surplus of supply and imported competition. Demand for poultry products should remain strong as chicken is the preferred source of protein among the emerging middle classes. This will be tempered somewhat by the countrys rising unemployment rate, with little prospect of a reversal in the near term in the job losses recorded in the economy over the last year. Given the limited capacity to increase margins in what is a highly competitive market, the group will focus its attention on ongoing improvement in operational efficiencies, astute procurement and expansion of market opportunities. The Animal Nutrition division is well placed to benefit from any upturn in consumer demand, as it has both the production capacity and human resources to enlarge its market footprint. We continue to look to new market opportunities domestically and in Africa, using our well established presence in Botswana and Zambia as a beachhead into these promising markets.
Prospects
The poultry industry in South Africa will continue operating at reduced margins compared to previous years, with demand and realisations remaining under pressure. Feed costs are likely to remain low relative to previous years, while fuel costs are expected to be stable.
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OPERATIONAL REVIEW Others
Ross Africa operates in Zambia and Botswana where it has interests in poultry breeding operations using the Ross genetics. Animal Nutrition Other Africa consists of two animal feed mills, one in Gaborone and the other in Lusaka. The beef businesses are made up of an abattoir in Klerksdorp and a beef trading enterprise.
Poultry Africa
This division comprises a grandparent breeding operation in Zambia, and a parent breeding operation in Botswana. Economic conditions in Zambia, Botswana and Namibia were adversely affected by the global economic downturn, and this was reflected in softening demand for poultry products. Poultry Africa had a difficult year, showing a loss of R5,5 million (2009: R9,1 million profit). Profitability in Zambia was adversely impacted by new competitors entering that market with the consequent negative impact on prices. The Zambian business reported a small loss for the first time since 2000, and the focus for the coming financial year is to regain market share and restore profitability. The Botswana business was also negatively affected, though for different reasons: the countrys major abattoir burned down in the prior year, and we were forced to process reduced volumes at smaller abattoirs and at a higher cost. Our breeding capacity in Botswana was also affected by this event. A new state-of-the-art Europeanrated abattoir will be commissioned in Botswana in the new calendar year, allowing for a return to more normal trading patterns. Our broiler farm and abattoir in Francistown are operating well, though the Botswana
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OPERATIONAL REVIEW Others (continued)
market is not immune to the general downturn in the poultry market. The acquisition of the broiler farm and cold distribution business in Botswana during the previous financial year expanded the product diversity and market potential of this business. Higher costs eroded profitability in the financial year under review, though we expect a much improved profit in 2011.
We remain excited by the expansion opportunities that await in these markets, as rising disposable incomes translate into increased demand for poultry products. Chicken prices in Botswana and Zambia remain relatively strong, and we expect a return to healthier profit levels in the coming financial year. Ross Africa holds the agency for the production and
expanding the Africa business and introducing cuttingedge genetics packages to the relatively undeveloped poultry markets to the north. CBH continues to explore new opportunities across the continent, building on our successful operations in Zambia and Botswana. New markets under exploration include Mozambique, Zimbabwe and Tanzania.
Supreme continues to supply the Namibian market from South Africa. The groups intention was to expand its production facilities into Namibia once infant industry protections were put in place. These have not been forthcoming, so this market will continue to be serviced from our South African operations.
marketing of the Ross genetic package in much of subSaharan Africa, excluding South Africa. Ross genetics are developed by Aviagen, the world leader in poultry breeding. Aviagen also develops the Arbor Acres genetic package used by Supreme in South Africa. The Ross agency for Africa represents an excellent vehicle for
THE GROWTH IN POULTRY CONSUMPTION NATURALLY INCREASES THE DEMAND FOR ANIMAL FEED PRODUCTS. IMPROVED PROCUREMENT PRACTICES AND ENHANCED ECONOMIES OF SCALE WILL ENSURE THAT NUTRI FEEDS IS WELL PLACED TO BENEFIT FROM THESE OPPORTUNITIES. OWING TO THE LOCATION OF THE COMPANYS MILLING OPERATIONS, OPPORTUNITIES EXIST FOR INCREASED EXPOSURE TO EXPORTS WITH NEIGHBOURING COUNTRIES.
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Animal Nutrition Other Africa

The feed mills in both Zambia and Botswana are on target for penetration into their markets, showing a combined operating profit increase of 28% to R10,9million (2009: R8,6 million). The feed mill in Zambia was commissioned towards the end of the previous financial year, and supplies product to poultry businesses in that country. It is also in a position to add other Ross Africa products to its customer base. These businesses are able to leverage off the South African operation by way of intellectual capital and procurement, to name just two. We expect to see continuing growth in the profitability of these businesses in the coming financial year.
Operations
Ross Zambia is a fully owned subsidiary of CBH

and an established business employing 320 people. It has been successfully expanded to achieve a 50% market share in Zambia.
Ross Botswana was formed early in 2005 via the acquisition of a 60% shareholding in a hatchery. It is the leading supplier of day-old chicks to the market in Botswana.
Red Meat
This division comprises an abattoir in Klerksdorp and a trading operation. The industry remains under severe pressure even though this was alleviated to an extent by innovation and the shift towards value-added meat products. There are no obvious signs of these circumstances changing in the short to medium term and the continued investment in this business will become the focus of debate.
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Providing quality products at affordable prices
CBH is committed to a learning culture by ensuring that the process of learning, training and continuous development is based on a partnership involving management and employees, in which business goals, organisational requirements and individual requirements are integrated with a view to improve skills and performance.
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SUSTAINABILITY REPORT
Environment
The group recognises that its activities have an impact on the environment and has adopted a strategy that strives to minimise this impact by regularly reviewing its activities and by compliance with all relevant legislation. Environmental policies are clearly articulated and implemented by management throughout the organisation, and all group companies are expected to comply with these policies as well as all relevant environmental legislation. CBH is committed to continual improvement of environmental performance by identifying all environmental aspects and the significance of their impacts on a continual basis in order to provide a framework for setting objectives and targets for environmental performance. Group environmental policy is directed towards achieving the following: To constantly increase environmental awareness in allpersonnel; To develop environmentally responsible practices, tothe benefit of all interested and affected parties; To communicate with interested and affected parties, at their request, on significant environmental impacts that may affect their quality of life; To liaise and cooperate with legislative bodies onall matters regarding legal compliance; To invest, within the constraints of technology and business interests, resources in the achievement of environmentally responsible practices; To monitor environmental performance; To achieve, in relevant aspects of the business, certificated compliance with ISO 14001: 2004 through assessment of CBHs integrated management system; and To undertake regular environmental monitoring and auditing of the groups activities. practices and policies. CBH strives to promote and maintain an environment that empowers its entire staff to achieve their highest potential without fear ofprejudice or bias. Training and skills development across the group has the full support of management. CBH is committed to a learning culture by ensuring that the process of learning, training and continuous development is based on a partnership involving management and employees, in which business goals, organisational and individual requirements are integrated with a view to improve skills and performance. Individual training and development requirements are identified by the active involvement of management, and the application and regular assessment of performance. Employees regarded as potentially functionally illiterate are identified by way of testing and receive the necessary adult basic training and development in their mother tongue to a minimum literacy level equal to Grade 4. Where higher literacy levels are required, the necessary training actions are planned and scheduled over a minimum period of five years. In terms of job-specific training requirements, the minimum training requirements (in respect of technical as well as human skills) for satisfactory performance by job incumbents are identified and documented. Should the incumbents not have completed such training successfully in the past, training actions are scheduled to meet the requirements. In terms of career and succession planning, critical succession positions are identified at the business unit level, where suitably qualified or promising
Employment equity and skills development

CBH has a clearly defined employment equity strategy aimed at realising the potential of previously disadvantaged people in South Africa. The group has complied in all material aspects with the South African legislative requirements on employment equity and has implemented employment equity plans throughout the organisation. This includes in-house and externally sourced training to uplift skills and groom previously disadvantaged employees for supervisory and management positions. CBH, through its employment equity policy, is committed to an equitable business environment that offers a nurturing and challenging workplace and employment climate, respectful of human diversity and the human dignity of all, irrespective of race, gender, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability, religion, HIV/ Aids status, conscience, belief, political opinion, culture, language and birth. The group is further committed to eliminating all forms of unfair discrimination and to taking corrective action, in the form of positive steps to remedy inequitable under-representation of designated groups and the lack of diversity in the composition of its staff, to equitably remedy the legacy of past discriminatory
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individuals are invited to participate in development programmes for potential succession. Potential candidates are selected on the basis of agreed criteria and are evaluated against core abilities/qualifications of the relevant positions. Individual development plans with realistic goals are prepared according to those aspects which need attention, and development actions are scheduled accordingly. At Supreme Poultry, five employees are on the leadership development programme. Nutri Feeds conducted the following training during the year: Maize grading course (seven employees) Steam boiler operating (four employees) Safe work permit course (10 employees) Bobcat driving (eight employees) Forklift driving (12 employees) Disciplinary hearing and counselling (22 employees) BEE training (nine employees). In the Zambian business, Ross Africa conducts ongoing staff training programmes and has awarded one candidate a bursary to attend college in Scotland for a Diploma in Agriculture and Poultry Science. Our Botswana business also conducts training for employees, both on- and off-site.
benefit to the recipient through the intended transfer of skills and experience rather than simple ownership of a small operation. Experience has shown that small operations are susceptible to failure through inadequate marketing, insufficient administration skills and the adverse conditions that occasionally impact the poultry market. Imparting skills and experience will allow the recipients the opportunity to work within any commercial poultry organisation throughout the country creating geographical mobility and opportunities in both good and bad times. Further opportunities in the field of preferential procurement, employment equity, skills development, enterprise development and socio-economic development, are under constant examination.
To comply with all relevant legislation as identified through the hazard identification and risk assessment (HIRA) process and cooperate with relevant regulatory bodies in all matters of non-compliance. The HIRA process provides a framework for setting individual objectives and targets, and identifying legislation relevant to CBHs activities and facilities. Based on the HIRA process employees are notified, trained and declared competent for the tasks that they perform and are informed of their responsibilities and roles in the achievement of individual and overall objectives. Furthermore, employees are informed of their rights and obligations in the proactive management of their own health and safety. At NutriFeeds, management is committed to the enforcement of the OH&Smanagement system based on OHSAS18001. All employees work according to the system, procedures, authorities and responsibilities contained in the documented system. This policy is consulted with employee forums and representatives in order to achieve consensus agreement and acceptance. Supreme adheres to a health, safety and environmental conservation policy system overseen by Phakamile Risk Consultants. This is a firm of independent consultants which conducts site visits to ensure that Supreme complies with the outlined policy. The purpose of these visits is to identify possible risks to the health and safety of employees and to ensure that Supreme complies with the statutory requirements for a safe working environment. Part of this function is to monitor noise levels, dust levels, chemical exposure and light intensity.
Health and safety

The group embraces the highest possible health and safety standards and in this regard strives to set the benchmark for the industry in which it operates. It recognises its responsibilities for the protection of the health and safety of all its personnel within the principles of tolerable risk and the reasonable man test. The group is committed to a policy of continual improvement in the health and safety performance of all its facilities. The overall health and safety performance objectives of the group are: To constantly strive for a decrease in all forms of health and safety incidents and statistics; To follow proactive rather than reactive processes in the management of health and safety issues; To follow a defined hierarchy of control in the management of risk; and
Black economic empowerment

The group has engaged with the Department of Trade and Industry to develop a new upliftment model for poultry farmers. The model is based upon sustainable
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SUSTAINABILITY REPORT (continued)

Risk evaluation of each job function and equipment is also done. Annual physical evaluations are done on all factory employees at Supreme, including separate audiometric, lung function and eye tests. These tests are all done onsite by accredited institutions. providing much-needed employment in the areas where CBHs facilities are situated, Supreme operates a support system for the Ragogang service centre endorsed by the Department of Social Development at the Tigane village. The service centre assists with training of the community in job skills and market gardening. It also assists local schools in educating the younger generation in African culture, traditions and the value system. This serves to affirm their local heritage. Supreme has supported Lebone Educare Centre (a home for children affected by HIV/Aids) with furniture and a monthly supply of chicken. The following seven needy institutions have benefited from monthly supplies of chicken and/or eggs, all of which are situated in the communities from which our staff are employed: Bartomia School for the Deaf Child Welfare Choc House Lebone House Salvation Army Webber House Yade House. In March 2010 Supreme Poultry launched a sponsorship initiative for Bloemfontein Child Welfare. Through this social responsibility initiative, the company hosts a monthly Supreme Poultry Chicken Day providing chicken and eggs at specifically identified Child Welfare facilities in Bloemfontein, benefiting some 480 children. This made a meaningful contribution to the lives of these children, and further such engagement with Bloemfontein Child Welfare is planned. The companys CSI activities are carried out under the Love Chicken umbrella. In Zambia, two projects aimed at promoting community self-sufficiency in poultry were launched during the previous financial year, and a primary school was built at the companys Chainda farm to educate the children of employees. Altogether 30 children are in regular attendance in the current year. Ross Zambia selected the Zambian Society for the Blind as its community project for the past year and throughout the period has been renovating homes, painting walls, fixing roofs, replacing windows and installing plumbing. Ross Zambia also provides cash donations and other forms of assistance to a wide range of schools, churches, communities, local government organisations and the local police. Weekly contributions of commercial eggs are made to the Womens Federation for World Peace and Missionaries for Africa to assist with feeding Aids orphans and streetchildren. Similarly, the business supports Lusaka Animal Welfare Society and the Munda Wanga Animal Sanctuary. Donations of game pellets are also made to the Wildlife Trust to feed starving buffalo and orphaned elephants. Ross community projects for the year include the continuing rehabilitation of the Mimosa disabled/blind housing project, and the upgrade of a community crche for employees children at Chainda farm to facilitate wives of employed husbands to work at the breeder farm. In Gaborone, nine organisations have benefited from the support of Ross Botswana in various forms, from cash donations to the supply of day-old chicks for community feeding schemes.
Quality standards
CBH is committed to a policy of continuous improvement of quality assurance across the group. Nutri Feeds follows the quality assurance process described in ISO 9001: 2000 and feed safety in terms of ISO 22000: 2005. Management ensures that this policy is understood, accepted, implemented and maintained throughout the company. Nutri Feeds policy is to provide the highest quality animal feeds through expert product development practices, optimised manufacturing practices, compliance with feed safety standards and well-controlled quality practices. Supremes poultry breeding operations and abattoirs conform to the highest quality standards and comply with all relevant quality regulations and legislation with particular attention paid to animal welfare. Supreme follows an accredited food safety system in the form of a hazard analysis critical control point (HACCP) system. All of the groups process plants are South African Bureau of Standards (SABS) certified according to SANS 10330:2007. The Tigane process plant is currently star accredited for food safety, security and quality.
Communities
CBH is involved in various activities across the region aimed at community development. In addition to
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CORPORATE GOVERNANCE REPORT

Corporate governance statement
Country Bird Holdings (CBH) subscribes to the principles of the Code of Corporate Practices and Conduct set out in the King Report II on Corporate Governance (King Code II), and is mindful of the requirements embodied in the King III Report. In doing so, the directors recognise the need to conduct the business with integrity in accordance with generally accepted corporate policies. This includes timely, relevant and meaningful reporting to shareholders and other stakeholders, providing a proper and objective perspective of CBH. The directors have, accordingly, established meaningful mechanisms and policies appropriate to the groups business in keeping with its commitment to the best practices in corporate governance in order to ensure compliance with the King Code II. These are reviewed by the directors from time to time. The formal steps taken bythe directors aresummarised below. independent. The boards responsibilities include providing CBH with clear strategic direction, ensuring that there is adequate succession planning at senior levels, overseeing operational performance and management, determining policies and processes which seek to ensure the integrity of CBHs risk management and internal controls, implementing and maintaining the companys communication policy and overseeing director selection, orientation and evaluation. The board retains full and effective control over the business of CBH. The board has defined levels of materiality through a written delegation of authority, which sets out the decisions the board wishes to reserve for itself. The delegation is regularly reviewed and monitored. The board is accountable for communicating appropriate risk and control policies throughout the group. Non-executive directors bring an independent view to the boards decision-making. The non-executive directors enjoy significant influence at board meetings. No non-executive directors have fixed terms of appointment and all the non-executive directors are subject, by rotation, to retirement and re-election by shareholders every year, in accordance with CBHs view of good practice. Generally directors have been and will be nominated based on their calibre, credibility, knowledge, experience, the beneficial impact they are expected to exert over the companys affairs, and the time and attention they are able to devote to their duties. The remuneration and nomination committee is responsible for vetting the individuals proposed for directorship and making recommendations to the full board for approval. Before nomination, appropriate background checks are performed on proposed new directors. The board meets at least four times a year with additional meetings called if necessary or desirable. Information relevant to a meeting is supplied on a timely basis to the board ensuring directors can make reasoned decisions. The directors have unrestricted access to CBH information and management, and where appropriate, they may seek the advice of independent professionals on matters concerning theaffairs of the group, at the expense of CBH.
Attendance at meetings
The following is a list of scheduled board meetings and board committee meetings attended by each director during the year:
Chairperson and chief executive officer

Bryan Kent, an independent non-executive director, chairs the board. The chairperson is responsible for providing leadership to the board, overseeing its efficient operation and has been tasked with ensuring effective corporate governance practices. The chief executive officer, Jeff Wright, is responsible for formulating, implementing and maintaining the strategic direction of CBH, as well as ensuring that the day-to-day affairs of the company are appropriately supervised and controlled.
Board of directors
The board comprises four executive directors and two non-executive directors, both of whom are
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CORPORATE GOVERNANCE (continued)

CBH attendance at meetings Board meetings Name BH Kent JD Wright R Gibbison1 GP Heath2 GP Heath2 IWM Isdale3 KW James C Stein RJ Taylor MJ Antunes Position Chairman Managing director Non-executive director Non-executive director Executive director Non-executive director Executive director Non-executive director Financial director Company secretary 21-08-09 N/A N/A N/A 23-11-09 N/A N/A N/A 09-02-10 N/A N/A 21-05-10 N/A
Board committees
The responsibilities delegated to board committees are formally documented in the terms of reference for that committee, which have been approved by the board and are reviewed annually. The effectiveness of the committees is reviewed annually by the board, based on a self-evaluation done by each committee of the degree to which it has fulfilled its terms of reference. Audit committee The audit committee is chaired by Bryan Kent, an independent non-executive director. The committee consists of two non-executive directors. The current members are CarlStein and Bryan Kent. The committee meets at least three times a year together with management and the internal and external auditors and is responsible for assisting the board in fulfilling its responsibilities in respect of financial reporting issues, internal and external audit management, ensuring compliance with laws and regulations, risk management and development/maintenance of an effective internal control system. The auditors of CBH attend audit committee meetings.
Notes: 1 R Gibbison was appointed 9 February 2010. 2 GP Heath resigned as an executive director and was appointed as a non-executive director on 9 February 2010. 3 IWM Isdale was appointed 10 February 2010.
Audit committee meetings Name BH Kent C Stein R Gibbison1 By invitation JD Wright GP Heath2 GP Heath2 RJ Taylor MJ Antunes Position Chairman Non-executive director Non-executive director Managing director Non-executive director Executive director Financial director Company secretary 20-08-09 N/A N/A 23-11-09 N/A N/A 09-02-10 N/A
Notes: 1 R Gibbison was appointed 9 February 2010. 2 GP Heath resigned as an executive director and was appointed as a non-executive director on 9 February 2010.
Committee members have unrestricted access to information and management of CBH and, where appropriate, may seek the advice of independent professionals on matters concerning the affairs of the group, at the expense of CBH. A documented and tested business continuity plan exists to ensure continuity of business critical activities. The audit committee has satisfied itself on the expertise and experience of the group financial director, Robbie Taylor.
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The audit committee recommends the appointment of external auditors to the board. The audit committee may authorise engaging non-audit services with the appointed external auditors or any other practising firm of auditors, after consideration of the following: The essence of the work to be performed may not be of a nature that any reasonable and informed observer would construe as being detrimental to good corporate governance or in conflict with that normally undertaken by the accountancy profession; The nature of the work being performed will not affect the independence of the appointed external auditors in undertaking normal audit assignments; The work being done may not conflict with any requirements of IFRS or principles of good corporate governance, and Compliance with the operational structure, internal standards and processes that were adopted by the audit firm in order to ensure that audit independence is maintained in the event that such audit firm is engaged to perform accounting or other non-audit services to its client base. Specifically: The company may not appoint a firm of auditors to improve systems or processes where such firm of auditors will later be required to express a view as to the functionality of effectiveness of such systems or processes; The company may not appoint a firm of auditors to provide services where such firm of auditors will later be required to express a view on the fair representation of information as a result of these services to the company; The total fee earned by an audit firm for non-audit services in any financial year of the company,
expressed as a percentage of the total fee for audit services, may not exceed 35% without the approval of the board; and A firm of auditors will not be engaged to perform any management functions (such as acting as curator) without the express prior approval from the board. A firm of auditors may be engaged to perform operational functions, including that of bookkeeping, when such firm of auditors is not the appointed external auditor of the company and work is being performed under management supervision. Consultation and cooperation between the external auditors and internal auditors are encouraged by the board. Remuneration and nomination committee The remuneration and nomination committee is chaired by Carl Stein, an independent non-executive director. The committee consists of one executive director and two nonexecutive directors. The current members are KevinJames, Carl Stein and Bryan Kent. The committee meets at least twice a year and is responsible for assisting the board in fulfilling its responsibilities with respect to maintaining an appropriate remuneration strategy, ensuring the companys directors and senior executives are fairly rewarded, providing for succession planning, assessing the effectiveness of the composition of the board and evaluating the boards and individual directors performance. The remuneration strategy is aimed at ensuring that levels of remuneration are sufficient to attract, retain and motivate executives and, where appropriate, at aligning
the executives interests with those of shareholders. Consequently, the strategy is aimed at ensuring that the performance-related elements of an executives remuneration should constitute a meaningful portion of total remuneration. The current remuneration package has three elements: a market-related base pay; an annual cash bonus; and the CBH Employee Share Incentive Scheme. In setting and approving remuneration levels and structures, the committee makes comparisons with remuneration paid by other companies in the same or similar industries, taking into account differing levels of responsibility, size, performance and complexity.
Internal audit
An independent and objective internal audit function was established during the year, governed by a charter approved by the board. The internal audit function liaises with the group financial director to set up the annual programme of work, but reports directly to the chairman of the audit committee and has unrestricted access to the chairman of the board. The role of internal audit is to review compliance with internal controls, systems and procedures. The board is satisfied that the groups internal controls are adequate in safeguarding the groups assets, preventing and detecting errors and fraud, ensuring the adequacy and completeness of accounting records and preparing reliable financial statements.
Share dealing
The board has implemented an insider trading policy, in terms of which closed periods (as defined in the
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CORPORATE GOVERNANCE (continued)

