Astral Foods Annual Report 2008 - ShareData · PDF fileAstral Foods is a leading South African...

Astral FoodsAnnual Report 2008

Profile, strategy and vision 1

Group activities 2

Financial highlights 4

Group structure 6

Directorate 7

Chairman’s review 10

Chief executive officer’s review 12

Corporate governance 15

Sustainability report 22

Value-added statement 25

Historical review 26

Annual financial statements 28

Analysis of ordinary shareholders 83

Notice of annual general meeting 84

Shareholders’ diary 87

Administration 88

Form of proxy: Inserted

CONTENTS

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PROFILEAstral Foods is a leading South African food group withkey activities in animal feed, animal feed pre-mix, broilergenetics, broiler operations and the production and saleof day-old broilers and hatching eggs.

STRATEGYTo grow the business in selected food markets to remaina leading food commodity company.

VISIONTo be a leading commodity food business.

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GROUP ACTIVITIES

ANIMAL NUTRITION

ANIMAL FEEDEleven strategically placed feed mills in Southern Africa are well equipped to produce and distribute a wide rangeof specialised products for all commercially farmed animal species.

The South African operations consist of mills located in Randfontein, Delmas, Welkom, Paarl, Port Elizabeth,Pietermaritzburg, Ladismith and a speciality mill in Richmond.

The African operations consist of a feed mill in Lusaka (Zambia), a 33% shareholding in a feed mill in Port Louis(Mauritius) and an 80% shareholding in an operation in Maputo (Mozambique).

ANIMAL FEED PREMIXNuTec Southern Africa (Pty) Limited, a 50% joint venture with Provimi Holdings based in Holland, manufacturesand markets vitamin and mineral premixes for animal feed as well as a wide range of feed additives andcommodity and speciality raw materials.

ANALYTICAL LABORATORIESCentral Analytical Laboratories analyses feed and water samples for feed manufacturers and for theagricultural sector.

ANIMAL HEALTHCARENVS Biocare is involved in the marketing, sale and technical service of animal healthcare products, andmanufactures and markets a full range of speciality detergents and disinfectants focused on both the animal healthand food processing industries.

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POULTRY

DAY-OLD BROILER AND HATCHING EGG SUPPLIERThe National Chicks division conducts business as aday-old chick and hatching egg supplier to theAstral integrated broiler operations and theindependent non-integrated broiler producers inSouth Africa, Swaziland and Mozambique with atechnical team servicing its customer base.

INTEGRATED BROILER OPERATIONSThe group has three fully integrated broiler production, processing, distribution, sales and marketing operations.The combined production capacity of these three operations totals 3,75 million processed broilers per week madeup as follows:

Earlybird Standerton 1,25 million

Earlybird Olifantsfontein 1,25 million

County Fair Foods 1,25 million

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

County Fair Foods and Earlybird market and distribute a full range of value added products comprising frozenreformed filled products, ready to eat chicken products and a dedicated range of emulsified products.

BAKERYAstral acquired a 50% interest in East Balt SouthAfrica effective from 1 July 2008. East Balt SouthAfrica bakes hamburger buns, English muffins,Kaiser rolls and other sandwich carriers, primarilyfor selling to fast food outlets in South Africa.

BROILER GENETICSRoss Poultry Breeders (Pty) Limited is the sole distributor and supplier of both Ross 788 and 308 parent stock to theSouth African broiler industry. The company has a technology agreement with Aviagen Limited, a multi-nationalcompany which holds the worldwide proprietary rights to the “Ross” brand. The company has entered into anagreement with Aviagen Limited for the exclusive rights to the International Ross 308 broiler/ breeder which is worldrenowned for its superior broiler and breeder performance. The performance of the breed will be evident from 2010onwards. Aviagen Limited has a 10% shareholding in the company.

Elite Breeding Farms is a joint venture between Country Bird Holdings Limited and Astral Operations Limited, inwhich Astral Operations Limited holds an 82% interest. The joint venture supplies parent stock to National Chicksand County Fair Foods only.

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FINANCIAL HIGHLIGHTS

� OPERATING PROFIT DECREASED 32%

� EARNINGS PER SHARE DECREASED 38%

� DIVIDEND PER SHARE UNCHANGED

� CASH FROM OPERATING ACTIVITIES INCREASED 43%

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0807060504030201

OPERATING PROFIT DECREASED

BY 32% FROM R808 MILLION

TO R548 MILLION

REVENUE INCREASED BY 29%

FROM R6 329 MILLION TO

R8 184 MILLION

Operating profitRm

RevenueRm

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GREAT EMPHASIS IS PLACED ON CASH FLOW.

DESPITE LOWER PROFITS AND HIGH CAPITAL EXPENDITURE

THE NET DEBT TO EQUITY RATIO WAS 14%.

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EARNINGS PER

SHARE DECREASED

BY 38% TO

858 CENTS

CASH FROM

OPERATING ACTIVITIES AT

R639 MILLION

DIVIDEND PER SHARE

UNCHANGED AT

700 CENTS

Headline earnings per sharecents

Cash generated fromoperating activitiesRm

Dividends per share cents

ASTRAL OPERATIONS LIMITED

Meadow Feeds

NVS Biocare

Earlybird Olifantsfontein

Earlybird Standerton

County FairFoods

Animal Nutrition Operations

100%National Chicks Limited

67%National Chicks

Swaziland (Pty) Limited

50%NuTec Southern Africa

(Pty) Limited

100%Africa Feeds Limited

(Zambia)

33%Meaders Feeds Limited

(Mauritius)

Poulty Operations

Investment Holding

100%Meadow Feeds

(Eastern Cape) (Pty) Limited

50%East Balt South Africa

Partnership

90%Ross Poultry Breeders

(Pty) Limited

82%Elite Breeding Farms

80%Meadow Moçambique

Limited

National Chicks

100%

Bakery

Central AnalyticalLaboratories

GROUP STRUCTURE

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DIRECTORATE

JURIE JOHANNES GELDENHUYS (65)Independent non-executive directorBSc (Eng Elec), BSc (Eng Mining), MBADirector of companiesAppointed to the board on 24 May 2001Chairman of the board, chairman of the human resources and remuneration committee,chairman of the nominations committee and member of the audit and risk managementcommittee

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

Previously served on the Council of the Atomic Energy Corporation and on the National WaterAdvisory Council. Retired as managing director of Avgold Limited during 2001. Currently a directorof the listed Exxaro Resources Limited (chairman of safety, health and environmental committee andmember of the transformation, nominations, human resources and remuneration committee).

MALCOLM MACDONALD (66)Independent non-executive directorBCom, CA(SA), ACIMA Director of companiesAppointed to the board on 14 November 2003Chairman of the audit and risk management committee

Served as financial director of Iscor Limited (now ArcelorMittal South Africa) and its internationalsteel marketing company until retirement in 2004. Previously general manager of the IndustrialDevelopment Corporation of SA Limited and non-executive director of many of its associatedcompanies in a variety of industries (engineering, agriculture, chemicals, shipping, financial services,minerals extraction and processing).

Currently serves on the boards and as chairman of the audit committees of the listed GijimaASTGroup Limited, and unlisted Coris Capital.

THABANG CHARLOTTE CHRISTINE MAMPANE (50)Independent non-executive directorBA Hons (Public Administration), Masters in ManagementGroup Executive in the Group CEO’s office and Regions: South African BroadcastingCorporationAppointed to the board on 14 November 2003Member of the human resources and remuneration committee and member of thenominations committee

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

INDEPENDENT NON-EXECUTIVE DIRECTORS

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DIRECTORATE (continued)

NOMBASA TSENGWA (43)Independent non-executive directorBSc, MSc, PhD (Biotechnology)Executive General Manager: Safety and Sustainable Development, Exxaro Resources LimitedAppointed to the board on 8 May 2007Member of the nominations committee

Started career as Research Assistant, University of Transkei. Previous positions include Lecturer:Department of Genetics, University of Pretoria and Senior Co-ordinator: Agriculture and Agro-processing Sector within the National Research and Technology Foresight Project. Appointed asCorporate Manager: Biotechnology and Innovation Futures at the Council of Scientific and IndustrialResearch in 1999 before being appointed as Deputy-Director General: Environmental Managementat the National Department of Environmental Affairs and Tourism in 2000. Currently a member ofthe South African National Parks Board of Directors.

THEUNIS ELOFF (53)Independent non-executive directorBJur (Econ), ThB, ThM, ThDVice-Chancellor of North-West UniversityAppointed to the board on 8 May 2007

Ordained as minister of religion of a congregation at the University of Pretoria. Completed Doctoratein Theology with a dissertation on “Government, Justice and Race Classification”. Left the ministry in 1989 and jointed the Consultative Business Movement and was appointed asExecutive Director in 1990. In 1995 appointed as Chief Executive of the National Business Initiative.Served on the Economic Advisory Council of the Northwest Province, the Board of Business AgainstCrime and the Board of the Centre for Conflict Resolution. In 2002 became Vice-Chancellor of thePotchefstroom University for Christian Higher Education. In 2004 became Vice-Chancellor of thenewly merged North-West University. Currently serving as chairman of Higher Education SouthAfrica (HESA) and deputy chairman of the Association of Commonwealth Universities (ACU).

CHARLES GUSTAV VAN VEYEREN (74)Independent non-executive directorBSc AgricDirector of companiesAppointed to the board on 19 February 2001Member of the human resources and remuneration committee

Chairman of Onderberg Processing Co-operative Limited, Malelane Citrus Co-Operative Limited,Malelane Irrigation Board and Crocodile River Major Irrigation Board. Previously an executivemember of the South African Agricultural Union and served on the boards of the Land &Agricultural Bank of South Africa, Agricultural Research Council and Citrus Industry Trust.Also served on the Tariffs/Marketing Development Committee, National Water Advisory Committeeand as a Council Member of Eskom.

INDEPENDENT NON-EXECUTIVE DIRECTORS (continued)

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NICOLAAS CORNELIUS WENTZEL (53)Chief executive officerBCom (Hons), CA(SA)Appointed to the board on 9 February 2001

Appointed divisional director of Tiger Agri-Poultry in 1995 and divisional chairman of Tiger Millingand Baking operations in 1997. Left Tiger Brands in 1997 to take up position of chief executiveofficer of the Genfood Group. After successfully integrating the Premier Milling operations intoGenfood, accepted offer to head up Astral Foods Limited.

CHRISTIAAN ERNST SCHUTTE (48)Managing director, Animal Nutrition DivisionManagement Business Administration and Finance Dip.Appointed to the board on 18 August 2005

Joined Golden Lay Farms, a division of Tiger Brands, the leading egg producing organisation inSouthern Africa, in October 1984 as assistant farm manager. Spent 18 years with the group invarious positions. Joined Astral Foods Limited in 2002 as manager of retail sales for Meadow Feeds.Appointed as managing director for the Animal Nutrition Division in July 2004. Responsible forMeadow Feeds Southern Africa, National Veterinary Services, Central Analytical Laboratories andEast Balt South Africa.

EXECUTIVE DIRECTORS

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CHAIRMAN’S REVIEW

OVERVIEWThe year under review marked the break in an exceptional, uninterrupted earnings growth pattern since thelisting of Astral Foods in 2001. Underlying this was a South African poultry industry that came underunprecedented pressure during the latter half of the year. Reduced consumer spending led to an oversupply andthis, together with a substantial increase in input costs, caused profit margins to come under pressure.The group’s operating margin dropped from 12,8% to 6,7%.

The Animal Nutrition Division had an exceptional year and despite high raw material prices, operating profitincreased by 17,5%.

Revenue for the year increased by 29% to R8,2 billion but operating income was 32% lower at R548 million.Diligent attention to cash flow, with a focus on working capital management, resulted in the maintenance of astrong balance sheet. Net debt of R186 million was marginally higher than last year’s R159 million. This justifiedthe declaration of a dividend unchanged from last year’s, namely 700 cents per share.

The Competition Commission has referred the findings of its investigation into the complaint of anti-competitiveconduct by Astral Operations Limited and the Elite Breeding joint venture to the Competition Tribunal. The boarddisagrees with the views of the Commission and, in particular, the Commission’s view that Astral has, in any way,contravened the provisions of the Competition Act. We will raise, at the appropriate time, substantial factual andlegal issues material to the matter, which were not dealt with by the Commission on its referral.

The International Ross 308 bird will enter the market in 2010 replacing the Ascites resistant Ross 788 and theSouth African Ross 308. The International Ross 308 product is sold in 36 countries worldwide and will giveAstral access to the latest developed genetics from Aviagen International. The bird is more feed efficient as wellas a more prolific layer.

GROWTHIn line with our strategic plan to invest in organic expansion, projects to improve product mix and flexibility at theEarlybird processing plants, at a cost of R202 million, were completed during the year.

The new parent breeding operations of National Chicks Swaziland to produce 60 000 day-old chicks per week,was successfully commissioned in July 2008 at a cost of R14 million. Production is now in the correct locationand transportation of eggs has been reduced.

County Fair Foods completed its expansion to increase its broiler production by 55 000 broilers to 1,25 millionper week in August 2008 at a total cost of R48 million.

The year marked the break in anexceptional, uninterruptedearnings growth pattern sincelisting in 2001

JJ GeldenhuysChairman

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Construction was started on a breeding operation and broiler hatchery in Lusaka (Zambia) to produce 200 000day-old chicks per week. R18 million of the total cost of R55 million was spent during the year.

As a result of the current broiler expansion programmes, our Animal Nutrition Division will continue to grow.

Astral Foods acquired a 50% interest in East Balt South Africa effective 1 July 2008. East Balt South Africa bakeshamburger buns, English muffins, Kaiser rolls and other sandwich carriers primarily for selling to McDonald’s andKentucky Fried Chicken outlets in South Africa. Capital expenditure of R58 million for a second bakery in theWestern Cape was approved.

Central Analytical Laboratories (Cape), the agronomy side of the Cape Analytical Laboratories operations, wasperceived as non-core to Astral and was sold to SGS South Africa (Pty) Limited for R3,8 million.

PROSPECTSConsumption of poultry meat has increased steadily over the past few years and is expected to continue, albeit ata slower rate. The current weakness of the rand, if it persists, will continue to make imports of poultry meat veryexpensive.

Due to the weakening of world markets, international agricultural commodity prices are likely to remain weak,placing downward pressure on food inflation.

Reduced input costs together with lower imports are forecast in the new financial year. We therefore expect animprovement in earnings for the coming year, provided South African consumer demand for our products,particularly poultry, remains at acceptable levels despite a very uncertain global economy.

THE BOARD Mike Kingston, group poultry director since 2001, resigned with effect from 1 November 2008. Our thanks for ajob well done and best wishes accompany him into the future.

APPRECIATIONI would like to take this opportunity to thank my colleagues on the board for their wise counsel and to thankNick Wentzel, his management team and all the staff at Astral for yet another fine effort under extremely difficultconditions during the past year.

JJ GeldenhuysChairman

13 November 2008

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CHIEF EXECUTIVE

OFFICER’S REVIEW

FINANCIAL RESULTSResults for the year showed a 39% decline in headline earnings.

Revenue increased by 29% to R8,2 billion (2007: R6,3 billion). Operating profit decreased by 32% toR548 million (2007: R808 million) although the Animal Nutrition Division reported strong growth. Groupoperating margins at 6,7% were down on last year’s 12,8%.

Despite difficult trading conditions, cash flow was robust. As a result of a significant reduction in working capital,cash from operating activities increased 43% to R639 million compared to R448 million in 2007.

Expansion capital expenditure for the year totalled R181 million (2007: R240 million), the major items being:

� R48 million at County Fair Foods to expand capacity to 1,25 million broilers per week;

� R14 million at National Chicks (Swaziland) for a parent breeding operation;

� R18 million for a breeding operation and broiler hatchery in Lusaka, Zambia;

� R54 million to increase product mix and flexibility at Earlybird; and

� R26 million in respect of the Earlybird Standerton rendering plant.

Replacement capital expenditure of R93 million was in line with the depreciation charge of R89 million.

We place great emphasis on return on net assets. Net asset turn increased to 4,7 times but due to the lowerprofitability the return on net assets was 31% (2007: 55%).

Return on equity decreased from 45% to 25%.

ANIMAL NUTRITIONThe division comprises three arms – Animal Feeds, Animal Feed Pre-Mixes and Services.

Animal feedsDespite volatile local and international commodity markets and high input costs, the results for the year weremost pleasing. Revenue of R5,1 billion (2007: R3,5 billion) increased by 46% and operating profit of R385 million(2007: R333 million) improved by 16%. However, operating margins decreased from 9,4% to 7,5% as the fullimpact of increased input costs could not be recovered.

Robust operating cash flowdespite difficult tradingconditions.

NC WentzelChief executive officer

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The South African animal feed market is mature with the only significant growth prospects coming from theexpanding poultry industry. Our division is well positioned to take full advantage of any future poultry expansion.

Quality remains one of our core focus areas and a major reason for our strong market position. The division hasachieved certification with regard to ISO 22000/2005, ISO 9001/2000, Good Manufacturing Practices (GMP) andHazard Analysis and Critical Control Point (HACCP) at all of the main feed mills which offer complete producttraceability in line with European Union standards of feed safety.

The technical agreement with Provimi Holding BV, a leading international animal feed research and developmentorganisation, gives us access to the latest developments in animal feed nutrition.

Animal feed pre-mixNuTec Southern Africa, a 50% joint venture with Provimi Holding BV, produced an excellent financialperformance despite significantly higher vitamin prices brought about by world wide shortages.

Service companiesNational Veterinary Supplies showed good progress in both its animal health and chemical divisions.Central Analytical Laboratories, our laboratory operation, also reported satisfactory results.

A 50% stake in East Balt South Africa was acquired effective 1 July 2008 and reported results in line withbudget.

POULTRYThe division comprises three separate business units – integrated broiler operations, broiler genetics and theproduction and sale of day-old broiler chicks and hatching eggs.

Revenue from Poultry increased by 16% from R4,4 billion to R5,1 billion. However, with only an 8% increase inpoultry meat realisations against a 29% increase in feed costs, operating profit fell by 66% from R475 million toR163 million and operating margins dropped from 10,8% to 3,2%.

Integrated broiler operationsThe integrated broiler operations are represented by Earlybird, with production and processing facilities inGauteng and Mpumalanga, and County Fair Foods in the Western Cape.

Imported poultry products remain a strong competitor in the local market.

Disease is always a major threat in the poultry industry and control measures are a major feature of ourmanagement focus. Sporadic outbreaks of Newcastle disease continued into 2008. Avian influenza remains athreat to the industry and its status is constantly monitored.

Broiler geneticsThe broiler genetics company, Ross Poultry Breeders (Pty) Limited, operates in association with one of the twolargest global providers of broiler breeding stock, Aviagen Limited, which is a 10% shareholder. Despite increasedinput costs the company recorded good results.

Day-old broilers and hatching eggsOur National Chicks group has operations in Gauteng, KwaZulu Natal and Swaziland. Profit for the year wasmarginally below last year as high input costs could not be fully recovered in the market place.

A parent breeding operation in Swaziland to produce an additional 60 000 day-old chicks per week wascompleted in July 2008.

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CHIEF EXECUTIVE OFFICER’S REVIEW (continued)

CONCLUSIONThe poultry expansion programme to improve product mix and flexibility in the plants was completed during theyear.

The global recession has placed downward pressure on commodity prices and lower feed prices and energy costsare forecast for the coming year.

APPRECIATIONI would like to thank our customers for their support during the past year. We remain committed to deliveringexcellent client service and providing products of the highest quality.

I also wish to express our thanks to our suppliers for assisting us in achieving high performance standards.

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

Finally, the support received from our chairman, Jurie Geldenhuys, together with the board, is highly valued.The group has benefited from their wise counsel and depth of experience during the past year.

