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Contents

Profile, strategy and vision 1

Group activities 2

Financial highlights 4

Group structure 6

Directorate 7

Management 9

Chairman’s review 10

Chief executive officer’s review 12

Corporate governance 16

Sustainability report 22

Value-added statement 25

Seven year review 26

Ratios and statistics 27

Annual financial statements 28

Analysis of ordinary shareholders 84

Notice of annual general meeting 85

Shareholders’ diary 89

Administration 90

Form of proxy Inserted

Astral Foods Annual Report 2007

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1Astral Foods Annual Report 2007

PROFILEAstral Foods is a leading South African food group with key

activities in animal feed, animal feed pre-mix, broiler

genetics, broiler operations and the production and sale of

day-old broilers and hatching eggs.

STRATEGYTo grow the business in selected food markets to remain a

leading food commodity company.

VISIONTo be a leading commodity food business.

2 Astral Foods Annual Report 2007

Group act iv it ies

Animal Feed

The Animal Feed Division operates from eleven strategically placed feed mills in Southern Africa, wellequipped to produce and distribute a wide range of specialised products for all commercially farmedanimal species.

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

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

Analytical Laboratories

Central Analytical Laboratories (Pty) Limited analyses feed, soil, plant material, water, fertiliser, limeand growth medium samples for feed and fertiliser manufacturers as well as for the agricultural sector.

Animal Healthcare

NVS 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 theanimal health and the food processing industries.

Animal Feed Premix

NuTec Southern Africa (Pty) Limited, a 50% joint venture with Provimi Holdings, a leadinginternational feed technology company based in Holland, produces and markets vitamin and mineralpremixes for animal feed and also markets a wide range of feed additives and speciality raw materialsfor animal feed.

A N I M A L N U T R I T I O N


P O U L T R Y

Day-old broiler and hatching egg supplier

The National Chicks division conducts business as a day-old chick and hatching egg supplier to theAstral integrated broiler operations and the independent non-integrated broiler producers in SouthAfrica, Swaziland and Moçambique with a technical team servicing its customer base.

Integrated broiler operations

The group has three fully integrated broiler production, processing, distribution, sales and marketingoperations. The combined production of these three operations totals 3,660 million processed broilersper week made up as follows:

Earlybird Standerton 1,250 millionEarlybird Olifantsfontein 1,250 millionCounty Fair Foods 1,160 million

Both Earlybird Olifantsfontein and County Fair Foods market and distribute a full range of fresh andfrozen poultry products whereas Earlybird Standerton’s primary products are in the form of frozen IQFproducts.

Both County Fair Foods and Earlybird market and distribute a full range of value added productscomprising frozen reformed filled products, ready to eat chicken products and a dedicated range ofemulsified products.

Broiler genetics

Ross Poultry Breeders (Pty) Limited is the sole distributor and supplier of both Ross 788 and 308 parentstock to the South African broiler industry. The company has a technology agreement with AviagenLimited, a multi-national company which holds the worldwide proprietary rights to the “Ross” brand.

Elite Breeding Farms is a joint venture between Country Bird Holdings Limited and Astral Operations,in which Astral Operations holds an 82% interest. The joint venture is managed by Ross PoultryBreeders (Pty) Limited.The joint venture supplies parent stock to the participants in the joint venture.


• Operating profit up 6% to R808 million

• Headline earnings per share up

7% to 1 381 cents

• Dividend per share up 20% to 700 cents

Financial highl ights

Operating profit increasedby 6% from R766 million

to R808 million

2003 2004 2005 2006 20070

200

400

600

800

1 000

20022001

Operating profitRm

2003 2004 2005 2006 20070

150

300

600

750

20022001

Cash generated from operatingactivities Rm

450

Net cash inflow fromoperating activities

at R446 million


2003 2004 2005 2006 20070

1 000

2 000

3 000

4 000

5 000

6 000

7 000

20022001

RevenueRm

2003 2004 2005 2006 20070

200

300

400

600

700

20022001

Dividends per sharecents

500

100

Revenue increased by 22%from R5 184 million

to R6 329 million

Headline earnings per shareimproved by 7% to 1 381 cents

Dividend increasedby 20%

2003 2004 2005 2006 20070

400

600

800

1 200

1 400

20022001

Headline earnings per sharecents

1 000

200

We place great emphasis on return ofcapital employed. Despite the high capital

expenditure the return on net assets achieved

was 55%.

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 SA (Pty) Limited

100%Africa Feeds Limited

(Zambia)

33%Meaders Feeds Limited

(Mauritius)

Poulty Operations

Investment Holding

100%Meadow Feeds

(Eastern Cape) (Pty) Limited

100%Central Analytical

Laboratories (Pty) Limited

90%Ross Poultry Breeders

(Pty) Limited

82%Elite Breeding Farms

80%Meadow Moçambique

Limitada

National Chicks

100%


Group structure


Directorate

Thabang Charlotte Christine Mampane (49)

BA Hons (Public Administration), Masters in Management, Group Executive in theGroup’s CEO’s office and Regions: South African Broadcasting Corporation. Appointedto the board on 14 November 2003. Member of the human resources andremuneration committee.