JSEListings Requirements) apply. During any closed period, the directors, officers and defined employees and members of their households may not deal in the shares of CBH. Senior executives in all the subsidiary companies and in the holding company are required to obtain written clearance from the chairperson before dealing in CBH shares. If the chairperson wishes to deal in CBH shares, he or she must obtain written permission from a non-executive director. In terms of the JSE Listings Requirements, any share dealings by directors are required to be published immediately on SENS. A register of share dealings by directors is maintained by the company secretary and reviewed by the board on a regular basis. sets out high standards of honesty, integrity and mutual respect. Employees are expected to act in terms of the code of ethics at all times and failure to do so may result in disciplinary measures. An independent hotline is available where unethical behaviour, workplace dishonesty, fraud, theft or any other crime may be reported anonymously. All calls logged on the hotline are reported to the audit committee. The board has no reason to believe that there was any material non-compliance with CBHs code of ethics during the year under review.
Risk management
The objective of risk management is to identify, assess, manage and monitor the risks to which the business is exposed. This is a board responsibility but the audit committee is responsible for assessing the management of identified risk issues. CBH pursues active management policies designed to assess risk and mitigate the impact of unacceptable risk and believes that an adequate system of internal control is in place to achieve this. With the assistance of expert risk consultants, risks are assessed and appropriate insurance cover purchased for all material risks above predetermined, self-insured limits. Levels of cover are reassessed annually. The board believes that it has reasonable, but not absolute assurance with regard to the effectiveness and efficiency of operations, protection of assets and information, and regulatory and legal compliance.
Stakeholder communication
In all communication with stakeholders, the board aims to represent a balanced and understandable assessment of CBHs position. This is done through adhering to the principles of openness and substance over form and striving to address material matters of significant interest to all stakeholders. The board encourages shareholder attendance at general meetings and provides full and understandable explanations of the effects of resolutions to be proposed. Communication with institutional shareowners and investment analysts is maintained through periodic presentations of financial results, one-on-one visits, trading statements, and press announcements of interim and final results, as well as the proactive dissemination of any messages considered relevant to investors.
Company secretary
The company secretary acts as adviser to the board and plays a pivotal role in ensuring compliance with statutory regulations and the code, and the induction of new directors, tabling information on relevant regulatory and legislative changes, and giving guidance to the directors regarding their duties and responsibilities. The directors have unlimited access to the advice and services of the company secretary.
Behavioural code
The CBH group is committed to creating a culture of the highest levels of professionalism and integrity in its business dealings with stakeholders. CBHs code of ethics
page 37
CONTENTS
The peoples choice

37 124 FINANCIAL STATEMENTS Approval of annual financial statements 38 Statement by the board of directors 39 Certificate by the company secretary 39 Independent auditors report 40 Report by the audit committee 41 Directors report 42 Consolidated statement of financial position 44 Consolidated statement of comprehensive income 44 Consolidated statement of changes in equity 45 Consolidated statement of cash flows 46 Notes to the consolidated statement of cash flows 46 Accounting policies 47 Notes to the consolidated financial statements 63 Company statement of financial position 97 Company statement of comprehensive income 97 Company statement of changes in equity 98 Company statement of cash flows 99 Notes to the company statement of cash flows 99 Notes to the company financial statements 100 Analysis of ordinary shareholders 117 Notice of annual general meeting 119 General information 122 Form of proxy 123 Notes to the form of proxy 124
FINANCIALS
www.cbhltd.co.za
page 38
APPROVAL OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements and group annual financial statements of Country Bird Holdings Limited for the year ended 30 June 2010, set out on pages 42 to 116, were approved by the board of directors on 20 August 2010 and are signed on its behalf:
BH Kent Chairman
JD Wright Chief executive officer
page 39
STATEMENT BY THE BOARD OF DIRECTORS

for the year ended 30 June 2010
The directors are responsible for the preparation, integrity and fair presentation of the financial statements of Country Bird Holdings Limited and the group financial statements (financial statements). The financial statements presented on pages 42 to 116 have been prepared in accordance with International Financial Reporting Standards (IFRS), and include amounts based on judgements and estimates made by management. The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported expenses during the reporting period. Actual results could differ from those estimates. The directors consider that in preparing the financial statements they have used the most appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all IFRS that they consider to be applicable, have been followed. The directors are satisfied that the information contained in the financial statements fairly
presents the results of operations for the year and the financial position of the company and the group at year-end. The directors have responsibility for ensuring that proper accounting records are kept. The accounting records should disclose with reasonable accuracy the financial position of the company and the group to enable the directors to ensure that the financial statements comply with relevant legislation. Country Bird Holdings Limited and its subsidiaries operated in an established control environment, which is well documented and regularly reviewed. This incorporates risk management and internal control procedures, which are designed to provide reasonable, but not absolute, assurance that assets are safeguarded and the risks facing the business are being controlled. The going-concern basis has been adopted in preparing the financial statements. The directors have no reason to believe that the company and the group will not be going concerns in the foreseeable future based on forecasts and
available cash resources. These financial statements support the viability of the company and the group. The financial statements have been audited by the independent auditors, PricewaterhouseCoopers Inc, who were given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the board of directors and committees of the board. The directors believe that all representations made to the independent auditors during their audit are valid and appropriate. The audit report of PricewaterhouseCoopers Inc is presented on page 40.
FINANCIALS
BH Kent Chairman
JD Wright Chief executive officer
CERTIFICATE BY THE COMPANY SECRETARY

I hereby certify that in respect of the year ended 30 June 2010, the company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of section 268 G(d) of the Companies Act of 1973, as amended, and that all such returns are true, correct and up to date.
MJC Antunes Company secretary 20 August 2010
page 40
INDEPENDENT AUDITORS REPORT

To the members of Country Bird Holdings Limited
We have audited the group annual financial statements and annual financial statements of Country Bird Holdings Limited, which comprise the consolidated and separate statement of financial position as at 30 June 2010, and the consolidated and separate statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the directors report, as set out on pages 42 to 116. conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. separate financial position of Country Bird Holdings Limited as at 30 June 2010 and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.
Directors responsibility for the financial statements

The companys directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
PricewaterhouseCoopers Inc Director: DA Foster Registered Auditor 20 August 2010
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
Opinion
In our opinion, the financial statements present fairly, in all material respects the consolidated and
page 41
REPORT BY THE AUDIT COMMITTEE

The audit committee has pleasure in submitting this report, as required by sections 269A and 270A of the Companies Act (the act). Verified the independence of the external auditors, nominated PricewaterhouseCoopers Inc as the auditors for 2010 and noted the appointment of DerekFoster as the designated auditor. Approved the audit fees and engagement terms of the external auditors. Determined the nature and extent of allowable nonaudit services and approved the contract terms for the provision of non-audit services by the external auditors.
Attendance
The internal and external auditors, in their capacity as auditors to the company, attended and reported to all meetings of the audit committee. Executive directors and relevant senior managers attended meetings by invitation.
Functions of the audit committee

The audit committee has adopted formal terms of reference, delegated to it by the board of directors, as its audit committee charter. The audit committee has discharged the functions in terms of its charter and ascribed to it in terms of the act as follows: Reviewed the interim, abridged and year-end financial statements, culminating in a recommendation to the board to adopt it. In the course of its review the committee: takes appropriate steps to ensure that the financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the act; considers and, when appropriate, makes recommendations on internal financial controls; and deals with concerns or complaints relating to: accounting policies internal audit content auditing of annual financial statements internal financial controls Reviewed the external audit reports on the annual financial statements. Confirmed the internal audit charter and audit plan. Reviewed the internal audit and risk management reports and, where relevant, made recommendations to the board. Evaluated the effectiveness of risk management, controls and governance processes.
Confidential meetings
Audit committee agendas provide for confidential meetings between the committee members and the internal and external auditors.
Members of the audit committee

The audit committee consists of four independent non-executive directors, BH Kent (chairman), C Stein, IWMIsdale and R Gibbison. The members have at all times acted in an independent manner.
FINANCIALS
Independence of external auditors

During the year under review the audit committee reviewed a report by the external auditors and, after conducting its own review, confirmed the independence of the auditors.
Frequency of meetings
The audit committee met three times in the financial year under review.
Expertise and experience of financial director

As required by JSE Listings Requirements 3.84 (h), the audit committee has satisfied itself that the financial director has appropriate expertise and experience.
Internal audit
The audit committee fulfils an oversight role regarding the companys financial statements and the reporting process, including the system of internal financial control. It is responsible for ensuring that the companys internal audit function is independent and has the necessary resources, standing and authority within the organisation to enable it to discharge its duties. Furthermore, the audit committee oversees cooperation between the internal and external auditors, and serves as a link between the board of directors and these functions.
BH Kent Chairman of the audit committee 20 August 2010
page 42
DIRECTORS REPORT
The directors present their annual report, which forms part of the audited financial statements of the group and the company for the year ended 30 June 2010. shares were held by Jacinda (Pty) Limited as part of a BEE initiative. Refer to note 32 for further details. Restructuring The group has re-evaluated the group structure and has eliminated those subsidiaries that are dormant and nontrading. Refer to note 33 for further details. for the capitalrepayment of R2 756 540 (1,47 cents per share), which was declared by the directors on 20August 2010. Capital repayments are paid out of share premium.
Nature of business
Country Bird Holdings Limited is a holding company incorporating integrated poultry and stock feed business operations in South Africa, operating as Supreme Poultry (Pty) Limited and Nutri Feeds (Pty)Limited, and poultry breeding operations in the region, operating as Ross Africa Limited. Country Bird Holdings Limited currently operates in South Africa, Botswana, Zambia and Namibia.
Subsidiaries
Details of Country Bird Holdings Limiteds interest in its subsidiaries are set out in note 33. The attributable interest of the company in the profits and losses of its subsidiaries for the year ended 30 June 2010 is as follows: 2010 R Subsidiaries Total profit after tax Total loss after tax 67 368 360 (5 614 546) 46 371 184 (1 141 695) 2009 R
Segmental analysis
Information on segment reporting is set out in note 1 to the consolidated financial statements.
Events subsequent to statement of financial position date

The directors are not aware of any other matter orcircumstance arising since the end of the financial year that would significantly affect the operationsof the group and the company or the results of its operations.
Operating and financial review

The profit attributable to the owners of the parent forthe year ended 30 June 2010 amounted to R44353532(2009: R123 004 686). This translates into a basic earnings of 23,71 cents per share (2009: 65,74 cents per share) based on the shares in issue during the year. The financial statements on pages 44 to 116 set out fully the financial position, results of operations and cash flows of the group and the company for the year ended 30June 2010. Trading weeks The reporting period for the poultry segment ends onthe last Sunday of the financial year, resulting in a 52-week reporting period for 2010 (2009: 52 weeks). Acquisitions On 1 July 2009 the group repurchased the option in 25% of the shares held in the subsidiary company Supreme Poultry (Pty) Limited for an amount of R567 155. These
Directors remuneration
Details of directors remuneration are included in note 36.
Share capital
The authorised share capital of the company is 300000000shares of 1 cent each. The issued share capital of the company is 187 099 313 (2009: 187 099 313) ordinary shares of 1 cent each. The companys authorised share capital remained unchanged during the year. Refer to note 12 for further details on treasury shares issued during the year.
Special resolutions
No special resolutions, the nature of which may be significant to members in their appreciation of the state of affairs of the group and the company, were passed byany subsidiary company during the period covered bythis report.
Directors shareholding Dividends and capital repayments

A final capital repayment of R16 852 277 (9,52cents per share) and interim capital repayment of R12952643(6,41cents per share) were declared and, paid duringtheyear (2009: final and interim dividend ofR23200315 or 12,4 cents per share). Refer to note 26 At the date of this report the directors in aggregate had indirect beneficial interests in 112 774 853 ordinary shares and direct beneficial interests in 7 500 shares. Refer to note 36 for details of directors shareholdings.
page 43
Directors and secretary

The names of the directors and company secretary are listed on page122. The directors to the board are as follows: BH Kent JD Wright R Gibbison (appointed on 9 February 2010) GP Heath IWM Isdale (appointed on 10 February 2010) KW James CD Stein RJ Taylor In terms of the companys articles of association, Mr BHKent and Mr C Stein retire by rotation at the annual general meeting of shareholders, but both are eligible for re-election. No material contract in which the directors have an interest were entered into during the current year, other than the transactions detailed in note 27 to the consolidated financial statements.
FINANCIALS
Share incentive scheme

Refer to note 12 for the options granted to directors and employees during the financial year.
Auditors
PricewaterhouseCoopers Inc will continue in office in accordance with section 270(2) of the Companies Act of1973.
page 44
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 June 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2010
Note Revenue Cost of sales Gross profit Other expenses Other gains and losses Operating profit Finance income Finance costs Share of loss of associates Profit before income tax Income tax expense Profit for the year Other comprehensive income Currency translation differences Total comprehensive income for the year Profit attributable to: Owners of the parent Non-controlling interest Total comprehensive income attributable to: Owners of the parent Non-controlling interest Items in the statement above are disclosed net of tax. There is no income tax effect relating to each component of other comprehensive income. Earnings per share (cents) attributable to the owners of the parent during the year: Basic Diluted 1 19 19 18 20 20 5 21 2010 R 2 433 660 139 (2 159 295 947) 274 364 192 (157 751 099) 5 613 822 122 226 915 2 042 347 (55 451 731) (416 760) 68 400 771 (21 394 872) 47 005 899 (1 768 523) 45 237 376 44 353 532 2 652 367 47 005 899 2009 R 2 238 998 849 (1 985 064 496) 253 934 353 (140 167 531) 72 851 004 186 617 826 3 252 512 (50 833 450) (785 047) 138 251 841 (12 672 758) 125 579 083 (13 180 800) 112 398 283 123 004 686 2 574 397 125 579 083
Note
2010 R 541 376 423 397 155 664 94 394 807 383 763 9 212 781 40 229 408 775 075 111 128 170 500 131 265 898 384 143 026 7 696 147 123 799 540 1 316 451 534 382 849 364 1 870 993 795 886 780 17 435 355 375 076 880 (832 110 761) 358 159 247 24 690 117 435 170 925 345 655 409 89 515 516 498 431 245 326 256 645 1 672 625 169 419 360 1 082 615 933 602 170 1 316 451 534
2009 R 576 795 474 355 507 357 95 094 590 72 044 623 8 458 624 45 690 280 694 487 487 125 525 960 139 567 471 346 514 967 8 849 679 74 029 410 1 271 282 961 363 263 544 1 870 993 825 720 732 15 021 482 330 723 348 (832 110 761) 341 225 794 22 037 750 436 976 775 355 305 882 81 670 893 471 042 642 347 962 169 726 122 057 088 1 022 659 908 019 417 1 271 282 961
ASSETS
Non-current assets Property, plant and equipment Intangible assets Financial assets and other investments Investments in associates Deferred income tax assets Current assets Inventories Biological assets Trade and other receivables Current income tax receivable Cash and cash equivalents Total assets 2 3 4 5 7 8 9 10 11
13
EQUITY
Total equity Ordinary shares Share premium Other reserves Retained earnings Common control reserve Equity attributable to the owners of the parent Non-controlling interest 12 12 13 14
LIABILITIES
Non-current liabilities Borrowings Deferred income tax liabilities Current liabilities Trade and other payables Current income tax liabilities Borrowings Provision for other liabilities Total liabilities Total equity and liabilities 15 7 16 15 17
42 585 009 2 652 367 45 237 376
109 823 886 2 574 397 112 398 283
25 25
23,71 23,31
65,74 65,38
The notes on pages 47 to 96 are an integral part of these consolidated financial statements.
page 45
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Note Balance at 1 July 2008 Total comprehensive income Transactions with owners Capitalisation of loan accounts Employee share scheme Dividend Total transactions with owners Balance at 30 June 2009 Balance at 1 July 2009 Total comprehensive income Transactions with owners Shares issued to share incentive trust Treasury shares held by CBH Share Trust Share issue and listing expenses Acquisition of BEE share option Employee share scheme Capital distribution to shareholders Total transactions with owners Balance at 30 June 2010
Share capital R 1 870 993
Share premium R 825 720 732
Other reserves R 24 358 938 (13 180 800)
Retained earnings R 230 918 977 123 004 686
Common control deficit R (832 110 761)
Total attributable to equity holders of the parent company R 250 758 879 109 823 886
Noncontrolling interest R 8 113 237 2 574 397
Total equity R 258 872 116 112 398 283
12 26
1 870 993 825 720 732 1 870 993 825 720 732 149 700 (149 700) 1 870 993 14 820 300 (14 820 300) (29 032) (29 804 921) (29 833 953) 795 886 780
3 843 344 3 843 344 (23 200 315) (23 200 315) 3 843 344 (23 200 315) (19 356 971) 15 021 482 330 723 348 (832 110 761) 341 225 794 15 021 482 330 723 348 (832 110 761) 341 225 794 (1 768 523) 44 353 532 42 585 009 (582 771) 4 765 167 4 182 396 17 435 355 375 076 880 (832 110 761) 14 970 000 (14 970 000) (29 032) (582 771) 4 765 167 (29 804 921) (25 651 557) 358 159 247
11 350 116 11 350 116 3 843 344 (23 200 315) 11 350 116 (8 006 855) 22 037 750 363 263 544 22 037 750 363 263 544 2 652 367 45 237 376 14 970 000 (14 970 000) (29 032) (582 771) 4 765 167 (29 804 921) (25 651 557) 24 690 117 382 849 364
FINANCIALS
12 12 12 32 12 26
page 46
CONSOLIDATED STATEMENT OF CASH FLOWS

NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2010
2009 R A Reconciliation of net profit/(loss) before tax to cash generated from operations Cash generated from operations Profit before income tax Adjustment for: Depreciation and amortisation Finance income Financing costs Profit on disposal of assets (Profit)/loss on disposal of investment Foreign exchange differences Fair value adjustment to biological assets Fair value gains on financial assets at fair value through profit or loss Share-based payment Provision for liabilities and other charges Share of loss from associates Changes in working capital: Decrease/(increase) in inventory Decrease/(increase) in biological assets Decrease/(increase) in trade and other receivables Increase/(decrease) in trade and other payables Taxation payable Taxation paid during the year Balance owing at beginning of year Current tax for the year Acquisition of subsidiary Interest payable on current income tax Secondary tax on companies Balance recoverable/(payable) at end ofyear Proceeds on disposal of investment Disposal of investment Profit/(loss) on sale of investment 2010 R 2009 R
Note Cash flows from operating activities Net cash generated from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Interest paid Income tax paid Cash flows from investing activities Net cash used in investing activities Purchases of property, plant and equipment Proceeds from sale of property, plant andequipment Purchases of intangible assets Acquisition of subsidiaries and joint venture, net of cash acquired Proceeds of financial assets and investments Acquisition of financial assets and investments Increase in loans granted to associate Proceeds on disposal of joint venture or subsidiary Interest received Cash flows from financing activities Net cash used in financing activities Share issue and listing expenses Proceeds from borrowings Repayments of borrowings Dividends paid to companys shareholders Capital repayments to shareholders Repurchase of BEE shares Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Exchange gains/(losses) on cash and bank overdrafts Cash and cash equivalents at end of year
2010 R
57 919 926 2 396 032 080 (2 276 981 392) A 119 050 689 (55 451 731) B (5 679 032) (12 891 242) (73 795 757) 1 161 968 (40 663) 29 59 189 423 (277 644) (1 170 916) C 2 042 347 (50 036 243) (29 032) 57 333 304 (76 952 823) (29 804 921) (582 771) (5 007 559) (6 950 973) (2 553 628) (14 512 160)
102 578 935 2 158 191 082 (1 945 019 571) 213 171 512 (50 833 450) (59 759 127) (223 017 549) (62 082 700) 2 588 969 (438 597) (138 324 352) 1 567 009 (47 201 806) (7 378 584) 25 000 000 3 252 512 57 753 888 244 743 235 (163 789 032) (23 200 315) (62 684 726) 63 773 721 (8 039 968) (6 950 973) C B
119 050 689 68 400 771 31 684 145 (2 042 347) 55 451 731 (145 542) 4 551 559 1 387 516 (1 873 716) 8 197 523 4 765 167 59 956 416 760 (2 644 540) 10 175 289 (37 628 059) (21 705 524) 5 679 032 (8 848 954) 8 504 464 6 023 522
213 171 512 138 251 841 25 224 308 (3 252 512) 50 833 450 (791 221) (18 466 895) (607 689) (2 109 500) (15 629 237) 3 843 344 156 508 785 047 18 696 677 (2 488 569) (17 277 793) 36 003 753 59 759 127 37 127 357 2 337 759 6 468 213 2 656 812 2 320 032 8 848 954 25 000 000 6 533 105 18 466 895
11
page 47
ACCOUNTING POLICIES
1 General information
Country Bird Holdings Limited (the company) and its subsidiaries (together the group) incorporate an integrated poultry and stock feed business operation in South Africa, operating as Supreme Poultry (Pty) Limited and Nutri Feeds (Pty) Limited, and poultry breeding operations in the Africa region, operating as Ross Africa Limited. Country Bird Holdings Limited currently operates in South Africa, Botswana, Zambia and Namibia. The group also has a share incentive trust, namely CBH Share Incentive Scheme. The company is a public company incorporated and domiciled in the Republic of South Africa. The company has its primary listing on the JSE Limited (JSE). 2.2 These consolidated financial statements were authorised for issue by the board of directors on 20 August 2010. financial statements have been prepared under the historical cost convention, as modified by biological assets, and financial assets and financial liabilities at fair value through profit or loss. The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the groups accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in accounting policy note 3. Consolidation Business combinations common control transactions Common control transactions are business combinations in which all of the combining entities are ultimately controlled by the same entity before and after the transaction. These transactions are accounted for at the combining entities predecessor values. Assets and liabilities acquired are accounted for at the book value used in the consolidated financial statements of the highest entity that was under common control. The difference between the amount paid and the book value of the net assets acquired is taken to equity and disclosed as a common control deficit. Comparative information is restated as if the combination occurred on the opening statement of financial position date. The assets and liabilities of the acquired entity are recorded at book values. The predecessor values are adjusted to ensure uniform accounting policies. The difference between the consideration given and the aggregate book value of the assets and liabilities (as at the date of the transaction) of the acquired entity is recorded as an adjustment to equity. This difference is recorded in equity. Subsidiaries Subsidiaries are all entities (including specialpurpose entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the groups share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the statement of comprehensive income.
FINANCIALS
Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1
Basis of preparation The financial statements of Country Bird Holdings Limited, as well as the consolidated financial statements, have been prepared in accordance with and comply with International Financial Reporting Standards (IFRS), IFRIC interpretations and the requirements of the South African Companies Act of 1973, as amended. The
page 48
ACCOUNTING POLICIES (continued)

2
2.2
Summary of significant accounting policies (continued)

Consolidation (continued) Subsidiaries (continued) Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Transactions and non-controlling interest The group applies the economic entity model as a policy of treating transactions with noncontrolling interest. The difference between the purchase consideration and the carrying value of the net assets acquired is recognised in equity against a separate reserve for transactions with non-controlling parties. The gains and losses on disposals to non-controlling parties are also recorded in equity against the same reserve. Associates Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The groups investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. See note 2.8 for the impairment of non-financial assets including goodwill.
The groups share of its associates post-acquisition profits or losses is recognised in the statement of comprehensive income, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative postacquisition movements are adjusted against the carrying amount of the investment. When the groups share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the group and its associates are eliminated to the extent of the groups interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group. Dilution gains and losses arising in investments in associates are recognised in the statement of comprehensive income. Investments in subsidiaries, associates and joint ventures are accounted for at cost in the company financial statements. 2.3 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the group executive committee.
Management has determined the operating segments based on the reports reviewed by the executive committee that are used to make strategic decisions. The groups primary format for reporting segmental information is determined in accordance with the nature of business and its secondary format is determined with reference tothe geographical location of the operations. The executive committee assesses the performance of the operating segments based onoperating profit. Intersegment transfers Segment revenue, segment expenses and segment results include transfers between business segments and between geographical segments. Such transfers are accounted for at arms-length prices. These transfers are eliminated on consolidation. Segmental revenue and expenses All segment revenue and expenses are directly attributable to the segments. Segment revenue and expenses are allocated to the geographic segments based on the location of the operating activity. Segment assets All operating assets used by a segment, principally property, plant and equipment, investments, inventories, biological assets, and receivables (netof allowances) and cash and cash equivalents. Segment assets are allocated to the geographic segments based on where the assets are located.
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Segment liabilities All operating liabilities of a segment, principally accounts payable and external interest-bearing borrowings. 2.4 Foreign currency translation Functional and presentation currency Items included in the financial statements of each of the groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in South African rand (R), which is the groups presentation currency and the companys functional currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income within other gains and losses. Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security, and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity.
Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on nonmonetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; income and expenses for each statement of comprehensive income are translated at the average exchange rates, unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction date; and all resulting exchange differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of the net investment in foreign operations and of borrowings are taken to shareholders equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the statement of comprehensive income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. 2.5 Property, plant and equipment Land and buildings comprise mainly broiler and breeder operations, processing plants and offices. Land and buildings are shown at historical cost less subsequent depreciation for buildings. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable tothe acquisition of the items. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows: Buildings and improvements 33,3 50 years Plant and equipment 10 25 years Furniture 10 years Computer hardware 1 3 years Vehicles 5 years
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2
2.5
Summary of significant accounting policies (continued)

Property, plant and equipment (continued) The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount (accounting policy 2.7). Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within other gains and losses in the statement of comprehensive income. Work in progress constitutes buildings, sites and chicken houses under construction. These are capitalised to property, plant and equipment when the specific project is completed. No depreciation is provided until the assets are available-for-use as intended by management.
on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment. Brand names Acquired brand names are shown at historical cost. Brand names have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the brand names over their estimated useful lives (20 years). Customer relationships Customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The customer relations have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected useful life of the customer relationship (20 years). 2.7 Impairment of non-financial assets Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount 2.8
may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Biological assets Live broiler chicks and hatching eggs, which include both at own premises and at contract grower premises, are assessed based on fair values less estimated point-of-sale costs at appropriate reporting dates. Gains and losses arising from changes in the fair values are recorded in net profit or loss for the period in which they arise. The determination of fair value is based on active markets, where appropriate, or managements assessment of the fair value based on available data, which includes selling price of live birds, costs incurred and mortality ratios. Breeding stock includes parents in lay and in rear. Breeding stock is capitalised at cost at the beginning of its productive cycle and is amortised on a straight-line method over the anticipated productive cycle, to its estimated net realisable value. At reporting dates breeding stock is measured at their fair value less estimated pointof-sale costs. The determination of fair value is based on active markets, where appropriate, or managements assessment of the fair value based on available data, which includes selling price of live birds, costs incurred and mortality ratios.
2.6
Intangible assets Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the groups share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates and is tested for impairment as part of the overall balance. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses
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All the expenses incurred in establishing and maintaining the assets are recognised in the statement of comprehensive income. All costs incurred in acquiring biological assets are capitalised. Finance charges are not capitalised. Live broiler chicks are transferred to the processing plant at fair value less estimated point-of-sale costs. These chicks are then further processed when slaughtered. Once slaughtered, the biological assets are transferred to finished goods. 2.9 Financial assets 2.9.1 Classification The group classifies its financial assets in the following categories: fair value through profit or loss; and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held-for-trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held-for-trading unless they are designated as hedges. Assets in this category are classified as current assets. (b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are
included in current assets, except for maturities greater than 12 months after the statement of financial position date. These are classified as noncurrent assets. The groups loans and receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial position (accounting policy 2.14 and 2.15). 2.9.2 Recognition and measurement General policy applicable to all categories of financial assets Regular purchases and sales of financial assets are recognised on trade date the date on which the group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity financial assets are carried at amortised cost using the effectiveinterest method. Gains or losses arising from changes in the fair value of the financial assets at fair value through
profit or loss category, including interest and dividend income, are presented in the statement of comprehensive income within other gains and losses, in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of other income when the groups right to receive payments is established. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the statement of comprehensive income as gains and losses from investment securities. Interest on available-for-sale securities calculated using the effective interest method is recognised in the statement of comprehensive income as part of other income. Dividends on available-for-sale equity instruments are recognised in the statement of comprehensive income when the groups right to receive payments is established. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the group establishes fair value by using valuation techniques. These include the use of recent arms-length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.
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2 Summary of significant accounting policies (continued)
that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (aloss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the group uses to determine that there is objective evidence of an impairment loss include: Significant financial difficulty of the issuer or obligor. A breach of contract, such as default or delinquency in interest or principal payments. The group, for economic or legal reasons relating to the borrowers financial difficulty, granting to the borrower a concession that the lender would not otherwise consider. The probability that the borrower will enter bankruptcy or other financial reorganisation. The disappearance of an active market for that financial assets because of financial difficulties. Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: (i) adverse changes in the payment status of borrowers in the portfolio; and (ii) national or local economic conditions that correlate with defaults on the assets in the portfolio. The group first assesses whether objective evidence of impairment exists. The amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial assets original effective interest rate. The assets carrying amount is reduced and the amount of the loss is recognised in the consolidated statement of comprehensive income. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instruments fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtors credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement ofcomprehensive income. Impairment testing of trade receivables is described in note 10. 2.10 Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the derivatives is at
2.9 Financial assets (continued) 2.9.2 Recognition and measurement (continued) General policy applicable to all categories of financial assets The group assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the securities are impaired. If any such evidence exists for available-forsale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the statement of comprehensive income. Impairment testing of trade receivables is described in note 10. Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. 2.9.3 Impairment of financial assets Impairment carried at amortised cost The group assesses at each statement of financial position date whether there is objective evidence
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fair value through profit or loss. Changes in the fair value of these derivative instruments is recognised immediately in other income. 2.11 Current and deferred income taxes The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the groups subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates that
have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. 2.12 Secondary tax on companies South African resident companies are subject to a dual corporate tax system, one part of the tax being levied on taxable income and the other, secondary tax on companies (STC), on distributed income. A company incurs STC charges on the declaration or deemed declaration of dividends (as defined under tax law) to its shareholders. STC is not a withholding tax on shareholders, but a tax on companies. The STC consequence of dividends is recognised as a taxation charge in the statement of comprehensive income in the same period that the related dividend is accrued as a liability. The STC liability is reduced by dividends received during the dividend cycle. Where dividends declared exceed the dividends received during a cycle, STC is payable at the current STC rate on the net amount. Where dividends received exceed dividends declared within a cycle, there is no liability to pay STC. The potential tax benefit related to excess dividends received is carried forward to the next dividend cycle as an STC credit. Deferred tax assets are recognised on unutilised STC credits to the extent that it
is probable that the group will declare future dividends to utilise such STC credits. 2.13 Inventories Inventories are stated at the lower of cost, determined on a first-in first-out basis or weighted average cost, and net realisable value. The cost of finished goods comprises raw materials and direct labour costs, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Slaughtered chickens or livestock and byproducts are included in finished goods; consumer inventory under consumables; and other purchased products under raw materials and consumables. Cost method for each category of inventory is determined as follows: Slaughtered chickens In accordance with a formula at the weighted average cost, the cost of broilers is increased with handling, slaughter and freezing costs and the byproducts are offset at the net realisable value against cost. The cost of finished goods comprises raw materials and direct labour costs, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Slaughtered chickens are classified as finished goods under inventories. Byproducts At net realisable value on a first-in first-out basis. Byproducts are classified as finished goods under inventories.
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that the group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of a debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the statement of comprehensive income. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against other income in the statement of comprehensive income. Prepaid expenses are classified as trade and other receivables but are not considered to be financial assets in terms of IAS 39 Financial Instruments: Recognition and Measurement. 2.15 Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. 2.16 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options and initial listing expenses are shown in equity as a deduction, net of tax, from the proceeds. Where any group company purchases the companys equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the owners of the parent until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the parent. 2.17 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings using the effective-interest method. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.
2.13 Inventories (continued) Consumer inventory and raw materials At cost on a first-in first-out basis. Consumer inventory is classified as consumables and raw materials are classified as raw materials under inventories. Other purchased products At the weighted average cost or first-in first-out basis. Other purchased products are classified as consumables under inventories. Other livestock and carcasses Inventories consist of the produce of biological assets and are therefore initially recognised at fair value less costs to sell. At year-end the inventory is stated at the lower of cost and net realisable value. Other livestock and carcasses are classified as finished goods under inventories. 2.14 Trade receivables Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence
2.18 Employee benefits Pension obligations Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies, determined by periodic actuarial calculations. The group only has defined contribution plans. A defined contribution plan is a pension or provident plan under which the group pays fixed contributions into a separate entity. The group has
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no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The group pays contributions to publicly administered pension insurance plans on a voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. Share-based compensation The group operates a share-based compensation plan. The fair value of the employees services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, including any market performance conditions, excluding the impact of any non-vesting conditions (for example, the requirement for employees to save) and excluding the impact of any service and nonmarket performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At each statement of financial position date, the entity revises its estimates
of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transactions cost are credited to share capital (nominal value) and share premium when the options are exercised. Profit sharing and bonus plans The group recognises a liability and an expense for bonuses and profit sharing, based on a formula that takes into consideration the profit attributable to the companys shareholders. The group recognises a provision where contractually obliged to do so or where there is a past practice that has created a constructive obligation. The profit sharing and bonus plans are approved annually by the board. 2.19 Trade payables Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Ifnot, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. 2.20 Provisions Provisions are recognised when the group has a present legal or constructive obligation as a result of past events it is more likely than not that an outflow of resources will be required to settle
the obligation and when the amount has been reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. 2.21 Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the groups activities. Revenue is shown, net of value added tax, estimated returns, rebates and discounts and after eliminated sales within the group. The group recognises revenue when the amount of revenue can be reliably measured it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the groups activities as described below. Revenue is recognised as follows: (a) Sale of goods Sale of goods are recognised when the group has delivered products to the customer, the customer has accepted the products and collectability of the related receivables is reasonably assured. Furthermore, the sale of goods are recognised when both ownership and risk and rewards have been transferred to the customer. Credit terms given to customers for sale of goods varies according to the risk portfolio of the customer and is between seven and 31 days.
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the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other longterm payables. The interest element of the finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term. 2.23 Dividend and capital distributions Dividend and capital distributions to the companys shareholders are recognised as a liability in the companys financial statements in the period in which the dividends or capital distributions are approved by the companys shareholders. 2.24 Financial risk management 2.24.1 Financial risk factors The groups activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The groups overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the groups financial performance. (a) Market risk (i) Foreign exchange risk The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Botswana pula, Zambian kwacha and US dollar. The group also has translation risk arising from the consolidation of foreign entities into South African rands. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities and net investments in foreign operations. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entitys functional currency. The group has certain investments in foreign operations, the net assets of which are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the groups foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies. At 30 June 2010, if the currency had weakened/ strengthened by 1% against the Zambian kwacha with all other variables held constant, post-tax profit for the year would have been R45 909 (2009: R83 828) higher/lower, mainly as a result of the foreign exchange gains/losses on translation of foreign denominated trade receivables, payables and borrowings. At 30 June 2010, if the currency had weakened/ strengthened by 1% against the Botswana pula with all other variables held constant, post-tax profit for the year would have been R65 770 (2009: R342 680) higher/lower, mainly as a result of the foreign exchange gains/losses on translation of foreign denominated trade receivables, payables and borrowings.
2.21 Revenue recognition (continued) (b) Interest income Interest income is recognised on a time-proportion basis using the effective-interest method. When a receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original effective-interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective-interest rate. (c) Dividend income Dividend income is recognised when the shareholder has a right to receive payment is established. (d) Other income Other income is recognised when the right to receive payment is established. 2.22 Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. The group leases certain property, plant and equipment. Leases of property, plant and equipment, where the group has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the leases commencement at the lower of the fair value of
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At 30 June 2010, if the currency had weakened/ strengthened by 1% against the US dollar with all other variables held constant, post-tax profit for the year would have been R266 737 (2009: R3615121) higher/lower, mainly as a result of the foreign exchange gains/losses on translation of USdollar denominated trade receivables, payables and borrowings. At 30 June 2010, if the currency had weakened/ strengthened by 1% against the Zambian kwacha with all other variables held constant, equity would have been R114 770 (2009: R157 124) higher/lower as a result of the foreign exchange translation reserve. At 30 June 2010, if the currency had weakened/ strengthened by 1% against the Botswana pula with all other variables held constant, equity would have been R156 856 (2009: R110 674) higher/lower as a result of the foreign exchange translation reserve. (ii) Price risk The group is exposed to equity securities price risk because of investments held by the group and classified on the consolidated statement of financial position at fair value through profit or loss. The groups investments in equity of other entities that are publicly traded are listed on the JSE Limited (JSE). The table below summarises the impact of increases/decreases of the JSE trading price on the groups post-tax profit for the year and on equity. The analysis is based on the assumption that the JSE had increased/decreased by 5% with all other variables held constant:
Impact on posttax profit 2010 R JSE Limited 2009 R 3 596 021
rates would be a maximum increase/decrease of R3 620 148 (2009: R2 961 255). (iv) Contract growers The group utilises a number of contract growers who grow a substantial portion of broilers that are supplied to its processing operations. The performance of the contract growers is monitored by a dedicated team who advises and is consulted by the contract growers on various issues, ie feed, housing, medication, vaccination and best practices, to ensure continuous and maximum delivery of broilers to the processing plants.
Post-tax profit for the year would increase/ decrease as a result of the increase/decrease on equity securities classified as at fair value through profit or loss. The price risk for investments carried at cost is not calculated since they are not significant to the group. (iii) Cash flow and fair value interest rate risk As the group has no significant interest-bearing assets, the groups income and operating cash flows are substantially independent of changes in market interest rates. The groups interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk. The group analyses its interest rate exposure, its anticipated revenue from operations and the anticipated interest trends, and decides on the best financing options for the short, medium and long term. Traditionally, management have been averse to borrowing and have endeavoured to be self-financed. However, the positive benefits of gearing have been recognised and the group has geared itself ensuring adequate interest cover and an interest rate that is linked to prime. Based on the analysis performed by the group, the impact on post-tax profit of a 1% shift in interest
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(v) Commodity price risk The prices of commodities used by the group can fluctuate widely and in a competitive market it is not always possible to recover material commodity price increases from broiler customers. This can impact on the groups profitability. The group may suffer financial loss when a fluctuating price contract obligation is entered into and the commodity prices increase or when a fixed price agreement is entered into and commodity prices fall. Commodity price fluctuations are normally caused by factors such as supply conditions, weather, exchange rate fluctuations and other economic conditions. These risks are managed through an established process whereby the various conditions that influenced commodity prices are monitored on a daily basis. Decisions on the procurement of raw materials as well as the utilisation of derivative instruments to hedge against these risks are taken by executive management within board-approved mandates given. Detailed statements of raw-material contracts and hedging positions are prepared on a monthly basis.
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Cash flow forecasting is performed in the operating entities of the group and is aggregated by the group. Rolling forecasts of the groups liquidity requirements are monitored to ensure that the group has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the group does not breach borrowing limits or covenants on any of itsborrowing facilities. The table below analyses the groups financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12months equal their carrying balances as the impact of discounting is not significant. 2010 R Borrowings Less than 1 year Between 1 and 2years Between 2 and 5years Over 5 years 54 331 877 40 068 197 77 614 463 224 798 672 396 813 209 2009 R 38 965 229 32 199 126 275 227 613 255 328 672 601 720 641 2.24.2 Capital risk management The groups objectives when managing capital are to safeguard the groups ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the consolidated statement of financial position) less cash and cash equivalents. Total capital is calculated as equity as shown in the consolidated statement of financial position plus net debt. Financial covenants that the group is required to comply with for bank borrowings are monitored on a quarterly basis by the board in order to ensure compliance. The following covenants are to be maintained, namely gearing ratio not to exceed 1,50, debt service ratio not to be less than two times, general banking facility not to be less than three times covered by inventory and accounts receivable, and minimum interest cover of four times. The group currently complies with all covenants except for the interest cover. However, the non-compliance with this covenant does not have a negative impact on the group as these covenants relate to borrowings that are short term in nature.
2.24 Financial risk management (continued) 2.24.1 Financial risk factors (continued) (b) Credit risk Credit risk arises during the recognition of trade receivables due to the sale of goods and services. Except for one retailer who makes up about 18% of the accounts receivable, the group has no significant concentrations of credit risk. It has policies in place to ensure that wholesale sales of products are made to customers with an appropriate credit history. Should customers default with payments, alternative steps are taken to ensure collection of the outstanding balance is not at risk. Credit limits are followed up and monitored regularly. Credit risk also arises from our borrowings and cash deposits with banking institutions. The group uses only banking institutions that are reputable and well-known in the industry. Therefore, the credit risk here is not considered significant. Other borrowings with other entities does not hold significant risk for the group as these balances are not considered to be significant. (c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the group aims to maintain flexibility in funding by keeping committed credit lines available.
Trade and other payables Less than 1 year 177 074 124 177 074 124 Bank overdraft Less than 1 year 138 311 700 138 311 700
267 712 010 267 712 010 80 980 383 80 980 383
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The gearing ratios at statement of financial position date are as follows: 2010 R Total borrowings (note 15) Less: Cash and cashequivalents (note 11) Net debt Total equity Total capital Gearing ratio (%) 515 074 768 2009 R 477 362 970
assets held by the group is the current bid price. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The group uses a variety of methods and makes assumptions that are based on market conditions existing at each statement of financial position date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.
and liabilities within the next financial year are discussed below. Fair value of financial instruments The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The group uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at each statement of financial position date. The group has used discounted cash flow analysis for available-for-sale financial assets that were not traded in active markets.
(123 799 540) 391 275 228 382 849 364 774 124 592 51
(74 029 410) 403 333 560 263 544 766 597 104 53
FINANCIALS
2.24.3 Fair value estimations Effective 1 July 2009 the group adopted the amendment to IFRS 7 for financial instruments that are measured in the statement of financial position at fair value. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices) (level 2). Inputs for the asset or liability that are not based on observable market data (ie unobservable inputs) (level 3). The fair value of financial instruments traded in active markets (such as trading and availablefor-sale securities) is based on quoted market prices at the statement of financial position date. The quoted market price used for financial
Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The group makes estimates and assumptions concerning the future. The resulting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets
Fair value of biological assets The fair value of biological assets are determined with reference to the net realisable value of assets at year-end and making use of assumptions that are mainly based on market conditions existing at each statement of financial position date. These assumptions are made according to a formula, where the cost of broilers and other byproducts are adjusted to the fair value at each financial year-end. The determination of fair value is based on managements assessment of the fair value based on available data, which includes selling price of live birds, costs incurred and mortality ratios. Estimated impairment of goodwill The group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in note 2.7. The recoverable amounts of cash-generating units have been determined based on discounting of future cash flows. These calculations require the use of estimates.
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3 Critical accounting estimates and judgements (continued)
Recognition of deferred tax asset Deferred tax assets are recognised to the extent that it is probable that taxable income will be available in future against which they can be utilised. Business plans and forecasts are prepared annually and approved by the boards of the company. These plans and forecasts include estimates and assumptions regarding economic growth, interest rates, inflation and competitive forces. These plans contain profit forecasts and cash flows and these are utilised in the assessment of the recoverability of deferred tax assets. Management also exercises judgement in assessing the likelihood that business plans will be achieved and that the deferred tax assets are recoverable. Accruals and provisions The inclusion of accruals and provisions for the reporting period is based on a number of estimates due to the short timeframe from the end of the reporting period to the publication of the annual financial statements. Fair value of accounts receivable Refer to note 2.14 of the accounting policies as well as note 10 of the financial statements. Associates Associates are entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. However, if the shareholding is between 20% and 50% of the voting rights, the investment is not accounted for using the equity method of accounting where: the group does not have representation on the board of directors; the group does not participate in any policymaking processes, nor does the group participate in decisions about dividends or other distributions; there are no material transactions between the group and the entity; there is no interchange of managerial personnel; and there is no provision of essential technical information from either party to the other. Such an investment is accounted for at fair value through profit or loss. VAT treatment of listing fees Management was of the view that VAT on listing fees were claimable as input VAT. Some of the costs incurred related to the restructuring of the group and not directly to listing on the JSE. Management is of the view that the VAT on these restructuring costs is claimable as input VAT. During the current financial year SARS commenced with an investigation of the VAT claimed on these listing fees. This investigation was not finalised at yearend and it is therefore uncertain what the impact will be on the financial results. If SARS determines that the entire amount is not claimable as input VAT, VAT to the value of R758 400 would be repaid to SARS. However, should SARS agree that the VAT relating to the restructuring of the group is claimable, VAT to the value of R416 994 would be payable to SARS.
Impact of future amendments