NC WentzelChief Executive Officer

13 November 2008

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CORPORATE GOVERNANCE

We subscribe to the principles of discipline, transparency, independence, accountability, responsibility, fairnessand social responsibility identified as the primary characteristics of good governance in the King Report onCorporate Governance 2002 (King Report). Our approach to corporate governance is a keystone of our primaryobjective which is to create value for all our stakeholders. We have taken cognisance of the Public InvestmentCorporation’s corporate governance and proxy voting policy and have implemented measures to comply with itsrequirements as far as possible.

We acknowledge the constitution of South Africa as the supreme law of the country, and abide by all existinglegislation. We believe that the group’s governance practices are sound and that in all material respects, weconform to the principles embodied within the King Report and the listing requirements of the JSE Limited.The board remains committed to ensure that these principles continue to be an integral part of the way inwhich Astral’s business is conducted.

THE CONSTITUTION AND THE OPERATION OF THE BOARD OF DIRECTORS

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

� The chairman of the board is an independent non-executive director;

� A formal orientation programme for new directors is followed;

� Specific clauses, in line with the King Report, exist with regard to conflicts of interest and the maintenanceof a register of directors’ interests;

� The board conducts self-evaluation on an annual basis;

� Directors have access to staff, records and the advice and services of the company secretary;

� Succession planning for executive management is in place and is regularly updated;

� A strategic plan and approvals framework exist and are regularly reviewed;

� Policies and processes necessary to ensure the integrity of internal controls and risk management are inplace; and

� The nature and extent of social transformation, ethical, health and safety, human capital, and environmentalmanagement policies and practices are monitored and reported on regularly.

We have a unitary board structure, presently comprising eight directors, including six independent non-executivedirectors. The roles of chairman and chief executive are separate and distinct.

On 14 February 2008 Mr JL van den Berg retired as chairman and non-executive director. Mr JJ Geldenhuyssucceeded him as chairman of the board. Mr MA Kingston resigned as director on 1 November 2008.

We believe that the non-executive directors are of suitable calibre and number for their views to carry significantweight in the board’s decisions. An independent non-executive chairman leads the board. A schedule ofbeneficial interests of directors appears on page 38 of this report.

A complete list of board members appears on pages 7, 8 and 9 of this report. In terms of our articles ofassociation all new directors appointed during the year, as well as one third of the existing directors, have toretire on a rotational basis each year and they may offer themselves for re-election.

Our approach to corporate governance is a keystone of ourprimary objective which is to create value for all our stakeholders

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The board accepts responsibility for the induction of new or inexperienced directors. As part of the company’sinduction programme, a new director is briefed by the company secretary and provided with a comprehensivecompany information pack.

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

The board is aware that it is accountable for the actions of management and has retained full and effectivecontrol of the organisation over the past year. The board defines levels of materiality, reserving specific powersto itself, and delegates other matters with the necessary written authority to management. These matters aremonitored and evaluated on a regular basis.

The board, in terms of its charter, is required to meet at least quarterly so as to monitor important issues andmeet its objectives. Matters reviewed include strategy, planning, operational performance, broad-based blackeconomic empowerment compliance, acquisitions, disposals, shareholder communications and other materialaspects pertaining to the achievement of the group’s objectives. Board members are required to regularly declareany interest that they might have in transactions with the group.

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

Management ensures that the information needs of the board are well defined and regularly reviewed.The board of directors is ultimately responsible for ensuring that Astral is a viable business and to this endeffectively controls the company and its subsidiaries, monitors executive management and is involved in alldecisions that are material for this purpose.

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

Attendance at meetings The following is a list of scheduled and special board meetings and board committee meetings attended byeach director during the year:

CORPORATE GOVERNANCE (continued)

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Board:

2007 2008

Director 8/11 24/1• 14/2 15/5 19/5 5/6• 17/6• 14/8

T Eloff √ √ √ √ √ A √ √JJ Geldenhuys √ √ √ √ √ √ √ √MA Kingston √ √ √ √ √ √ √ √M Macdonald √ √ √ √ √ A √ √TCC Mampane √ A √ A A √ A √CE Schutte √ √ √ √ √ √ √ √N Tsengwa √ A √ √ √ A A √JL van den Berg √ √ * * * * * *CG van Veyeren √ √ √ √ √ √ √ √NC Wentzel √ √ √ √ √ √ √ √

Key: √ PresentA Absent* Retired 14 February 2008• Special board meetings

Audit and risk management committee

The committee met twice in 2008. Attendance at meetings was as follows:

2007 2008

Director 7/11 16/5

DM Macdonald √ √JL van den Berg √ *JJ Geldenhuys # √

Key: √ Present* Retired 14 February 2008# Appointed 16 May 2008

Human resources and remuneration committee

The committee met twice during 2008. Attendance at meetings was as follows:

2008

Director 8/5 7/8

JJ Geldenhuys √ √TCC Mampane √ √CG van Veyeren √ √

Key: √ Present

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Non-executive directors receive the following fees:

Fixed feeper annum

2008R’000

Chairman of the board 300Member of the board 150Chairman of the audit and risk management committee 110Member of the audit and risk management committee 60Chairman of the human resources and remuneration committee 110Member of the human resources and remuneration committee 60

The remuneration is paid quarterly in arrears. Members will be requested to approve an 8% increase in non-executive directors’ fees at the forthcoming annual general meeting.

Board committeesTo enable the board to properly discharge its responsibilities and duties, certain responsibilities of the board havebeen delegated to board committees. The board is satisfied that all committees have met their respectiveresponsibilities for the period under review. All board committees are chaired by an independent non-executivedirector. Particulars of the composition of the board of directors and committees appear on pages 7, 8 and 9 ofthis report. Board committee charters are reviewed on an ongoing basis to ensure that the committees’ dutiesand responsibilities are aligned with the requirements of corporate governance and keep abreast ofdevelopments in this field. The board committees are as follows:

The audit and risk management committeeThe audit and risk management committee consists of two members, both of whom are independent non-executive directors, and meets at least twice a year with management, internal and external auditors as wellas the group’s risk managers. Ideally, a third suitably qualified independent non-executive director should beappointed to the committee. The board will make this appointment on recommendation of the nominationscommittee. The opportunity is also created for discussion with the external and internal auditors without thepresence of management. We believe that the members of the committee are knowledgeable about the affairsof the company and have a working familiarity with basic finance and accounting practices. Mr NC Wentzel, ourchief executive officer, also makes a valuable contribution to the committee as a result of his extensive experienceas a chartered accountant as well as his in-depth knowledge of the poultry and milling industries.

The audit committee fulfils the responsibilities as set out in the audit committee charter, which include:

� Overseeing the internal and external audit function;

� Assisting the board in the discharge of its duties relating to the safeguarding of assets and operation ofadequate systems and internal controls;

� The preparation of accurate financial reporting and statements in compliance with all applicable legalrequirements, corporate governance and accounting standards; and

� Providing support to the board on the risk profile and risk management of the group.

Both the group internal audit manager and external auditors have unfettered access to the chief executive officer,the chairman of the board and the audit and risk management committee.

Members of the audit committee are:

Independent Member Non-executive Period

M Macdonald (chairman) Yes May 2004 to dateJJ Geldenhuys Yes May 2008 to date

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To further enhance the effectiveness of the audit and risk management committee we also have bi-annualdivisional audit committee meetings for each operation. As part of our enterprise wide risk managementprogramme, quarterly risk management meetings are held at operational and corporate level under thechairmanship of a risk control manager who reports to the group audit and risk management committee.

The nominations committeeThe nominations committee was established during the course of the year and consists of three independentnon-executive directors. The committee meets annually or more often at the committee’s discretion. The primarypurpose of the nominations committee is to ensure that the procedures for appointments to the board areformal and transparent, by making recommendations to the board on all new board appointments and reviewingsuccession planning for directors. The committee also has to evaluate all candidates for the position of directoron the basis of skill and experience. Thorough background checks are conducted.

Members of the nominations committee are:


JJ Geldenhuys (Chairman) Yes May 2008 to dateTCC Mampane Yes May 2008 to dateN Tsengwa Yes May 2008 to date

The human resources and remuneration committeeThe human resources and remuneration committee consists of three independent non-executive directorsincluding the chairman of the committee. The committee meets at least twice a year.

Responsibilities of the human resources and remuneration committee include:

� Development of our general policy and remuneration system for executive and senior management andmaking recommendations to the board on remuneration packages applicable to directors;

� Measuring the performance of executive directors to ensure that they are fairly rewarded;

� Employment equity and skills retention matters; and

� Management succession planning.

Members of the human resources and remuneration committee are:


JJ Geldenhuys (chairman) Yes May 2001 to dateTCC Mampane Yes August 2005 to dateCG van Veyeren Yes May 2001 to date

REMUNERATION POLICY, SHARE INCENTIVE SCHEMES AND MANAGEMENT BONUSINCENTIVE SCHEMEAstral’s remuneration policy is to attract, retain and incentivise management and personnel of the highest calibre.

Executive directors, senior management and middle management participate in a management bonus incentivescheme based on an Economic Value Added (EVA®) formula.

Executive directors, senior management and middle management are eligible to participate in the group’s shareincentive scheme, which is designed to enable them to participate in the growth that they helped create for theshareholders. Options are allocated at the market price ruling at the date they are granted, vest after stipulatedperiods, and are exercisable over a maximum period of ten years from the date of issue. Non-executive directorsare not entitled to options in terms of the group’s share option scheme. A number of other bonus schemes arealso in place that cover all levels of employees in the group.

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ORGANISATIONAL INTEGRITY AND ETHICSWe maintain a code of ethics, which requires all employees, managers and directors to comply with the letterand spirit of the code by observing the highest ethical standards and to ensure that all business practices areconducted in a manner which is beyond reproach.

We maintain a zero-tolerance approach to unethical behaviour. Any employee found to be acting unethicallyis subject to disciplinary proceedings, which can lead to dismissal. An independent hotline is available whereunethical behaviour, workplace dishonesty, fraud, theft or any other crime may be reported anonymously.

The Code of Ethics includes:

� Compliance with laws and regulations and codes;

� Culture, ethics and values;

� Client service;

� Privacy and confidentiality;

� Respect and dignity;

� Social responsibility; and

� Conflict of interest.

The board has no reason to believe that there has been any material non-adherence to the code of ethics duringthe year under review.

RESTRICTIONS ON SHARE DEALINGSDirectors and employees are prohibited from dealing in Astral shares during price sensitive periods. There is aformal clearance procedure in place with respect to directors dealing in Astral shares. Closed periods extend from31 March and 30 September, being the commencement of the interim and year-end reporting dates, up to thedate of announcement of interim and year-end results, and include any other period during which the companyis trading under a cautionary announcement.

RISK MANAGEMENT AND INTERNAL CONTROLRisk management is an integral part of our culture and strategic operations. The audit and risk managementcommittee is responsible for assessing our management of identified risk issues.

The board believes its focus on risk issues is appropriate and that an adequate system of internal control is inplace to mitigate significant risks and to provide the board with a reliable means of monitoring operationalsustainability.

Internal control self-appraisal systems are in place for all operations and are reviewed at divisional auditcommittee meetings. Annual audits are conducted in respect of health and safety, risk control organisation,emergency planning and fire and loss control. Documented crisis management plans are in place for alloperations. In addition, we promote ongoing commitment to risk management and control by participating inexternally organised risk management and safety programmes such as ISO 9001/2000, Good ManufacturingProcesses (GMP) and Hazard Analysis and Critical Control Points (HACCP) at our various operations.

In terms of the current Environmental Risk Management programme within the group, all manufacturingbusiness units are audited on a three year rotational basis. These audits are completed by a third party auditingcompany – Alexander Forbes Risk Engineering. Audits are aligned with the Group Environmental RiskManagement Policy Statement and aim to highlight areas of risk exposure and legal non compliance.

The board believes that it has reasonable, but not absolute, assurance with regard to the effectiveness andefficiency of operations, protection of assets and information, and regulatory and legal compliance.

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INTERNAL AUDITWe have established an independent, objective and effective internal audit department governed by a charterapproved by the board. The internal audit function reports to the chief executive officer and has unfetteredaccess to the chairman of the board and the chairman of the audit and risk management committee.

The role of internal audit is to review compliance with internal controls, systems and procedures. The board issatisfied that the group’s internal controls are adequate in safeguarding the group’s assets, preventing anddetecting errors and fraud, ensuring the accuracy and completeness of accounting records and preparing reliablefinancial statements.

During 2007 an independent review of the group’s internal audit department was conducted and thedepartment achieved the highest compliance rating of the Institute of Internal Auditors.

EXTERNAL AUDITThe audit and risk management committee recommends to the board the appointment of external auditors.It also considers the independence of the external auditors, and has set principles for the use of external auditorsto provide non-audit services. Consultation and co-operation between external auditors and internal auditors isencouraged by the board.

MANAGEMENT REPORTINGWe have comprehensive management reporting disciplines, which include the preparation of annual strategicplans and budgets by all operations. Group strategic plans and budgets are considered and approved by theboard. Results and the financial status of the operations are reported monthly and compared with approvedbudgets and results of the previous year. Working capital requirements and borrowing levels are monitored onan ongoing basis and corrective or remedial action taken as appropriate.

COMPANY SECRETARYAll directors have access to the advice of the company secretary and are entitled and authorised to seekindependent and professional advice about the affairs of the company at the company’s expense. The companysecretary is suitably qualified and experienced and plays an important role in ensuring that the board proceduresare followed correctly and reviewed regularly. The company secretary is responsible for the duties set out inSection 268G of the Companies Act and is appropriately empowered by the board to fulfil these duties.The certificate required to be signed in terms of Section 268G(d) of the Act appears on page 29.

COMMUNICATIONThe board ensures that material matters of significant interest and concern to shareholders and otherstakeholders are addressed in public disclosures and communications. In this regard, the board ensures thatadequate transparency on all pertinent financial and non-financial matters is provided.

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SUSTAINABILITY REPORT

Being conscious of our social, environmental and economic responsibility to employees, the broader communityand future generations, we subscribe to the principles of sustainable development and are committed to theimplementation of triple-bottom-line reporting.

ORGANISATIONAL DEVELOPMENT

Human resources developmentThe training and development of employees in all key areas is an integral part of the internationally recognised20 Keys Workplace Improvement Programme referred to below. Each employee attends a number of trainingsessions in this regard. A learnership programme in supervision has been introduced at several workplaces.

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

Some of the other training and development interventions that are focused on are:

� Information Technology skills;

� Supervisory skills;

� Sales;

� Quality systems; and

� Production and processing skills

The group is committed to the Skills Development Act. Our submission of skills development plans and ourimplementation against targets have ensured the maximum benefit in this regard. We have appointed30 apprentices (electricians, millwrights, fitters and turners) with assistance from the Sectoral Training Authorityfor Agriculture.

We have a study loan policy providing employees with financial assistance to further their academic qualificationsin line with current and future job requirements.

Attraction and retention of peopleWe continuously evaluate our recruitment processes to ensure that high calibre talent is employed, takingcognisance of leadership capabilities, identified competencies for positions and employment equity plans.Our approach is to attract the best people in the industry. In our employment process we also focus on theappointment of persons from the designated groups.

Workplace improvement programmeOver the past year we have continued with our drive for excellence through the implementation of the 20 KeysTotal Workplace Improvement Programme, which aims to energise the workforce to work faster, cheaper andbetter. All employees at the various workplaces participate as teams to improve productivity and efficiencies.We can claim that we have made the best progress in South Africa with the implementation of these concepts.Meadow Feeds Pietermaritzburg has recently been awarded the International Excellence Award and together

We subscribe to the principles of sustainable development andare committed to the implementation of triple-bottom-linereporting

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with Meadow Feeds Paarl, Meadow Feeds Randfontein, Earlybird Standerton and NuTec Southern Africa are theonly five operations in South Africa to have received this award.

We expect that the Meadow Feeds Delmas and Welkom operations will achieve this status during 2009.

The Meadow Feeds plants in Paarl and Randfontein, as well as NuTec Southern Africa, will strive to reach theBronze award during 2009, which will be a first in the world for operations of this kind.

HEALTH AND SAFETYWe have implemented a Risk Control Programme with emphasis on compliance with the Occupational Healthand Safety Act (the Act). A three tiered approach is followed in order to ensure compliance with the Act.

The first tier consists of employees’ awareness of their responsibilities in terms of the Act. Executive managementand employees are regularly updated on issues pertaining to the implementation and compliance with the Actthrough established structures and seminars.

The second tier comprises education. All employees are put through induction training. This training specificallydeals with health and safety in the workplace and compliance with regulations of the Act. Furthermore,legislatively required responsible persons, such as safety representatives and first aiders, are trained on aregular basis.

The third tier comprises the implementation, monitoring and auditing of Occupational Health and Safety Actmanagement systems to ensure compliance with the Act. A step by step documentary system is applied for eachsite, cross referenced to the actual sections of the Act. The system has received much praise from theDepartment of Labour inspectors conducting site inspections. Annual audits are done and results reportedthrough established structures.

Items affecting the wider risk management of each site are discussed at monthly corporate risk managementmeetings under the chairmanship of the group risk control officer. Matters arising from these meetings arereferred to the group audit and risk management committee (board sub-committee). An annual group riskmanagement meeting is held where senior management representing all the sites in the group are present.

We set a minimum requirement for each site to score at least 85%, with the major sites 95%. With theexception of one major site we have met these requirements. The target for the Occupational Health and SafetyAct compliance is 100%.

HIV/AIDSWe recognise the implications of the pandemic for the family structure, the community and long-term issues ofsustainability. The reality is that the prevalence of HIV/AIDS among our workforce is currently estimated to beabout 27%. This estimation was made through an actuarial impact study. The indications are that we are slightlyabove the industry norm.

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

� Educational programmes at all operations;

� Voluntary testing to determine the prevalence of HIV/AIDS; and

� Counselling of affected employees.

An initial AIDS Rating was introduced in 2007, which focused on strategy and implementation to increaseawareness and decrease HIV/AIDS infections. A second AIDS Rating in June 2008 shows a significantimprovement in awareness.

We are currently evaluating different options to introduce a wellness programme.

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SUSTAINABILITY REPORT (continued)

TRANSFORMATIONWe are committed to providing equal opportunities to all employees.

Employment equityAll our operations comply with the Employment Equity Act, 55 of 1998, and annual reports are submitted to theDepartment of Labour. Employment equity committees have been established at every business unit to set andmonitor progress. The different occupational levels below management level reflect that between 35% and 92%of employees are from the designated group. The figure on management level is 18%, reflecting good progresstowards the target set by the Department of Trade and Industry of 25 to 30% within 10 years. We believe thatno unfair discrimination exists in the workplace.

Black economic empowermentWe support and are committed to the concept of black economic empowerment and actively promote theempowerment of staff members and the communities in which we operate. The company has embarked on arating of its Black Economic Empowerment status by EmpowerDEX.

As a group the score for skills development came out high as a result of our focused approach to the trainingand development of staff and a satisfactory rating for employment equity.

We have established a procurement committee to focus on securing the services of providers who meet certainblack economic empowerment requirements and a formal policy in this regard has been implemented.

In a number of instances business units get involved in local communities, through schools, feeding schemes andallocation of bursaries to children of black employees.

Our Black Economic Empowerment rating by the Financial Mail during 2008 was listed as number 117 out of200 companies listed on the JSE.

THE ENVIRONMENTWe regard awareness of the need to protect the environment as of utmost importance. To this end we havemeasures and controls in place to ensure a friendly environment. The implementation of quality systems,ISO 9001-2000, ISO 22000:2005, Good Manufacturing Practices (GMP) and Hazard Analysis and Critical ControlPoint (HACCP) enable us to have full traceability of all products that go into the market. In accordance with ourenvironmental philosophy, third party environmental compliance audits are regularly conducted at key sites.During the period under review, environmental risk assessments were conducted at County Fair, Earlybird andMeadow Paarl. The assessments could not identify any high risks. Furthermore, no significant environmentalincidents were recorded during the year under review.