Started career at the SABC 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 Sectionin 1995 but returned to the SABC in 1996 as General Manager of the portfolio of eight radiostations, thereafter appointed as Chief Executive, Radio division for three years. Head ofRegions from 2002 to 2005 before being appointed to her current position as GroupExecutive in the Group’s CEO’s office and Regions. Non-executive director of the National Filmand Video Foundation.

Jan Louis van den Berg (71)

BCom, Chairman, Director of companies, Appointed to the board on 19 February 2001.Member of the human resources and remuneration committee and the audit and riskmanagement committee.

Independent director of companies including Tiger Brands Limited until 2006 and Iscor Limited(now ArcelorMittal South Africa) until 2002. Previous positions included executive director ofGeneral Mining and Finance Corporation (Gencor) and director of other companies in the GencorGroup, managing director of Finansbank until its acquisition by Nedbank in 1989.

Malcolm Macdonald (65)

BCom, CA(SA), ACIMA, Director of companies. Appointed to the board on 14 November 2003. Chairman of the audit and risk management committee.

Served as financial director of Iscor Limited (now ArcelorMittal South Africa) and itsinternational steel marketing company until retirement in 2004. Previously general manager ofthe Industrial Development Corporation of SA Limited and non-executive director of many of itsassociated companies in a variety of industries (engineering, agriculture, chemicals, shipping,financial services, minerals extraction and processing).

Currently serves on the board and as chairman of the audit committee of the listed GijimaASTGroup Limited.

Charles Gustav van Veyeren (73)

BSc Agric, Director of companies. Appointed to the board on 19 February 2001. Memberof the human resources and remuneration committee.

Chairman of Onderberg Processing Co-operative Limited, Malelane Citrus Co-operative, MalelaneIrrigation Board and Crocodile River Major Irrigation Board. Previously an executive member of theSouth African Agricultural Union and served on the boards of the Land & Agricultural Bank ofSouth Africa, Agricultural Research Council and Citrus Industry Trust. Also served on theTariffs/Marketing Development Committee, National Water Advisory Committee and as aCouncil Member of Eskom.

Independent non-executive directors


Directorate (continued)

Theunis Eloff (52)

BJur (Econ), ThB, ThM, ThD. Vice-Chancellor of North-West University. Appointed to theboard on 8 May 2007.

Ordained as minister of religion of a congregation at the University of Pretoria. Completed hisDoctorate in Theology with a dissertation on “Government, Justice and Race Classification”. Left the ministry in 1989 and joined the Consultative Business Movement and was appointed asExecutive Director in 1990.

In 1995 appointed as Chief Executive of the National Business Initiative. Served on the EconomicAdvisory Council of the Northwest Province, the Board of Business Against Crime and the Boardof the Centre for Conflict Resolution. In 2002 became Vice-Chancellor of the PotchefstroomUniversity for Christian Higher Education. Currently serving as chairman of Higher Education SouthAfrica (HESA) and deputy chairman of the Association of Commonwealth Universities (ACU).

Nombasa Tsengwa (42)

BSc, MSc, PhD (Biotechnology). General Manager: Safety, Health andEnvironment, Exxaro Resources Limited. Appointed to the board on 8 May 2007.

Started career as Research Assistant, University of Transkei. Previous positions includeLecturer: Department of Genetics, University of Pretoria and Senior Co-ordinator:Agriculture and Agro-processing Sector within the National Research and TechnologyForesight Project. Appointed as Corporate Manager: Biotechnology and InnovationFutures at the Council of Scientific and Industrial Research in 1999 before beingappointed as Deputy-Director General: Environmental Management at the NationalDepartment of Environmental Affairs and Tourism in 2000.

Nicolaas Cornelius Wentzel (52)

BCom (Hons), CA(SA), Chief Executive Officer. Appointed to the board on 9 February 2001.Member of the human resources and remuneration committee and the audit and riskmanagement committee.

Appointed divisional director of Tiger Agri-Poultry in 1995 and divisional chairman of Tiger Millingand Baking operations in 1997. Left Tiger Brands Limited in 1997 to take up position of chiefexecutive officer of the unlisted Genfood Group. Appointed as the first CEO of Astral FoodsLimited in 2001.

Executive directors

Jurie Johannes Geldenhuys (64)

BSc (Eng Elec), BSc (Eng Mining), MBA, Director of companies. Appointed to the board on24 May 2001. Chairman of the human resources and remuneration committee.

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 other chamberrelated board committees. Resigned as a director of Sallies on 30 June 2006.

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).


Michael Andrew Kingston (56)

Director: Astral Operations: Poultry. Appointed to the board on 19 February 2001.

Has extensive experience in the poultry industry having been with Rainbow Chicken for 12 yearsand prior to that involved in commercial farming operations in Mid-Illovo. Joined poultry producerCountry Bird in 1986 and returned the company to profitability. In 1994 appointed as managingdirector of County Fair Foods.

Currently accountable for County Fair Foods, Earlybird Farm, National Chicks, Ross Poultry Breedersand Elite Breeders.

He has served on the South African Poultry Association for the past 21 years and is a pastchairman of the Broiler Organisation Committee. Awarded “Poultry Man of the Year” in 1999.