Standards, amendments and interpretations effective in 2010 The following amendments and interpretations to standards are mandatory for the groups accounting periods beginning on or after 1July2009: IFRS 8 Operating Segments effective 1January 2009. The amendment requires an entity to adopt the management approach to reporting on the financial performance of its operating segments. The amendment does not have a material impact on the group financial statements. IFRS 7 Financial Instruments Disclosures (amendment) effective 1 January 2009. The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share. IAS 32 (amendment) Financial Instruments: Presentation and IAS 1 (amendment) Presentation of Financial Statements effective 1 January 2009. The amendment requires entities to classify certain types of financial instruments as equity, provided they have particular features and meet
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specific conditions. The amendment does not have a material impact on the group financial statements. IFRS 1 (revised) First-time Adoption of International Financial Reporting Standards and IAS 27 (revised) Consolidated and Separate Financial Statements effective 1January 2009. The amendments allow first-time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the companys financial statements. The amendment does not have an impact on the group or company financial statements. IAS 1 (revised) Presentation of Financial Statements effective 1 January 2009. This revised standard prohibits the presentation of items of income and expenses (ie nonowner changes in equity) in the statement of changes in equity, requiring non-owner changes in equity to be presented separately from owner changes in equity in a statement ofcomprehensive income. As a result the group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Comparative information has been re-presented so that it also is in conformity with the revised standard. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
IFRS 2 (amendment) Share-based Payment effective 1 January 2009 deals with vesting conditions and cancellations. It clarified that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. These features would need to be included in the grant date fair value for transactions with employees and others providing similar services. They would not impact the number of awards expected to vest or valuation thereof subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The amendment does not have a material impact on the group or companys financial statements. IAS 23 (revised) Borrowing Costs effective 1January 2009. In respect of borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after 1 January 2009, the group capitalises borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The group previously recognised all borrowing costs as an expense immediately. This change in accounting policy was due to the adoption of IAS23 Borrowing Costs (2007) in accordance with the transition provisions of the standard. Comparative figures have not been restated. The change in accounting policy had no material impact on earnings per share. IFRS 3 (revised) Business Combinations effective 1 July 2009. The new standard continues to apply the acquisition method to business combinations
with some significant changes. The revised standard does not have a material impact on the group financial statements for the current year. IAS 27 (revised) Consolidated and Separate FinancialStatements effective 1 July 2009. The revised standard requires the effects of all transactions with non-controlling interest to be recorded in equity if there is no change in control. The revised standard does not have a material impact on the group financial statements for the current year. IAS 39 (amended) Financial Instruments: Recognition and Measurement effective 1 July 2009. The amendment prohibits designating inflation as a hedgeable component of a fixed rate debt and it also prohibits including time value in the one-sided hedged risk when designating options as hedges. The amendment will not be applicable to the group since the group does not apply hedge accounting. Improvements to IFRS in terms of the annual improvements project effective 1 January 2009. These amendments are the result of conclusions the IASB reached on proposals made in its annual improvements project. The annual improvements project provides a vehicle for making nonurgent but necessary amendments to IFRS. The amendments do not have a material impact on the group or company financial statements. IFRIC 15 Agreements for the Construction of Real Estate effective 1 January 2009. IFRIC 15 addresses diversity in accounting for real estate sales. This guidance is not applicable to the group.
FINANCIALS
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4 Impact of future amendments (continued)
Standards, amendments and interpretations effective in 2010 (continued) IFRIC 16 Hedges of a Net Investment in a Foreign Operation effective 1 October 2008. IFRIC 16 clarifies the accounting treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences in functional currency not presentation currency, and hedging instruments may be held anywhere in the group. The requirements of IAS 21 The Effects of Changes in Foreign Exchange Rates do apply to the hedged item. IFRIC 16 will not be applicable to the group as the group does not apply net investment hedging. IFRIC 17 Distribution of Non-cash Assets to Owners effective 1 July 2008. IFRIC 17 provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. The interpretation does not have a material impact on the group or companys financial statements. IFRIC 18 Transfers of Assets from Customers effective 1 July 2009. This provides guidance on how to account for items of property, plant and equipment received from customers, or cash that is received and used to acquire or construct specific assets. The interpretation does not have a material impact on the group or companys financial statements. Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group. The following standards, amendments and interpretations to existing standards have been published and are mandatory for the groups accounting periods beginning on or after 1January 2010 or later periods, but the group has not early adopted them: IFRS 2 (amendment) Group Cash-settled Share-based Payment Transactions effective 1 January 2010. The amendment clarifies the accounting for group cash-settled share-based payment transactions. The amendment will not have a material impact on the groups financial statements. IAS 32 (amendment) Financial Instruments: Presentation effective 1 February 2010. The amendment clarifies the accounting treatment when rights issues are denominated in a currency other than the functional currency of the issuer. The amendment will not have a material impact on the groups financial statements. IAS 24 (amendment) Related-party Disclosures effective 1 January 2011. This amendment provides partial relief from the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. The amendment is not applicable to the group. IFRS 9 Financial Instruments effective 1 January 2013. This standard addresses classification and measurement of financial assets and replaces the multiple classification and measurement models in IAS 39 with a single model. The impact of the new standard on the group financial statements is still to be assessed. IFRS 1 (amendment) First-time Adoption of International Financial Reporting Standards effective 1 July 2010. This amendment provides first-time adopters with the same transition provisions as included in the amendment to IFRS 7Financial Instruments: Disclosures. The amendment is not applicable to the group. Improvements to IFRS in terms of the annual improvements project effective 1 January 2010. These amendments are the result of conclusions the IASB reached on proposals made in its annual improvements project. The annual improvements project provides a vehicle for making nonurgent but necessary amendments to IFRS. The amendments do not have a material impact on the group or company financial statements. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments effective 1 July 2010. This IFRIC clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is extinguished through the debtor issuing its own equity instruments to the creditor. This guidance is not expected to have a material impact on the group or company financial statements. IFRIC 14 Prepayments of a Minimum Funding Requirement effective 1 January 2011. This amendment will not have an impact on the group or companys financial statements as it applies only to companies that are required to make minimum funding contributions to a defined benefit pension plan.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Segmental information
Management has determined the reportable segments based on reports reviewed by the executive committee that are used to make strategic decisions. The committee considers the business from both a geographic and a product perspective. Geographically, the executive committee considers the performance in South Africa and other Africa regions. These segments are then segregated into poultry, animal nutrition and beef. The executive committee assesses the performance of the reportable segments based on operating profit and revenue and is therefore consistent with that of the financial statements. The totals provided to the executive committee with respect to total liabilities and total assets are measured in a manner consistent with that of the financial statements and are allocated based on the operations of the segment. Therefore, reconciliations between this segment report and the financial statements is not required. 2010 R Poultry South Africa Other Africa Intersegment revenue Animal nutrition South Africa Other Africa Intersegment revenue Beef 2009 R 2010 R 2009 R
Revenue 1 646 238 954 1 614 442 449 1 514 097 895 1 512 536 485 144 705 655 168 813 767 (12 564 596) (66 907 803) 493 431 411 448 821 604 927 209 912 840 527 779 190 551 443 190 755 505 (624 329 944) (582 461 680) 293 989 774 175 734 796 2 433 660 139 2 238 998 849 Assets 811 995 730 682 482 368 129 513 362 476 018 408 359 272 004 116 746 404 28 437 396 1 316 451 534 785 246 347 657 714 970 127 531 377 456 632 959 335 892 490 120 740 469 29 403 655 1 271 282 961
Operating profit 84 907 254 164 067 360 90 120 945 155 012 771 (5 213 691) 9 054 589 38 140 804 19 314 875 27 205 097 10 758 533 10 935 707 8 556 342 (821 143) 3 235 591 122 226 915 186 617 826 Liabilities 454 444 780 435 391 835 19 052 945 421 845 852 313 529 580 108 316 272 57 311 538 933 602 170 417 220 131 406 052 799 11 167 332 452 289 652 330 488 222 121 801 430 38 509 634 908 019 417
FINANCIALS
Poultry South Africa Other Africa Animal nutrition South Africa Other Africa Beef
Poultry South Africa Other Africa Animal nutrition South Africa Other Africa Beef
Capital expenditure Depreciation 52 809 073 46 204 492 22 731 966 18 639 280 47 268 286 31 093 579 17 502 392 14 505 316 5 540 787 15 110 913 5 229 574 4 133 964 18 108 750 52 660 735 7 961 124 6 013 605 15 321 236 29 369 874 4 468 766 3 548 728 2 787 514 23 290 861 3 492 358 2 464 877 2 877 934 1 643 989 437 934 202 635 73 795 757 100 509 216 31 131 024 24 855 520 Revenues of approximately R230 848 380 (2009: R190 094 392) are derived from a single external customer. These revenues are attributable to the South African Poultry segment.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Land and buildings R
Plant and equipment R
Furniture and computers R
Vehicles R
Work in progress R
Total R
Property, plant and equipment

Year ended 30 June 2009 Carrying value at beginning of year Cost price Accumulated depreciation Additions Acquisition of subsidiary (note 29) Disposals Cost price Accumulated depreciation Depreciation Reclassification Carrying value at end of year Cost price Accumulated depreciation 117 827 472 148 462 977 (30 635 505) 10 559 368 14 834 969 (4 306 150) 138 915 659 174 704 588 (35 788 929) 149 638 891 240 763 875 (91 124 984) 46 213 524 21 381 037 (1 664 767) (1 786 448) 121 681 (17 553 455) 3 113 465 201 128 696 316 800 825 (115 672 129) 1 687 811 5 119 279 (3 431 468) 1 171 131 145 429 (1 902) (2 392) 490 (802 205) 2 200 263 7 400 394 (5 200 131) 5 123 450 13 621 813 (8 498 363) 4 608 029 975 577 (131 079) (380 436) 249 357 (2 193 710) 8 382 269 19 393 654 (11 011 385) 7 373 785 7 373 785 (469 353) 1 089 503 (3 113 465) 4 880 470 4 880 470 281 651 409 415 341 729 (133 690 320) 62 082 700 38 426 516 (1 797 748) (2 169 276) 371 528 (24 855 520) 355 507 357 523 179 931 (167 672 574)
Year ended 30 June 2010 Carrying value at beginning of year 138 915 659 201 128 696 2 200 263 8 382 269 4 880 470 355 507 357 Cost price 174 704 588 316 800 825 7 400 394 19 393 654 4 880 470 523 179 931 Accumulated depreciation (35 788 929) (115 672 129) (5 200 131) (11 011 385) (167 672 574) Additions 5 437 147 51 440 811 1 763 921 5 595 224 9 558 654 73 795 757 Disposals (746 410) (4 362) (265 654) (1 016 426) Cost price (2 663 586) (18 820) (1 039 750) (3 722 156) Accumulated depreciation 1 917 176 14 458 774 096 2 705 730 Depreciation (4 583 770) (22 681 636) (1 103 113) (2 762 505) (31 131 024) Carrying value at end of year 139 769 036 229 141 461 2 856 709 10 949 334 14 439 124 397 155 664 Cost price 180 141 735 365 578 050 9 145 495 23 949 128 14 439 124 593 253 532 Accumulated depreciation (40 372 699) (136 436 589) (6 288 786) (12 999 794) (196 097 868) A general notarial bond to the value of R18 584 552 (2009: R11 269 869) is registered over land and buildings and R70 000 000 (2009: R70 000 000) is registered over loose assets as security for facilities granted to the group. Certain movable assets with a book value of R38 656 485 (2009: R21 402 534) are encumbered as security for instalment sales agreements as stated in note 16. Depreciation expense of R28 891 425 (2009: R22 523 170) has been charged in cost of goods sold and R2 239 599 (2009: R2 332 351) in other operating expenses. Lease rentals amounting to R9 333 447 (2009: R9 202 608) relating to the lease of machinery, property and office equipment are included in the statement of comprehensive income (note 19). A register of land and buildings is available for inspection at the registered office of the group in accordance with section 22(3) of schedule 4 of the Companies Act.
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Brand name R
Goodwill R
Customer relationships R
Total R
Intangible assets
Year ended 30 June 2009 Carrying value at beginning of year Cost price Accumulated amortisation Acquisition of subsidiaries (note 29) Acquisition of brand name Exchange differences Amortisation charge Carrying value at end of year Cost price Accumulated depreciation Year ended 30 June 2010 Carrying value at beginning of year Cost price Accumulated amortisation Acquisition of brand name Exchange differences Amortisation charge Carrying value at end of year Cost price Accumulated depreciation Amortisation is included in other expenses in the statement of comprehensive income. 456 000 480 000 (24 000) 4 813 223 438 597 (188 318) 5 519 502 5 731 820 (212 318) 15 065 865 15 065 865 68 886 102 389 517 84 341 484 84 341 484 5 414 072 (180 469) 5 233 603 5 414 072 (180 469) 15 521 865 15 545 865 (24 000) 79 113 397 438 597 389 517 (368 787) 95 094 589 95 487 376 (392 787)
FINANCIALS
5 519 502 5 731 820 (212 318) 40 663 (282 418) 5 277 747 5 772 483 (494 736)
84 341 484 84 341 484 (187 323) 84 154 161 84 154 161
5 233 603 5 414 072 (180 469) (270 704) 4 962 899 5 414 072 (451 173)
95 094 589 95 487 376 (392 787) 40 663 (187 323) (553 122) 94 394 807 95 340 716 (945 909)
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2010 R
2009 R
Intangible assets (continued) Impairment tests for goodwill

Goodwill is allocated to the groups cash-generating units (CGUs) identified according to operating segment. A summary of goodwill by segment is as follows: Animal nutrition Poultry Beef The recoverable amount of the relevant CGUs 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. Key assumptions used for value-in-use calculations are as follows: % Growth rate Poultry Beef Discount rate2 Animal nutrition Poultry Beef
1 2 1
84 154 161 75 697 925 2 698 010 5 758 226
84 341 484 75 697 924 2 885 334 5 758 226
% 3 5 7 19,35 16,99 21,03
Animal nutrition
3 5 5 18,9 22,8 13,9
Weighted average growth rate used to extrapolate cash flows beyond the budget period. Pre-tax discount rate applied to the cash flow projections. Rates varied from 13,9% to 22,8%.
These assumptions have been used for the analysis of each CGU within the operating segment. Goodwill 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.
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2010 R
2009 R 72 044 623 30 312 30 312 71 920 415 93 896 93 896
Financial assets and other investments

Total financial assets and other investments Unlisted shares at cost price: Vetlab Limited Listed shares at fair value: Sovereign Food Investment Limited Loan accounts: Other loans 383 763 133 200 133 200 250 563 250 563
The fair value of the shares in Vetlab Limited could not be determined reliably because it is not openly traded and therefore the market value cannot be determined. The unlisted shares are measured at cost. The price risk for investments carried at cost is not calculated as they are not significant to the group. Sovereign Food Investment Limited was designated as a financial asset at fair value through profit or loss. This investment was disposed of during the current financial year. Loans are classified as loans and receivables and are measured at amortised 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. Changes in fair values of financial assets at fair value through profit or loss are recorded in other gains and losses in the statement of comprehensive income (note 18). None of these financial assets are either past due or impaired. The maximum exposure of the loan account to credit risk at the reporting date is the carrying value of the financial assets. The fair value of all securities is based on their current bid prices in an active market.
FINANCIALS
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2010 R
2009 R
Investments in associates
Shares at cost Share of retained profit/(loss) Loans to associate Total investment in associates Reconciliation of carrying value: Total investment in associates Balance at beginning of year Interest accrued on loan account Loan recovered from associate Share of profit/(loss) of associates Share of loss in associate after tax On 28 November 2008 the group sold its 18% shareholding in Elite Breeding Farms and Kayfour Investments (Pty) Limited for the amount of R25 million, realising a profit of R18,5million (note 32). 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 loan. The company has subordinated its claim against the company in respect of its loan account in favour of other creditors. The groups share of the results of its principal associates, all of which are unlisted, and its share of the assets and liabilities are as follows: Silver Blade Abattoir (Pty) Limited Assets Liabilities Revenues Profit/(loss) Interest held (%) 2 905 299 5 655 581 5 069 096 (416 760) 37,5 3 457 825 5 791 348 4 893 480 (785 047) 37,5 9 212 781 8 458 625 1 170 916 (416 760) (416 760) 8 458 625 14 146 252 1 432 543 (6 335 123) (785 047) (785 047) 38 (2 750 320) (2 750 282) 11 963 063 9 212 781 78 (2 333 560) (2 333 482) 10 792 107 8 458 625
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Investments in associates (continued)

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: 2010 % Growth rate1 Discount rate2
1 2
5 13,9
Weighted average growth rate used to extrapolate cash flows beyond the budget period. 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.
FINANCIALS
6a
Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below: 2010 R Loans and receivables Assets per statement of financial position Trade and other receivables Other financial assets Cash and cash equivalents Available-for-sale financial assets Assets per statement of financial position Other financial assets Assets at fair value through profit or loss Assets per statement of financial position Other financial assets Other financial liabilities at amortised cost Liabilities per statement of financial position Borrowings Trade and other payables excluding statutory liabilities 2009 R
365 689 200 9 463 344 123 799 540
320 499 242 8 552 520 74 029 410
133 200
30 312
71 920 415
515 074 768 177 074 124
477 362 970 267 712 010
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6b
Credit quality of financial assets (continued)