CONCLUSIONWe believe that the sustainability of our business lies firmly in the hands of our people, as they are the greatestsource of our competitive advantage. We implement best practices in all areas of our operations in order toachieve meaningful improvement in the productivity of our people and in the quality of life for them and theircommunities.

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The value-added statement measures performance in terms of value added by the group through the collectiveefforts of management, employees and the providers of capital. The statement shows how value has beendistributed to those contributing to its creation, and the portion retained for future investments.

2008 2007R'000 % R'000 %

Value addedSales of goods and services 8 184 205 6 329 311 Less cost of materials and services (6 836 398) (4 773 801)

Value added from trading operations 1 347 807 99,2 1 555 510 99,4Income from investments 10 762 0,8 9 407 0,6

Total value added 1 358 569 100,0 1 564 917 100,0

Value distributedTo labour 706 386 52,0 635 313 40,6To government 168 859 12,4 266 755 17,0

Income tax 164 159 261 089 Skills development levies 4 700 5 666

To providers of capital 329 399 24,3 254 889 16,3

Dividends to shareholders 269 236 243 891 Interest on borrowings 60 163 10 998

Total distributions 1 204 644 88,7 1 156 957 73,9Income retained in the business 153 925 11,3 407 960 26,1

Depreciation/amortisation 88 935 106 293 Retained profit for the year 64 990 301 667

Total value distributed and reinvested 1 358 569 100,0 1 564 917 100,0

VALUE-ADDED STATEMENTfor the year ended 30 September 2008

2008 2007

Providers of capital

Government

Reinvested

Labour

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2008* 2007* 2006* 2005* 2004 2003 2002 2001

Income statementinformationRevenue R million 8 184 6 329 5 184 4 838 4 053 3 947 3 692 2 792 EBITDA R million 637 915 855 674 464 396 278 248 EBITDA margin % 7,8 14,5 16,5 13,9 11,4 10,0 7,5 8,9 Operating profit R million 548 808 766 597 389 327 220 203 Operating profit margin % 6,7 12,8 14,8 12,3 9,6 8,3 5,9 7,3 Profit for year R million 334 546 516 415 264 210 140 115 Headline earnings for year R million 320 536 510 397 263 208 140 117

Balance sheetinformationTotal assets R million 3 157 2 867 2 172 1 825 1 838 1 328 1 389 1 027 Total equity R million 1 328 1 308 1 121 983 765 615 467 366 Total liabilities R million 1 829 1 559 1 051 842 1 073 713 922 661 Net assets R million 1 791 1 663 1 240 1 126 1 133 681 680 547

Profitability and asset managementReturn on total assets % 16,7 32,2 38,6 31,3 27,1 23,0 14,8 17,0 Return on equity % 25,3 45,0 49,3 46,4 38,6 39,0 33,4 31,2 Return on net assets % 31,3 54,8 64,7 51,3 48,3 48,1 35,8 37,1 Net asset turn times 4,7 4,3 4,4 4,2 4,7 5,8 6,0 5,1

Shareholders' ratiosEarnings per share cents 858 1 387 1 285 989 630 487 323 266 Headline earnings per share cents 840 1 381 1 286 958 631 487 326 272 Dividend per share cents 700 700 585 380 230 168 108 90 Dividend cover times 1,2 2,0 2,2 2,5 2,7 2,9 3,0 3,0

Stock exchange statisticsMarket value per share– At year end cents 9 650 12 100 8 650 7 100 4 071 2 395 1 310 1 185– Highest cents 15 490 14 347 10 400 7 500 4 100 2 400 1 555 1 220– Lowest cents 7 300 8 600 6 580 4 020 2 385 1 300 1 000 760Closing dividend yield % 7,3 5,1 5,6 3,8 4,7 5,0 8,2 7,6 Closing earnings yield % 8,9 11,3 13,9 10,3 13,7 15,2 24,9 22,9 Closing price/earnings ratio times 11,3 8,8 7,2 7,7 6,5 4,9 4,0 4,4 Number of shares issued # '000 42 136 42 728 43 277 44 520 43 499 42 867 42 867 42 924 Number of transactions 17 492 15 030 8 809 6 807 5 401 2 793 4 760 5 564 Number of shares traded '000 23 646 25 027 22 317 19 530 21 783 15 158 20 178 32 663 Number of shares tradedas a percentage of issuedshares % 56 59 52 44 50 35 47 76 Value of shares traded R million 2 596 2 889 1 846 1 185 679 270 249 304 Closing market capitalisation R million 4 066 5 170 3 743 3 161 1 786 1 027 562 509

# Refer to note 10 of the financial statements for the number of shares effectively in issue net of treasury shares

* Figures presented on IFRS basis

HISTORICAL REVIEW

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DEFINITIONS

Operating profit marginOperating profit before interest and income tax as a percentage of revenue.

EBITDAEarnings before interest, income tax, depreciation and amortisation.

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

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

Return on equityNet profit attributable to ordinary shareholders as a percentage of average ordinary shareholders' interest.

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

Net asset turnRevenue divided by average net assets.

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

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

Headline earningsNet profit for the year adjusted for profit/loss on sale of property, plant and equipment, and investments.

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

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

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

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

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ANNUAL FINANCIAL STATEMENTS

for the year ended 30 September 2008

Approval of annual financial statements 29

Certificate by company secretary 29

Statement of directors’ responsibility 30

Independent auditors’ report 31

Directors’ report 32

Directors’ remuneration report 36

Segment report 39

Accounting policies 40

Balance sheet 54

Income statement 55

Statement of changes in equity 56

Cash flow statement 57

Notes to the cash flow statement 58

Notes to the annual financial statements 59

CONTENTS

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APPROVAL OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements and group annual financial statements of Astral Foods Limited for the year ended30 September 2008 set out on pages 32 to 82, were approved by the board of directors on 13 November 2008 andsigned on its behalf by:

JJ Geldenhuys NC WentzelChairman Chief executive officer

Pretoria13 November 2008

CERTIFICATE BY COMPANY SECRETARY

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

MA EloffGroup company secretary

13 November 2008

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The directors are responsible for the preparation, integrity and fair presentation of the financial statements of AstralFoods Limited and its subsidiaries. The financial statements presented on pages 32 to 82 have been prepared inaccordance with International Financial Reporting Standards (IFRS), and in the manner required by the Companies Act ofSouth Africa and include amounts based on judgments and estimates made by management.

The preparation of financial statements in conformity with IFRSs requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and thereported 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 accountingpolicies, consistently applied and supported by reasonable and prudent judgments and estimates, and that all IFRS thatthey consider to be applicable have been followed. The directors are satisfied that the information contained in thefinancial statements fairly presents the results of operations for the year and the financial position of the company andthe group at year end.

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

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

The going concern basis has been adopted in preparing the financial statements. The directors have no reason to believethat the company and the group will not be a going concern in the foreseeable future based on forecasts and availablecash resources. These financial statements support the viability of the company and the group.

The financial statements have been audited by the independent auditors, PricewaterhouseCoopers Incorporated, whowere 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 theindependent auditors during their audit are valid and appropriate.

The audit report of PricewaterhouseCoopers Incorporated is presented on page 31.

STATEMENT OF DIRECTORS’ RESPONSIBILITY

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INDEPENDENT AUDITOR’S REPORT

We have audited the annual financial statements and group annual financial statements of Astral Foods Limited,which comprise the directors’ report, the balance sheet and the consolidated balance sheet as at 30 September 2008,the income statement and the consolidated income statement, the statement of changes in equity and theconsolidated statement of changes in equity, the cash flow statement and the consolidated cash flow statement forthe year then ended, and a summary of significant accounting policies and other explanatory notes, as set out onpages 32 to 82.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTSThe company’s directors are responsible for the preparation and fair presentation of these financial statements inaccordance with International Financial Reporting Standards and in the manner required by the Companies Act ofSouth Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to thepreparation and fair presentation of financial statements that are free from material misstatement, whether due tofraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that arereasonable in the circumstances.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these financial statements based on our audit. We conducted ouraudit in accordance with International Standards on Auditing. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether the financial statements arefree from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financialstatements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness 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 auditopinion.

OPINIONIn our opinion, the financial statements present fairly, in all material respects, the financial position of the companyand of the group as of 30 September 2008, and their financial performance and their cash flows for the year thenended in accordance with International Financial Reporting Standards and in the manner required by the CompaniesAct of South Africa.

PricewaterhouseCoopers Inc Director: DJ FouchéRegistered Auditor

Johannesburg13 November 2008

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The directors’ report is presented, which forms part of the audited financial statements of the company and the groupfor the year ended 30 September 2008.

1. NATURE OF BUSINESSThe company holds investments in subsidiary and joint venture companies, with key activities in animal feeds,animal feed pre-mixes, broiler genetic breeding, broiler operations, and the production and sale of day-old broilersand hatching eggs as well as the manufacture of baking products.

2. LISTING INFORMATIONAstral Foods Limited is listed on the main board of the JSE Limited under the share code: ARL. The company’s ISIN number is ZAE000029757.

3. REGISTERED ADDRESSThe company’s registered address is:

Block 9, Boardwalk Office Park, 107 Haymeadow Crescent, Faerie Glen, Pretoria, 0043Postnet Suite 329, Private Bag X10, Elarduspark, 0047.

4. BUSINESS REVIEWProfit for the year fell by 39% to R334 million from last year’s R545 million.

The South African poultry industry came under pressure during the year following the reduction in consumerspending early in 2008 which led to an over supply situation developing. This, together with a substantial furtherincrease in input costs, squeezed poultry margins severely.

Revenue increased by 29% from R6,329 million to R8,184 million driven largely by input costs, but operatingprofit was 32% lower at R548 million (2007: R808 million). While Animal Nutrition operating profit improved by16%, Poultry operating profit was down 66%. The group’s operating margin of 6,7% was down on last year’s12,8%.

Net interest paid for the year of R49,4 million compares to last year’s R1,6 million.

Earnings per share decreased by 38% from 1 387 cents to 858 cents.

Cash from operating activities for the year of R639 million was 43% higher than the R448 million generated in2007.

Net debt for the year increased by R28 million to R187 million representing a debt to equity ratio of 14%.

A final dividend of 440 cents per share has been declared, resulting in a total dividend for the year of 700 cents,the same as last year. The distribution is justified by our robust underlying cash flow and strong balance sheet.

DIRECTORS’ REPORT

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4. BUSINESS REVIEW (continued)

The financial position of the group for the financial year ended 30 September 2008 can be summarised as follows:

2008 2007 R'000 R'000

Operating resultsRevenue 8 184 205 6 329 311

Operating profit 547 786 808 238 Net finance costs (49 401) (1 591)

Profit before income tax 498 385 806 647 Income tax expense (164 159) (261 089)

Profit for the year 334 226 545 558

Attributable to:Equity holders of the company 327 261 537 858 Minority interests 6 965 7 700


Financial positionNon-current assets 1 614 525 1 416 775 Current assets 1 542 689 1 449 933

Total assets 3 157 214 2 866 708

Total equity 1 328 150 1 307 513 Non-current liabilities 390 223 329 967 Current liabilities 1 438 841 1 229 228

Total equity and liabilities 3 157 214 2 866 708

Segment analysisA segment analysis of the revenue, operating profit and liabilities is set out on page 39 of the annual financialstatements.

AcquisitionsThe company acquired a 50% interest in East Balt South Africa effective 1 July 2008. East Balt South Africabakes hamburger buns, English muffins, Kaiser rolls and other sandwich carriers, primarily for sale to fast foodoutlets in South Africa.

5. SHARE CAPITALDetail of share capital is reflected under note 10 of the financial statements.

At the annual general meeting of shareholders held on 14 February 2008, shareholders passed a specialresolution authorising the company, or a subsidiary, to acquire the company’s own ordinary shares.

In terms of the share repurchase programme a total of 450 000 (2007: 1 036 886) shares were acquired at acost of R59 million (2007: R115 million) and subsequently cancelled.

In terms of the group’s share incentive scheme, 37 916 (2007: 547 100) options were exercised.

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

7,5% of the unissued shares were placed under the control of the directors until the next annual general meeting of the company.

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DIRECTORS’ REPORT (continued)

6. SUBSIDIARIES AND JOINT VENTURESDetails of the joint ventures and subsidiaries of Astral Foods Limited are set out in notes 30 and 31 respectively ofthe annual financial statements.

The attributable interest of the company in the profits and losses of its subsidiaries and joint ventures for the yearended 30 September 2008 is as follows:

2008 2007 R'000 R'000

SubsidiariesTotal profits before income tax 483 018 793 898 Total profits after income tax 352 807 564 526 Total losses before income tax 1 694 793Total losses after income tax 1 309 677

Joint venturesTotal profits before income tax 20 216 14 762Total profits after income tax 13 867 9 999

7. DIVIDENDSThe following ordinary dividends were declared:

2008 2007 R'000 R'000

Interim dividend (No. 15) of 260 cents per share (2007: 260 cents per share) 109 554 112 026Less: Dividends received on treasury shares held by a subsidiary (10 630) (11 248)Final dividend (No. 16) of 440 cents per share (declared post year end) (2007:440 cents per share) 185 400 188 005Less: Dividends receivable on treasury shares held by a subsidiary (17 990) (18 782)Total dividend at 700 cents per share (2007: 700 cents per share) 266 334 270 001

8. PROPERTY, VEHICLES, PLANT AND EQUIPMENTThere has been no major change in the nature of and policy relating to property, vehicles, plant and equipment.

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

The estimated useful lives of certain assets were re-assessed at the beginning of the current financial year. Changeswere made to the useful lives of buildings from 25 to 50 years and of certain plant items from 15 to 25 years.

9. DIRECTORSThe names of the directors who currently hold office are set out on pages 7, 8 and 9 of this report. In terms ofArticle 14 of the company’s articles of association, Ms TCC Mampane, Dr T Eloff and Mr NC Wentzel retire byrotation at the annual general meeting of shareholders and are eligible for re-election. No director holds more than 1% of the ordinary shares in the company. The directors beneficially and non-beneficially hold 189 293(2007: 334 512) ordinary shares in the company – see directors’ remuneration report on page 36 for details.Following the formal performance evaluation of the above directors, the chairman confirms that these individuals’performance continues to be effective and shows commitment to the role.

Mr JL van den Berg retired as director at the annual general meeting held on 14 February 2008 and Mr JJ Geldenhuyswas appointed chairman of the board. Mr CG van Veyeren advised the board that he wishes to retire at theforthcoming annual general meeting and the board has agreed not appoint a new director to fill his position until thenormal nomination and selection processes as laid down by our nominations committee have been followed.

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9. DIRECTORS (continued)

Subsequent to the year end, Mr. MA Kingston resigned as director with effect from 1 November 2008.

Particulars of the company secretary and her business and postal address appear on page 88 of this report.

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

10. RESOLUTIONSWith the exception of two special resolutions detailed below, no further special resolutions, the nature ofwhich might be significant to members in their appreciation of the state of affairs of the group, were passedby any subsidiary companies during the period covered by this report.

• Special resolution passed by the company and referred to under item 5 above relating to the repurchase ofshares; and

• Special resolution passed by Ross Poultry Breeders (Pty) Limited approving a transaction with Aviagen SouthAfrica (Pty) Limited and Aviagen Limited in terms of which Ross Poultry Breeders (Pty) Limited undertook tosell certain existing poultry stock to Aviagen South Africa (Pty) Limited for a certain period of time afterwhich Aviagen Limited undertook to supply poultry stock to Ross Poultry Breeders (Pty) Limited for a certainperiod of time. The special resolution was passed in terms of Section 228 of the Companies Act No. 61 of1973 (as amended).

11. SHARE INCENTIVE SCHEMEThe number of shares placed under the control of the directors by the shareholders for purposes of thecompany’s employee share incentive scheme is limited to 10% of the issued share capital of Astral FoodsLimited from time to time. The directors have decided to limit this to about 7,5% of the issued share capital.

As at 30 September 2008, options in respect of 787 100 shares remained outstanding, being 2% of issuedshare capital.

Details of the dates and prices at which the options were granted are given in note 11 to the financial statements.

12. SHAREHOLDERSDetails of shareholders are set out on page 83 of the annual financial statements.

13. EVENTS SUBSEQUENT TO BALANCE SHEET DATENo events took place between year end and the date of the report that would have a material effect on thefinancial statements as disclosed.

14. LITIGATIONA complaint was lodged against Astral Operations Limited and Elite Breeding Farms at the CompetitionCommission regarding anti-competitive behaviour relating to an existing supply agreement of parent stock. TheCompetition Commission referred the matter to the Competition Tribunal for determination. The group willoppose a claim and it is not anticipated that any material liabilities will arise from a claim.

Profile Feeds (Pty) Limited and Paarl Poultry Farms (Pty) Limited instituted claims against Astral OperationsLimited on the basis of a purported cancellation of a long-term feed agreement in the sum of R42 million,alternatively R21 million, alternatively R3,7 million. The prospects for success of these claims are regarded asbeing remote and any possible financial loss has been estimated and provided for in the financial statements.

15. DATE FOR AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTSThe financial statements have been authorised for issue by the board of directors on 13 November 2008.No authority was given to anyone to amend the financial statements after the date of issue.

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DIRECTORS’ REMUNERATION REPORTfor the year ended 30 September 2008

EMOLUMENTSOther

Perfor- Retire- benefitsmance ment andrelated fund con- allow- Total Total

Salary bonus* tributions ances 2008 2007R'000 R'000 R'000 R'000 R'000 R'000

Executive directorsFor managerial servicesNC Wentzel 2 714 – 484 162 3 360 5 128 CE Schutte 1 370 – 266 213 1 849 2 399 MA Kingston 1 754 – 400 208 2 362 3 248 T Pritchard @ – – – – – 1 461 CA du Toit @ – – – – – 359

5 838 – 1 150 583 7 571 12 595

Non-executive directors' feesFor services as directorsJJ Geldenhuys 402 215 Dr T Eloff ** 150 62 M Macdonald 260 235 TCC Mampane 210 175 Dr N Tsengwa 150 62 CG van Veyeren 210 175 JL van den Berg @ 105 410

1 487 1 334

Total paid to directors by the company and its subsidiaries 9 058 13 929

* No performance related bonuses have been provided for the current year@ Remuneration to date of retirement/resignation

** Director's fee paid to the North West University

Summary of benefits received from options exercisedShare

Share appreciation option option

scheme scheme 2008 2007R'000 R'000 R'000 R'000

NC Wentzel 2 405 – 2 405 30 650 CE Schutte – – – 3 714 MA Kingston – 4 447 4 447 4 900 T Pritchard – – – 14 583

2 405 4 447 6 852 53 847

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SHARE INCENTIVE SCHEME INTERESTSShare option schemeOptions outstanding Number of options

Grant date Exercise price 2008 2007

NC Wentzel 81 100 98 816

17 April 2001 R7,75 – 17 716 28 August 2007 R122,00 81 100 81 100

CE Schutte 28 August 2007 R122,00 33 600 33 600 MA Kingston 28 August 2007 R122,00 49 400 49 400

164 100 181 816

Options exercised Benefit received 2008 2007

Number Average price R'000 R'000

NC Wentzel 17 716 R143,82 2 405 23 871 CE Schutte – – – 1 003 MA Kingston – – – 4 900 T Pritchard – – – 11 872

2 405 41 646

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

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

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

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

Share appreciation option schemeOptions outstanding Number of options

Grant date Exercise price 2008 2007

NC Wentzel 85 000 85 000

15 July 2005 R63,87 45 000 45 000 15 July 2006 R77,75 40 000 40 000

MA Kingston 45 000 87 000

19 August 2004 R33,82 – 42 000 15 July 2005 R63,87 24 000 24 000 15 July 2006 R77,75 21 000 21 000

CE Schutte 32 500 32 500

15 July 2005 R63,87 17 400 17 400 15 July 2006 R77,75 15 100 15 100

162 500 204 500

Options exercised Benefit received 2008 2007

Number Average price R'000 R'000

NC Wentzel – – – 6 779 CE Schutte – – – 2 711 MA Kingston 42 000 R139,71 4 447 – T Pritchard – – – 2 711

4 447 12 201

The scheme provides incentive remuneration based on the increase in the value of shares of the company.The right to receive payment based on the options granted, vests after three years and lapses after five years fromthe grant date.