Christiaan Ernst Schutte (47)

Management Business Administration and Finance Diploma. Director: Astral Operations:Animal Feed. Appointed to the board on 18 August 2005.

Joined Golden Lay Farms, a division of Tiger Brands Limited, the leading egg producingorganisation in Southern Africa, in October 1984 as assistant farm manager. Spent 18 yearswith the group in various positions. Joined Astral Foods Limited in 2002 as manager of retailsales for Meadow Feeds.

Appointed as managing director for the Animal Feeds Division in July 2004. Vice chairmanand director of Animal Feed Manufacturers Association of South Africa.

Management

Corporate officeM Eloff Group company secretary S Burger Group credit managerD Ferreira Group financial manager E Potgieter Group internal auditorL Hansen Group human resources manager O Lukhele Group technical manager

– Veterinary Services

PoultryM Gericke Ross Poultry BreedersF Greyling Earlybird StandertonD Stock National ChicksS Vermaak Earlybird OlifantsfonteinG Visser County Fair Foods

Animal NutritionG Arnold Animal Feed Cape RegionD Barnard Animal Feed NutritionJ Berry NuTecT Botha Central Analytical LaboratoriesA Crocker Animal Feed Eastern Cape RegionG de Wet NVS BiocareC Neumann Animal Feed Central RegionM Schmitz Animal Feed Natal RegionW Stander Animal Feed ProcurementR Steenkamp Animal Feed Africa

In my review last year, I anticipated that the probability of a drop in world prices and substantiallyhigher maize plantings in South Africa would tend to drive down the price of maize, which constitutesthe group’s major input cost. This did not materialise. On the contrary, erratic weather conditionsseverely disrupted world production and the South African maize producing industry experienced itsworst drought conditions in thirty years. In the event, the domestic price of yellow maize increased62% over the previous year, as measured by the average Safex price. Prices of other feed inputcomponents also rose substantially. The effect of these higher input prices on our operations wassevere, although it was partly mitigated by good procurement positioning achieved by managementduring the first part of the year.

Revenue for the year increased by 22% to R6,3 billion but, as the increased commodity input costscould only be partially recovered during the year, operating margins dropped to 12,8% from 14,8%.

Under these circumstances, the financial results for the past year, culminating in headline earnings ofR536 million, were satisfactory. This is equivalent to a 7% increase in headline earnings per share to1 381 cents.

Dividends declared out of the year’s earnings increased by 20% to 700 cents per share. Thiscomparatively higher distribution is justified by our robust underlying cash flow and strong balance sheet.

Expansion programmesIn line with our strategic plan to invest in organic expansion, two majorprojects were undertaken at our Earlybird poultry operation. The first project,to increase broiler capacity by 12% to 2,5 million broilers per week, wassuccessfully completed at the end of June at a cost of R162 million. The secondproject, to improve product mix and flexibility at the processing plants, at a costof R202 million, is expected to be fully operational by the end of December2007. Earlybird plans to increase its capacity by an additional 100 000 broilersper week from April 2008.

The new Gauteng hatchery of our National Chicks division was successfullycommissioned in December 2006 to increase capacity by 8% at a cost ofR24 million. The production of day-old broiler chicks is in the correct locationand transportation of chicks is reduced.

County Fair is currently completing its expansion project, started in 2005,which will increase its broiler production by 100 000 to 1,25 million per weekby April 2008.

Chairman’s review


Consumption of poultry meatincreased steadily over the past few

years and the trend is expected to continue.

JL van den BergChairman


As a result of the broiler expansion programmes, our Animal Feeds division will continue to grow aswell. The Meadow mill at Delmas was upgraded at a cost of R7,2 million to supply additional feedto Earlybird.

During the year we increased our shareholding in Meadow Mozambique from 33% to 80% at aconsideration of R2,5 million. The operation has recorded good sales volumes and profit growth isexpected to continue into 2008.

We have spent and committed R611 million on expansion capital over the past two years and we aregearing ourselves for further expansion as the market continues to grow.

Share repurchase programmeWe repurchased a further 1,04 million (2006: 2,3 million) shares during the year in terms of our sharerepurchase programme, at a total cost of R115 million (2006: R190 million) and at an average price ofR110 (2006: R60) per share. This brings the total repurchases since the inception of the programmein 2003 to 7,3 million shares at an average price of R67 per share, representing 16% of issued sharesat the start of the programme.

ProspectsConsumption of poultry meat has increased steadily over the past few years and the trend is expectedto continue, driven by the positive economic climate in the country, the growing middle class and therelative price advantage of poultry meat over alternative sources of protein such as red meat.

The current strength of the rand, if it persists, will continue to make imports of poultry meat verycompetitive.

Due to the good rains recently experienced and currently high maize prices, farmers are expectedto increase their maize plantings, which could result in lower local maize prices going forward.International agricultural commodity prices are likely to remain relatively high, placing upwardpressure on food inflation.

The full potential of our poultry expansions is expected to flow through during the new financial yearand we expect an improvement in earnings for the coming year.

The boardDuring the year we appointed two new directors to the board, Dr Nombasa Tsengwa and Dr TheunsEloff. We look forward to their contributions to the successful future of your company.