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. 2010 R Trade receivables Counterparties without external credit rating Group 1 Group 2 Group 3 Group 4 Cash and cash equivalents Moodys investor service: A3 Standard and Poors: BBB+ AA Group 1: New customers/related parties (less than six months). Group 2: Existing customers/related parties (more than six months) with no defaults in the past. Group 3: Existing customers/related parties (more than six months) with some defaults in the past. All defaults were fully recovered. Group 4: Existing customers (more than six months) with defaults and the balance considered to be impaired. None of the loans to related parties are past due but not impaired. 5 397 050 16 290 692 977 117 983 889 97 454 661 379 070 252 10 348 312 302 961 489 49 156 452 16 603 999 328 249 899 4 183 458 267 057 528 52 674 485 4 334 428 2009 R
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2010 R
2009 R
Deferred 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 liabilities (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 Deferred tax liability to be recovered after more than 12 months 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% (2009: 28%). The movements on the deferred tax account are as follows: Closing net deferred tax asset/(liability) At beginning of the year Change in tax rate in foreign tax Acquisition of subsidiary Exchange rate differences Charged to statement of comprehensive income (note 21) Capital allowances Fair value adjustments Estimated tax losses Other Deferred tax assets and liabilities are attributable to the following items: Deferred tax assets and liabilities Capital allowances Fair value adjustments Estimated tax losses Other (49 286 108) (64 583 516) (19 369 903) 31 102 393 3 564 918 (35 980 613) (58 738 838) (12 886 599) 38 395 868 (2 751 044) (49 286 108) (35 980 613) (10 034) (415 084) (12 880 377) (5 844 678) (6 483 304) (7 293 476) 6 741 081 (35 980 613) (30 162 991) (1 450 223) 3 647 568 (8 014 967) (10 602 523) (26 894 094) 4 315 838 25 165 812 (49 286 108) 40 229 408 31 102 393 9 127 015 (89 515 516) (64 583 516) (24 932 000) (35 980 613) 45 690 280 38 395 868 7 294 412 (81 670 893) (58 738 838)
FINANCIALS
(22 932 055)
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.
page 72

2010 R
2009 R 125 525 960 50 227 398 49 705 316 25 593 246
Inventories
Total inventories Raw materials Finished goods Consumables The cost of inventories recognised as expense and included in cost of sales amounted to R1 715 012 464 (2009: R1 607 417 892) (note 19). 128 170 500 51 259 265 41 623 923 35 287 312
Biological assets
Total biological assets Breeding stock* At the end of the year at fair value At the beginning of the year Increase due to established costs Decrease due to harvest and sales Exchange rate differences Gain arising from changes in fair values due to physical changes less point-of-sale cost Broiler stock** At the end of the year at fair value At the beginning of the year Increase due to established costs Decrease due to harvest and sales Exchange rate differences Gain arising from changes in fair values due to physical changes less point-of-sale cost Egg stock*** At the end of the year at fair value At the beginning of the year Increase due to established costs Decrease due to harvest and sales Exchange rate differences Gain arising from changes in fair values less point-of-sale cost 131 265 898 57 986 309 58 824 243 243 623 576 (247 151 763) (755 904) 3 446 157 57 418 329 63 530 351 1 083 742 780 (1 115 022 831) (86 961) 25 254 990 15 861 260 17 212 877 348 250 453 (354 078 123) (205 104) 4 681 157 139 567 471 58 824 243 59 785 586 261 065 668 (256 425 198) (6 693 029) 1 091 216 63 530 351 55 310 831 1 981 126 707 (1 978 737 211) (68 825) 5 898 849 17 212 877 19 872 985 331 132 989 (336 558 645) (1 777 989) 4 543 537
The group is exposed to financial risks arising from changes in commodity prices. These risks are managed through an established process whereby the various conditions that influenced commodity prices are monitored on a daily basis. Decisions on the procurement of raw materials as well as the utilisation of derivative instruments to hedge against these risks are taken by executive management within board-approved mandates given. The fair value of biological assets are determined with reference to the fair value less cost to sell at year-end and making use of assumptions that are mainly based on market conditions existing at each statement of financial position date.
*Birds kept for the purpose of producing hatching eggs. **Birds grown to be harvested. ***Eggs to be hatched.
page 73
2010 R
2009 R 346 514 967 328 249 899 (7 750 657) 320 499 242 1 395 680 24 620 045
10
Trade and other receivables

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 effect of this adjustment was recognised as other income (note 18). The carrying amounts of trade and other receivables approximate their fair values. As at statement of financial position date, trade receivables of R338 552 432 (2009: R274 405 290) 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 R27 136 768 (2009: R46 093 952) 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 of these trade receivables is as follows: Up to three months From three to six months Longer than six months The carrying amounts of the groups trade and other receivables are denominated in the following currencies: SA rand US dollar Botswana pula Zambian kwacha As at statement of financial position date, trade receivables of R13 387 114 (2009: R18 438 298) were impaired and provided for. The amount of the provision was R13 381 014 (2009: R7 750 657). The individually impaired receivables relate to customers in unexpectedly difficult economic situations. It was assessed that a portion of the receivables is expected to be recovered. The ageing of these receivables is as follows: Up to three months From three to six months Longer than six months
384 143 026 379 070 214 (13 381 014) 365 689 200 1 884 578 16 569 248
FINANCIALS
22 760 134 4 337 294 39 340 27 136 768 329 034 659 7 380 709 40 699 714 7 027 944 384 143 026
44 104 728 1 989 224 46 093 952 290 645 835 10 668 246 42 153 952 3 046 934 346 514 967
733 534 5 504 825 7 148 755 13 387 114
13 286 810 2 455 123 2 696 365 18 438 298
page 74

2010 R
2009 R
10
Trade and other receivables (continued)

Movements on the group provision for impairment of trade receivables are as follows: At 1 July Provision for receivables impairment Receivables written off during the year as uncollectable Unused amounts reversed Exchange difference At 30 June 2010 The creation and release of provision for impaired receivables have been included in other expenses in the statement of comprehensive income (note 19). Amounts charged to the provision account are generally written off when there is no expectation of recovering additional cash. The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The group does not hold any collateral as security. Trade receivables are ceded as security for facilities granted to the group as stated in notes 11 and 15. 7 750 657 15 929 240 (10 229 423) (47 310) (22 150) 13 381 014 5 029 544 6 795 604 (2 153 233) (1 716 358) (204 900) 7 750 657
11
Cash and cash equivalents

Bank balances 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 15)
123 799 540 123 380 939 418 601 (14 512 160) 123 799 540 (138 311 700)
74 029 410 73 163 928 865 482 (6 950 973) 74 029 410 (80 980 383)
Bank overdrafts bear interest at the South African and Botswana prime rate of 10%. The general overdraft and loan facilities of the group are secured by the cession of all present and future debtors and letters of suretyship. The facilities also require that certain covenants be maintained, namely gearing ratio not to exceed 1,50, debt service ratio not to be less than two times, general banking facility not to be less than three times covered by inventory and accounts receivable, and minimum interest cover of four times.
page 75
2010 R
2009 R
12
Share capital and share premium

Authorised shares 300 000 000 ordinary shares of 1 cent per share Ordinary shares 187 099 313 ordinary shares of 1 cent per share Shares issued to share incentive trust Treasury shares held by CBH Share Trust Issued share capital is fully paid up. Share premium At end of year At beginning of year Capital distribution (note 26) Share issue and listing expenses Shares issued to share incentive trust Treasury shares held by CBH Share Trust The group issued 14 970 000 shares on 15 December 2009 to the CBH Share Incentive Scheme at R1 per share. The shares are held as treasury shares by the group. Share options Share options are granted to selected directors and employees. The exercise price of the granted option is equal to R1 each. Options are conditional on the employee completing three years 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. 795 886 780 825 720 732 (29 804 921) (29 032) 14 820 300 (14 820 300) 825 720 732 825 720 732 3 000 000 3 000 000 1 870 993 1 870 993 149 700 (149 700) 3 000 000 3 000 000 1 870 993 1 870 993
FINANCIALS
page 76

12
Share capital and share premium (continued)

Movements in the number of share options outstanding and their related exercise prices are as follows: Exercise price in R per share 1 1 1 1 1 Options 2 191 000 2 590 000 4 781 000 4 781 000 4 400 000 (692 000) 8 489 000
At 1 July 2008 Granted Forfeited Exercised Expired At 30 June 2009 At 1 July 2009 Granted Forfeited Exercised Expired At 30 June 2010 Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Exercise price Expiry date in R per share Shares 1 July 2010 1 1 491 000 17 September 2010 1 700 000 1 July 2011 1 2 590 000 At 30 June 2009 4 781 000 1 July 2010 1 889 000 17 September 2010 1 700 000 1 July 2011 1 6 900 000 At 30 June 2010 8 489 000 On 1 July 2007, 1 491 000 share options were granted to directors and employees with an exercise price of R1 per share. Share options outstanding have an expiry date of 1July2010. On 17 September 2007, 700 000 share options were granted to directors and employees with an exercise price of R1 per share. Share options outstanding have an expiry date of 17 September 2010. On 26 March 2009, 2 590 000 share options were granted to directors and employees with an exercise price of R1 per share. Share options outstanding have an expiry date of 1July 2011. On 23 November 2009, 4 400 000 share options were granted to directors with an exercise price of R1 per share. Share options outstanding have an expiry date of 1 July 2011.
page 77
12
Share capital and share premium (continued) The weighted average fair value of options granted during the period as determined using the binomial tree option valuation model was R0,82 (2009: R1,03) per option. The significant inputs into the model were:
share price of R1,76 (2009: R1,90) at the grant date; exercise price of R1 (2009: R1) per option; volatility of 41,3% (2009: 5,8%); dividend yield of 1,66% (2009: 1,54%); expected option life of three years; and annual risk-free interest rate of 9,75%. 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 23 for the total expense recognised in the statement of comprehensive income for share options granted to directors and employees.
FINANCIALS
2010 R
2009 R 15 021 482 (3 945 134) 9 235 666 (13 180 800)
13
Other reserves
Translation reserve At end of year Balance at beginning of year Currency translation differences The translation reserve was recognised by the group due to the foreign exchange differences incurred on conversion of the foreign subsidiaries into rand. Share-based payment reserve At end of year Opening balance Employee share scheme Acquisition of BEE share option (note 32)
17 435 355 (5 713 657) (3 945 134) (1 768 523)
23 149 012 18 966 616 4 765 167 (582 771)
18 966 616 15 123 272 3 843 344
14
Common control reserve

At end of year Opening balance (832 110 761) (832 110 761) (832 110 761) (832 110 761)
The common control deficit is in terms of the predecessor method of accounting in terms of which the difference between the purchase consideration and the carrying value of the net assets acquired is recorded directly in equity.
page 78

2010 R
2009 R
15
Borrowings
Secured loans Bank borrowings Instalment sales agreements Other short-term borrowings Bank overdraft Unsecured loans Other borrowings Total borrowings Current portion of borrowings Bank borrowings Instalment sale agreements Other borrowings Non-current portion of borrowings Bank borrowings Bank borrowings bear interest at varying interest rates linked to the South African, Botswana and Zambian prime rate. The bank borrowings are secured by the following: cession of all present and future debtors, cession of loan and creditor loan accounts, limited and unlimited suretyships, general notarial bond over moveable assets, mortgage bonds over certain properties in the North West Province and subordination of certain loan accounts. The loans are repayable over periods varying from two to six years. 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. Refer to note 11. Instalment sale agreements The instalment sale agreements are secured by vehicles and equipment with a carrying value of R38 656 485 (2009: R21 402 534). The effective interest rates at the statement of financial position date varied according to South African prime rate and the loans are repayable over periods varying from two to five years. Monthly instalments vary from R2 402 and R275 580. Instalment sale agreements minimum payments: Not later than one year Later than one year and not later than five years Future finance charges on instalment sale agreements Present value of liabilities Present value of liabilities: Not later than one year Later than one year and not later than five years Present value of liabilities 12 871 316 25 152 836 38 024 152 (5 679 496) 32 344 656 10 228 647 22 116 009 32 344 656 9 666 743 6 640 460 16 307 203 (1 691 974) 14 615 229 8 570 217 6 045 012 14 615 229 258 786 438 88 130 082 32 344 656 138 311 700 256 288 330 256 288 330 515 074 768 169 419 360 155 742 967 13 676 393 345 655 408 207 316 989 111 721 377 14 615 229 80 980 383 270 045 981 270 045 981 477 362 970 122 057 088 96 082 517 13 933 551 12 041 020 355 305 882
page 79
2010 R
2009 R
15
Borrowings (continued)
Other borrowings Other borrowings to the value of R243 986 878 bear interest at South African prime rate (2009: South African prime less 2%). This loan was subject to a two-tiered rate that changed during the loan period during the previous year. All other borrowings 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 10% (2009: 11%). No limit has been placed in the articles of association on the borrowing powers of the company.
16
Trade and other 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 19). The carrying amounts of trade and other payables approximate their fair values.
326 256 645 177 074 124 127 588 238 21 594 283
347 962 169 267 712 010 58 136 106 22 114 053
FINANCIALS
17
Provision for other liabilities and charges

Total provision Opening balance Charged to the statement of comprehensive income: Additional provisions Unused amounts reversed Consisting of: Product liability claims Product liability claims This provision relates to claims instituted against the group for alleged damages suffered by customers as a result of feed supplied. The claims are being addressed by the management via quality control procedures and are expected to be settled within the next financial year. There are uncertainties as to the validity of these claims and the claims therefore need to be considered by management through their quality control procedures. 59 956 1 082 615 1 082 615 756 507 (600 000) 1 022 659 1 022 659 1 082 615 1 022 659 1 022 659 866 152
page 80

2010 R
2009 R 72 851 004 791 221 18 466 895 15 629 237 29 010 635 607 689 2 517 539 5 827 788
18
Other gains and losses

Profit from sale of property, plant and equipment Profit from sale of associate Loss from sale of financial assets and other investments Fair value gain/(loss) on financial assets at fair value through profit or loss Interest earned on debtors Foreign exchange gain/(loss) Management fees Sundry income
5 613 822 145 542 (4 551 559) (8 197 523) 15 850 074 (1 387 516) 300 000 3 454 804
19
Expenses by nature
Total cost of sales and other expenses Changes in inventory finished goods Raw materials and consumables Gain arising from changes in fair values less point-of-sale cost Depreciation, amortisation and impairment costs Employee benefit expense Maintenance Transportation costs Operating leases Other expenses 2 317 047 047 1 009 235 043 705 777 422 (33 382 301) 31 162 993 266 672 190 53 959 652 124 712 918 9 333 447 149 575 683 2 125 232 027 1 016 842 806 590 575 086 (11 533 601) 24 855 520 224 656 844 46 259 568 120 038 466 9 202 608 104 334 730
20
Finance income and costs

Finance income Bank Investment income Finance costs Long-term loans Bank loans, medium-term loan and overdrafts Other Net finance costs 2 042 346 1 920 182 122 164 (47 563 019) (29 760 213) (17 800 908) (1 898) (45 520 673) 3 252 512 1 098 594 2 153 918 (50 833 450) (39 646 893) (8 373 115) (2 813 442) (47 580 938)
page 81
2010 R
2009 R (12 672 758) (2 337 759) (2 320 032) (8 014 967) % 9,16 28,00 (0,94) (1,76) 1,68 0,45 (1,87) (16,40) 0,00
21
Income tax expense

Current tax Change in tax rate in foreign tax Secondary tax on companies Deferred tax (note 7) The tax on the groups 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 Standard rate of taxation applicable to profits in the respective countries Adjusted for: Foreign tax rate differential Net non-taxable and non-deductible items Secondary tax on companies Prior year over/(under) provision Capital gain Impairment losses Assessed losses forfeited The weighted average applicable tax rate was 28% (2009: 28%). Estimated assessable losses for set-off against future taxable income is R101 948 410 (2009: R125 530 023). Unutilised capital expenditure in terms of the Income Tax Act is Rnil (2009: R7103 125).
(21 394 872) (8 504 464) (10 031) (12 880 377) % 31,28 28,00 (1,90) 3,35 0,00 (1,93) 0,00 0,00 3,77
FINANCIALS
22
Employee benefit expense

Salaries and wages Share options granted to directors and employees Leave and bonus pay accrual Other employee benefits Other employee benefits consists inter alia of the following expenses: motor allowances, motor running costs, staff catering and protective clothing.
R 266 672 191 252 311 547 5 101 304 181 844 9 077 496
R 224 656 844 213 988 999 3 384 605 1 727 607 5 555 633
page 82

2010 R
2009 R
23
Executive directors Salary Performance-related bonus Retirement fund contributions Other benefits and allowances Share option expense Non-executive directors fees These emoluments relate to all amounts paid by both the company and its subsidiaries. Refer to the directors remuneration report for a detailed analysis of amounts paid to directors. 13 776 229 8 748 366 134 269 222 434 4 671 160 429 660 11 491 248 8 466 228 2 500 000 41 914 169 134 313 972 347 200
24
Auditors remuneration
Audit fees Other
3 572 150 3 436 310 135 840
3 353 522 3 263 107 90 415
25
Earnings per share

(a) Basic Basic earnings per share is calculated by dividing the profit attributable to the owners of the parent by the weighted average number of ordinary shares in issue during the year excluding ordinary shares held as treasury shares. Profit for the year attributable to the owners of the parent used for calculating earnings per share Number of ordinary shares in issue during the year for calculating earnings per share Basic earnings per share (cents) (b) Diluted Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The company has one category of dilutive potential ordinary shares via share options. A calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the companys shares) based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares calculated below is compared with the number of shares that would have been issued assuming the exercise of the share options. 44 353 532 187 099 313 23,71 123 004 686 187 099 313 65,74
page 83
2010 R
2009 R
25
Earnings per share (continued)

Profit for the year, attributable to the owners of the parent, used for calculating diluted earnings per share Number of ordinary shares in issue Adjusted for share options Number of ordinary shares in issue during the year for calculating diluted earnings per share Diluted earnings per share (cents) (c) Headline Headline earnings reconciliations Headline earnings Profit for the year attributable to the owners of the parent Profit on sale of property, plant and equipment Profit from sale of associate Taxation on profit or loss Number of ordinary shares in issue during the year for calculating headline earnings per share Headline earnings per share (cents) Diluted headline earnings per share (cents) 44 248 820 44 353 532 (111 046) 6 334 187 099 313 23,65 23,25 106 747 993 123 004 686 (503 049) (15 881 530) 127 886 187 099 313 57,05 56,74 44 353 532 187 099 313 3 196 723 190 296 036 23,31 123 004 686 187 099 313 1 029 731 188 129 044 65,38
FINANCIALS
26
Dividends and capital repayment

The capital repayment paid in 2010 was R29 804 921 (15,93 cents per share). In 2009 a dividend of R23 200 315 (12,4 cents per share) was paid. A capital repayment of 1,47 cents per share was declared by the board of directors on 20 August 2010. The total capital repayment of R2 756 540 will be paid on 29 November 2010.
27
Related-party transactions
Related-party relationships exist between Country Bird Holdings Limited and its subsidiaries and associates. Supreme Distributors Kimberley (Pty) Limited, Supreme Distributors Bloemfontein (Pty) Limited and Arbor Acres South Africa (Pty) Limited are companies controlled by the families of directors of the group. Fouries Poultry Farms (Pty) Limited held 50% interest until October 2008 in Nutri Feeds (Pty) Limited and Hollyberry Props 40 (Pty) Limited. Country Bird Holdings Limited held the other 50% until October 2008 and 100% thereafter. Country Bird (Pty) Limited, a subsidiary of Country Bird Holdings Limited, held an 18% interest in Elite Breeding Farms until November 2008. Associated Investment Development Corporation (AIDC) (Pty) Limited has a significant shareholding in Tswana Pride (Pty) Limited, Coldline (Pty) Limited and Ross Breeders (Botswana) (Pty) Limited, a subsidiary of Ross Africa Limited. AIDC (Pty) Limited owns 40% of Ross Breeders (Botswana) (Pty) Limited. Shamva Meats (Pty) Limited has a significant shareholding in Silver Blade Abattoir (Pty) Limited, an associate of Country Bird Holdings Limited.
page 84