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DIRECTORS’ REMUNERATION REPORT (continued)


ISSUED SHARE CAPITAL INTERESTDirectly held Indirectly held

number of shares number of shares2008 2007 2008 2007

Beneficial interestsNon-executive directorsM Macdonald – – 60 000 60 000 CG van Veyeren 4 860 4 860 – – JL van den Berg – – – 146 219

Executive directorsNC Wentzel 75 833 75 833 15 000 15 000 MA Kingston 17 500 17 500 – – CE Schutte 16 100 15 100 – –

114 293 113 293 75 000 221 219

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SEGMENT REPORT – GROUPfor the year ended 30 September 2008

2008 2007 2008 2007R'000 R'000 R'000 R'000

Revenue Operating profitAnimal Nutrition 5 138 064 3 530 610 384 922 332 707

– South Africa 4 825 052 3 347 738 339 052 294 752 – Other Africa 313 012 182 872 45 870 37 955

– Intergroup (1 774 073) (1 324 106)

Poultry– South Africa and Swaziland 5 099 284 4 382 651 162 864 475 531 – Intergroup (279 070) (259 844)

8 184 205 6 329 311 547 786 808 238

Net finance expense (49 401) (1 591)

Profit before income tax 498 385 806 647 Income tax expense (164 159) (261 089)


Assets Liabilities

Animal Nutrition 1 172 300 923 615 596 545 686 724

– South Africa 1 010 086 826 690 519 444 640 684 – Other Africa 162 214 96 925 77 101 46 040

Poultry – South Africa and Swaziland 2 235 666 2 097 183 1 483 271 1 026 561 Set-off of intergroup balances (250 752) (154 090) (250 752) (154 090)

3 157 214 2 866 708 1 829 064 1 559 195

Depreciation, amortisationCapital expenditure and impairment

Animal Nutrition 64 847 30 292 24 415 28 236

– South Africa 40 904 26 055 20 618 25 965 – Other Africa 23 943 4 237 3 797 2 271

Poultry – South Africa and Swaziland 209 834 291 457 65 208 78 057

274 681 321 749 89 623 106 293

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

1. BASIS OF PREPARATIONThe consolidated financial statements of Astral Foods Limited group have been prepared in accordance withInternational Financial Reporting Standards (IFRS) and the requirements of the South African Companies Act, asamended.

The consolidated financial statements have been prepared under the historical cost convention, except as disclosedin the accounting policies below.

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

The preparation of financial statements in conformity with IFRS requires the use of certain critical accountingestimates. It also requires management to exercise its judgment in the process of applying the group’s accountingpolicies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimatesare significant to the consolidated financial statements, are disclosed in note 26 of the accounting policies.

2. NEW STANDARDS AND INTERPRETATIONSAccounting policy developments Accounting policy developments include new standards issued, amendments to standards, and interpretationsissued on current standards. These developments resulted in the first time adoption of new standards and revisedand additional disclosures required.

Standards, amendments and interpretations effective in 2008IFRS 7 Financial Instruments: Disclosures, and a complementary amendment to IAS 1 Presentation of FinancialStatements – Capital DisclosuresThis statement, which was adopted as at 1 October 2007, introduces new disclosures relating to financialinstruments. These disclosure requirements have been included in the financial statements.

IFRIC 10 Interim Financial Reporting and ImpairmentIFRIC 10, effective for annual periods beginning on or after 1 November 2006, prohibits the impairment lossesrecognised in an interim period on goodwill, investments in equity instruments and investments in financial assetscarried at cost to be reversed at a subsequent balance sheet date. This interpretation has had no effect on thefinancial statements of the company.

IFRIC 11 IFRS 2 Group and Treasury Share TransactionsThis interpretation addresses issues on whether certain share-based payment transactions should be accounted foras equity-settled or as cash-settled under the requirements of IFRS 2, and where certain arrangements involve twoor more entities within the same group.

This interpretation is applicable to the company but no impact is currently expected on the company’s financialstatements.

Standards, amendments and interpretations not yet effectiveThe company has evaluated the effect of all new standards, amendments and interpretations that have beenissued but which are not yet effective. Based on the evaluation, management does not expect these standards,amendments and interpretations to have a significant impact on the company’s results and disclosures. Theexpected implications of applicable standards, amendments and interpretations are dealt with below.

IAS 1 (Revised) Presentation of Financial StatementsThe main objective of IAS 1 was to aggregate information in the financial statements on the basis of sharedcharacteristics.

The changes relate to disclosure in the financial statements and are unlikely to have a significant impact on thecompany’s financial statements. These changes are effective for the financial year commencing on 1 September2009.

ACCOUNTING POLICIESfor the year ended 30 September 2008

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2. NEW STANDARDS AND INTERPRETATIONS (continued)Standards, amendments and interpretations not yet effective (continued)IAS 23 (Revised) Borrowing CostsBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying assetform part of the cost of that asset and may no longer be expensed. Other borrowing costs are recognised asan expense.

IAS 27 (Revised) Consolidated and Separate Financial StatementsThe IAS 27 amendments related, primarily, to accounting for non-controlling interests and the loss of control ofa subsidiary.

IAS 27R and IFRS 3R Business Combinations have to be adopted in the same period. Both these standards areeffective for the financial year commencing on 1 September 2009.

IFRS 2 Amended Share-based Payments Vesting Conditions and CancellationsIFRS 2 was amended to provide more clarity on vesting conditions and cancellations. The effect of theamendment has been considered by management.

IFRS 3 (Revised) Business CombinationsThe objective of the revised IFRS 3 is to enhance the relevance, reliability and comparability of the informationthat an entity provides in its financial statements about a business combination and its effects. It does that byestablishing principles and requirements for how an acquirer:

a) recognises and measures in its financial statements the identifiable assets acquired, the liabilities assumedand any non-controlling interest in the acquiree;

b) recognises and measures the goodwill acquired in the business combination or a gain from a bargainpurchase; and

c) determines what information to disclose to enable users of the financial statements to evaluate the natureand financial effects of the business combination.

As the standard will only be applicable to acquisitions on or after 1 September 2009, no effect has yet beenconsidered.

IFRS 8 Operating SegmentsIFRS 8 sets out the requirements for disclosure of information about an entity’s operating segments also aboutthe entity’s products and services, the geographical areas in which it operates, and its major customers.

These changes are effective for the financial year commencing on 1 September 2009 and have no impact onthese financial statements.

IFRIC 12 Service Concession ArrangementsThis interpretation gives guidance on the accounting by operators for public-to-private service concessionarrangements.

This interpretation is not applicable to the company.

IFRIC 13 Customer Loyalty ProgrammeThis interpretation addresses how companies that grant their customers loyalty awards credits when buyinggoods or services, should account for their obligation to provide free or discounted goods, or services, if andwhen customers redeem the points.

This interpretation is not applicable to the company.

Annual improvements projectThe IASB decided to initiate an annual improvements project in 2007 as a method of making necessary, butnon-urgent, amendments to IFRS that will not be included as part of another major project. The IASB’sobjective was to ease the burden for all concerned.

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2. NEW STANDARDS AND INTERPRETATIONS (continued)Standards, amendments and interpretations not yet effective (continued)Annual improvements project (continued)Unless otherwise specified the amendments are effective for annual periods beginning on or after 1 January 2009,although entities are permitted to adopt them earlier.

The following standards have been affected by the project:

IFRS 5 Non-current Assets Held for Sale and Discontinued OperationsIAS 1 Presentation of Financial StatementsIAS 16 Property, Plant and EquipmentIAS 19 Employee BenefitsIAS 20 Accounting for Government Grants and Disclosure of Government AssistanceIAS 23 Borrowing CostsIAS 27 Consolidated and Separate Financial StatementsIAS 28 Investments in AssociatesIAS 29 Financial Reporting in Hyperinflationary EconomiesIAS 31 Interests in Joint VenturesIAS 36 Impairment of AssetsIAS 38 Intangible AssetsIAS 39 Financial Instruments: Recognition and MeasurementIAS 40 Investment PropertyIAS 41 Agriculture

Management is currently considering the effect of the changes.

3. INTEREST IN GROUP ENTITIESSubsidiariesSubsidiaries are all entities (including special purpose entities) over which the group has the power to govern thefinancial and operating policies which generally accompany a shareholding of more than one half of the votingrights.

Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date on which control ceases.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilitiesincurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assetsacquired and liabilities and contingent liabilities assumed in a business combination are measured initially at theirfair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost ofacquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill.If the cost of acquisition is less than the fair value of the group’s share of the net assets of the subsidiary acquired,the difference is recognised directly in the income statement. Inter-company transactions, balances and unrealisedgains on transactions between group companies are eliminated. Unrealised losses are also eliminated butconsidered an impairment indicator of the asset transferred.

The investments in subsidiaries by the company are stated at cost less amounts written off.

Subsidiaries’ accounting policies have been changed where necessary to ensure consistency with the policiesadopted by the group.

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

The group combines its share of the jointly controlled entities’ individual income and expense, asset, liability andcash flow items on a line-by-line basis with similar items in the group’s financial statements.

ACCOUNTING POLICIES (continued)


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3. INTEREST IN GROUP ENTITIES (continued)Joint ventures (continued)The group recognises the portion of gains or losses on the sale of assets by the group to the joint venture thatis attributable to the other ventures. The group does not recognise its share of profits or losses from the jointventure that result from the group’s purchase of assets from the joint venture until it resells the assets to anindependent party. A loss on the transaction is recognised immediately if it provides evidence of a reduction inthe net realisable value of current assets, or an impairment loss. Jointly controlled entities’ accounting policieshave been changed where necessary to ensure consistency with the policies adopted by the group.

Minority interestMinority interests are valued at the minorities’ portion of the acquirer’s identifiable assets, liabilities andcontingent liabilities at the acquisition date, plus the minorities’ portion of post acquisition reserves.

Minority interests are included in equity on the balance sheet and are also reconciled in the statement ofchanges in equity.

Disposals to minority interests result in gains and losses for the group and are recorded in the incomestatement. Purchases from minority interests result in goodwill, being the difference between any considerationpaid and the relevant share acquired of the carrying value of net assets of the subsidiary.

Transactions with minority interests are treated as transactions with parties external to the group.

4. SEGMENT REPORTINGA primary segment is identified as a group of assets and operations engaged in providing products or servicesthat are subject to risks and returns that are different from those of other business segments and is reportedand managed separately from other segments.

A secondary geographical segment is identified within the primary segments, in respect of that group of assetsand operations engaged in providing products in an economic environment that are subject to risks and returnsthat are different from other economic environments.

5. FOREIGN CURRENCIESFunctional and presentation currencyItems included in the financial statements of each of the group’s entities are measured using the currency ofthe primary economic environment in which the entity operates (the functional currency). The consolidatedfinancial statements are presented in Rand, which is the company’s functional and presentation currency.

Transactions and balances of monetary itemsTransactions in a currency other than the functional currency are translated into the functional currency usingthe prevailing exchange rate at the date of the transaction.

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

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

Changes in the fair value of monetary securities denominated in foreign currency classified as available for saleare analysed between translation differences related to changes in the amortised cost resulting from changes inthe amortised cost of the security, and other changes in the carrying amount of the security. Translationdifferences related to changes in the amortised cost are recognised in profit or loss, and other changes incarrying amount are recognised in equity. Translation differences on non-monetary financial assets and liabilitiesare reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets andliabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of thefair value gain or loss. Translation differences on non-monetary financial assets such as equities classified asavailable for sale are included in the fair value reserve in equity.

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5. FOREIGN CURRENCIES (continued)Foreign operationsThe results and financial position of all group entities (none of which has the currency of a hyperinflationaryeconomy) that have a functional currency different to the company’s presentation currency, are translated into thepresentation currency as follows:

(i) Assets and liabilities at the closing exchange rate at the reporting date;

(ii) Income and expense items are translated at the average exchange rates (unless this average is not areasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in whichcase income and expenses are translated at the dates of the transactions);

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

All resulting exchange differences are classified as a foreign currency translation reserve and recognised as aseparate component of equity.

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

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

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

6. PROPERTY, PLANT AND EQUIPMENTLand and buildings comprise mainly factories, poultry farms and offices.

Land is not depreciated and is stated at historical cost.

All other property, plant and equipment (PPE) are stated at historical cost less accumulated depreciation andimpairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items and mayalso include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchasesof PPE.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,only when it is probable that future economic benefits associated with the item will flow to the group and the costof the item can be measured reliably. All other repairs and maintenance costs are charged to the income statementduring the financial period in which they are incurred.

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

• Buildings 50 years

• Plant and machinery 8 – 25 years

• Equipment and motor vehicles 5 – 10 years

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

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are includedin the income statement under other gains/losses.

Borrowing costs incurred for the construction of any qualifying assets are capitalised during the period of time thatis required to complete and prepare the asset for its intended use.



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6. PROPERTY, PLANT AND EQUIPMENT (continued)The assets’ residual values and useful lives are reviewed annually and adjusted if appropriate, taking intoaccount technology developments and maintenance programmes. Uniform depreciation and amortisation ratesare established based on the straight-line method which may not represent the actual usage of the assets. Anasset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount isgreater than its estimated recoverable amount.

7. INTANGIBLE ASSETSComputer softwareAcquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring touse the specific software. These costs are amortised over their estimated useful lives (three to five years).

Costs associated with developing or maintaining computer software programs are recognised as an expense asincurred.

Costs that are directly associated with the production of identifiable and unique software products controlledby the group, and that will probably generate economic benefits exceeding costs beyond one year, arerecognised as intangible assets. Direct costs include the costs of software development employees and anappropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised over their estimated useful lives(three to five years).

Research and developmentResearch expenditure is recognised as an expense as incurred. Costs incurred on development projects (relatingto the design and testing of new or improved products) are recognised as intangible assets when it is probablethat the project will be a success, considering its commercial and technological feasibility, and costs can bemeasured reliably. Other development expenditures are recognised as an expense as incurred. Developmentcosts previously recognised as an expense are not recognised as an asset in a subsequent period. Developmentcosts that have a finite useful life and that have been capitalised are amortised from the commencement of thecommercial production of the product on a straight-line basis over the period of its expected benefit, notexceeding five years.

8. GOODWILLGoodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the netidentifiable assets of the acquired subsidiary at the date of acquisition.

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

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entitysold.

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

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

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10. BIOLOGICAL ASSETSLive broiler chicks and hatching eggs are assessed based on fair values less estimated point-of-sale costs atappropriate reporting dates. Gains and losses arising from changes in the fair values are recorded in net profit orloss for the period in which they arise. The determination of fair value is based on active market values, whereappropriate, or management’s assessment of the fair value based on available data and benchmark statistics.

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

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

11. IMPAIRMENT OF NON-FINANCIAL ASSETSAssets that have an indefinite useful life are not subject to amortisation and are tested annually for impairmentand whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assetsthat are subject to amortisation are tested for impairment whenever events or changes in circumstance indicatethat the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fairvalue less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowestlevels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other thangoodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

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

The group classifies its financial assets in the following categories:

• At fair value through profit and loss;

• Loans and receivables; and

• Available-for-sale.

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

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

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

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

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

Financial assets carried at fair value through profit and loss are initially recognised at fair value and transactioncosts are expensed in the income statement. Subsequent measurement is at fair value with gains or lossesrecognised in profit or loss.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quotedin an active market and include “short-term loans”, “trade and other receivables” and “cash and cashequivalents”.



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12. FINANCIAL ASSETS (continued)Loans and receivables (continued)They are included in current assets, except for maturities greater than 12 months after the balance sheet datewhich are classified as non-current assets.

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

Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that are either designated in this category or not classifiedin any of the other categories. They are included in non-current assets unless management intends to disposeof the investment within 12 months of the balance sheet date.

Available-for-sale financial assets are initially recognised at fair value and are subsequently also measured at fairvalue through profit and loss.

Regular purchases and sales of financial assets are recognised on trade date – the date on which the groupcommits to purchase or sell the asset.

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

13. FINANCIAL LIABILITIESFinancial liabilities are recognised when there is an obligation to transfer benefits and that obligation is acontractual liability to deliver cash or another financial asset or to exchange financial instruments with anotheron potentially unfavourable terms.

The group classifies its financial liabilities in the following categories:

• At fair value through profit or loss; or

• Other.

At fair value through profit or lossFinancial liabilities at fair value through profit or loss are initially recognised at fair value with transaction costsbeing expensed. Subsequent measurement is at fair value with changes recognised in profit or loss.

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

14. TRADE RECEIVABLESTrade receivables are recognised initially at fair value and subsequently measured at amortised cost using theeffective interest method, less provision for impairment.

A provision for impairment of trade receivables is established when there is objective evidence that the groupwill not be able to collect all amounts due according to the original terms of the receivables and therebyrepresent a risk of non-payment.

Adjustments in the provision for impairments are recognised in the income statement under administrativeexpenses. When a trade receivable is uncollectible it is written off in the income statement or when previouslywritten off amounts are recovered it is credited in the income statement, both within administrative expenses.

15. CASH AND CASH EQUIVALENTSCash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highlyliquid investments with original maturities of three months or less, and bank overdrafts.

Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

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16. TRADE PAYABLESTrade payables are recognised initially at fair value and subsequently measured at amortised cost using theeffective interest method.

17. BORROWINGSBorrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequentlystated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption valueis recognised in the income statement 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 theliability for at least 12 months after the balance sheet date.

18. SHARE CAPITALOrdinary shares are classified as equity.

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

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

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

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

Provisions are measured at the present value of the expenditures expected to be required to settle the obligationsusing a pre-tax rate that reflects current market assessments of the time value of money and the risks specific tothe obligation. The increase in the provision due to passage of time is recognised as interest.

20. CURRENT AND DEFERRED INCOME TAXThe charge for current income tax is based on results for the year as adjusted for income that is exempt andexpenses that are not deductible using tax rates that are applicable to the taxable income.

Deferred income tax is provided, using the liability method, on temporary differences arising between the tax basesof assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax isnot accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a businesscombination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferredincome tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balancesheet date and are expected to apply when the related deferred income tax asset is realised or the deferredincome tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will beavailable against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, joint ventures andassociates, except where the timing of the reversal of the temporary difference will not reverse in the foreseeablefuture.



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21. DERIVATIVE FINANCIAL INSTRUMENTS The group uses derivative financial instruments to manage its exposure to foreign exchange and commodityprice risks arising from operational activities.

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

When the group designates certain derivatives as either:

– hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or

– hedges of highly probable forecast transactions (cash flow hedge); or

– hedges of net investments in foreign operations,

the relationship between hedging instruments and hedged items, as well as its risk management objective andstrategy for undertaking various hedge transactions are documented at the inception of the transaction. Thegroup also then documents its assessment, both at hedge inception and on an ongoing basis, of whether thederivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cashflows of hedged items.

Fair value hedgeChanges in the fair value of derivatives that are designated and qualify as fair value hedges are recorded underother income/expenses in the income statement, together with any changes in the fair value of the hedgedasset or liability that are attributable to the hedged risk.