Tom Pritchard, group financial director since 2001, retired at the end of August 2007. Our thanks fora job well done and our 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 andto congratulate Nick Wentzel, his management team and all the people at Astral on yet another fineeffort during the past year under difficult conditions

JL van den BergChairman8 November 2007

Gearing for future growth – expansion

capital expenditure increased to R240 million.


Chief Executive Off icer ’s review

Financial resultsResults for the year showed an improvement with headline earnings increasing by 5% and headlineearnings per share by 7% as a result of the share buy-back programme approved by shareholders.

Revenue increased by 22% to R6,3 billion (2006: R5,1 billion). Operating profit of R808 million (2006: R766 million) increased by 5% with the Animal Nutrition division reporting strong growth of22%. Group operating margins at 12,8% were down on last year’s 14,8%.

The group’s Share Appreciation Option Scheme provides cash settled incentive remuneration based onthe increase in the value of the shares of the company. The fair value of options granted is recognisedas an expense in the income statement. Due to the substantial increase in the share price the expensefor the year amounted to R37 million (2006: R14,1 million). A hedge was taken out against theoutstanding options issued in 2005 and 2006. This should limit the charge against the incomestatement for outstanding options to less than R20 million per annum. Further awards from thisscheme have been curtailed in favour of the traditional share option scheme.

As we gear ourselves for further growth, expansion capital expenditure increased from R212 million to R240 million, including:

• R67 million for Earlybird to expand capacity to 2,5 million broilers per week;• R129 million to increase product mix and flexibility at Earlybird; and• R24 million to increase product mix and flexibility at County Fair.

Replacement capital expenditure of R80 million (2006: R82 million) was very much in line with thedepreciation and amortisation charge of R106 million (2006: R88 million).

We place great emphasis on return on capital employed. It is pleasing to report that despite the highcapital expenditure the return on net assets achieved was 55% (2006: 65%). Net asset turn remainedconstant.

Return on equity decreased from 49% to 44%.

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

Animal FeedsThe division, trading under the Meadow Feeds trade name, consolidated its position further as theleading feed manufacturer in Southern Africa by increasing its shareholding from 33% to 80% inMeadow Feeds Mozambique.


The operations outside South Africa now consist of a wholly owned feed mill in Lusaka (Zambia),a 33% shareholding in a mill in Port Louis (Mauritius) and an 80% shareholding in a mill in Maputo(Mozambique).

In view of the highly competitive animal feeds market characterised by under utilised capacity, theresults for the year were most pleasing. Revenue of R3,5 billion (2006: R2,7 billion) increased by 32%,operating profit of R333 million (2006: R272 million) improved by 22%. Operating margins decreasedfrom an all time high last year of 10,2% to 9,3% as the increased input costs related to the highermaize prices could not be fully recovered.

The South African animal feed market is mature with the only significant growth prospects comingfrom the expanding poultry industry and our division is well positioned to take full advantage of theexpansion in the Poultry division.

Quality remains one of our core focus areas and a major reason for our strong market position.Our division has achieved certification with regard to ISO 9001/2000, Good Manufacturing Practices(GMP) and Hazard Analysis and Critical Control Point (HACCP) at all of the main feed mills, whichoffer complete product traceability in line with European Union (EU) standards of feed safety.Complementary to this, the Paarl and Randfontein mills achieved the “Excellence Award” from theinternationally acclaimed 20 Keys Management Programme and Meadow Paarl won the ProductivitySA Award in the industrial sector.

The technical agreement with Provimi, a leading international animal feed research and developmentorganisation, was renewed, giving us access to the latest developments in animal feed nutrition.

Maans Manuel (Meadow Paarl), Paulus van Rooyen (Meadow Paarl), Len Hansen (Astral Operations) Chris Schutte (MD Animal Feed Division),Nikki Moodley (NuTec SA), Gary Arnold (Meadow Paarl), Dickson Khanyile (NuTec SA), James Berry (NuTec SA)


Chief Executive Off icer ’s review(continued)

Animal Feed Pre-MixNuTec SA, a 50% joint venture with Provimi, produced an excellent financial performance despitesignificantly higher vitamin prices brought about by world wide shortages. The operation achieved the“Excellence Award” from the 20 Keys Management programme and was one of three finalists in theProductivity SA competition.

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

PoultryThe division comprises three separate business units – integrated broiler operations, broiler geneticsand the production and sale of day-old broiler chicks and hatching eggs.

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

Imported poultry remains a strong competitor in the local market.

The steady growth of the South African economy has increased disposable income, resulting in theper capita consumption of poultry meat increasing by 14% over the past six years from 19,74 kg in2000 to 22,41 kg in 2006. The poultry market in South Africa remains highly competitive.

Revenue from Poultry increased by 21% from R3,6 billion to R4,4 billion. With a 13% increase inrealisations and a 29% increase in feed costs, operating profit fell by 4% from R494 million toR475 million and operating margins reduced from 13,6% to 10,9%.

Sporadic outbreaks of Newcastle disease continued into 2007. Avian Influenza remains a threat to theindustry and its status is constantly monitored.