2010 R
2009 R
27
Related-party transactions (continued)

The following transactions were carried out with related parties: Sales of goods Supreme Distributors Kimberley (Pty) Limited Arbor Acres South Africa (Pty) Limited Tswana Pride (Pty) Limited Supreme Distributors Bloemfontein (Pty) Limited Coldline (Pty) Limited Silver Blade Abattoir (Pty) Limited Purchases of goods Arbor Acres South Africa (Pty) Limited Tswana Pride (Pty) Limited Silver Blade Abattoir (Pty) Limited Supreme Distributors Bloemfontein (Pty) Limited AIDC (Pty) Limited Coldline (Pty) Limited Outstanding balances arising from purchase of goods Coldline (Pty) Limited Tswana Pride (Pty) Limited Arbor Acres South Africa (Pty) Limited Silver Blade Abattoir (Pty) Limited Supreme Distributors Kimberley (Pty) Limited 543 318 277 46 461 474 1 785 686 49 985 937 416 495 221 28 392 786 197 173 55 648 089 27 601 020 13 526 870 11 914 899 2 029 853 575 447 1 238 101 46 584 55 821 876 710 258 986 509 093 316 52 095 384 1 282 829 52 636 360 359 352 119 43 717 421 9 203 69 073 949 27 442 375 478 718 27 166 035 9 610 032 3 752 361 624 428 5 346 767 256 248 5 073 193 17 326
The payables to related parties arise mainly from purchase transactions and are subject to the same terms and conditions applicable to all customers. The payables bear no interest.
page 85
2010 R
2009 R
27

Outstanding balances arising from sale of goods Supreme Distributors Kimberley (Pty) Limited Supreme Distributors Bloemfontein (Pty) Limited Silver Blade Abattoir (Pty) Limited Arbor Acres (Pty) Limited Tswana Pride (Pty) Limited Coldline (Pty) Limited The payables from related parties arise mainly from purchase transactions and are subject to the same terms and conditions applicable to all customers. The payables bear no interest. Loans to associates Loan to Silver Blade Abattoir (Pty) Limited At the beginning of the year Interest accrued on loan account 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 loan. Loans from related parties Loan from Synapp International Limited At the beginning of the year Loans advanced/(repaid) during the year Interest accrued on loan account The loan from Synapp International Limited bears interest at the South African prime rate (2009: prime less 2%). No fixed terms ofrepayment have been set and no security was provided for the repayment of the loan. Loan from Fouries Poultry Farms (Pty) Limited At the beginning of the year Loans advanced/(repaid) during the year Interest accrued on loan account The loan from Fouries Poultry Farms (Pty) Limited bears no interest. The loan was repaid during 2009. 2 566 829 (2 566 829) (256 288 331) (256 294 550) 22 918 295 (22 912 076) (256 294 550) (144 144 056) (83 339 358) (28 811 136) 11 963 063 10 792 147 1 170 916 10 792 147 9 359 605 1 432 542 92 046 982 7 845 027 73 683 748 6 565 313 637 4 709 676 5 488 329 108 212 028 4 367 849 87 637 462 214 765 12 853 963 3 137 989
FINANCIALS
page 86

2010 R
2009 R
27

Loan from AIDC (Pty) Limited At the beginning of the year Loans advanced/(repaid) during the year Interest accrued on loan account The loan from AIDC (Pty) Limited bears interest at 12% per annum. The loan was repaid during 2009. Key management compensation Fees for services as directors Basic salaries Bonuses and performance-related payments Other allowances and fringe benefits Medical aid contributions Other Retirement benefit contributions Share option expense Directors of subsidiary companies fulfil the role of key management. 25 197 255 16 660 792 30 566 452 473 143 939 383 939 261 727 7 263 819 23 387 486 219 719 16 928 605 4 200 000 241 781 157 092 404 321 82 078 1 153 890 23 357 650 (23 450 649) 92 999
28
Commitments
Other commitments Raw material purchases contracted for at the statement of financial position date but not yet incurred are as follows: Inventories These commitments will be financed from working capital generated within the group. Lease commitments The group leases land and buildings, plant and machinery and 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 19. 69 701 959 75 691 303
page 87
Within 1 year
Within 2 to 5years
After 5 years
28
Commitments (continued) Year ended 30 June 2010

Minimum lease payments with regard to land and buildings and other equipment Year ended 30 June 2009 Minimum lease payments with regard to land and buildings and other equipment 3 595 442 7 061 544 1 738 168 2 200 558 5 925 272 351 950
29
Business combinations
There were no acquisitions for the year ended 30 June 2010. Year ended 30 June 2009
FINANCIALS
Business combinations Nutri Feeds (Pty) Limited and Hollyberry Props 40 (Pty) Limited On 24 October 2008 the group acquired the remaining 50% of the share capital of Nutri Feeds (Pty) Limited, which has stock feed business operations in South Africa, and Hollyberry Props 40 (Pty) Limited, a rental company, for a cash consideration of R123 255 141. The group already owned 50% of the company and acquired the remaining 50% of the company during the previous year. The acquired business contributed revenues of R859 853 137 and net profit of R23 669 370 to the group for the period from 24 October 2008 to 30 June 2009. Should the acquisition have occurred on 1 July 2008, group revenue would have been R2 378 901 174 and net profit would have been R137 535 719. 2010 Details of the net assets acquired and goodwill are as follows: Purchase consideration paid in cash Direct costs relating to the acquisition Fair value of assets acquired Goodwill 122 814 384 440 757 (62 623 082) 60 632 059 2009
The goodwill is attributable to the workforce of the acquired business and significant synergies expected to arise after the groups acquisition of Nutri Feeds (Pty) Limited and Hollyberry Props 40 (Pty) Limited.
page 88

Fair value R
Acquirees carrying amount R
29
Business combinations (continued)

The assets and liabilities arising from the acquisition are as follows: Cash and cash equivalents Property, plant and equipment Intangible assets Financial assets and other investments Inventories Trade and other receivables Trade and other payables Borrowings Current tax liability Deferred tax assets Net assets acquired Share of net assets previously recognised Fair value of additional 50% of net assets acquired Goodwill Total purchase consideration Purchase consideration settled in cash Cash and cash equivalents in subsidiary acquired Cash outflow on acquisition Business combinations Oistins (Pty) Limited On 1 July 2008 the group acquired selected assets within a newly established company, Oistins (Pty) Limited, which will operate as a poultry operation in Botswana. The assets purchased include the property and all the land and buildings erected on the property together with all fixed assets and other assets installed therein as well as biological assets, inventories and certain trade and other receivables and trade and other payables. The acquired business contributed revenues of R26 065 066 and net loss of R54 327 to the group for the period from 1 July 2008 to 30 June 2009. The purchase consideration was R9 515 740. These assets were purchased and placed within a newly established company. (30 521 295) 59 437 766 10 830 975 12 631 324 61 811 394 115 189 363 (98 435 017) (7 470 782) (4 772 886) (383 682) 118 317 160 (55 694 078) 62 623 082 60 632 059 123 255 141 123 255 141 30 521 295 153 776 436 (30 521 295) 59 437 766 1 207 360 12 631 324 61 811 394 115 189 363 (98 435 017) (7 470 782) (4 772 886) 2 310 930 111 388 157
page 89
2010 R
2009 R
29
Business combinations (continued) Details of the net assets acquired and goodwill are as follows: Purchase consideration paid in cash Direct costs relating to the acquisition Fair value of assets acquired Goodwill
The goodwill is attributable to the workforce of the acquired business and significant synergies expected to arise after the groups acquisition of Oistins (Pty) Limited in Botswana. The assets and liabilities arising from the acquisition are as follows:
6 503 488 3 012 252 (7 019 983) 2 495 757
Property, plant and equipment Inventories Trade and other payables Net assets acquired Non-controlling interests (40%) Net assets acquired Purchase consideration settled in cash Cash and cash equivalents in subsidiary acquired Cash outflow on acquisition
Fair value R 7 847 242 1 668 498 (2 495 757) 7 019 983 2 807 993 4 211 990 6 503 488 6 503 488
Acquirees carrying amount R 7 847 242 1 668 498 (2 495 757) 7 019 983
FINANCIALS
Business combinations Long Iron Meats (Pty) Limited On 1 March 2009 the group acquired the remaining 50% of the share capital of Long Iron Meats (Pty) Limited, which operates as a beef abattoir in South Africa, for a cash consideration of R1. The group already owned 50% of the company and acquired the remaining 50% of the company during the previous year. The acquired business contributed revenues of R175 734 796 and net profit of R250 561to the group for the period from 1 March 2009 to 30 June 2009. Should the acquisition have occurred on 1 July 2008, group revenue would have been R2 414 733 645 and net profit would have been R125 829 644. 2009 2010 R R Details of the net assets acquired and goodwill are as follows: Purchase consideration paid in cash Direct costs relating to the acquisition Liability assumed by acquirer Fair value of assets/(liabilities) acquired Goodwill 1 6 048 5 547 422 (204 816) 5 758 287
page 90

Fair value R
Acquirees carrying amount R
29
Business combinations (continued) The goodwill is attributable to the workforce of the acquired business.
The assets and liabilities arising from the acquisition are as follows: Cash and cash equivalents Property, plant and equipment Financial assets and other investments Inventories Trade and other receivables Trade and other payables Borrowings Deferred tax assets Net assets/(liabilities) acquired Share of net assets previously recognised Fair value of additional 50% of net assets acquired Goodwill Total purchase consideration Purchase consideration settled in cash Cash and cash equivalents in subsidiary acquired Cash outflow on acquisition 9 705 1 720 782 5 547 422 4 042 198 11 870 583 (11 764 823) (11 991 889) 156 390 (409 632) 204 816 (204 816) 5 758 287 5 553 471 6 049 (9 705) (3 656) 9 705 1 720 782 5 547 422 4 042 198 11 870 583 (11 764 823) (11 991 889) 156 390 (409 632)
page 91
2010 R
2009 R
30
Interest in joint ventures

(a) Nutri Feeds (Pty) Limited The group held a 50% interest in a joint venture with Nutri Feeds (Pty) Limited, which has stock feed business operations in South Africa, until 24 October 2008. The remaining 50% was acquired by the group during the previous year. Refer to note 29 for further details. The following represent the groups 50% share of the assets and liabilities, and sales and results of the joint venture before elimination of intergroup transactions for the previous year. They are included in the statement of financial position and statement of comprehensive income. Assets Non-current assets Current assets Liabilities Non-current liabilities Current liabilities Net assets Income Expenses Profit before tax Income tax Profit after income tax Proportionate interest in joint ventures commitments (b) Hollyberry Props 40 (Pty) Limited The group held a 50% interest in a joint venture with Hollyberry Props 40 (Pty) Limited, which owns a feedmill and related equipment for rental purposes, until 24 October 2008. The remaining 50% was acquired by the group during the previous year. Refer to note 29 for further details. The following represent the groups 50% share of the assets and liabilities, and revenue and results of the joint venture before elimination of intergroup transactions for the previous year. They are included in the statement of financial position and statement of comprehensive income. Assets Non-current assets Current assets Liabilities Non-current liabilities Current liabilities Net assets/(liabilities) Income Expenses Profit before tax Income tax Profit after income tax There are no contingent liabilities relating to the groups interest in the joint venture, and no contingent liabilities of the venture itself.
140 451 824 (128 354 629) 12 097 195 12 097 195
FINANCIALS
(291 953) (291 953) 81 747 (210 206)
page 92

2010 R
2009 R
30
Interest in joint ventures (continued) (c) Long Iron Meats (Pty) Limited The group held a 50% interest in a joint venture with Long Iron Meats (Pty) Limited, which operates a red-meat feedlot, until 28 February 2009. The remaining 50% was acquired by the group during the previous year. Refer to note 30 for further details. As indicated in note 30, Long Iron Meats (Pty) Limited was acquired by the group during the previous year. The following represent the groups 50% share of the assets and liabilities, and sales and results of the joint venture before elimination of intergroup transactions. They are included in the statement of financial position and statement of comprehensive income. Assets Non-current assets Current assets Liabilities Non-current liabilities Current liabilities Net assets/(liabilities) Income Expenses Profit/(loss) before tax Income tax Profit/(loss) after income tax There are no contingent liabilities relating to the groups interest in the joint venture, and no contingent liabilities of the venture itself. Disposal of investment in associates
The group held an 18% equity stake in Elite Breeding Farms and Kayfour Investments. The investments were sold by the group on 28November 2008. Total proceeds on sale net of cash and cash equivalents Assets and liabilities other than cash disposed of Profit on sale of investment
82 354 687 (82 547 462) (192 775) 52 216 (140 559)
31
25 000 000 (6 533 105) 18 466 895
32
BEE ownership transaction

On 1 July 2009 the group repurchased the option in 25% of the shares held in the subsidiary company Supreme Poultry (Pty) Limited for an amount of R582 771. These shares were held by Jacinda (Pty) Limited as part of a BEE initiative whereby a BEE share option was granted in 2007. In 2007 a BEE share option to the value of R12 333 514 was recognised as an expense in the statement of comprehensive income and a reserve within equity and therefore resulted in a decrease of 6,59 cents in earnings per share. However, in terms of the accounting standard IFRS 2 Share-based Payment, the group cannot recognise the balance of the reserve resulting from the repurchase of this BEE share option as a gain of R11 750 743 in the statement of comprehensive income. This amount therefore remains as a reserve within equity.
page 93
33
Interests in subsidiary companies

Details of the principal subsidiary companies of Country Bird Holdings Limited are as follows: Issued ordinary shares Effective percentage holding Companys interest
Unlisted investments Directly held Incorporated in South Africa Country Bird (Pty) Limited Webram Thirty Two (Pty) Limited Supreme Poultry (Pty) Limited Silverblade Imports (Pty) Limited Nutri Feeds (Pty) Limited Hollyberry Props 40 (Pty) Limited Long Iron Meats (Pty) Limited CBH Share Incentive Scheme Incorporated in the Republic of the Seychelles Ross Africa Limited Incorporated in Namibia Ross Breeders (Namibia) (Pty) Limited Supreme Poultry (Namibia) (Pty) Limited Indirectly held Incorporated in Botswana Ross Breeders (Botswana) (Pty) Limited Master Farmer Feeds (Pty) Limited Oistins (Pty) Limited Incorporated in Zambia Ross Breeders Zambia Limited Master Farmer Zambia Limited Nature of business
(a) (b) (c) (d) (e) (f ) (g) (h) (i) (j) (k) Investment holding Integrated poultry farming and production operation including breeder sites, broiler sites, processing plants and hatcheries Sale of imported goods Production and sale of day-old broilers and hatching eggs Broiler genetics and broiler breeding production Feed producer Production operation including broiler sites and processing plants Rental company Beef abattoir Dormant Group share scheme.
(j) (j) (b) (j) (f ) (j) (i) (k) (a) (d) (d)
2 000 200 100 100 100 100 100 120 100 728 100 100
100% 100% 100% 85% 100% 100% 100% 100% 100% 100% 100%
2 000 200 100 100 85 100 100 120 100 728 100 100
FINANCIALS
(d) (f ) (g) (e) (f )
3 000 2 260 100 100 000 000 5 000 000
60% 60% 60% 100% 100%
1 800 1 356 60 100 000 000 5 000 000
page 94

33
Interests in subsidiary companies (continued) The directors valuation of the investments in associate is not less than its carrying value.
The group is currently in a restructuring process in order to simplify the group structure and ensure that taxation is streamlined across the group. The assets and liabilities inCountry Bird (Pty) Limited, Webram Thirty Two (Pty) Limited and Silver Blade Imports (Pty) Limited have been 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 have been 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 had not been finalised by year-end. Furthermore, the assets and liabilities in Master Farmer Zambia Limited is to be sold to Ross Zambia Limited. This process had also not been finalised at year-end. The restructuring does not have an impact on the consolidation.
34
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 Revenue Service is currently conducting an investigation onthe 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 as at 30 June 2010.
35
Reclassification
Statement of cash flows In the prior year financial statements proceeds from borrowings and repayment of borrowings were disclosed net in the groups statement of cash flows. Furthermore, proceeds from financial assets and investments and acquisition of financial assets and investments were also disclosed net in the groups statement of cash flows. In order to more fairly present the cash flow information, these amounts have been separately disclosed in the current year statement of cash flows. This has resulted in the restatement of the prior year figures. Disclosure as per statement of cash flows for the year ended 30 June 2009: As previously reported R Proceeds from borrowings Repayment of borrowings Acquisition of financial assets and investments Proceeds of financial assets and investments (45 634 797) 80 954 203 As reclassified R 244 743 235 (163 789 032) (47 201 806) 1 567 009
page 95
35
Reclassification (continued) Statement of comprehensive income In the prior year financial statements, distribution costs and administrative expenses were disclosed separately on the consolidated statement of comprehensive income. In the current year, these amounts are now disclosed under other expenses. Furthermore, in the prior year, expenses to the value of R8 758 500 million was incorrectly allocated to costs of sales. This amount should have formed part of other expenses. This has resulted in the restatement of prior year figures. Disclosure as per consolidated statement of comprehensive income for the year ended 30 June 2009: As previously As reported reclassified R R Cost of sales (1 993 822 996) (1 985 064 496) Distribution costs (11 924 971) Administrative expenses (119 484 060) Other expenses (140 167 531)
Performancerelated bonus R Retirement fund contributions R Other benefits and allowances R
FINANCIALS
Salary R
Total 2010 R
Total 2009 R
36
Emoluments Executive directors For managerial services JD Wright RJ Taylor KW James GP Heath Non-executive directors fees For services as directors BH Kent C Stein GP Heath IWM Isdale
3 344 000 2 006 400 2 230 596 1 167 370 8 748 366
44 140 26 484 41 144 22 499 134 267
104 445 39 351 56 972 21 667 222 435
3 492 585 2 072 235 2 328 712 1 211 536 9 105 068
4 323 975 3 130 260 2 062 147 1 660 894 11 177 276
214 830 167 090 23 870 23 870 429 660
195 300 151 900 347 200
page 96

Number of options Total 2010 R Total 2009 R
Options outstanding
Grant date
Exercise price
Exercise date
36
Directors remuneration (continued)

Share incentive scheme interests RJ Taylor RJ Taylor JD Wright 17 Sep 07 26 Mar 09 23 Nov 09 1 1 1 16 Sep 10 01 Jul 11 01 Jul 11 164 000 750 000 4 400 000 5 314 000 No options have been exercised during the current or previous year. The scheme provides the right to purchase shares in the company at the exercise price. All the options are exercisable within one year of the expiry date. None of the non-executive directors has share incentive scheme interests. Issued share capital interest Directly held shares Beneficial interests KW James GP Heath RJ Taylor Position Executive director Non-executive director Finance director 2010 7 500 7 500 2009 7 500 7 500 Indirectly held shares 2010 100 244 314 12 530 539 112 774 853 2009 100 244 314 12 530 539 112 774 853 164 000 750 000 914 000
page 97
COMPANY STATEMENT OF FINANCIAL POSITION

as at 30 June 2010
COMPANY STATEMENT OF COMPREHENSIVE INCOME

Note
2010 R 1 276 644 896 790 548 455 319 926 739 981 332 244 596 11 963 101 4 451 351 15 739 041 15 431 241 302 800 5 000 1 292 383 937 837 548 791 1 870 993 795 886 779 4 152 103 35 638 916 319 249 375 319 238 254 11 121 135 585 771 5 112 095 130 473 676 454 835 146 1 292 383 937
2009 R 1 334 604 813 484 474 438 597 985 956 297 338 084 900 8 458 625 1 181 920 2 034 127 2 032 127 2 000 1 336 638 940 910 151 207 1 870 993 825 720 732 114 055 82 445 427 331 676 478 331 664 910 11 569 94 811 255 8 673 635 86 137 620 426 487 733 1 336 638 940 Revenue Cost of sales Gross profit Other expenses Other income Operating profit/(loss) Finance income Finance costs Profit/(loss) before income tax Income tax expense Profit/(loss) for the year Other comprehensive income Total comprehensive income/(loss) for theyear
Note 16 16 15 17 17 18
2010 R (728 182 542) 691 910 972 (36 271 570) 24 750 535 (38 555 354) (50 076 389) 3 269 878 (46 806 511) (46 806 511)
2009 R (19 492 861) 31 288 223 11 795 362 31 270 516 (32 578 254) 10 487 624 (1 354 451) 9 133 173 9 133 173
ASSETS
Non-current assets Property, plant and equipment Intangible assets Investment in subsidiaries Other financial instruments Investments in associates Deferred income tax assets Current assets Trade and other receivables Current income tax receivable Cash and cash equivalents Total assets 2 3 4 5 6 8 9 10
FINANCIALS
EQUITY
Total equity Ordinary shares Share premium Other reserves Retained earnings 11 11 12
The notes on pages 100 to 116 are an integral part of these financial statements.
LIABILITIES
Non-current liabilities Borrowings Deferred income tax liabilities Current liabilities Trade and other payables Borrowings Total liabilities Total equity and liabilities 13 8 14 13
The notes on pages 100 to 116 are an integral part of these financial statements.
page 98
COMPANY STATEMENT OF CHANGES IN EQUITY

Note Balance at 1 July 2008 Total comprehensive income Transactions with owners Employee share scheme Dividend Total transactions with owners Balance at 30 June 2009 Balance at 1 July 2009 Total comprehensive income/(loss) Transactions with owners Share issue and listing expenses Shares issued to share incentive trust Treasury shares held by CBH Share Trust Employee share scheme Capital distribution to shareholders Total transactions with owners Balance at 30 June 2010
Share capital R 1 870 993
Share premium R 825 720 732
Other reserves R 114 055 114 055 114 055 114 055 4 038 048 4 038 048 4 152 103 Note 12
Retained earnings R 96 512 569 9 133 173
Total equity R 924 104 294 9 133 173
12 22
1 870 993 825 720 732 1 870 993 825 720 732 149 700 (149 700) 1 870 993 (29 032) 14 820 300 (14 820 300) (29 804 921) (29 833 953) 795 886 779
114 055 (23 200 315) (23 200 315) (23 200 315) (23 086 260) 82 445 427 910 151 207 82 445 427 910 151 207 (46 806 511) (46 806 511) (29 032) 14 970 000 (14 970 000) 4 038 048 (29 804 921) (25 795 905) 35 638 916 837 548 791
11 11 12 22
page 99
COMPANY STATEMENT OF CASH FLOWS