Cash flow hedgeThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flowhedges are recognised in equity. The gain or loss relating to the ineffective portion is recognised immediatelyunder other income/expenses in the income statement. Amounts accumulated in equity are recycled in theincome statement in the periods when the hedged item will affect profit or loss (for example, when theforecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in therecognition of a non-financial asset (for example, inventory) or a liability, the gains and losses previouslydeferred in equity are transferred from equity and included in the initial measurement of the cost of the assetor liability. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria forhedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and isrecognised when the forecast transaction is ultimately recognised in the income statement. When a forecasttransaction is no longer expected to occur, the cumulative gain or loss that was reported in equity isimmediately transferred to the income statement.

Derivatives that do not qualify for hedge accountingCertain derivative instruments do not qualify for hedge accounting. Such derivatives are classified as at fairvalue through profit or loss, and changes in the fair value of any derivative instruments that do not qualify forhedge accounting are recognised immediately under other income/expenses in the income statement.

Over-the-counter (OTC) contractsThe group enters into over-the-counter (OTC) forward purchases for the purchase of commodities for own use.These contracts are settled by taking physical delivery in the normal course of business and are therefore notregarded as financial instruments.

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

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21. DERIVATIVE FINANCIAL INSTRUMENTS (continued)Fair value estimation (continued)The fair value of financial instruments that are not traded in an active market (for example, over-the-counterderivatives) is determined by using valuation techniques. The group uses a variety of methods and makesassumptions that are based on market conditions existing at each balance sheet date. Quoted market prices ordealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discountedcash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest-rateswaps is calculated as the present value of the estimated future cash flows. The fair value of forward foreignexchange contracts is determined using forward exchange market rates at the balance sheet date.

The nominal value less estimated credit adjustments of trade receivables is assumed to approximate their fairvalues. The fair value of financial liabilities for disclosure purposes is estimated by discounting the futurecontractual cash flows at the current market interest rate that is available to the group for similar financialinstruments.

22. EMPLOYEE BENEFITSPension obligationsThe group operates defined contribution retirement schemes.

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

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

Other post-employment benefit obligationsThe group provides post-retirement healthcare benefits to some of its retirees. The entitlement to these benefits isusually conditional on the employee remaining in service up to retirement age. The expected costs of thesebenefits are accrued over the period of employment using the same accounting methodology as used for definedbenefit pension plans.

Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions, are chargedor credited to income as they arise. These obligations are valued every year, and the assumptions are reviewedannually, by independent qualified actuaries.

Termination benefitsTermination benefits are payable when employment is terminated by the group before the normal retirement date,or when an employee accepts voluntary redundancy in exchange for these benefits. The group recognisestermination benefits when it is demonstrably committed to either: terminating the employment of currentemployees according to a detailed formal plan without possibility of withdrawal; or providing termination benefitsas a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months afterbalance sheet date are discounted to present value.

Profit-sharing and bonus plansThe group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes intoconsideration the profit attributable to the company’s shareholders. These profit-sharing and bonus plans areapproved annually by the board.

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

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



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22. EMPLOYEE BENEFITS (continued)

Share-based plans (continued)The share option scheme, which is equity-settled, provides the right to purchase shares in the company at theexercise price. The contractual life of options granted is between 7 and 10 years. The options vest one third aftereach of the third, fourth and fifth year of date of granting the option. No compensation cost is recognised for thefair value of the options granted before the effective date of accounting for share-based payments in terms ofIFRS 2. The proceeds received net of any directly attributable transaction costs are credited to share capital(nominal

value) and share premium when the options are exercised. The fair value of the employee service received inexchange for the grant of the options is recognised as an expense with a corresponding increase in equity. Thetotal amount to be expensed over the vesting period is determined by reference to the fair value of the optionsgranted, excluding the impact of any non-market conditions. Non-market conditions are included inassumptions about the number of options that are expected to vest. It recognises the impact of the revision tooriginal estimates, if any, in the income statement with a corresponding adjustment to equity.

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

23. REVENUE RECOGNITIONRevenue comprises the fair value of the consideration received or receivable for the sale of goods and servicesin the ordinary course of the group’s activities. Revenue is shown net of value-added tax, returns, rebates anddiscounts and after eliminating sales within the group.

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that futureeconomic benefits will flow to the entity and specific criteria have been met for each of the group’s activities asdescribed below. The amount of revenue is not considered to be reliably measurable until all contingenciesrelating to the sale have been resolved. The group bases its estimates on historical results, taking intoconsideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised as follows:

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

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

Dividend incomeDividend income is recognised when the right to receive payment is established.

Interest incomeInterest income is recognised on a time-proportion basis using the effective interest method. When a receivableis impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cashflow discounted at the original effective interest rate of the instrument, and continues unwinding the discountas interest income. Interest income on impaired loans is recognised using the original effective interest rate.

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24. LEASESLeases of property, plant and equipment, where the group has substantially all the risks and rewards of ownership,are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair valueof the leased property and the present value of the minimum lease payments. Each lease payment is allocatedbetween the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Thecorresponding rental obligations, net of finance charges, are included in other long-term payables. The interestelement of the finance cost is charged to the income statement over the lease period so as to produce a constantperiodic rate of interest on the remaining balance of the liability for each period. The property, plant andequipment acquired under finance leases are depreciated over the shorter of the asset’s useful life and the leaseterm.

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

25. DIVIDEND DISTRIBUTIONDividend distribution to the company’s shareholders is recognised as a liability in the group’s financial statements inthe period in which the shareholders are entitled to the dividend.

26. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTSThe preparation of the financial statements in accordance with IFRS requires the use of certain critical accountingestimates. It requires management to exercise judgment in the process of applying the group’s accounting policies.The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates aresignificant to the financial statements, are mainly the following;

Impairment of trade receivablesA provision for impairment is established when there is evidence of significant financial difficulties of the debtor,probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency inpayments.

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

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

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

Fair value of retirement benefits The fair value calculation is based on the most recent relevant economic data available. The key estimates andassumptions relating to these areas are disclosed in the relevant note to the financial statements.

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



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26. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (continued)Deferred tax assetsThe recoverability of deferred tax assets is based on the future profitability of the relevant entity and the abilityto generate future taxable income.

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

Financial instrumentsFinancial instruments are fair valued at balance sheet date. The value of financial instruments are subject tomaterial fluctuations and disclosed amounts may differ from values ultimately realised.

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

BALANCE SHEETat 30 September 2008

GROUP COMPANY2008 2007 2008 2007

Notes R’000 R’000 R’000 R’000

ASSETSNon-current assetsProperty, plant and equipment 1 1 462 364 1 254 028 – –Intangible assets 2 12 251 15 718 – –Goodwill 3 124 802 123 548 – –Investment in subsidiaries and joint ventures 4 – – 276 153 228 520 Investments and loans 13 184 2 873 – –Derivative financial instruments 7 – 15 549 – –Deferred income tax asset 13 1 924 5 059 – 1 220

1 614 525 1 416 775 276 153 229 740

Current assetsInventories 5 300 124 249 368 – –Biological assets 6 318 218 282 308 – –Trade and other receivables 8 723 128 772 490 – 23 Current income tax asset 33 924 22 318 74 74 Derivative financial instruments 7 7 201 16 555 – –Cash and cash equivalents 9 160 094 106 894 – –

1 542 689 1 449 933 74 97

Total assets 3 157 214 2 866 708 276 227 229 837

EQUITYCapital and reserves attributable to equity holders of the companyOrdinary shares 10 422 427 422 427 Share premium 10 314 5 757 314 5 757 Other reserves 13 736 (437) 6 033 503 Treasury shares (204 435) (211 231) – –Retained earnings 1 492 850 1 492 547 124 181 182 779

1 302 887 1 287 063 130 950 189 466 Minority interest in equity 25 263 20 450 – –

Total equity 1 328 150 1 307 513 130 950 189 466

LIABILITIESNon-current liabilitiesBorrowings 12 19 757 6 228 – –Deferred income tax liabilities 13 301 756 256 326 – –Retirement benefit obligations 14 68 710 64 460 – –

390 223 327 014 – –

Current liabilitiesTrade and other payables 15 1 101 544 957 326 272 285 Loan from subsidiary 31 – – 123 300 33 137 Current income tax liabilities 9 471 14 651 – –Borrowings 12 326 870 259 415 20 749 6 160 Shareholders for dividend 956 789 956 789

1 438 841 1 232 181 145 277 40 371

Total liabilities 1 829 064 1 559 195 145 277 40 371

Total equity and liabilities 3 157 214 2 866 708 276 227 229 837

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INCOME STATEMENTfor the year ended 30 September 2008

GROUP COMPANY2008 2007 2008 2007

Notes R’000 R’000 R’000 R’000

Revenue 17 8 184 205 6 329 311 – –Cost of sales (6 951 375) (4 915 311) – –

Gross profit 1 232 830 1 414 000 – –Administrative expenses (307 947) (302 248) (1 706) (1 239)Distribution costs (318 906) (257 497) – –Marketing expenditure (65 949) (61 929) – –Other income 21 4 800 5 393 328 779 362 505 Other gains/(losses) 22 2 958 10 519 (17) (26)

Operating profit 547 786 808 238 327 056 361 240 Finance income 23 10 762 9 407 67 58 Finance expense 23 (60 163) (10 998) (1 499) (13)

Profit before income tax 498 385 806 647 325 624 361 285 Income tax expense 24 (164 159) (261 089) (27 984) (27 070)

Profit for the year 334 226 545 558 297 640 334 215

Attributable to:Equity holders of the company 327 261 537 858 297 640 334 215 Minority interest 6 965 7 700 – –

Profit for the year 334 226 545 558 297 640 334 215

Earnings per share for profit attributable to the equity holders of the company during the year:Earnings per ordinary share (cents) 25 858 1 387Diluted earnings per share (cents) 25 858 1 385

STATEMENT OF CHANGES IN EQUITYfor the year ended 30 September 2008

Minority TotalAttributable to ordinary shareholders of Astral Foods Limited interest equity

EquityShare capital Currency compen-

and translation sation Treasury Retainedpremium reserve reserve shares earnings Total

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

Group2007

Balance at 1 October 2006 120 627 993 – (215 539) 1 195 541 1 101 622 19 332 1 120 954 Shares issued (share options exercised) 4 736 – – – – 4 736 – 4 736 Shares bought back and cancelled (119 179) – – 4 308 – (114 871) – (114 871)Option value of share options granted – – 503 – – 503 503 Acquisition of subsidiary – – – – – – 1 407 1 407 Loan due to minorities paid – – – – – – (5 250) (5 250)Profit for the year – – – – 537 858 537 858 7 700 545 558 Dividends declared – – – – (240 852) (240 852) (3 039) (243 891)Currency translation differences arising in year – (1 633) – – – (1 633) – (1 633)Minority interest in translation differences – (300) – – – (300) 300 –

Balance at 30 September 2007 6 184 (940) 503 (211 231) 1 492 547 1 287 063 20 450 1 307 513

2008Balance at 1 October 2007 6 184 ( 940) 503 (211 231) 1 492 547 1 287 063 20 450 1 307 513 Shares issued (share options exercised) 441 – – – – 441 – 441 Shares bought back and cancelled (5 889) – – 6 796 (60 053) (59 146) – (59 146)Option value of share options granted – – 5 530 – – 5 530 33 5 563 Profit for the year – – – – 327 261 327 261 6 965 334 226 Dividends declared – – – – (266 905) (266 905) (2 331) (269 236)Currency translation differences arising in year – 8 789 – – – 8 789 – 8 789 Minority interest in translation differences – (146) – – – (146) 146 –

Balance at 30 September 2008 736 7 703 6 033 (204 435) 1 492 850 1 302 887 25 263 1 328 150

Company2007

Balance at 1 October 2006 120 627 – – – 116 241 236 868 Shares issued (share options exercised) 4 736 – – – – 4 736 Shares bought back and cancelled (119 179) – – – – (119 179)Option value of share options granted – – 503 – – 503 Profit for the year – – – – 334 215 334 215 Dividends declared – – – – (267 677) (267 677)

Balance at 30 September 2007 6 184 – 503 – 182 779 189 466

2008Balance at 1 October 2007 6 184 – 503 – 182 779 189 466 Shares issued (share options exercised) 441 – – – – 441 Shares bought back and cancelled (5 889) – – – (60 053) (65 942)Option value of share options granted – – 5 530 – – 5 530 Profit for the year – – – – 297 640 297 640 Dividends declared – – – – (296 185) (296 185)

Balance at 30 September 2008 736 – 6 033 – 124 181 130 950

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CASH FLOW STATEMENTfor the year ended 30 September 2008

GROUP COMPANY2008 2007 2008 2007

Notes R’000 R’000 R’000 R’000

Cash flows from operating activitiesCash operating profit A 660 736 913 454 327 056 361 240 Changes in working capital B 111 433 (221 711) 9 (212)

Cash generated from operations 772 169 691 743 327 065 361 028 Income tax paid C (133 138) (243 790) (26 764) (28 374)

Cash generated from operating activities 639 031 447 953 300 301 332 654 Cash used in investing activities (269 803) (336 550) (42 590) 58

Purchase of property, plant and equipment to expand operations (180 713) (240 070) – –Purchase of property, plant and equipment to maintain operations (92 691) (79 676) – –

Total purchases (273 404) (319 746) – –Less: Interest capitalised 8 664 12 309 – –

Net purchases of property, plant and equipment (264 740) (307 437) – –Costs incurred on intangibles (1 277) (2 003) – –Proceeds on disposal of property, plant and equipment 19 118 2 344 – –Cost of acquisition of subsidiary E (33 505) (4 518) – –Increase in loans and investments (2 941) (1 479) (42 657) –Investment income 10 762 9 407 67 58 Proceeds from derivative instruments 3 041 – – –Investment in derivative instruments (261) (32 864) – –

Cash generated for the year 369 228 111 403 257 711 332 712 Cash flows to financing activities (382 249) (385 129) (272 300) (336 159)

Proceeds from issue of shares 441 4 736 441 4 736 Shares repurchased (59 146) (114 669) (65 942) (118 977)Share delisting expenses – (202) – ( 202)Dividends paid to the company's shareholders D (266 738) (240 818) (296 018) (267 643)Payments to minority interests (2 331) (8 289) – –Loan payments received from subsidiary – – 90 718 45 940 Interest paid (68 827) (23 307) (1 499) (13)Increase in borrowings 14 352 (2 580) – –

Loans received 17 777 – – –Payment of long-term borrowings (3 425) (2 438) – –Payment of capital element of finance lease liabilities – (142) – –

Net decrease in cash and cash equivalents (13 021) (273 726) (14 589) (3 447)Effects of exchange rate changes 3 512 (1 912) – –Cash and cash equivalents from acquisition of subsidiary E (2 621) 5 974 – –Cash and cash equivalents at beginning of year (150 041) 119 623 (6 160) (2 713)

Cash and cash equivalents at end of year 9 (162 171) (150 041) (20 749) (6 160)

The prior year figures were reclassified to disclose interest received as an investing activity and interest paid as afinancing activity.

NOTES TO THE CASH FLOW STATEMENTfor the year ended 30 September 2008

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GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

A. CASH OPERATING PROFITOperating profit 547 786 808 238 327 056 361 240 Adjustments for:Depreciation and amortisation 88 935 106 293 – –Impairment of fixed assets 688 – – –Profit on disposal of fixed assets (8 609) (746) – –Increase/(decrease) in provision for retirement benefit obligations 4 250 (467) – –Fair value adjustment on derivative financial instruments 22 123 – – –Other non-cash flow items 5 563 136 – –

Cash operating profit 660 736 913 454 327 056 361 240

B. CHANGES IN WORKING CAPITALIncrease in inventories (45 749) (50 174) – –Increase in biological assets (35 910) (67 954) – –Decrease/(increase) in trade and other receivables 55 689 (323 698) 23 (17)Increase/(decrease) in trade and other payables 137 403 220 115 (14) (195)

Total change in working capital 111 433 (221 711) 9 (212)

C. INCOME TAX PAID Balance at beginning of year 7 667 (55 787) 74 (10)Normal income tax provision (87 512) (147 635) – (12)Secondary tax on companies provision (29 294) (30 542) (26 764) (28 278)Withholding tax (167) (1 823) – –Acquisition of subsidiaries – (984) – –Translation differences 621 648 – –Net balance at end of year (24 453) (7 667) (74) (74)

Total income tax paid (133 138) (243 790) (26 764) (28 374)

D. DIVIDENDS PAIDBalance at beginning of year (789) (755) (789) (755)Per statement of changes in equity (266 905) (240 852) (296 185) (267 677)Balance at end of year 956 789 956 789

Total dividends paid (266 738) (240 818) (296 018) (267 643)

E. ACQUISITION OF SUBSIDIARYProperty, plant and equipment and intangibles (24 219) (740) – –Loans (7 370) – – –Inventory (5 007) (966) – –Trade and other receivables (6 327) (761) – –Minority interest – 1 407 – –Deferred income tax liability 1 236 – – –Trade and other payables 6 815 412 – –Income tax liabilities – 984 – –Overdraft/(Cash and cash equivalents) 2 621 (5 974) – –

Net assets acquired (32 251) (5 638) – –Goodwill paid (1 254) – – –Excess net asset value over purchase consideration – 1 120 – –

Total purchase consideration and related costs for interest in subsidiary (33 505) (4 518) – –(Overdraft)/Cash and cash equivalents acquired (2 621) 5 974 – –

Cash flow on acquisition, net of overdraft and cash acquired (36 126) 1 456 – –

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NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 30 September 2008

CapitalisedLand and Plant, and leasedbuildings equipment Vehicles assets Total

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

1. PROPERTY, PLANT AND EQUIPMENTGroup2007Balance at 1 October 2006:Cost 695 948 924 354 131 806 1 453 1 753 561Accumulated depreciation (201 002) (445 055) (68 356) (820) (715 233)

Net book amount at 1 October 2006 494 946 479 299 63 450 633 1 038 328Changes for the year ended 30 September 2007:Exchange differences (513) (752) (99) – (1 364)Reclassifications – 352 – (352) –Additions – Expansion 87 001 151 488 1 581 – 240 070Additions – Replacement 3 593 56 897 19 188 – 79 678 Acquisition of subsidiary 446 288 – – 734 Disposals (79) (1 236) (285) – (1 600)Depreciation charge (29 069) (61 698) (10 981) (70) (101 818)

Closing net book amount 556 325 624 638 72 854 211 1 254 028

Balance at 30 September 2007:Cost 786 315 1 125 992 148 755 562 2 061 624 Accumulated depreciation (229 990) (501 354) (75 901) (351) (807 596)

Closing net book amount 556 325 624 638 72 854 211 1 254 028

2008Net book amount at 1 October 2007 556 325 624 638 72 854 211 1 254 028Changes for the year ended 30 September 2008:Exchange differences 1 426 3 693 982 – 6 101 Reclassifications – 211 – (211) –Additions – Expansion 77 014 97 084 6 615 – 180 713 Additions – Replacement 6 571 63 377 22 743 – 92 691 Acquisition of joint venture 1 295 22 879 45 – 24 219 Disposals (553) (1 858) (8 098) – (10 509)Impairment – (688) – – (688)Depreciation charge (14 304) (56 891) (12 996) – (84 191)

Closing net book amount 627 774 752 445 82 145 – 1 462 364

Balance at 30 September 2008:Cost 873 066 1 312 818 160 471 – 2 346 355Accumulated depreciation (245 292) (560 373) (78 326) – (883 991)

Closing net book amount 627 774 752 445 82 145 – 1 462 364

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

Assets with a book value of R48 255 000 (2007: R10 696 000) are pledged as security for secured loans of R19 523 000 (2007: R8 708 000) (refer note 12).