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

Day-old broiler and hatching eggsThis business unit, consisting of the National Chicks group with activities in South Africa andSwaziland, operated at full capacity throughout the year due to the shortage of eggs in the industry.The division produced an excellent financial performance.

The R24 million project to expand the Gauteng hatchery was successfully commissioned in December 2006.

ConclusionThe poultry expansion programme to improve product mix and flexibility in the plants will becompleted during the coming year and is expected to have a significant impact on the profitabilityof the Poultry division.

The higher anticipated plantings of maize are expected to result in lower feed prices going forward.


AppreciationI would like to thank our customers for their support during the past year. We remain committed todelivering excellent 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 performancestandards.

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

Finally, the support received from our chairman, Jan van den Berg, and the board is highly valued. The group has benefited from their wise counsel and depth of experience during the past year.

NC WentzelChief Executive Officer8 November 2007

Quality remains one of our corefocus areas and a major reason for our

strong market position.

The group’s governance practicesare sound and in all material respects

the group conforms to the King Code 2002

principles.


Corporate governance

The group subscribes to the principles of discipline, transparency, independence, accountability,responsibility, fairness and social responsibility identified as the primary characteristics of goodgovernance in the second report of the King Committee.

The board believes that the group’s governance practices are sound and that in all material respects,the group conforms to the principles embodied within the King Code 2002 and the listingrequirements of the JSE Limited. The board remains committed to ensure that these principlescontinue to be an integral part of the way in which the group’s business is conducted.

The constitution and the operation of the board of directorsThe boardThe board operates in terms of a formally approved charter which sets out its role and responsibilities,namely:

• 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 second report of the King Committee, exist with regard to conflicts

of interest and the maintenance of a register;• 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

have been formulated; and• The nature and extent of social transformation, ethical, safety and health, human capital and

environmental management policies and practices are monitored and reported on.

Astral has a unitary board structure, presently comprising ten directors, including seven independentnon-executive directors.

On 9 May 2007, Drs T Eloff and N Tsengwa were appointed as independent non-executive directors. Mr T Pritchard retired as financial director on 31 August 2007.

Astral believes that the non-executive directors are of suitable calibre and number for their views tocarry significant weight in the board’s decisions. An independent non-executive chairman leads theboard. A schedule of beneficial 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 thecompany’s articles of association all new directors appointed during the year, as well as one third ofthe existing directors, have to retire on a rotational basis each year and they may offer themselves forre-election.


The directors are experienced business people and are required to exercise leadership, enterprise,integrity and judgment based on the principles of good governance. The board is committed toguiding and monitoring those high standards. The directors complete questionnaires on an annualbasis to evaluate the effectiveness of the board.

The board is aware that it is accountable for the actions of the management and has retained full andeffective control of the organisation over the last year. The board defines levels of materiality, reservingspecific powers to itself, and delegates other matters with the necessary written authority tomanagement. These matters are monitored and evaluated on a regular basis.

The board, in terms of its charter, is required to meet at least quarterly so as to monitor importantissues and meet its objectives. Matters reviewed include strategy, planning, operational performance,acquisitions, disposals, shareholder communications and other material aspects pertaining to theachievement of the group’s objectives.

The board periodically reviews the mix of skills and experience available within the board. Proceduresfor appointment to the board are formal and transparent and are vested with the board. An inductionprogramme is followed for newly appointed directors.

Management ensures that the information needs of the board are well defined and regularlyreviewed. The board of directors is ultimately responsible for ensuring that Astral is a viable businessand to this end effectively controls the company and its subsidiaries, monitors executive managementand is involved in all decisions that are material for this purpose.

Attendance at meetings The following is a list of scheduled board meetings and board committee meetings attended by eachdirector during the year:

Board

2006 2007

Director 9/11 15/2 10/5 14/5 16/8

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

Key: √ PresentA Absent* Appointed as directors on 8 May 2007


Corporate governance(continued)

A number of ad-hoc meetings of non-executive directors took place during the year.Audit and risk management committee

2006 2007

Director 8/11 11/5 7/11

M Macdonald √ √ √JL van den Berg √ √ √

NC Wentzel √ √ √

Key: √ Present

Human resources and remuneration committee

2007

Director 3/5 7/8 27/8*

JJ Geldenhuys √ √ √TCC Mampane √ A AJL van den Berg √ √ √CG van Veyeren √ √ ANC Wentzel √ √ √

Key: √ PresentA Absent

*Special

Board committeesTo enable the board to properly discharge its responsibilities and duties, certain responsibilities of theboard have been delegated to board committees. The board is satisfied that all committees have mettheir respective responsibilities for the period under review. All board committees are chaired by anindependent non-executive director. Particulars of the composition of the board of directors andcommittees appear on pages 7, 8 and 9 of this report. The board committees are as follows:

The audit and risk management committeeThe audit and risk management committee consists of three members, two of whom are independentnon-executive directors, and meets at least twice a year with management, internal and external auditas well as the group’s risk managers. The opportunity is also created for discussion between the non-executive directors and the external auditors without the presence of management.