NOTES TO THE COMPANY STATEMENT OF CASH FLOWS

Note Cash flows from operating activities Net cash generated from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Interest paid Income tax paid Cash flows from investing activities Net cash used in investing activities Purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Purchases of intangible assets Additional investment in subsidiaries Purchase of financial assets Proceeds on sale financial assets Loans advanced Loans repayment received Loans granted to associate Interest received Cash flows from financing activities Net cash used in financing activities Share issue and listing expenses Proceeds from borrowings Repayments of borrowings Dividends paid to companys shareholders Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year
2010 R
2009 R A Reconciliation of net profit/(loss) before tax to cash generated from operations Cash generated from operations Profit/(loss) before income tax Adjustment for: Depreciation and amortisation Impairment of investments Finance income Financing costs Interest payable on current income tax Foreign exchange gains/(losses) Dividend received (Profit)/loss on disposal of investment Fair value gains on financial assets at fair value through profit or loss Share-based payment Changes in working capital: Decrease/(increase) in trade and other receivables Increase/(decrease) in trade and other payables Taxation payable Taxation paid during the year Balance owing at beginning of year Secondary tax on companies Balance recoverable/(payable) at end ofyear
2010 R
2009 R
A B
(46 542 516) 10 174 081 (17 858 443) (7 684 362) (38 555 354) (302 800) 44 470 068 (554 748) 1 242 (40 663) (54 282 244) 59 171 333 (567 745 463) 586 674 551 (3 504 475) 24 750 535 (50 488 437) (29 032) 31 856 544 (52 511 028) (29 804 921) (52 560 885) (63 690 537) (116 251 422)
(34 799 214) 14 316 108 (12 242 608) 2 073 500 (32 578 254) (4 294 460) (214 428 724) (562 919) (438 597) (128 808 611) (56 262 990) (432 727 725) 373 749 098 (647 496) 31 270 516 185 568 743 227 463 243 (18 694 185) (23 200 315) (63 659 195) (31 342) (63 690 537) B
(7 684 362) (50 076 389) 271 371 709 585 420 (24 750 535) 38 555 354 ( 9 201) (681 086 860) 4 551 559 8 197 523 4 038 048
2 073 500 10 487 624 93 900 (31 270 516) 32 085 154 493 100 (15 657 425) 114 055
FINANCIALS
(13 399 112) (3 561 540) 302 800 302 800
(1 341 317) 7 068 925 4 294 460 1 974 428 2 320 032
10
page 100
NOTES TO THE COMPANY FINANCIAL STATEMENTS

Accounting policies
The group and company apply the same accounting policies. These policies are to be found within the consolidated financial statements. Furniture and computers R Vehicles R Total R
Property, plant and equipment

Year ended 30 June 2009 Carrying value at beginning of year Cost price Accumulated depreciation Additions Depreciation Carrying value at end of year Cost price Accumulated depreciation Year ended 30 June 2010 Carrying value at beginning of year Cost price Accumulated depreciation Additions Disposals Cost price Accumulated depreciation Depreciation Carrying value at end of year Cost price Accumulated depreciation Depreciation expense of R247 430 (2009: R93 900) has been charged in other expenses (note 16). Lease rentals amounting to R268 636 (2009: R165 395) relating to the lease of machinery, property and office equipment, are included in the statement of comprehensive income (note 16). 188 641 224 384 (35 743) 136 768 (1 244) (1 382) 138 (106 767) 217 398 359 770 (142 372) 295 833 355 000 (59 167) 417 980 (140 663) 573 150 772 980 (199 830) 484 474 579 384 (94 910) 554 748 (1 244) (1 382) 138 (247 430) 790 548 1 132 750 (342 202) 15 455 16 465 (1 010) 207 919 (34 733) 188 641 224 384 (35 743) 355 000 (59 167) 295 833 355 000 (59 167) 15 455 16 465 (1 010) 562 919 (93 900) 484 474 579 384 (94 910)
page 101
Brand name R
Total R
Intangible assets
Year ended 30 June 2009 Carrying value at beginning of year Cost price Accumulated amortisation Acquisition of brand name Amortisation charge Carrying value at end of year Cost price Accumulated depreciation Year ended 30 June 2010 Carrying value at beginning of year Cost price Accumulated amortisation Acquisition of brand name Amortisation charge Carrying value at end of year Cost price Accumulated depreciation Amortisation is included in other expenses in the statement of comprehensive income (note 16). 438 597 438 597 40 663 (23 941) 455 319 479 260 (23 941) 438 597 438 597 40 663 (23 941) 455 319 479 260 (23 941) 438 597 438 597 438 597 438 597 438 597 438 597
FINANCIALS
page 102
NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)

2010 R
2009 R 985 956 297 451 352 917 255 008 860 200 555 880 4 773 643 68 711 152 75 100 100 100 5 553 470 % 100 100 100 100 100 85 85 100 100 100
Investment in subsidiaries
Country Bird (Pty) Limited Webram Thirty Two (Pty) Limited Nutri Feeds (Pty) Limited Hollyberry Props 40 (Pty) Limited Ross Africa Limited Supreme Poultry (Pty) Limited Silver Blade Imports (Pty) Limited Supreme Poultry (Namibia) (Pty) Limited Ross 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 Ross Africa Limited Supreme Poultry (Pty) Limited Silver Blade Imports (Pty) Limited Supreme Poultry (Namibia) (Pty) Limited Ross Poultry Breeders (Namibia) (Pty) Limited Long Iron Meats (Pty) Limited
926 739 981 200 555 880 68 711 152 651 919 279 100 100 5 553 470 % 100 100 100 100 100 100 85 100 100 100
The group is currently in a restructuring process in order to simplify the group structure and ensure that taxation is streamlined across the group. The assets and liabilities inCountry Bird (Pty) Limited, Webram Thirty Two (Pty) Limited and Silver Blade Imports (Pty) Limited have been 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 have been 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 have been impaired during the current financial year. Refer to note16 for the amount of the investment impaired. The reserves available in these dormant companies have been declared as dividends during the year. Refer to note 15 for the amount of the dividend received from the subsidiaries.
page 103
2010 R
2009 R 338 084 900 71 920 415 71 920 415 266 164 485 53 861 319 58 549 559 4 692 040 1 301 189 7 836 442 125 917 282 1 810 580 12 196 074
Other financial instruments

Listed shares at fair value: Sovereign Food Investment Limited Loan accounts: Country Bird (Pty) Limited Ross Africa Limited Hollyberry Props 40 (Pty) Limited Silver Blade Imports (Pty) Limited Nutri Feeds (Pty) Limited Supreme Poultry (Pty) Limited Supreme Poultry (Namibia) (Pty) Limited Long Iron Meats (Pty) Limited
332 244 596 332 244 596 88 360 038 122 728 987 103 603 205 1 870 858 15 681 508
FINANCIALS
Sovereign Food Investment Limited is designated as a financial asset at fair value through profit or loss. Loans are classified as loans and receivables and are measured at amortised 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 parents 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. The loan to Ross Africa Limited was subordinated to the value of R21 100 000 in favour of other payables of the company, both present and future. The fair value of all securities is based on their current bid prices in an active market.
page 104

2010 R
2009 R
Investments in associates
Shares at cost Loans to associate Total investment in associates Reconciliation 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 R6 300 000 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 intention to pursue 100% acquisition of this investment in future. Furthermore, the company shows positive cash flows in future. The companys share of the results of its principal associates, all of which are unlisted, and its share of the assets and liabilities are asfollows: Silver Blade Abattoir (Pty) Limited Assets Liabilities Revenues Profit/(loss) Interest held (%) 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 rate1 (%) Discount rate2 (%)
1 2
38 11 963 063 11 963 101 11 963 101 8 458 625 3 504 476
78 8 458 547 8 458 625 8 458 625 7 811 129 647 496
2 905 299 5 655 581 5 069 096 (416 760) 37,5
3 457 825 5 791 348 4 893 480 (785 047) 37,5
5 13,9
7 21,0
Weighted average growth rate used to extrapolate cash flows beyond the budget period. Pre-tax discount rate applied to the cash flow projections. Rates varied from 13,9% to 22,8%.
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.
page 105
2010 R
2009 R
7a
Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below: Loans and receivables Assets per statement of financial position Trade and other receivables Other financial assets Cash and cash equivalents Assets at fair value through profit or loss Assets per statement of financial position Other financial assets Other financial liabilities at amortised cost Liabilities per statement of financial position Borrowings Trade and other payables excluding statutory liabilities
15 170 426 332 244 596 5 000
1 616 680 266 164 484 2 000
71 920 415
FINANCIALS
449 711 931 481 890
417 802 530 2 317 992
7b
Credit 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 1 Group 2 Group 2: Existing customers/related parties (more than six months) with no defaults in the past. Group 3: Existing customers/related parties (more than six months) with some defaults in the past. All defaults were fully recovered. None of the loans to related parties is past due but not impaired.
15 170 426 76 693 15 093 733
1 616 680 1 616 680
page 106

2010 R
2009 R
Deferred 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 Deferred tax liability to be recovered after more than 12 months 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% (2009: 28%). The movements on the deferred tax account are as follows: Closing net deferred tax asset/(liability) At beginning of the year Charged to statement of comprehensive income Capital allowances Provisions Estimated tax losses Other
4 440 230 4 451 351 3 116 956 1 334 395 (11 121) (11 121)
1 170 351 1 181 920 31 540 1 150 380 (11 569) (11 569)
4 440 230 1 170 351 3 269 879 448 (945 177) 3 085 416 1 129 192
1 170 351 204 770 965 581 (11 307) 911 951 31 540 33 397
The deferred tax assets and liabilities are attributable to the following items: Deferred tax assets and liabilities 4 440 230 1 170 351 Capital allowances (11 121) (11 569) Provisions 171 806 1 116 983 Estimated tax losses 3 116 956 31 540 Other 1 162 589 33 397 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.
page 107
2010 R
2009 R 2 032 127 1 616 680 1 616 680 415 447
Trade and other receivables

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 45 days) were granted. The effect of this adjustment was recognised as other income (note 15). The carrying amounts of trade and other receivables approximate their fair values. As at statement of financial position date, trade receivables of R15 170 426 (2009: R1 616 680) 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 R15 170 426 (2009: R1 616 680) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default or with whom specific repayment plans had been entered into. The ageing of these trade receivables is as follows: Up to three months Three to six months Longer than six 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.
15 431 241 15 170 426 15 170 426 244 262 16 553
FINANCIALS
15 170 426 15 170 426
1 616 680 1 616 680
10
Cash and cash equivalents 5 000 2 000 Cash on hand 5 000 2 000 Cash and cash equivalents include the following for the purposes of the cash flow statement: Cash and cash equivalents per cash flow (116 251 422) (63 690 536) Cash and cash equivalents 5 000 2 000 Bank overdrafts (note 13) (116 256 422) (63 692 536) 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 R90 000 000 by Nutri Feeds (Pty) Limited and cession of the loan account, unlimited surety by Supreme Poultry (Pty) Limited and a negative pledge over assets.
page 108

2010 R
2009 R
11
Share capital and share premium

Authorised shares 300 000 000 ordinary shares of 1 cent per share Ordinary shares 187 099 313 ordinary shares of 1 cent per share Shares issued to share incentive trust Treasury shares held by CBH Share Trust Issued share capital is fully paid up. Share premium At end of year At beginning of year Capital distribution (note 21) Share issue and listing expenses Shares issued to share incentive trust Treasury shares held by CBH Share Trust The group issued 14 970 000 shares on 15 December 2009 to the CBH Share Incentive Scheme at R1 per share. The shares are held as treasury shares. 3 000 000 3 000 000 1 870 993 1 870 993 149 700 (149 700) 3 000 000 3 000 000 1 870 993 1 870 993
795 886 779 825 720 732 (29 804 921) (29 032) 14 820 300 (14 820 300)
825 720 732 825 720 732
12
Other reserves
Share-based payment reserve At end of year 4 152 103 114 055 Opening balance 114 055 Employee share scheme 4 038 048 114 055 Share options Share options are granted to selected directors and employees. The exercise price of the granted option is equal to R1 each. Options are conditional on the employee completing three years 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.
page 109
Exercise price in R per share
Options
12
Other reserves (continued)

Movements in the number of share options outstanding and their related exercise prices are as follows: At 1 July 2008 Granted Forfeited Exercised Expired At 30 June 2009 At 1 July 2009 Granted Forfeited Exercised Expired At 30 June 2010 Share options outstanding at the end of the year have the following expiry dates and exercise prices: Expiry date 1 1 1 950 000 950 000 950 000 4 400 000 5 350 000
FINANCIALS
Exercise price in R per share
Shares
1 July 2011 1 950 000 At 30 June 2009 950 000 1 July 2011 1 5 350 000 At 30 June 2010 5 350 000 On 26 March 2009, 950 000 share options were granted to directors and employees with an exercise price of R1 per share. Share options outstanding have an expiry date of 1 July 2011. On 23 November 2009, 4 400 000 share options were granted to directors with an exercise price of R1 per share. Share options outstanding have an expiry date of 1 July 2011. The weighted average fair value of options granted during the period as determined using the binomial tree option valuation model was R0,82 (2009: R1,03) per option. The significant inputs into the model were: share price of R1,76 (2009: R1,90) at the grant date; exercise price of R1 (2009: R1) per option; volatility of 41,3% (2009: 5,8%); dividend yield of 1,66% (2009: 1,54%); an expected option life of three years; and an annual risk-free interest rate of 9,75%. The volatility was measured at the standard deviation of continuously compounded share returns as based on the analysis of the daily share price over the three months. See note19 for the total expense recognised in the statement of other comprehensive income for share options granted to directors and employees.
page 110

2010 R
2009 R
13
Borrowings
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 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 R90 000 000 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 and Arbor Acres South Africa (Pty) Limited. The loan from ArborAcres South Africa (Pty) Limited was provided at the South African prime interest rate and the loan from Synapp International Limited was provided at the South African prime interest rate (2009: South African prime interest rate less 2%). 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 10% (2009: 11%). No limit has been placed in the articles of association on the borrowing powers of the company. 185 875 777 69 619 355 116 256 422 263 836 153 263 836 153 449 711 930 130 473 676 14 217 253 116 256 423 319 238 254 143 214 621 79 522 085 63 692 536 274 587 909 274 587 909 417 802 530 86 137 620 22 445 084 63 692 536 331 664 910
14
Trade and other payables
5 112 095 8 673 635 Trade payables 481 890 2 317 992 Accrued expenses 2 404 423 5 731 390 Other payables 2 225 782 624 253 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 administrative expenses (note 16). The carrying amounts of trade and other payables approximate their fair values.
page 111
2010 R
2009 R 31 288 223 15 629 237 1 561 15 657 425
15
Other income
Profit/(loss) from sale of investment Fair value gains/(loss) on financial assets at fair value through profit or loss Interest earned on debtors Management fees Dividend received
691 910 972 (4 551 559) (8 197 523) 23 573 194 681 086 860
16
Expenses by nature
Total cost of sales and other expenses Depreciation, amortisation and impairment costs Employee benefit expense Maintenance Transportation costs Operating leases Consulting fees Impairment of investments Other expenses 728 182 542 271 373 13 209 676 121 344 209 547 268 636 1 470 080 709 585 420 3 046 466 19 492 861 93 827 12 340 425 62 093 155 475 165 395 1 155 104 5 520 542
FINANCIALS
17
Finance income and costs

Finance income Bank Investment income Finance costs Long-term loans Bank loans, medium-term loan and overdrafts Other Net finance costs 24 750 535 16 446 24 734 089 (38 555 354) (22 946 009) (15 607 447) (1 898) (13 804 819) 31 270 517 390 652 30 879 865 (32 578 254) (29 180 184) (2 904 970) (493 100) (1 307 737)
page 112

2010 R
2009 R 1 354 451 2 320 032 (965 581) % 12,9 28,0 0,0 (37,2) 0,0 22,1
18
Income tax expense

Secondary tax on companies Capital gains tax Deferred tax (note 8) The tax on the companys 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 Standard rate of taxation applicable to profits Adjusted for: Dividend received Non-taxable and non-deductible items Capital gains tax Secondary tax on companies The weighted average applicable tax rate was 28% (2009: 28%). Estimated assessable losses for set-off against future taxable income is R11 131 985 (2009: R112 644 ).
3 269 878 (383 791) 3 653 669 % 6,5 28,0 380,8 (403,1) 0,8 0,0
R 12 340 424 8 590 854 114 055 3 256 975 378 540
19
Employee benefit expense

Salaries and wages Share options granted to directors and employees Leave and bonus pay accrual Other employee benefits Other employee benefits consist inter alia of the following expenses: motor allowances, motor running costs, staff catering and protective clothing.
13 209 676 8 669 184 4 038 048 502 444
20
Executive directors Salaries Fringe benefits Performance bonus Other Share option expense Non-executive directors fees Directors fulfil the role of key management. 9 664 878 5 350 400 32 467 111 329 4 170 682 429 660 7 768 206 4 897 647 56 587 2 500 000 313 972 347 200
page 113
2010 R
2009 R 962 747 956 919 5 828
21
Auditors remuneration
Audit fees Other
926 427 925 277 1 150
22
Capital distribution to shareholders

The dividends or capital repayment paid in 2010 and 2009 were R29 804 921 (15,93 cents per share) and R23 200 315 (12,4 cents per share) respectively. A capital repayment of 1,47 cents per share was declared by the board of directors on 20 August 2010. The total capital repayment of R2 756 540 will be paid on 29 November 2010.
23
Related-party transactions
Refer to note 4 for the identified related parties. Arbor Acres South Africa (Pty) Limited is a company controlled by close family members of a director of the company. Synapp International Limited is a significant shareholder of Country Bird Holdings Limited. Directors fulfil the role of key management. The following transactions were carried out with related parties: Management fees received Supreme Poultry (Pty) Limited Nutri Feeds (Pty) Limited Long Iron Meats (Pty) Limited Outstanding balances arising from sale of goods Supreme Poultry (Pty) Limited Nutri Feeds (Pty) Limited Arbor Acres South Africa (Pty) Limited Long Iron Meats (Pty) Limited Loans to related parties Country Bird (Pty) Limited At the beginning of the year Loans advanced/(repaid) during the year Interest accrued on loan account
FINANCIALS
23 563 993 16 780 631 6 783 362 15 085 187 6 943 191 7 896 745 75 448 169 803 53 861 319 (53 861 319)
15 657 424 11 758 786 3 898 638 1 621 903 1 484 001 64 995 1 459 71 448 53 861 319 46 256 190 630 657 6 974 472
page 114

2010 R
2009 R
23
Related-party transactions (continued) Ross Africa Limited At the beginning of the year Loans advanced/(repaid) during the year Interest accrued on loan account Hollyberry Props 40 (Pty) 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 Impairment of loan Interest accrued on loan account 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 Long Iron Meats (Pty) Limited At the beginning of the year Loans advanced/(repaid) during the year Interest accrued on loan account
88 360 038 58 549 559 22 330 054 7 480 426 4 692 040 (4 692 040) 1 301 189 (1 301 189) 122 728 987 7 836 441 113 134 380 1 758 166 103 603 205 125 917 282 (35 125 708) 12 811 631 1 870 858 1 810 581 11 565 48 712 15 681 508 12 196 074 2 000 000 1 485 434
58 549 559 43 462 131 8 088 519 6 998 909 4 692 040 2 079 779 2 140 190 472 071 1 301 189 2 654 863 (1 730 322) 376 648 7 836 441 808 045 6 508 586 519 810 125 917 282 111 514 604 1 187 506 13 215 172 1 810 581 410 247 1 262 591 137 743 12 196 074 11 694 447 501 627
page 115
2010 R
2009 R
23
Related-party transactions (continued) Silver Blade Abattoir (Pty) Limited 11 963 063 8 458 625 At the beginning of the year 8 458 625 7 811 129 Loans advanced/(repaid) during the year 3 504 438 647 496 Loans from related parties: Arbor Acres South Africa (Pty) Limited (704 913) At the beginning of the year (704 913) (1 196 878) Loans repaid/(advanced) during the year 738 845 649 852 Interest accrued on loan account (33 932) (157 887) Long Iron Meats (Pty) Limited (5 547 422) (5 547 422) At the beginning of the year (5 547 422) Loans repaid/(advanced) during the year (5 547 422) Interest accrued on loan account Synapp International Limited (256 288 331) (256 294 550) At the beginning of the year (256 294 550) (144 144 056) Loans repaid/(advanced) during the year 22 918 296 (83 339 358) Interest accrued on loan account (22 912 077) (28 811 136) 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. The loan from Synapp International Limited bears interest at the South African prime rate (2009: South African prime rate less 2%) per annum. No fixed terms of repayment have been set and no security was provided for the repayment of the loan.
FINANCIALS
page 116