The estimated useful lives of certain assets were re-assessed at the beginning of the current financial year. Changeswere made to the useful lives of buildings from 25 to 50 years and of certain plant items from 15 to 25 years.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)


GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

2. INTANGIBLE ASSETS – SOFTWAREOpening net book amount 15 718 18 177 Changes for the year:Acquisition of subsidiary – 6 Capitalisation of costs incurred 1 277 2 010 Amortisation (4 744) (4 475)

Closing net book amount 12 251 15 718

Cost 25 524 24 210 Accumulated amortisation (13 273) (8 492)

Closing net book amount 12 251 15 718

3. GOODWILLCost at beginning of year 123 548 123 548 Cost incurred on acquisition of joint venture 1 254 –

Cost at end of year 124 802 123 548

Impairment test for goodwillGoodwill is allocated to the group's cash-generating units identified according to business segment.

A summary of goodwill per segment is as follows;Animal Nutrition 13 244 11 990 Poultry 111 558 111 558

124 802 123 548

Impairment tests were based on the following assumptions: – Growth rates up to 5% (2007: 10%) – Discount rates of 14,5% (2007: 13,5%)

There would be a goodwill impairment of R1 million if the discount rate increased by 1%.

The accounting estimates and judgments on which the impairment tests are based are set out in note 26 of the accounting policies.

4. INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURESShares at cost:Subsidiaries 222 121 217 218 Joint ventures 11 375 11 302 Indebtedness:Subsidiaries 42 657 –

Total 276 153 228 520

Details of joint ventures and subsidiaries are given in notes 30 and 31 respectively.

5. INVENTORIESRaw materials 149 960 141 083 – –Finished goods and merchandise 98 109 70 948 – –Consumable stores 52 055 37 337 – –

300 124 249 368 – –

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Egg Breeding Broiler stock stock stock Total

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

6. BIOLOGICAL ASSETS

Group2007Fair value at 1 October 2006 31 577 129 624 53 153 214 354 Increase due to established costs 113 108 327 611 978 629 1 419 348 Decrease due to harvest/sales (100 880) (291 732) (961 339) (1 353 951)Fair value adjustment 2 500 – 57 2 557

Fair value at 30 September 2007 46 305 165 503 70 500 282 308

2008Fair value at 1 October 2007 46 305 165 503 70 500 282 308 Increase due to established costs 90 780 444 690 1 218 688 1 754 158 Decrease due to harvest/sales (87 749) (418 798) (1 212 932) (1 719 479)Fair value adjustment (153) – 1 384 1 231

Fair value at 30 September 2008 49 183 191 395 77 640 318 218

GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

7. DERIVATIVE FINANCIAL INSTRUMENTEquity call option 6 940 32 104 – –

Non-current portion – 15 549 – –Current portion 6 940 16 555 – –

A wholly owned subsidiary entered into cash-settledcall option contracts on the shares of the company.These contracts are recognised at fair value. Changesin the fair values to the amount are recognised in theincome statement under other gains/losses (note 22).

The current year's adjustment was a loss ofR22 121 000 (2007: R760 000).

The fair value of the contracts were determined using the Black and Scholes pricing model.

The significant inputs in the valuation model were:– strike price – R77,75– risk free rate – 11,8%– volatility – 30%– dividend yield – 4%– period to lapse (years) – 0,75

Currency option contracts 261 – – –These are contracts in underlying exchange rates.

Currency option contracts are mark-to-market on adaily basis and gains or losses are immediatelysettled in cash, and recognised in the incomestatement under gains and losses.

The current year's gain was R225 000 (2007: nil).

7 201 32 104 – –

Derivative financial instruments are classified as held for trading.

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GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

8. TRADE AND OTHER RECEIVABLESFinancial instrumentsTrade receivables 668 297 736 201 – –Provision for impairment (3 499) (4 500) – –

Trade receivables – net 664 798 731 701 – –Other receivables 10 440 5 950 – 23 Non-financial instrumentsPrepayments 3 390 5 514 – –Other receivables 44 500 29 325 – –

723 128 772 490 – 23

A joint venture of the group ceded trade receivables with a book value of R5 755 000 (2007: R3 477 000) assecurity for its available borrowing facilities (refer note 12).

The fair values of trade and other receivables approximate their carrying value.

Provision for impairment is made in respect of overdue trade receivables which represent a risk of non-payment.

The carrying amounts of the group's trade and other receivables are denominated in the following currencies:

GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

SA Rand 705 676 760 039 – 23 Zambia Kwacha 5 081 3 018 – –Mozambique Meticals 1 780 2 572 – –Mauritius Rupees 10 591 6 861 – –

723 128 772 490 – 23

GROUP2008 2007

R'000 R'000

Trade receivables are categorised per the following industries:– Farming 237 996 208 402– Retail 151 649 288 924– Wholesale 258 153 225 949– Other 20 499 12 926

– Total 668 297 736 201

Ageing profile of trade receivables:– Up to 30 days 663 191 730 973– 30 to 60 days 1 607 728– 60 days and longer 3 499 4 500

– Total 668 297 736 201

Provision for impairment:– Balance at 1 October (4 500) (9 518)– (Increase)/decrease charged (against)/to profit and loss (427) 377– Impairment provision utilised against trade receivables 1 525 4 641– Acquisition of joint venture (97) –

– Balance at 30 September (3 499) (4 500)

Ageing profile of provision for impairment:– 60 days and longer (3 499) (4 500)

Collateral security held against trade receivables:– Bank guarantees 42 194 34 330– Covering bonds over property 3 500 7 300– Notarial bonds 2 000 3 250– Credit Guarantee Insurance Cover 70 926 61 452

118 620 106 332

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GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

9. CASH AND CASH EQUIVALENTSCash at bank and in hand 132 114 92 388 – –Short-term bank deposits 27 980 14 506 – –

160 094 106 894 – –

Short-term bank deposits are invested on call account at interest rates linked to the daily bank rate.

Closing interest rate at end of year (%) 10,4 8,4

Cash and cash equivalents include the following for purposes of the cash flow statement:

Cash at bank and in hand and short-term bank deposits 160 094 106 894 – –Bank overdrafts (note 12) (322 265) (256 935) (20 749) (6 160)

Cash and cash equivalents per cash flow statement (162 171) (150 041) (20 749) (6 160)

10. SHARE CAPITALAuthorised share capital75 000 000 ordinary shares of 1 cent each(2007: 75 000 000 ordinary shares of 1 cent each) 750 750 750 750

Issued share capital42 136 285 ordinary shares of 1 cent each(2007: 43 276 569 ordinary shares of 1 cent each) 422 427 422 427

Share premium 314 5 757 314 5 757

Total issued share capital and premium 736 6 184 736 6 184

All issued shares are fully paid.

Number Number Number NumberNumber of shares effectively in issue of shares of shares of shares of shares

Issued sharesShares at beginning of year 42 728 369 43 276 569 42 728 369 43 276 569 Shares issued (share options exercised) 37 916 547 100 37 916 547 100 Shares cancelled (630 000) (1 095 300) (630 000) (1 095 300)

– Shares bought back and cancelled (300 000) (1 036 886) (630 000) (1 095 300)– Treasury shares previously held by subsidiary

cancelled (330 000) (58 414) – –

42 136 285 42 728 369 42 136 285 42 728 369 Treasury shares held by subsidiary (4 088 577) (4 268 577) – –

– Treasury shares at beginning of the year (4 268 577) (4 326 991)– Treasury shares transferred to holding company

and cancelled 330 000 58 414 – Shares bought back during the year (150 000) –

Shares at end of year 38 047 708 38 459 792 42 136 285 42 728 369

Treasury sharesTreasury shares are held by a wholly owned subsidiary of the company.

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10. SHARE CAPITAL (continued)Buy-back of sharesThe group bought back 450 000 (2007: 1 036 886) of the company's shares at a cost of R59 146 000 (2007: R114 669 000) during the year (average cost per share: R131.44). These shares were subsequently delistedand cancelled.

The number of shares which could be bought-back during the year by the company and its subsidiary was limitedto 20% of the total number of shares in issue at the date of the Annual General Meeting on 14 February 2008.

Unissued share capital7,5% of the unissued shares were placed under the control of the directors until the next annual general meetingof the company.

The number of shares available to be utilised for purposes of the share option scheme:

GROUP COMPANY2008 2007 2008 2007

Number Number Number Numberof shares of shares of shares of shares

Number of share options available at beginning of year 3 436 984 3 695 384 3 436 984 3 695 384 Number of share options allocated (40 000) (815 500) (40 000) (815 500)Number of share options forfeited 70 400 10 000 70 400 10 000 Number of share options exercised during the year 37 916 547 100 37 916 547 100

Number of share options available at end of year 3 505 300 3 436 984 3 505 300 3 436 984 Number of share options outstanding at end of year 787 100 855 416 787 100 855 416

Number of shares under the control of directors for the purpose of the share optionscheme at end of year 4 292 400 4 292 400 4 292 400 4 292 400

Share options forfeited were in respect of employees who left the employment of the group.

11. SHARE-BASED PAYMENTSThe group had two share-based payment arrangements during the year:

Share option scheme

The scheme, an equity-settled incentive remuneration scheme, provides the right to purchase shares in the companyat the exercise price.

The contractual life of options granted prior to 28 August 2007 is ten years. Options not taken up will lapse on thetenth anniversary of the option date.

The contractual life of options granted on or after 28 August 2007 is seven years. Options not taken up will lapseon the seventh anniversary of the option date.

The scheme allows one third of the share options to be exercised per year after each of the third, fourth and fifthyear from date of granting the option.

The exercise price of the granted options is equal to the market price of the shares on date of the grant.



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11. SHARE-BASED PAYMENTS (continued)Movement during the year in the number of options is as follows:

Number of Number of Number of Number of Number of Number ofoptions options options options options options

outstanding allocated forfeited exercised outstanding exercisableExercise at beginning during during during at end of at end

Date price of year the year the year the year the year of year

17 April 2001 R7,75 19 716 – – (17 716) 2 000 2 000 22 May 2003 R15,00 20 200 – – (20 200) – –28 August 2007 R122,00 815 500 – (70 400) – 745 100 –21 May 2008 R88,49 – 40 000 – – 40 000 –

855 416 40 000 (70 400) (37 916) 787 100 2 000

Options were exercised during the year at a weighted average share price of R116,12.

Value of share options outstanding at the end of the year at the exercise price amounts to R94 457 300 (2007: R99 946 799).

The fair value of services received in return of share options granted during the year was determined using theBlack and Scholes pricing model. The significant inputs in the valuation model were:

Date of grant 21 May 2008 Share price at date of the grant R88,49 Exercise price R88,49 Volatility 29-30%Dividend yield 8,00%Risk free interest rate 11,50%Contractual life from grant date 7 yearsThe estimated average value of the options granted – per option R18,19

The total service cost of options granted during the year to be recognised over its vesting period (five years)amounts to R728 000.

The service cost recognised in the current year in return for the cumulative share options granted to date toemployees and directors amounts to R5 563 000 (2007: R496 000).

No compensation cost has been recognised for the fair value of the options granted before the effective date ofaccounting for share-based payments in terms of IFRS 2.

Share appreciation option scheme

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

The options are subject to a three year service vesting condition, and their fair value is recognised as an expense inthe income statement and a liability on the balance sheet.

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

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

Number of Number of Number of Number of Number ofoptions options options options options

outstanding forfeited exercised outstanding exercisableat beginning during during at end of at end

Date Exercise price of year the year the year the year of year

19 August 2004 R33,82 138 700 – (97 700) 41 000 41 00019 November 2004 R47,52 25 500 – (22 000) 3 500 3 50018 July 2005 R63,87 286 200 (13 800) – 272 400 –15 July 2006 R77,75 304 100 (15 900) – 288 200 –

754 500 (29 700) (119 700) 605 100 44 500

Share appreciation options were exercised during the year at a weighted average share price of R141,13.

The fair value of the liability in respect of the outstanding options at the end of the year, was determined using theBlack and Scholes pricing model.

GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

11. SHARE-BASED PAYMENTS (continued)Closing balance of liability for share appreciation option scheme (disclosed as part of Trade and other payables) 17 969 28 044 Fair value loss on cash-settled share-based payments to employees and directors recognised in the income statement 2 439 36 349

12. BORROWINGSNon-currentFinance lease liabilities – 14 – –Secured loans 19 523 8 694 – –Unsecured loans 4 839 – – –

Total 24 362 8 708 – –Less: Portion payable within one year included in current liabilities (4 605) (2 480) – –

19 757 6 228 – –

CurrentBank overdrafts 322 265 256 935 20 749 6 160 Portion of non-current borrowings payable within one year 4 605 2 480 – –

326 870 259 415 20 749 6 160

Total borrowings 346 627 265 643 20 749 6 160

The carrying amounts of the group's borrowings are denominated in the following currencies:SA Rand 326 921 254 697 20 749 6 160 US Dollar 15 632 7 674 – –Mauritius Rupees 4 074 3 272 – –

346 627 265 643 20 749 6 160

All borrowings rates are variable, ranging between 15,5% and 7,1% during the year.

The carrying amounts of both the long-term and short-term borrowings approximate their fair value.

Assets with the following book values are pledgedas security for secured loans (note 1):

Property 24 245 10 485 – –Plant and equipment 24 051 211 – –

Contractual maturity of payments of non-current borrowingsNot later than one year 5 914 3 109 Between one and five years 16 312 9 417 – –Over five years 10 252 – – –

32 478 12 526 – –Less: Finance charges (8 116) (3 818) – –

24 362 8 708 – –

Borrowing facilitiesThe group has the following general borrowing facilities at floating interest rates 740 700 502 500 – –

The borrowing facilities are reviewed on an annual basis.

Borrowing powersNo limit has been placed in the articles of association on the borrowing powers of the company.

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GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

13. DEFERRED INCOME TAXDeferred income tax is calculated on all temporary differences under the liability method, using a principal tax rate of 28% (2007: 29%).

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current income tax assets against current income tax liabilities and when deferred income taxes relate to the same fiscal authority.

Deferred tax assets have been recognised in respect of available secondary tax on companies (STC) credits.

Movement on the deferred income tax asset account is as follows:At beginning of year 5 059 1 752 1 220 –Reduction due to tax rate change (129) – – –Decrease in deferred tax asset on STC credit (1 220) (25) (1 220) 1 220 (Charge)/credit to the income statement (2 840) 3 332 – –Transfer credit balance to deferred income tax liability 1 054 – – –

At end of year 1 924 5 059 – 1 220

Analysis of deferred income tax assets:Accelerated income tax depreciation (6 747) (5 453) – –Assessed losses utilised 8 290 10 227 – –STC credits – 1 220 – 1 220 Other temporary differences 381 (935) – –

1 924 5 059 – 1 220

Movement on the deferred income tax liability account is as follows:At beginning of year (256 326) (171 906) – –Exchange differences (143) (24) – –Reduction due to tax rate change 8 600 – – –Acquisition of business unit (1 236) – – –Transfer credit balance from deferred income tax asset (1 054) – – –Charged to the income statement (51 597) (84 396) – –

At end of year (301 756) (256 326) – –

Analysis of deferred income tax liabilities:Accelerated income tax depreciation (248 973) (218 565) – –Lower tax value for livestock and farming consumables (92 189) (82 349) – –Assessed losses utilised to reduce deferred income tax 2 783 23 – –Other temporary differences 36 623 44 565 – –

(301 756) (256 326) – –

GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

14. RETIREMENT BENEFIT OBLIGATIONSPost-employment medical benefitsThe group provides post-retirement healthcare benefits to some of its retirees. Benefits paid and the movement in the provision are charged against profits in the current period.

Amounts recognised in the income statement:Benefits paid 2 674 2 051 Increase in the provision for the liability 4 250 428

Provision for liability at balance sheet date 68 710 64 460 Estimated employer benefits payable during next 12 months 2 630 2 241

The liability recognised in the financial statements was actuarially valued at 30 September 2008 (previous valuation date: 30 September 2007). The liability was valued using the projected unit credit method.

Discount rate (%) 9,25 8,5Healthcare inflation rate (%) 7,75 7,25Expected rates of salary increases (%) 7.,25 6,75Pre-retirement mortality rates as per SA85-90 ultimate tablePost-retirement mortality rates as per PA(90) ultimate table rated down two years and with 1% improvement from 2006.

Present value of funded obligations per actuarial valuation at 30 SeptemberBalance at beginning of year 64 460 62 830 Current service cost 1 506 2 629 Interest costs 5 360 7 011 Actuarial gains (375) (5 072)Expected benefit payments (2 241) (2 938)

Balance at end of year 68 710 64 460

The effect of a 1% movement in the assumed medical cost trend rate is as follows: + 1% –1%

Increase/(decrease) in accrued liability at 30 September 7 536 (7 748)Increase/(decrease) in current service and interest costs 886 (954)

The present value of the defined benefit obligation Experienceand the experience adjustment were as follows: R'000 adjustment

30 September 2008 68 710 0,6%30 September 2007 64 460 7,9%30 March 2006 62 830 3,4%Actuarial valuations were done only every third year prior to 30 March 2006.

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GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

15. TRADE AND OTHER PAYABLESFinancial instrumentsTrade payables 763 186 629 256 – –Accruals and other payables 164 307 124 995 272 285 Non-financial instrumentsOther payables 156 082 175 031 – –Provision for share-based payments 17 969 28 044 – –

1 101 544 957 326 272 285

16. CONTINGENCIES AND COMMITMENTSCapital commitmentsCapital expenditure approved not contracted 84 856 72 782 – –

Capital expenditure contracted but not recognised in the financial statements: 24 417 83 893 – –

The capital commitments will be financed by operating cash flow and borrowings well within the accepted gearing profile of the group.

Operating lease commitmentsThe group leases various properties, plant and equipment and vehicles under non-cancellable operating leases. Future lease payments are as follows:

Not later than 1 year 51 446 54 216 – –Later than I year and not later than 5 years 188 821 228 650 – –Later than 5 years 9 833 91 278 – –

250 100 374 144 – –

Leases are contracted for periods ranging from 36 to 120 months with no renewal options. Rental escalations vary from nil to prime interest rate linked escalations.

The lease expenditure charged to the income statement is disclosed in note 18.

Other commitmentsThe group has contracted its raw-material requirements from various suppliers in terms of future supply agreements.

Contracted amounts not recognised in the balance sheet are as follows: 897 328 348 145 – –

The company guaranteed the payment obligations of its subsidiary, Astral Operations Limited, in respect of rawmaterial purchases.

The group entered into a feed supply agreement whereby an agreed quantity of raw materials are procured from asupplier at market related prices. The remaining period of the agreement is six years.

GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

16. CONTINGENCIES AND COMMITMENTS (continued)Contingent liabilitiesThe following contingent liabilities to be noted:– Contingent liability in respect of a guarantee

given to a third party 7 583 7 875 – –

– A complaint was lodged against Astral OperationsLimited and Elite Breeding Farms at theCompetition Commission regarding anti-competitive behaviour relating to an existingsupply agreement of parent stock. TheCompetition Commission referred the matter tothe Competition Tribunal for determination. Thegroup will oppose a claim and it is not anticipatedthat any material liabilities will arise from a claim.

– Profile Feeds (Pty) Limited and Paarl Poultry Farms(Pty) Limited instituted claims against AstralOperations Limited on the basis of a purportedcancellation of a long-term feed supplyagreement in the sum of R42 million, alternativelyR21 million, alternatively R3,7 million. Theprospects for success of these claims are regardedas being remote and any possible financial losshas been estimated and provided for in thefinancial statements.

17. REVENUERevenue from the sale of goods:Revenue of South African operations 7 871 193 6 104 608 – –Revenue denominated in foreign functional currencies 313 012 224 703 – –

8 184 205 6 329 311 – –

Intergroup revenue excluded 2 053 143 1 583 950 – –

Revenue is disclosed net of value-added tax, normal discounts and rebates, and returns.