Responsibilities of the audit and risk management committee include:

• Overseeing the internal and external audit function;• Assisting the board in the discharge of its duties relating to the safeguarding of assets, the

implementation of adequate systems and internal controls;• Monitoring the preparation of accurate financial reports and statements and application of

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 the external auditors have unfettered access to the chiefexecutive officer, the chairman of the board and the audit and risk management committee.


To further enhance the effectiveness of the group’s audit and risk management functions, the groupalso has bi-annual divisional audit committee meetings for each operation. As part of the group’senterprise wide risk management programme, quarterly risk management meetings are held atoperational and corporate level under the chairmanship of a risk control manager who reports to thegroup audit and risk management committee.

Human resources and remuneration committeeThe human resources and remuneration committee consists of four members, including threeindependent non-executive directors. The committee meets at least twice a year.

Responsibilities of the human resources and remuneration committee include:

• Development of the group’s general policy and remuneration system for executive and seniormanagement and making recommendations to the board on remuneration packages applicableto directors;

• Measuring the performance of executive directors and ensuring that they are fairly rewarded;• Employment equity and skills retention matters; and• Management succession planning.

Remuneration policy, share incentive schemes and management bonus incentiveschemesAstral’s remuneration policy is to attract, retain and incentivise management and personnel of thehighest calibre.

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

During this financial year, the share option scheme was reintroduced and replaces the shareappreciation rights scheme. The number of options outstanding, forfeited and exercised is shown innote 10 to the annual financial statements.

Organisational integrity and ethicsThe group maintains a code of ethics, which requires all employees to comply with the letter and spiritof the code by observing the highest ethical standards and to ensure that all business practices areconducted in a manner which is beyond reproach.

Directors and employees are prohibited from dealing in Astral shares during price-sensitive periods.Closed periods extend from 31 March and 30 September, being the commencement of the interim andyear end reporting dates up to the date of announcement of interim and year end financial results andinclude any other period during which the company is trading under a cautionary announcement.There is also a formal clearance procedure in respect of directors dealing in Astral shares.

The group maintains a zero-tolerance approach to unethical behaviour. Any employee found to beacting unethically is subject to disciplinary proceedings, which can lead to dismissal. An independenthotline is available where unethical behaviour may be reported anonymously.

The code of ethics describes the following relationships or events:

• Application and general obligation;• Compliance with laws and regulations and codes;• Culture, ethics and values;• Client service;


Corporate governance(continued)

• 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 ofethics during the year under review. A detailed disciplinary procedure supports the code of ethics withbreaches of either code resulting in disciplinary action.

Risk management and internal controlRisk management is an integral part of the group’s culture and strategic thinking. The audit and riskmanagement committee is responsible for assessing the group’s management of identified risk issues.

The board believes its focus on risk issues is appropriate and that an adequate system of internalcontrol is in place to mitigate significant risks and to provide the board with a reliable means ofmonitoring the group’s operational sustainability.

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, the group promotes ongoing commitment to risk management and control byparticipating in externally organised risk management and safety programmes such as ISO 9001/2000,Good Manufacturing Processes (GMP) and Hazard Analysis and Critical Control Points (HACCP) at itsvarious operations.

The board believes that it has reasonable, but not absolute, assurance with regard to the effectivenessand efficiency of the group’s operations, protection of its assets and information, and regulatory andlegal compliance.

Internal auditAstral has established an independent, objective and effective internal audit department governed bya charter approved by the board. The internal audit function reports to the chief executive officer andhas unfettered access to higher levels of authority as set out above.

The role of internal audit is to review compliance with internal controls, systems and procedures. Theboard is satisfied that the group’s internal controls are adequate in safeguarding the group’s assets,preventing and detecting errors and fraud, ensuring the accuracy and completeness of accountingrecords and preparing reliable financial statements.

External auditThe audit and risk management committee recommends to the board the appointment of externalauditors. It also considers the independence of the external auditors, and has set principles for the useof external auditors to provide non-audit services. Consultation and co-operation between externalauditors and internal auditors is encouraged by the board.

The external auditors provide an independent assessment of Astral’s systems of internal financialcontrol and express an independent opinion on the annual financial statements. The external auditors’plan is reviewed by the audit and risk management committee to ensure that significant areas ofconcern are covered, without infringing on the external auditors’ independence.


Management reportingThe group has comprehensive management reporting disciplines, which include the preparation ofannual strategic plans and budgets by all operations. Group strategic plans and budgets areconsidered and approved by the board. Results and the financial status of the operations are reportedmonthly and compared with approved budgets and results of the previous year. Working capitalrequirements and borrowing levels are monitored on an ongoing basis and corrective or remedialaction taken as appropriate.

Company secretaryAll directors have access to the advice of the company secretary and are entitled and authorised toseek independent and professional advice about the affairs of the company at the company’s expense.The company secretary is responsible for the duties set out in Section 268G of the Companies Act.The certificate required to be signed in terms of Section 268G(d) appears on page 29.

CommunicationThe board ensures that material matters of significant interest and concern to shareholders and otherstakeholders are addressed in the company’s public disclosures and communication. In this regard, theboard ensures that the group provides adequate transparency on all pertinent financial and non-financial matters.

After the bi-annual release of group results, the results are presented to investors, analysts and thePress. Presentations of results are also done to employees on a national basis. Astral meets regularlywith institutional shareholders and investment analysts.