24
Commitments
Lease commitments The company leases various items of 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 15. Within 1 year R 99 947 99 947 144 352 144 352 Within 2 to 5 years R 387 811 387 811 164 541 164 541 After 5 years R
Year ended 30 June 2010: Minimum lease payments with regard to: Land and buildings and other equipment Year ended 30 June 2009: Minimum lease payments with regard to: Land and buildings and other equipment
25
Contingent liability
When the company listed on the JSE Limited during 2007, the company claimed value added tax on certain listing and restructuring expenses.The South African Revenue Services 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 2010.
26
Reclassification
Statement of financial position In the prior year financial statements, investments in subsidiaries and other financial assets was presented as investments and other financial assets on the face of the statement of financial position. In order to more fairly present the statement of financial position the investment in subsidiaries and other financial assets have been disclosed separately. The effect on 2009 is summarised below. Disclosure as per statement of financial position for the year ended 30 June 2009: As previously As reported reclassified R R Financial assets and other investments Investment in subsidiaries Other financial assets Statement of cash flows In the prior year financial statements, cash inflows and outflows relating to borrowings and financial assets and investments were presented on a net basis on the face of the cash flow statement. In order to more fairly present the cash flow information, these amounts have been separately disclosed in the current year statement of cash flows. The effect on 2009 is summarised below. Disclosure as per statement of cash flows for the year ended 30 June 2009: Proceeds from borrowings Repayment of borrowings Realisation of financial assets and investments Investment in subsidiaries Purchase of financial assets Loans advanced Loans repayment received 1 324 041 197 985 956 297 338 084 900
208 769 058 (244 050 228)
227 463 243 (18 694 185) (128 808 611) (56 262 990) (432 727 726) 373 749 098
page 117
ANALYSIS OF ORDINARY SHAREHOLDERS

An analysis of holdings extracted from the register of ordinary shareholders at 30 June 2010 is listed below: Number of shareholders % Number of shares %
Shareholder spread
1 1 000 shares 1 001 10 000 shares 10 001 100 000 shares 100 001 1 000 000 shares 1 000 001 shares and over 169 602 228 56 16 1 071 15,8 56,2 21,3 5,2 1,5 100 99 618 2 912 041 6 665 392 17 569 006 159 853 256 187 099 313 0,05 1,56 3,56 9,39 85,44 100
Distribution of shareholders
Assurance companies Close corporations Collective investment schemes Custodians Foundations and charitable funds Hedge funds Holding company Insurance companies Investment partnerships Managed funds Organs of state Private companies Public companies Retail shareholders Retirement benefit funds Stockbrokers and nominees Trusts Unclaimed scrip 2 17 35 3 5 1 1 3 9 1 1 39 2 827 32 7 84 1 1 070 0,19 1,59 3,27 0,28 0,47 0,09 0,09 0,28 0,84 0,09 0,09 3,66 0,19 77,29 2,99 0,65 7,85 0,09 100 1 039 686 228 966 31 730 615 392 464 140 940 191 000 125 305 392 526 267 163 401 1 050 185 127 2 161 869 22 453 9 835 771 4 195 634 384 916 10 593 478 284 187 099 313 0,56 0,12 16,96 0,21 0,08 0,10 66,97 0,28 0,09 0,00 0,10 1,16 0,01 5,26 2,24 0,20 5,66 0,00 100
page 118
ANALYSIS OF ORDINARY SHAREHOLDERS (continued)

Number of shareholdings Number of shares
Public/non-public shareholders
Non-public shareholders Directors of the company holdings Strategic holdings (more than 10%) Public shareholders 2 1 1 1 068 1 070 0,18 0,09 0,09 99,82 100 125 312 892 7 500 125 305 392 61 786 421 187 099 313 66,98 0,00 66,98 33,02 100
Beneficial shareholders with a holding greater than 3% of the shares in issue

Synapp International Coronation Fund Managers Sanlam Group Investec Total number of shareholdings Total number of shares in issue 1 12 9 2 24 1 070 187 099 313 125 305 392 12 495 192 8 393 145 7 623 741 153 817 470 66,97 6,68 4,49 4,07 82,21
Share price performance

Opening price 1 July 2009 Closing price 30 June 2010 Closing high for the period Closing low for the period Number of shares in issue Volume traded during period Ratio of volume traded to shares in issue (%) R2,70 R2,66 R3,85 R2,55 187 099 313 30 608 501 16,36
page 119
NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the fourth annual general meeting of the shareholders of Country Bird Holdings Limited (CBH) will be held at Investec, 100 Grayston Drive, Sandton, Johannesburg on Monday, 22 November 2010 at 14:00 for the following business: 1. Ordinary resolution number 1: To receive and consider the company and group annual financial statements for the year ended 30 June 2010. Ordinary resolution number 2: To elect the directors in place of Messrs CD Stein, BH Kent, GP Heath, IWM Isdale and R Gibbison who retire by rotation in accordance with the articles of association and who, being eligible, offer themselves for re-election. Details of each of the retiring directors are set out on page 7 of the 2010annual report. Ordinary resolution number 3: To confirm the reappointment of PricewaterhouseCoopers as the auditors of the company (with L Rossouw as the individual designated auditor) until the next annual general meeting and to authorise the directors to approve the amount of their remuneration for the forthcoming year. Ordinary resolution number 5: Repayment of the share premium account. That subject to the provisions of the Companies Act and the JSE Limiteds Listings Requirements, the directors of the company shall be entitled to pay, to ordinary shareholders, by way of a repayment of the share premium account an amount, subject to the following conditions: in terms of paragraph 5.86 of the JSE Limiteds Listings Requirements, any general payment will not exceed 20% of the companys issued share capital in any one financial year; any general payment will be made pro rata to all shareholders; this general authority shall be valid until the companys next annual general meeting, provided that it shall not extend beyond 15months from the date of passing this ordinary resolution; and, the company and the group will be able to pay its debts in the ordinary course of business for a period of 12 months after the date of the notice of the annual general meeting; the assets of the company and the group, fairly valued in accordance with International Financial Reporting Standards, will be in excess of the liabilities of the company and group for a period of 12 months after the date of the notice of the annual general meeting; the share capital and reserves of the company and the group will be adequate for ordinary business purposes for a period of 12 months after the date of the notice of the annual general meeting; and the working capital available to the company and the group will be adequate for the purposes of the business of the company and the group for the period of 12 months after the date of the notice of the annual general meeting. 5. Ordinary resolution number 6: Control of authorised but unissued shares That the unissued authorised shares in the capital of the company be and are hereby placed under the control of the directors until the next annual general meeting of the company for allotment and issue to such persons and upon such terms and subject to such conditions as the directors in their sole discretion may determine from time to time, but at all times subject to the provisions of the Companies Act No 61 of 1973, as amended, and to the rules and regulations of the JSE Limited. 6. Ordinary resolution number 7: General authority to issue shares for cash Resolved that in terms of the Listings Requirements of the JSE Limited, a mandate be given to the directors of the company in terms of a general authority to issue securities for cash, as and when suitable opportunities arise, subject to the JSE Listings Requirements, including the following conditions: that this general authority be valid until the companys next annual general meeting provided that it shall not extend beyond 15months from the date of the passing of this ordinary resolution (whichever period is shorter); that the securities be of a class already in use; that securities be issued to public shareholders as defined in the JSE Listings Requirements and not to related parties; that a paid press announcement giving full details, including the impact on net asset value and earnings per share, be published at the time of any issue representing, on a cumulative basis within one financial year, 5% or more of the number of securities in issue prior to the issue/s; that issues in the aggregate in any one financial year shall not exceed 15% of the companys issued share capital of that class; and that, in determining the price at which an issue of securities will be made in terms of this authority, the maximum discount permitted
2.
3.
4.
page 120
NOTICE OF ANNUAL GENERAL MEETING (continued)

shall be 10% of the weighted average traded price of those securities over the 30 business days prior to the date that the price of the issue is determined or agreed by the directors. In terms of the Listings Requirements of the JSE, the approval of 75% majority of the votes of all shareholders, present or represented by proxy, is required to approve these ordinary resolutions. 7. Ordinary resolution number 8: Non-executive directors fees Board/committee Board Audit committee Remuneration committee Member Chairman R R 103 118 25 780 25 780 154 678 51 559 51 559 the company and the counterparty; this general authority shall be valid until the companys next annual general meeting, provided that it shall not extend beyond 15(fifteen) months from the date of passing of this special resolution number 1; an announcement will be published as soon as the company has acquired ordinary shares constituting, on a cumulative basis, 3% of the number of ordinary shares in issue and for each 3% in aggregate of the initial number acquired thereafter, in compliance with Rule 11.27 of the JSE Listings Requirements; acquisitions of shares in aggregate in any one financial year may not exceed 20% of the companys ordinary issued share capital, as the case may be, as at the date of passing of this special resolution number 1; ordinary shares may not be acquired at a price greater than 10% above the weighted average ofthe market value at which such ordinary shares are traded on the JSE as determined over the five business days immediately preceding the date of repurchase of such ordinary shares; the company has been given authority by its articles of association; at any point in time, the company may only appoint one agent to effect any repurchase on the companys behalf; the company undertakes that it will not enter the market to repurchase the companys securities until the companys sponsor has provided written confirmation to the JSE regarding the adequacy of the companys working capital in accordance with schedule 25 of the JSE Listings Requirements; the company and/or its subsidiaries do not repurchase any shares during a prohibited period as defined by the JSE Listings Requirements unless they have in place a repurchase programme where the dates and quantities of securities to be traded during the relevant period are fixed and full details of the programme have been disclosed in an announcement over SENS prior to the commencement of the prohibited period. Before entering the market to effect the general repurchase, the directors, having considered the effects of the repurchase of the maximum number of ordinary shares in terms of the aforegoing general authority, will ensure that for a period of 12 (twelve) months after the date of the notice of annual general meeting: the company and the CBH group will be able, in the ordinary course of business, to pay its debts; the assets of the company and the CBH group, fairly valued in accordance with International Financial Reporting Standards, will exceed the liabilities of the company and the CBH group; the company and the CBH groups ordinary share capital, reserves and working capital will be adequate for ordinary business purposes; and the working capital of the company and the CBH group will be adequate for the purposes of the business of the company and the CBH group. The following additional information, some of which may appear elsewhere in the annual report of which this notice forms part, is provided in terms of the JSE Listings Requirements for purposes of ordinary resolution number 5 and special resolution number 1: Directors and management page 7; Major beneficial shareholders page 118;
To approve in terms of the companys articles of association, with effect from 1 July 2010, the remuneration of directors who hold office from time to time (other than those in the employ of the company) be determined as follows: 8. Special resolution number 1: General authority to repurchase shares That the company or any of its subsidiaries be and is hereby authorised, by way of a general approval, to acquire ordinary shares issued by the company, in terms of sections 85(2) and 85(3) of the Companies Act No 61 of 1973, as amended (the Companies Act), and in terms of the JSE Limited (the JSE) Listings Requirements, being that: any such acquisition of ordinary shares shall be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between
page 121
Directors interests in ordinary shares page 96; and Share capital of the company page 75.
Litigation statement
No legal or arbitration proceedings have been instituted that may have or have had, in the last 12 months, a material effect on the company and the CBH groups financial position nor is the company aware of any such proceedings that are pending or threatened.
The reason for and effect of the special resolution is to grant the directors of the company a general authority in terms of the Companies Act and the JSE Listings Requirements for the repurchase by the company, or a subsidiary of the company, of the companys shares. 9. To transact other business as may be transacted at an annual general meeting.
complete the relevant form of proxy attached in accordance with the instructions therein and lodge it with, or mail it to, the transfer secretaries. Forms of proxy should be forwarded to reach the companys transfer secretaries at the address given below by not later than 10:00 on Wednesday, 17 November 2010. The completion of a form of proxy will not preclude a shareholder from attending the annual general meeting.
Voting and proxies

Shareholders are entitled to attend, speak and vote at the meeting. Shareholders may appoint a proxy to attend, speak and vote in their stead. Shareholders holding dematerialised shares but not in their own name must furnish their Central Securities Depository Participant (CSDP) or broker with their instructions for voting at the annual general meeting should they wish to vote. If your CSDP or broker, as the case may be, does not obtain instructions from you, it will be obliged to act in terms of your mandate furnished to it, or if the mandate is silent in this regard, to complete the relevant form of proxy attached. Unless you advise your CSDP or broker, in terms of the agreement between you and your CSDP or broker by the cut-off time stipulated therein, that you wish to attend the annual general meeting or send a proxy to represent you at the annual general meeting, your CSDP or broker will assume you do not wish to attend the annual general meeting or send a proxy. If you wish to attend the annual general meeting or send a proxy, you must request your CSDP or broker to issue the necessary letter of representation to you. Shareholders holding dematerialised shares in their own name, or who hold shares that are not dematerialised, and who are unable to attend the annual general meeting and wish to be represented thereat, must
Directors responsibility statement

The directors, whose names appear on the inside back cover of the annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the special resolution contains all information.
By order of the board
MJC Antunes Company secretary Registered office 269 Oxford Road Cnr Harries Road Illovo Johannesburg, 2196
Material changes
Other than the facts and developments reported on in the annual report, there have been no material changes in the affairs or financial position of the company and its subsidiaries since the date of signature of the audit report and up to the date of this notice. The directors have no specific intention, at present, for the company to repurchase any of its shares but consider that such a general authority should be put in place should an opportunity present itself to do so during the year which is in the best interests of the company and its shareholders.
page 122
GENERAL INFORMATION
Registration number
2005/008505/06
Postal address
PO Box 6851 Bloemfontein, 9300
Website
www.cbhltd.co.za
JSE share code

CBH
Transfer secretaries Business address

15 Coro Street Old East End Bloemfontein, 9301 Computershare Investor Services (Pty) Limited 70 Marshall Street Johannesburg, 2001
ISIN code
ZAE000094835
Bankers Country of incorporation

Republic of South Africa
Registered office/street address

269 Oxford Road Cnr Harries Road Illovo Johannesburg, 2196
Absa Bank Limited
Attorneys
Ramsay Webber inc
Directors
BH Kent (Non-executive chairperson) JD Wright (Chief executive officer) R Gibbison (Independent non-executive) GP Heath IWM Isdale (Independent non-executive) KW James CD Stein (Independent non-executive) RJ Taylor
Auditors Postal address

PO Box 412523 Craighall, 2024 PricewaterhouseCoopers Inc
Sponsor
Investec Bank Limited
Telephone
Company secretary +27 51 448 6803
Secretary
MJC Antunes
page 123
FORM OF PROXY
THE FORM OF PROXY IS ONLY FOR USE BY:
1. REGISTERED MEMBERS WHO HAVE NOT YET DEMATERIALISED THEIR ORDINARY SHARES 2. REGISTERED MEMBERS WHO HAVE ALREADY DEMATERIALISED THEIR ORDINARY SHARES AND REGISTERED THEM IN THEIR OWN NAME * *See explanatory note overleaf. I/We (Name in block letters) of (address) being a member/members of Country Bird Holdings Limited (Registration number 2005/008505/06) and the registered holder/s of 1. ordinary shares in the company, hereby appoint (see instruction 1 overleaf ) or failing him/her
2. or failing him/her 3. the chairman of the annual general meeting as my/our proxy to attend, speak and vote for me/us and on my/our behalf or to abstain from voting at the annual general meeting of the company to be held at Investec, 100 Grayston Drive, Sandton, Johannesburg on Monday, 22 November at 14:00 and at any adjournment thereof as follows: In favour 1. Receive and consider annual financial statements 2. Re-election of directors CD Stein, BH Kent, GP Heath, IWM Isdale and R Gibbison 3. Reappointment of auditors PricewaterhouseCoopers and approval of their remuneration 4. Repayment of the share premium account 5. Control of authorised but unissued shares 6. General authority to issue shares for cash 7. Non-executive directors fees 8. Special resolution number 1: General authority to repurchase shares (Indicate instructions to proxy by way of a cross in the space provided) Unless otherwise instructed, my/our proxy may vote as he/she thinks fit. Signed (Signature) this (day) day of (month) 2010 Against Abstain
page 124
NOTES TO THE FORM OF PROXY

1. A member entitled to vote at the annual general meeting is entitled to appoint one or more proxies to attend, speak and vote in his/her stead. A proxy need not be a registered member of the company. Every member present in person or by proxy entitled to vote at the annual general meeting of the company shall, on a show of hands, have one vote only, irrespective of the number of shares such member holds. In the event of a poll, every member shall be entitled to that proportion of the total votes in the company which the aggregate amount of the nominal value of the shares held by that member bears to the aggregate amount of the nominal value of all the shares issued by the company. Members who registered in their own name are members who elected not to participate in the Issuer-Sponsored Nominee Programme and who appointed Computershare Custodial Services as their Central Securities Depository Participant (CSDP) with the express instruction that their uncertificated shares are to be registered in the electronic subregister of members in their own names. without deleting the chairman of the annual general meeting, but any such deletion must be initialled by the member. Should this space be left blank, the proxy will be exercised by the chairman of the annual general meeting. The person whose name appears first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow. 5. 2. A members voting instructions to the proxy must be indicated by the insertion of an X, or the number of votes exercisable by the member, in the appropriate spaces provided overleaf. Failure to do so will be deemed to authorise the proxy to vote or to abstain from voting at the annual general meeting, as he/she thinks fit in respect of all the members exercisable votes. A member or his/her proxy is not obliged to use all the votes exercisable by him/her or by his/her proxy, but the total number of votes cast, or those in respect of which abstention is recorded, may not exceed the total number of votes exercisable by the member or his/ her proxy. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the transfer secretaries. To be valid, the completed forms of proxy must be deposited at the registered office of the company or posted to the company secretary, PO Box 6851, Bloemfontein, 9300, or lodged with the transfer secretaries, Computershare Investor Services (Pty) Limited at 70Marshall Street, Johannesburg, 2001, South Africa, or posted to the transfer secretaries at POBox 61051, Marshalltown, 2107 to be received not later than 10:00 on Thursday, 18November 2010 (South African time). Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the transfer secretaries or waived by the chairman of the annual general meeting. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such a member wish to do so. The completion of any blank spaces overleaf need not be initialled. Any alterations or corrections to this form of proxy must be initialled by the signatory/ies. The chairman of the annual general meeting may accept any form of proxy which is completed other than in accordance with these instructions provided that he is satisfied as to the manner in which a member wishes to vote.
2.
6.
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Instructions on signing and lodging the form of proxy

1. A member may insert the name of a proxy or the names of two alternative proxies of the members choice in the spaces provided overleaf with or 4.
8.
The peoples choice
BASTION GRAPHICS
Countr y Bird Holdings Annual Repor t 2010
www.cbhltd.co.za

CBH Ar2010

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Annual Repor t 2010

The peoples choice

The peoples choice

Country Bird Holdings Annual Report 2010

8,7% increase in revenue

8,8% cost of sales increase

R122,2 million operating profit

Poultry South Africa

Animal Nutrition South Africa Animal Nutrition Other Africa

Poultry Other Africa

Country Bird Holdings Annual Report 2010 010

Supreme Poultry (Pty) Limited

Nutri Feeds (Pty) Limited

Ross Breeders Botswana (Pty) Limited Poultry Other Africa

Oistins (Pty) Limited

COUNTRY BIRD HOLDINGS LIMITED

Ross Breeders Zambia (Pty) Limited

Master Farmer (Pty) Limited (Botswana) Animal Feed Other Africa

Master Farmer Zambia (Pty) Limited

Silver Blade Abattoir (Pty) Limited

Long Iron Meats (Pty) Limited

We are going for chicken and beef

Country Bird Holdings Annual Report 2010

Zambia amb mbi bi

Gaborone Johannesburg Mafikeng Potchefstroom Viljoenskroon Klerksdorp Bloemfontein

Country Bird Holdings Annual Report 2010

(Rm) Revenue EBITDA EBITDA margin (%)

2010 1 514 108 7,1

2009 1 513 141 9,3

% change 0 23,4 23,7

(Rm) Revenue EBITDA EBITDA margin (%)

2010 927 32 3,5

2009 841 7 0,8

% change 10,2 357 337,5

We continue to see great returns on our investments

Number of employees: 3 302

Number of employees: 2 364

Heading H Head He ea ad din ing 1

(Rm) Revenue EBITDA EBITDA margin (%)

2010 335 14 4,2

2009 360 11 3,1

% change 6,9 27,3 35,5

Number of employees: 1 227

Country Bird Holdings Annual Report 2010

Country Bird Holdings Annual Report 2010

Country Bird Holdings Annual Report 2010

Operations and economic environment

Bryan Hugh Kent Non-executive chairman

Country Bird Holdings Annual Report 2010

CHAIRMANS REPORT (continued)

Country Bird Holdings Annual Report 2010

Changes to the board

Bryan Kent Non-executive chairman

Country Bird Holdings Annual Report 2010

CEOS AND CFOS REVIEW

Jeff Wright Chief executive officer

Country Bird Holdings Annual Report 2010

Jeff Wright Chief executive officer

Robbie Taylor Chief financial officer

Robbie Taylor Chief financial officer

Country Bird Holdings Annual Report 2010

Country Bird Holdings Annual Report 2010

Country Bird Holdings Annual Report 2010