Revenue comprises the net value of the sales of animal feed and poultry related products.

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GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

18. EXPENSES BY NATUREThe following expense items by nature have been included in arriving at operating profit:Auditors' remuneration 4 455 3 902 – –

Audit fees 4 261 3 766 – –Management consulting services 34 – – –Taxation services – 20 – –Expenses 160 116 – –

Fees paid for managerial, secretarial and technical services 9 019 7 803 111 104 Impairment of plant and equipment 688 – – –Amortisation of intangible assets 4 744 4 475 – –Depreciation on property, plant and equipment 84 191 101 818 – –

Buildings 14 304 29 069 – –Plant and equipment 56 891 61 698 – –Vehicles 12 996 10 981 – –Leased assets under finance leases – 70 – –

Operating lease payments 54 380 54 980 – –

Property 14 128 12 962 – –Plant and machinery 2 472 2 392 – –Vehicles 37 780 39 626 – –

Research and development expenditure 5 265 4 573 – –Biological assets – movement in fair value adjustment 1 231 2 557 – –Directors' remuneration (note 19) 9 058 13 929 1 087 924 Employee benefit expense (note 20) 697 328 621 384 – –Provision for cash-settled share-based payments to employees and directors 2 439 36 349 – –Cost recognised for share options granted to employees and directors 5 563 496 – –

19. DIRECTORS' REMUNERATIONExecutive directorsSalaries 5 838 6 528Performance related bonuses – 4 095Retirement fund contributions 1 150 1 304Other benefits 583 668Share options exercised 6 852 53 847

14 423 66 442Non-executive directorsFees 1 487 1 334

Total directors' remuneration 15 910 67 776Less: Share options exercised (6 852) (53 847)

9 058 13 929Less: Paid by subsidiary (7 971) (13 005)

1 087 924

No share options in terms of the share option scheme were granted to the executive directors of the companyduring the year (2007: 164 100 options).

No options in terms of the share appreciation option scheme were granted to the executive directors of thecompany during the year (2007: nil).

Refer note 11 for details of the share-based payment schemes.

GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

20. EMPLOYEE BENEFIT EXPENSEWages and salaries 642 326 569 485 – –Termination benefits 2 393 2 385 – –Retirement fund contributions 49 935 47 463 – –Post-retirement benefits 2 674 2 051 – –

697 328 621 384 – –

Number of employees– Permanent employees: 8 049 (2007: 7 889)– Contracted labour: 721 (2007: 872)

21. OTHER INCOMEDividends received 18 – 328 779 362 505 Scrap sold 599 390 – –Storage fee income 2 974 3 859 – –Rental received 1 209 1 144 – –

4 800 5 393 328 779 362 505

22. OTHER GAINS/(LOSSES)Foreign exchange forward contract losses (406) (613) – –Foreign exchange gains on financial instruments 744 696 (17) (26)Profit on sale of property, plant and equipment 8 609 746 – –Fair value gains/(losses) on financial instruments and raw material contracts in respect of procurement not qualifying as effective hedges 2 800 2 457 – –Fair value adjustment on equity call options (22 121) (760) – –Excess of the fair value of interest acquired in a subsidiary over cost – 1 120 – –Net of other gains and losses 13 332 6 873 – –

2 958 10 519 (17) (26)

23. NET FINANCE (EXPENSE)/INCOMEInterest expenseBank borrowings 67 194 21 534 – –Loans 876 116 – –Other 757 1 657 1 499 13

68 827 23 307 1 499 13 Less: Interest capitalised (8 664) (12 309) – –

60 163 10 998 1 499 13

Interest incomeBank deposits 8 463 9 407 – 58 Other 2 299 – 67 –

10 762 9 407 67 58

Net finance (expense)/income (49 401) (1 591) (1 432) 45

Interest was capitalised at an average rate of 14,2% in respect of expenditure on assets which took a substantialperiod of time to get ready for their intended use.

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GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

24. INCOME TAX EXPENSECurrent income tax 87 169 149 085 – 13 Deferred income tax 55 682 81 687 – –

142 851 230 772 – 13 Income tax – prior year 343 (1 450) – (1)Deferred income tax – prior year (1 245) (623) – –Withholding tax 167 1 823 – –Deferred income tax adjustment due to rate change (8 471) – – –Tax on dividends/Secondary tax on companies 29 294 30 542 26 764 28 278 Secondary tax on companies deferred reversed/(raised) 1 220 25 1 220 (1 220)

164 159 261 089 27 984 27 070

The tax on the group's profit before tax differs from the theoretical amount that would arise using the basic income tax rate of South Africa:Profit before tax 498 385 806 647 325 624 361 285

Income tax calculated at a rate of 28% (2007: 29%) 139 548 233 928 91 175 104 773 Minority interest in income tax charge of consolidated partnership (113) (917) – –Effect of different income tax rates in other countries 2 075 1 042 – –Expenses not deductible for income tax purposes 5 024 – 883 366 Deferred income tax adjustment due to rate change (8 471) – – –Utilisation of income tax losses against normal and deferred income tax provision – (2 670) – –Adjustments to prior year's normal income tax provision 343 (1 450) – (1)Adjustments to prior year's tax base of assets and provisions (1 245) (623) – –Income not subject to tax (3 683) (611) (92 058) (105 126)Withholding tax 167 1 823 – –Secondary tax on companies 30 514 30 567 27 984 27 058

Income tax charge per income statement 164 159 261 089 27 984 27 070

Further information about deferred income tax is presented in note 13.

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GROUP COMPANY2008 2007 2008 2007

number number number numberof shares of shares of shares of shares

25. EARNINGS PER SHAREWeighted average number of ordinary shares in issue during the year for calculating earnings per share 38 134 718 38 789 127 Adjustments for share options 22 647 36 014

Weighted average number of ordinary shares for calculating diluted earnings per share 38 157 365 38 825 141

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

Profit attributable to equity holders of the company used for calculating earnings per share and diluted earnings per share 327 261 537 858

Basic earnings per ordinary share (cents) 858 1 387Diluted earnings per share (cents) 858 1 385

Basic earnings per shareBasic earnings per share is calculated by dividing theprofit attributable to equity holders of the companyby the weighted average number of ordinary sharesduring the year, reduced by ordinary sharespurchased and held as treasury shares.

Diluted earnings per shareDiluted earnings per share is calculated by adjustingthe weighted average number of ordinary sharesoutstanding to assume conversion of all dilutivepotential ordinary shares from the exercise of shareoptions. A calculation is done to determine thenumber of shares that could have been acquired atfair value (determined as the average annual marketshare price of the company's shares) based on themonetary value of the subscription rights attachedto the outstanding share options. The number ofshares calculated is compared with the number ofshares that would have been issued assuming theexercise of the share options. No adjustment ismade where the issue of share options has nodilutive effect on the number of shares in issue.

26. HEADLINE EARNINGSNet profit attributable to shareholders 327 261 537 858 Adjusted for:Profit on sale of property, plant and equipment (7 371) (503)Impairment of assets 495 –Investment previously written off now reversed – (714)Excess of the fair value of interest acquired in a subsidiary over cost of investment – (1 120)

Headline earnings 320 385 535 521

Headline earnings per share (cents) 840 1 381 Diluted headline earnings per share (cents) 840 1 379

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GROUP COMPANY2008 2007 2008 2007

R’000 R’000 R’000 R’000

27. DIVIDENDSThe following dividends were declared in respect of the current year's profits:

Interim dividend (Dividend no 15) declared on 19 May 2008 in respect of the year ended 30 September 2008 of 260 cents per share (2007: 260 cents per share) – net of treasury shares 98 924 100 778

Final dividend (Dividend no 16) declared on 13 November 2008 in respect of the year ended 30 September 2008 of 440 cents per share (2007: 440 cents per share) – net of treasury shares 167 410 169 223

266 334 270 001

The current financial statements do not include the final dividend.The dividends exclude any tax or withholding tax on dividends.

28. FINANCIAL INSTRUMENTS28.1 Financial instruments by category

The financial instruments are classified as follows:Financial assetsAssets at fair value through profit and lossDerivatives 7 201 32 104 – –Loans and receivablesLoans 13 184 2 873 42 657 –Trade and other receivables 675 238 737 651 – 23 Cash and cash equivalents 160 094 106 894 – –

855 717 879 522 42 657 23

Financial liabilitiesOtherAccounts payable 927 493 754 251 272 285 Loans from subsidiary – – 123 300 33 137 Shareholders for dividend 956 789 956 789 Bank overdrafts 322 265 256 935 20 749 6 160 Borrowings 24 362 8 708 – –

1 275 076 1 020 683 145 277 40 371

All financial instruments are initially recognised at fair value, and subsequently measured as follows:– Assets at fair value through profit and loss, at fair value– Loans and receivables at amortised costs– Other financial liabilities at amortised costs

At 30 September 2008 the carrying amounts of loans and receivables and financial liabilities approximatedtheir fair values due to the short-term maturities of these financial instruments.

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28. FINANCIAL INSTRUMENTS (continued)28.2 Financial risk management

The group is exposed to the following major financial risks:

(A) Market riskMarket risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, willhave on the value of financial instruments at year end and the resulting effect on the group's income.

(i) Interest rate riskThe group's risk is limited to surplus funds on cash deposits, loan liabilities and funds borrowed onbank overdrafts.

Interest is at variable rates which are linked to the bank prime lending rate. Cash flow exposurefrom interest rate fluctuations is hedged by entering into interest swap agreements whenmanagement regards it prudent.

The group's main income and operating cash flows are substantially independent of changes in themarket interest rates.

Based on the financial instruments as at 30 September, the after tax effect of a 1% movement inthe interest rates on the income statement and equity will be R1 572 000 (2007: R1 143 000).

(ii) Foreign currency riskThe group enters from time to time into transactions in currencies which are different from thefunctional currencies in which it conducts its business activities, and is as result exposed to foreignexchange rate fluctuations.

Exposure to exchange rate fluctuations is managed by utilising forward exchange contracts andcurrency option contracts when management regards it prudent. Forward exchange contractsentered into are related to specific balance sheet items.

The following rand value items reported in the financial statements are exposed to foreign exchangerate fluctuations at 30 September:

Group British Pound Euro US Dollar Total2008 R'000 R'000 R'000 R'000

Financial assets – 938 18 914 19 852 Financial liabilities (2 945) (2 979) (35 766) (41 690)

(2 945) (2 041) (16 852) (21 838)

2007Financial assets – – 22 249 22 249 Financial liabilities (746) (3 746) (12 796) (17 288)

(746) (3 746) 9 453 4 961

A 10% movement in the ZAR against the relevant foreign currencies will result in a R1 572 000 after taxeffect in the profits of the group (2007: R357 000). A weakening of the ZAR will result in lower profitsand a corresponding reduction in net asset value in the event of net foreign exposed liabilities.

Foreign exchange contracts at 30 September 2008 (2007: nil):Group Euro US Dollar

Contract value – R'000 1 769 2 378 Fair value – R'000 1 859 2 477 Foreign currency value – '000 151 308 Average exchange rates R11,64 R7,71 Maturity 2 months 2 months

Currency option contracts at 30 September 2008 (2007: nil):Group US Dollar

Fair value – R'000 6 757 Foreign currency value–USD "000 800

A 10% movement in the yield against the foreign currency will result in a R487 000 after tax effectin the profits of the group (2007: nil). A weakening of the yield will result in increased profits and acorresponding increase in the net asset value.

The company had no exposure to foreign currency risk for both the current and previous year.

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28. FINANCIAL INSTRUMENTS (continued)28.2 Financial risk management (continued)

(A) Market risk (continued)(iii) Commodity price risk

The prices of commodities used by the group can fluctuate widely and in a competitive market it isnot always possible to recover material commodity price increases from broiler customers. This canimpact on the group's profitability. The group may suffer financial loss when a fluctuating pricecontract obligation is entered into and the commodity prices increase or when a fixed priceagreement is entered into and commodity prices fall. Commodity price fluctuations are normallycaused by factors such as supply conditions, weather, exchange rate fluctuations and othereconomic conditions.

These risks are managed through an established process whereby the various conditions which influencedcommodity prices are monitored on a daily basis. Decisions on the procurement of raw materials as wellas the utilisation of derivative instruments to hedge against these risks are taken by executivemanagement within board approved mandates given. Detailed statements of raw material contracts andhedging positions are prepared and submitted on a monthly basis to the chief executive officer.

(B) Credit riskCredit risk is the risk of financial loss to the group if a counterparty to a financial instrument fails to meetits contractual obligations. Credit risk for the group arises on cash and cash equivalents, derivatives andtrade receivables. Credit risk is managed on a group basis.

Dealings with counterparties arising from money market and derivative instruments are limited to well-established financial institutions of high credit standing.

The group's main credit risk is concentrated in the aggregate balance of trade receivables on balancesheet date. Exposure to trade receivables comprises a large, widespread customer base. These risks arecontrolled by the application of credit limits and credit controlling procedures. The largest single creditrisk amounts to R137 million. The group does not consider there to be any significant concentration ofcredit risk that has not been adequately provided for at 30 September 2008.

Details of the carrying amounts of trade receivables, impairments recognised as well as collateral securityheld, are contained in note 8.

(C) Liquidity riskLiquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due.

The group's liquidity risk consists mainly of the amounts borrowed on long term to fund specific capitalexpenditure items, trade payables and amounts borrowed on general bank facilities. The expected cash flow is well within the confirmed facilities available to the group. The details of borrowings andundrawn facilities are disclosed in note 12. In terms of the articles of association, the group's borrowingpowers are unlimited.

The liquidity risk is managed through the management of working capital, by monitoring the dailyborrowing levels and by conducting cash flow forecasts at regular intervals, in order to maintainsufficient funds to fund the business activities from cash generated by operations and funds availablefrom committed credit facilities.

28. FINANCIAL INSTRUMENTS (continued)28.2 Financial risk management (continued)

(C) Liquidity risk (continued)The maturity profile of the financial liabilities is analysed below:The amounts disclosed are undiscounted cashflows.

Within Between More than1 year 1 and 5 years 5 years TotalR'000 R'000 R'000 R'000

Group2008Borrowings 5 914 16 312 10 252 32 478Trade and other payables 927 493 – – 927 493Shareholders for dividend – 956 – 956 Bank* 322 265 – – 322 265

1 255 672 17 268 10 252 1 283 192

2007Borrowings 3 109 9 417 – 12 526Trade and other payables 754 251 – – 754 251Shareholders for dividend – 789 – 789 Bank* 256 935 – – 256 935

1 014 295 10 206 – 1 024 501

Company2008Trade and other payables 272 – – 272 Loans from subsidiary 123 300 – – 123 300 Shareholders for dividend – 956 – 956 Bank* 20 749 – – 20 749

144 321 956 – 145 277

2007Trade and other payables 285 – – 285 Loans from subsidiary 33 137 – – 33 137 Shareholders for dividend – 789 – 789 Bank* 6 160 – – 6 160

39 582 789 – 40 371

* Bank facilities are reviewed on an annual basis.The company intends to finance its financial liabilities with dividend income.

28.3 Capital risk managementThe group manages its capital to maintain a sound net debt position and to provide adequate return oncapital employed. This is taken into account in deciding on the dividends to be paid to shareholders as well asto the extent capital is returned to shareholders by way of share repurchases.

The group continuously monitors its net debt to equity ratio. Net debt is calculated as total debt less cash andcash equivalents. Equity comprises all components of equity as disclosed in the balance sheet.

The net debt to equity ratio as at 30 September was as follows:

GROUP2008 2007

R'000 R'000

Total debt 346 627 265 643 Less: Cash and cash equivalents (160 094) (106 894)

Net debt 186 533 158 749

Total equity 1 328 150 1 307 513

Net debt to equity ratio (%) 14,0% 12,1%

The company manages its capital structure with dividend income from subsidiaries.

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Group2008 2007

R'000 R'000

29. RELATED PARTY TRANSACTIONSThe group entered into transactions and has balances with related parties as listed below. These include joint ventures, entities under common control and directors. Transactions that are eliminated on consolidation are not included. Transactions with related parties are effected at arm's length.

Sales of goods and servicesSales to joint ventures 7 057 10 996 Purchases from joint ventures 58 668 43 204 Outstanding balances at year end:Receivables from joint ventures 8 690 3 529 Trade payables to joint ventures 7 183 2 090

Directors' remunerationDetails of directors' remuneration are given on page 36. Executive directors are eligible for an annual performancerelated bonus payment linked to appropriate group targets. The structure and payments of bonuses is decided bythe human resources and remuneration committee.

Details of share options granted to directors are given in the directors' remuneration report.

Key managementEmployees fulfilling the role of key management are all appointed to the board of directors.

Principal joint ventures and subsidiary undertakingsDetails of joint ventures and subsidiaries are set out in notes 30 and 31 to the financial statements.

Cross guaranteesCross deed of suretyship in respect of borrowings has been given by Astral Foods Limited, Astral OperationsLimited, County Fair Foods (Pty) Limited, Ross Poultry Breeders (Pty) Limited, National Veterinary Supplies (Pty)Limited, Meadow Feeds (Eastern Cape) (Pty) Limited and Central Analytical Laboratories (Pty) Limited in respectof borrowings.

Group2008 2007

% %

30. INTEREST IN JOINT VENTURESThe principal joint ventures of the group are:

NuTec Southern Africa (Pty) Limited g 50 50 Meaders Feeds Limited (Mauritius) d 33 33 East Balt South Africa partnership h 50 –The following amounts represent the group's share of assets and liabilities, revenue and expenses and cash flows of the joint ventures, and are included in the consolidated financial statements:

R'000 R'000

Assets and liabilitiesNon-current assets 42 536 17 014 Current assets 75 224 41 834

Total assets 117 760 58 848

Non-current liabilities 13 392 515

Interest bearing 13 392 302 Non-interest bearing – 213

Current liabilities 50 412 27 892

Interest bearing 3 655 2 970 Non-interest bearing 46 757 24 922

Deferred income tax liability 2 293 882

Total liabilities 66 097 29 289

Net assets 51 663 29 559

Revenue and expensesRevenue 189 503 118 812

Profit before tax 20 216 14 762 Income taxes (6 349) (4 763)

Profit after tax 13 867 9 999

Cash flowsCash flow from operating activities 9 761 12 042 Profit distribution/dividend paid (10 273) (6 658)Investing cash flows (4 391) (944)Financing cash flows 4 186 (101)

Net cash flows (717) 4 339

Capital commitmentsCapital expenditure approved not contracted 28 000 –Capital expenditure contracted but not recognised in the financial statements 750 –

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31. INTEREST IN SUBSIDIARY COMPANIESDetails of the principal subsidiary companies of Astral Foods Limited are as follows:

Issued Effective Company's interest

ordinary capital percentage holding Equity Loans to/(from) 2008 2007 2008 2007 2008 2007 2008 2007

R'000 R'000 % % R'000 R'000 R'000 R'000

Unlisted investmentsDirectly held:Astral Operations Limited a 12 12 100 100 158 003 153 183 (123 300) (33 137)National Chicks Limited b 23 720 23 720 100 100 63 993 63 993 42 657 –County Fair Holdings (Pty) Limited c – 20 – 100 – 29 – –Africa Feeds Limited (Zambia)^ d 24 24 100 100 125 13 – –

222 121 217 218

Indirectly held:Meadow Feeds (Eastern Cape) (Pty) Limited d – – 100 100 Meadow Moçambique Limitada* d 8 8 80 80 Ross Poultry Breeders (Pty) Limited e 1 1 90 90 Elite Breeding Farms e – – 82 82 National Chicks Swaziland (Pty) Limited# f 1 1 67 67

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

^ Incorporated in Zambia. * Incorporated in Mozambique # Incorporated in Swaziland

Nature of business

a Animal feed and pre-mix production,

broiler operations , production and

sale of day-old broilers and hatching

eggs, retailer of animal health

products and analytical services

b Investment holding

c Dormant

d Animal feed production

e Broiler genetics and broiler breeding

production

f Production and sale of day-old

broilers and hatching eggs

g Animal feed pre-mixes

h Manufacturer of baking products

GROUP2008 2007

R’000 R’000

32. BUSINESS COMBINATIONThe group entered into an agreement during the year to acquire a 50% interest inEast Balt South Africa partnership. The business of East Balt South Africa consists ofmanufacturing baking products, primarily for sale to fast food outlets.