Going concernThe annual financial statements set out on pages 32 to 83 have been prepared on the going-concernbasis since the directors, after due deliberation at the last meeting of the board, have every reason tobelieve that the group has adequate resources to continue in operation for the foreseeable future.

All employees comply with a code ofethics which ensures that all business

practices are conducted in a manner which

is beyond reproach.

The group is committed to the

implementation of triple-bottom-line

reporting to ensure the futureof the business.


Sustainabi l i ty report

Being conscious of its social, environmental and economic responsibility to shareholders, employees,the broader community and future generations, the group subscribes to the principles of sustainabledevelopment and is committed to the implementation of triple-bottom-line reporting.

Organisational developmentHuman resources developmentThe training and development of employees in all key areas is an integral part of the 20 Keysworkplace improvement programme referred to below. Each employee attends a number of trainingsessions in this regard. A learnership programme in Supervision has been introduced at severalworkplaces.

Emphasis is placed on the development of technical skills, which includes training under our technicalagreement with Provimi of Holland, a world leader in animal nutrition solutions.

Other training and development interventions include:

• IT skills• Supervisory skills• Sales• Quality systems• Production and processing skills

The group is committed to the Skills Development Act. Our submission of skills development plansand our implementation against targets have ensured the maximum benefit in this regard.

In terms of a study loan policy the Group provides employees with financial assistance to further theiracademic qualifications in line with current and future job requirements.

Attraction and retention of peopleThe group continuously evaluates its recruitment processes to ensure that high calibre talent isemployed, taking cognisance of leadership capabilities, identified competencies for positions andemployment equity plans. Our approach is to attract the best people in the industry.

Workplace improvement programmeOur drive for excellence continues through the implementation of the 20 Keys total workplaceimprovement programme. This programme, which originated in Japan, aims to energise the workforceto work faster, cheaper and better. All employees at the various workplaces participate as teams toimprove productivity and efficiencies. As a group we can claim that we have made the best progressin South Africa with the implementation of these concepts. NuTec SA has recently been awarded theInternational Excellence Award and together with Meadow Feeds Paarl, Meadow Feeds Randfonteinand Earlybird Standerton are the only four operations in South Africa to have received this award.


We expect that Meadow Feeds Pietermaritzburg and the National Veterinary Supplies operation willachieve this status during 2008.

The Meadow Feeds plants in Paarl and Randfontein will also strive to attain the Bronze award during2008, which will also be a first in the world for an animal feed company.

Safety and healthThe group has implemented a risk control programme with emphasis on compliance with theOccupational Health and Safety Act (the Act). A three tiered approach is followed in order to ensurecompliance with the Act.

The first tier concentrates on employee awareness of their responsibilities in terms of the Act. Executivemanagement and employees are regularly updated on issues pertaining to the implementation andcompliance with the Act through established structures and seminars.

The second tier comprises education. All employees are put through induction training. This trainingspecifically deals 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 aretrained on a regular basis.

The third tier comprises the implementation, monitoring and auditing of OSHACT management systemsto ensure compliance with the Act. A step by step documentary system is applied for each site, crossreferenced to the actual sections of the Act. The system has received much praise from the Department ofLabour inspectors conducting site inspections. Annual audits are done and results reported throughestablished structures.

Items affecting the wider risk management of each site are discussed at monthly corporate riskmanagement meetings under the chairmanship of the group’s risk control officer. Matters arising fromthese meetings are referred to the group audit and risk management committee (board subcommittee).An annual group risk management meeting is held where senior management representing all the sitesin the group, are present.

HIV/AIDSThe group recognises the implications of the pandemic on the family structure, the community andlong-term issues of sustainability. The reality is that the prevalence of HIV/AIDS among the Astralworkforce is currently estimated to be about 15%.

The group has 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.

Recently an AIDS Rating has been introduced for the group, which will focus on strategy andimplementation to increase awareness and decrease HIV/AIDS infections.

TransformationEmployment EquityThe Group is committed to providing equal opportunities to all its employees.


Sustainabi l i ty report(continued)

All our operations comply with the Employment Equity Act, 55 of 1998, and annual reports aresubmitted to the Department of Labour. Employment equity committees have been established at everybusiness unit to set and monitor progress. The different occupational levels within the group reflect thatbetween 35% and 92% of employees are from the designated group. The figure on the managementlevel is 18%, which is already good progress, considering that the target set by the Department ofTrade and Industry is 25% – 30% within 10 years. We believe that no unfair discrimination exists inthe workplace.

Black Economic EmpowermentThe group is supportive of and committed to the concept of black economic empowerment andactively promotes the empowerment of staff members and the communities in which it operates. Thecompany has embarked on a rating of its BEE status by EmpowerDEX.

As a group the score for skills development came out high as a result of our focused approach to thetraining and development of staff.

The group has established a procurement committee to focus on securing the services of providerswho meet certain BEE requirements. A formal policy in this regard has been implemented.

Our rating by the Financial Mail as a company supporting BEE has improved to the top 30% of listedcompanies on the JSE.