Payment of the purchase consideration was made at the beginning of July 2008,following approval from the competition authorities in terms of the Competition Act.

The group assumed joint control of East Balt South Africa from 1 July 2008 and wasproportionately consolidated from that date onwards, contributing the following tothe group's results:

(Comparative figures are in respect of the acquisition of Meadow MozambiqueLimitada during the prior year.)

Revenue 18 515 4 472Operating profit 734 1 334If the acquisition had occurred on 1 October 2007, the contribution to the group's results would have been as follows:

Revenue 65 828 26 509Operating profit 5 023 4 990

Detail of net assets acquired and the cost of the investment is as follows:Purchase consideration including acquiring of loan accounts 33 430 4 461Direct costs relating to the acquisition 75 57Fair value of interest acquired (32 251) (5 638)

Goodwill/(excess fair value over cost of investment) 1 254 (1 120)

Refer to the note E of the cash flow statement for detail of the assets and liabilities acquired.

The carrying amounts of the assets and liabilities acquired, determined in accordance with IFRS, equals the fair valueof the interest acquired.

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ANALYSIS OF ORDINARY SHAREHOLDERSat 30 September 2008

SHAREHOLDER SPREAD

Number of Number ofshareholders % shares %

1 – 1 000 shares 3 478 72,02 1 203 791 2,861 001 – 10 000 shares 1 047 21,68 3 132 550 7,43

10 001 – 100 000 shares 230 4,76 8 031 115 19,06100 001 – 1 000 000 shares 69 1,43 16 936 704 40,20

1 000 001 shares and over 5 0,11 12 832 125 30,45

4 829 100,00 42 136 285 100,00

DISTRIBUTION OF SHAREHOLDERS


Banks 77 1,59 3 169 149 7,52Close corporations 64 1,32 83 885 0,20Endowment funds 38 0,79 280 410 0,66Individuals 3 363 69,64 3 548 895 8,42Insurance companies 42 0,87 5 789 863 13,74Investment companies 17 0,35 5 167 456 12,26Medical aid schemes 8 0,17 194 160 0,46Mutual funds 132 2,73 11 527 594 27,36Nominees and trusts 744 15,41 1 586 962 3,77Other corporations 52 1,08 277 256 0,66Pension funds 128 2,65 5 279 773 12,53Private companies 151 3,13 918 115 2,18Public companies 12 0,25 4 141 455 9,83Share trusts 1 0,02 171 312 0,41

4 829 100,00 42 136 285 100,00

PUBLIC/NON-PUBLIC SHAREHOLDERS


Non-public shareholders 8 0,17 4 449 182 10,60

Directors and associates of the company holdings 6 0,13 189 293 0,45Own holdings 1 0,02 4 088 577 9,70Share incentive schemes 1 0,02 171 312 0,41

Public shareholders 4 821 99,83 37 687 103 89,40

4 829 100,00 42 136 285 100,00

BENEFICIAL SHAREHOLDERS HOLDING 3% OR MORE

Number ofshares %

Astral Operations Limited 4 088 577 9,70Old Mutual Life Assurance Company SA 3 305 159 7,84Public Investment Corporation 2 946 229 6,99Nedgroup Investment Rainmaker Fund 1 346 828 3,20

NOTICE OF ANNUAL GENERAL MEETING

EIGHTH ANNUAL GENERAL MEETINGNotice is hereby given that the eighth annual general meeting of members of Astral Foods Limited will be held in theBoardroom, Block 9, Boardwalk Office Park, 107 Haymeadow Crescent, Faerie Glen, Pretoria on Thursday, 12 February2009 at 08:00, to transact the following business:

ORDINARY BUSINESS:CONSIDERATION OF ANNUAL FINANCIAL STATEMENTSOrdinary resolution no. 1To present the annual financial statements for the company and the group for the year ended 30 September 2008,together with the directors’ and auditors’ reports.

RE-ELECTION OF DIRECTORSOrdinary resolution no. 2To note that in terms of article 14 of the company’s articles of association, Ms. TCC Mampane, Dr. T Eloff and Mr. NC Wentzel retire by rotation at this annual general meeting but, being eligible, have offered themselves for re-election.

It is proposed that any vacancies that occur as a result of the above directors not being available for re-election, will notbe filled at the meeting and the normal nomination and selection processes as laid down by the company’s nominationscommittee will be followed for the appointment of new directors.

Brief particulars of the qualifications and experience of the above are available on pages 7, 8 and 9 of this report.

NON-EXECUTIVE DIRECTORS’ FEESOrdinary resolution no. 3To approve that in terms of article 13.5 of the company’s articles of association, with effect from 1 October 2008, theremuneration of the directors who hold office from time to time (other than those in the employ of the company) bedetermined as follows:

Fixed fee Fixed feeper annum per annum

2009 2008R’000 R’000

Chairman of the board 324 300Member of the board 162 150Chairman of the audit and risk management committee 119 110Member of the audit and risk management committee 65 60Chairman of the human resources and remuneration committee 119 110Member of the human resources and remuneration committee 65 60

The remuneration will be paid quarterly in arrears.

Ordinary resolution no. 4To re-appoint PricewaterhouseCoopers as auditors of the company (with IS Buys as the individual designated auditor) forthe 2009 financial year.

SPECIAL BUSINESS:To consider and, if deemed fit, to pass, with or without modification, the following resolutions in the manner requiredby the Companies Act 61 of 1973, as amended (the Act) and subject to the Listing Requirements of the JSE Limited(JSE):

AMENDMENT OF ARTICLES OF ASSOCIATIONSpecial resolution no. 1“Resolved that the company’s articles of association be and are hereby amended by deleting the existing article 14.2 inits entirety and replacing it with the following new article 14.2:

An annual general meeting or other general meeting of the company may fill any vacancy and a retiring director shall beeligible for re-election. If at any meeting at which an election of directors ought to take place the offices of the retiringdirectors are not filled, unless it is expressly resolved not to fill such vacancies, the meeting shall stand adjourned and theprovisions of Article 10.3 and 10.5 shall apply mutatis mutandis to such adjournment, and if at such adjourned meetingthe vacancies are not filled, the retiring directors or such of them as have not had their offices filled shall be deemed tohave been re-elected at such adjourned meeting unless a resolution for the re-election of any such director shall havebeen put to the meeting and rejected.”

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AMENDMENT OF ARTICLES OF ASSOCIATION (continued)The reason and effect of the amendment to the company’s articles of association is to bring the wording of thearticle in line with the wording contained in Schedule 1, Table A of the Companies Act, 1973, as amended.

GENERAL AUTHORITY TO REPURCHASE SHARESSpecial resolution no. 2“Resolved that the company may, as a general approval in terms of section 85(2) of the Act, acquire from time totime, such of its securities at such price or prices and on such other terms and conditions as the directors may fromtime to time determine, but subject to the following requirements from time to time of the JSE:

� The repurchase of securities shall be effected through the order book operated by the JSE trading system anddone without any prior understanding or arrangement between the company and the counter party;

� The repurchase of securities is authorised by the company’s articles of association;

� The authority shall be valid only until the next annual general meeting of the company or for 15 months from thedate on which this special resolution is passed, whichever is the shorter;

� Repurchases may not be made at a price more than 10% above the weighted average of the market value forthe securities for the five business days immediately preceding the date on which the transaction is effected;

� At any one point in time, the company may only appoint one agent to effect any repurchase(s) on the company’sbehalf;

� The company may only undertake a repurchase of the securities if, after such repurchase, it still complies with theListings Requirements of the JSE concerning shareholder spread requirements; and

� The company or its subsidiaries may not repurchase the company’s shares during a prohibited period, as definedin the Listings Requirements of the JSE.”

The reasons and effect of special resolution number 2 is to generally approve, in terms of section 85(2) of the Act,the acquisition by the company of securities issued by it, subject to the Listings Requirements of the JSE. Thedirectors intend to utilise this authority at such time or times, in respect of such number of securities, at such priceand on such terms as they may consider appropriate in the circumstances from time to time, provided that anyrepurchase of securities should not, in the aggregate, in this financial year, exceed 10% of the company’s issuedsecurities of the class concerned. Accordingly the method by which the company intends to acquire its securities, themaximum number of securities which will be acquired and the price(s) and date(s) at which the acquisition(s) is (are)to take place are not presently known. In considering whether or not to act in terms of this general authority, thedirectors will ensure, for a period of 12 months after the date of the notice of the general meeting, that:

� The company and its subsidiaries (the group) will be able, in the ordinary course of business, to pay its debts;

� The assets of the company and the group will be in excess of the liabilities of the company and the group. Forthis purpose, the assets and liabilities will be recognised and measured in accordance with the accounting policiesused in the latest audited annual group financial statements;

� The company and the group will have adequate capital and reserves; and

� The working capital of the company and the group will be adequate for ordinary business purposes.

When the company has cumulatively repurchased 3% of the initial number of the relevant class of securities and foreach 3% in aggregate of the initial number of that class acquired thereafter, the company will publish anannouncement giving details thereof in accordance with Rule 11.27 of the Listings Requirements of the JSE. The company undertakes that it will not enter the market to repurchase the company’s securities in terms of thisgeneral authority until such time as the company’s sponsor has provided written confirmation to the JSE regarding theadequacy of the company’s working capital in accordance with Schedule 25 of the Listings Requirements of the JSE.

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GENERAL AUTHORITY TO REPURCHASE SHARES (continued)Directors’ responsibility statementThe directors collectively and individually accept full responsibility for the accuracy of the information given in thefinancial statements and certify that to the best of their knowledge and belief there are no facts that have been omittedwhich would make the statement false or misleading.

Material changeThere has been no material change in the financial or trading position of the company and its subsidiaries since the dateof publication of the company’s annual results on 14 November 2008.

LitigationThe company and its subsidiaries are not, and have not in the twelve months preceding the date of this notice of annualgeneral meeting been involved in any legal or arbitration proceedings which may have or have had a material effect onthe financial position of the company and its subsidiaries, but have noted the following contingent liabilities:

– A complaint was lodged against Astral Operations Limited and Elite Breeding Farms at the Competition Commissionregarding anti-competitive behaviour relating to an existing supply agreement of parent stock. The CompetitionCommission referred the matter to the Competition Tribunal for determination. The group will oppose a claim and itis not anticipated that any material liabilities will arise from a claim.

– Profile Feeds (Pty) Limited and Paarl Poultry Farms (Pty) Limited instituted claims against Astral Operations Limited onthe basis of a purported cancellation of a long-term feed supply agreement in the sum of R42 million, alternativelyR21 million, alternatively R3,7 million. The prospects for success of these claims are regarded as being remote and anypossible financial loss has been estimated and provided for in the financial statements.

The general information regarding the company, referred to Paragraph 11.26(b) of the Listings Requirements of the JSE,is contained elsewhere in this annual report as follows:

Directors of the company and of material subsidiaries, on pages 7, 8, 9 and 88.Major shareholders, on page 83.Material changes since year end, on page 35.Directors’ interest in the company’s shares, on page 38.Company’s share capital, on pages 63 and 64.Directors’ responsibility statement, on page 30.Litigation, on page 35.

VOTING AND PROXIESOn a show of hands a member of the company present in person or by proxy shall have only 1 (one) vote irrespective ofthe number of shares he holds or represents, provided that a proxy shall irrespective of the number of members herepresents have only 1 (one) vote. On a poll a member who is present in person or represented by proxy shall be entitledto that proportion of the total votes in the company which the aggregate amount of the nominal value of the sharesheld by him bears to the aggregate amount of the nominal value of all the shares issued by the company.

A member entitled to attend, speak and vote at the annual general meeting is entitled to appoint a proxy or proxies toattend, speak and vote in place of that member. A proxy need not be a member of the company.

Registered holders of certificated Astral shares and holders of dematerialised Astral shares in their own name and whoare unable to attend the annual general meeting and who wish to be represented at the meeting, must complete andreturn the attached form of proxy in accordance with the instructions contained in the form of proxy, so as to bereceived by the share registrars, Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001(PO Box 61051, Marshalltown, 2107) by no later than 08:00 on Wednesday, 11 February 2009.

Holders of Astral shares (whether certificated or dematerialised) through a nominee should timeously make thenecessary arrangements with that nominee or, if applicable, Central Securities Depository Participant (CSDP) or broker toenable them to attend and vote at the annual general meeting or to enable their votes in respect of their Astral sharesto be cast at the annual general meeting by that nominee or a proxy or a representative.

By order of the board

MA EloffCompany Secretary

Pretoria 13 November 2008

NOTICE OF ANNUAL GENERAL MEETING (continued)

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SHAREHOLDERS’ DIARY

Financial year end 30 September 2008Annual general meeting 12 February 2009

REPORTS AND ACCOUNTSInterim report for the six months ending 31 March 2009 May 2009Announcement of annual results for the year ending 30 September 2009 November 2009Annual report December 2009

DIVIDENDSInterim dividend – March 2009

Declaration May 2009Payment June 2009

Final dividend – September 2009

Declaration November 2009Payment January 2010

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ASTRAL FOODS LIMITEDRegistration No. 1978/003194/06Share code: ARLISIN number ZAE000029757

REGISTERED OFFICEBlock 9Boardwalk Office Park,107 Haymeadow CrescentFaerie GlenPretoria, 0043

POSTAL ADDRESSPostnet Suite 329Private Bag X10Elarduspark, 0047Telephone (012) 990 8260Telefax (012) 991 2381e-mail: [email protected]

WEBSITE ADDRESShttp/www.astralfoods.com

AUDITORSPricewaterhouseCoopers Inc.

PRINCIPAL BANKERNedcor Bank Limited

SPONSORJPMorgan Equities Limited(Johannesburg Branch)1 Fricker Road, Cnr. Hurlingham RoadIllovo, Johannesburg, 2196Private Bag X9936, Sandton, 2146Telephone (011) 507 0430

TRANSFER SECRETARIESComputershare Investor Services (Pty) Limited70 Marshall StreetJohannesburg, 2001PO Box 61051, Marshalltown, 2107

COMPANY SECRETARYMA Eloff

MANAGEMENTCorporate OfficeS Burger Group credit managerM Eloff Group company secretaryD Ferreira Group financial managerL Hansen Group human resources managerO Lukhele Group technical manager

– veterinary servicesE Potgieter Group internal auditor

MAJOR SUBSIDIARIES AND JOINT VENTURESAstral Operations LimitedRegistration No. 1947/027453/06Directors: NC Wentzel

LW HansenCE Schutte

Animal Feeds Limited (Zambia)Registration No. 36327Directors: CE Schutte

NR Mwanyungwi*DAR Phiri*CL SextonRJ Steenkamp

*Zambian

Meadow Feeds (Eastern Cape) (Pty) LimitedRegistration No. 2003/021458/07Directors: NC Wentzel

LW HansenCE Schutte

Ross Poultry Breeders (Pty) LimitedRegistration No. 1999/027125/07Directors: NC Wentzel

TA Exley*CP Lea*

*British

NuTec Southern Africa (Pty) LimitedRegistration No. 1996/002008/07Directors: NC Wentzel

R Raterink##Dutch

Meadow Moçambique LimitadaRegistration No. 5710/MP/G/2001Directors: CE Schutte

JR Tinga*RJ SteenkampCL SextonS Jager

*Mozambican

National Chicks SwazilandRegistration No. 94/63894/07Directors: R Packard**Swazilander

Meaders Feeds LimitedRegistration No. 10746Directors: JHM De Marasse Enouf*

RJB Montocchio*JB Wiehe*NC WentzelJH Hong*

*Mauritian

ADMINISTRATION

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FORM OF PROXY

ASTRAL FOODS LIMITED(Incorporated in the Republic of South Africa)(Registration Number 1978/003194/06)(Share code: ARL)(ISIN code: ZAE000029757)

Form of proxy for the use of shareholders, registered as such and who have not dematerialised theirshares or hold own name dematerialised shares, at the eighth annual general meeting of the company tobe held at Block 9, Boardwalk Office Park, 107 Haymeadow Crescent, Faerie Glen, Pretoria on Thursday,12 February 2009 at 08:00

Shareholders who have dematerialised their shares must inform their CSDP or broker of their intention to attend theannual general meeting and request their CSDP or broker to issue them with the necessary authorisation to attendor provide their CSDP or broker with their voting instructions should they not wish to attend the annual generalmeeting in person. Such shareholders must not return this form of proxy to the transfer secretaries.

I/We

of (address)

being the holder(s) of shares in the company, do hereby appoint (see note 1)

or failing him/her

or failing him/her

the chairman of the meeting, as my/our proxy to vote for me/us on my/our behalf at the eighth annual generalmeeting of the company to be held on 12 February 2009 and at any adjournment thereof.

Signed this day of 2008/9

Signature

(*indicate instructions to proxy by way of a cross in the space provided below)Unless otherwise instructed, my/our proxy may vote as he/she thinks fit or abstain from voting.

*In favour *Against *Abstain

ORDINARY BUSINESS1. To adopt the annual financial statements for the year ended

30 September 2008

2. (a) To re-elect Ms. TCC Mampane as a director

(b) To re-elect Dr. T Eloff as a director

(c) To re-elect Mr. NC Wentzel as a director

3. To approve the remuneration of the non-executive directors

4. To approve the re-appointment of PricewaterhouseCoopers as auditors for the 2009 financial year

SPECIAL BUSINESS5. Special resolution no. 1

To approve the amendment to the articles of association

6. Special resolution no. 2To approve the acquisition of shares issued by the company

Please refer to the notes on the reverse side of this form.

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A shareholder may insert the name or the names of two alternative proxies of his/her choice in the space provided,with or without deleting “the chairman of the meeting”. The person whose name stands first on the form of proxyand who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whosenames follow. Any such proxy, who need not be a shareholder of the company, is entitled to attend, speak and vote onbehalf of the shareholder.

A proxy is entitled to one vote on a show of hands and, on a poll, one vote for each share held. A shareholder’sinstructions to the proxy must be indicated in the appropriate spaces.

If a shareholder does not indicate on this instrument that the proxy is to vote in favour of or against any resolution or toabstain from voting or gives contradictory instructions, or should any further resolution/s or any amendment/s whichmay be properly put before the annual general meeting be proposed, the proxy shall be entitled to vote as he thinks fit.

This form of proxy must be received by the transfer secretaries, Computershare Investor Services (Pty) Limited, GroundFloor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by no later than 08:00 onWednesday, 11 February 2009.

Documentary evidence establishing the authority of the person signing the proxy in a representative capacity must beattached hereto unless previously recorded by the company’s transfer secretaries.

The completion and lodging of this form of proxy will not preclude a shareholder from attending the annual generalmeeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms of this proxy form.

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

The chairman of the meeting may accept or reject any form of proxy, which is completed and/or received other than inaccordance with these notes.

Shareholders who have dematerialised their shares must inform their CSDP or broker of their intention to attend theannual general meeting and request their CSDP or broker to issue them with the necessary authorisation to attend theannual general meeting or provide their CSDP or broker with their voting instructions should they not wish to attend theannual general meeting in person but wish to be represented thereat. This must be done by the cut-off time asrequested by the CSDP or broker.

NOTES TO FORM OF PROXY

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