The environmentAwareness of the need to protect the environment is of utmost importance to the group. Theimplementation of quality systems, ie ISO 9001-2000, Good Manufacturing Practices (GMP) andHazard Analysis and Critical Control Point (HACCP) enable the group to have full traceability of theproduct that goes into the market. In accordance with our group environmental philosophy, thirdparty environmental compliance audits are conducted at key sites regularly. No significantenvironmental incidents were recorded during the year under review.

All new project developments are preceded by environmental impact assessments in terms ofenvironmental legislation.

Corporate Social InvestmentWe support various feeding schemes ie Meals on Wheels, adoption homes, hospices, schools, etc.Sponsorships are mainly farmers’ days, agricultural shows and fund raising projects.

ConclusionWe believe that the sustainability of our business lies firmly in the hands of our people, as they are thegreatest source of our competitive advantage. We implement best practices in all areas of ouroperations in order to achieve meaningful improvement in the productivity of our people and in thequality of life for them and their communities.


The value-added statement measures performance in terms of value added by the group through the collective efforts ofmanagement, employees and the providers of capital. The statement shows how value has been distributed to thosecontributing to its creation, and the portion retained for future investments.

2007 2006 R'000 % R'000 %

Value addedSales of goods and services 6 329 311 5 183 664 Less cost of materials and services (4 773 801) (3 718 291)

Value added from trading operations 1 555 510 99,4 1 465 373 99,6Income from investments 9 407 0,6 6 301 0,4

Total value added 1 564 917 100,0 1 471 674 100,0

Value distributedTo labour 635 313 40,6 600 242 40,8To government 266 755 17,0 264 782 18,0

Taxation 261 089 254 339 Regional Service Council levies – 6 114Skills development levies 5 666 4 329

To providers of capital 254 889 16,3 196 655 13,3

Dividends to shareholders 243 891 195 238 Interest on borrowings 10 998 1 417

Total distributions 1 156 957 73,9 1 061 679 72,1Income retained in the business 407 960 26,1 409 995 27,9

Depreciation/amortisation 106 293 88 735 Retained profit for the year 301 667 321 260

Total value distributed and reinvested 1 564 917 100,0 1 471 674 100,0

Value-added statementfor the year ended 30 September 2007

2007

Providers of capital

Government

Income retained in the business

Labour

2006

16,3%

17,0%

26,1%

40,6% 40,8%

13,3%

18,0%

27,9%


Review of operat ionsSeven year review

2007* 2006* 2005* 2004 2003 2002 2001

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

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

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

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

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

# Refer to note 9 of the financial statements for the number of shares effectively in issue net of treasury shares* Figures presented on IFRS basis


DefinitionsOperating profit marginOperating profit before interest and taxation as a percentage of revenue.

EBITDAEarnings before interest, tax, depreciation and amortisation.

Net assetsTotal assets less total liabilities excluding cash and cash equivalents, borrowings, normal and deferredtax, 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 assets Operating profit before interest and taxation 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 duringthe 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.

Ratios and stat ist ics


Annual financial statementsFor the year ended 30 September 2007

Contents

Approval of annual financial statements 29

Certificate by company secretary 29

Statement of directors’ responsibility 30

Independent auditor’s report 31

Directors’ report 32

Directors’ remuneration report 36

Segment report – group 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 60



The annual financial statements and group annual financial statements of Astral Foods Limited for theyear ended 30 September 2007 set out on pages 32 to 83, were approved by the board of directorson 8 November 2007 and signed on its behalf by:

JL van den Berg NC WentzelChairman Chief executive officerPretoria8 November 2007

Approval of annual financial statements

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

MA EloffCompany Secretary8 November 2007

Certificate by company secretary


The directors are responsible for the preparation, integrity and fair presentation of the financialstatements of Astral Foods Limited and its subsidiaries. The financial statements presented on pages32 to 83 have been prepared in accordance with International Financial Reporting Standards (IFRS),and include amounts based on judgements and estimates made by management.

The preparation of financial statements in conformity with IFRS requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities at the date of thefinancial statements and the reported expenses during the reporting period. Actual results could differfrom those estimates.

The directors consider that in preparing the financial statements they have used the most appropriateaccounting policies, consistently applied and supported by reasonable and prudent judgements andestimates, and that all IFRS that they consider to be applicable have been followed. The directors aresatisfied that the information contained in the financial statements fairly presents the results ofoperations for the year and the financial position of the company and the group at year end.

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

Astral Foods Limited and its subsidiaries operated in an established control environment, which is welldocumented and regularly reviewed. This incorporates risk management and internal controlprocedures, which are designed to provide reasonable, but not absolute, assurance that assets aresafeguarded and the risks facing the business are being controlled.

The going concern basis has been adopted in preparing the financial statements. The directors haveno reason to believe that the company and the group will not be a going concern in the foreseeablefuture based on forecasts and available cash resources. These financial statements support the viabilityof the company and the group.

The financial statements have been audited by the independent auditors, PricewaterhouseCoopersIncorporated, who were given unrestricted access to all financial records and related data, includingminutes of all meetings of shareholders, the board of directors and committees of the board. Thedirectors believe that all representations made to the independent auditors during their audit are validand appropriate.

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

Statement of directors’ responsibility


To the members of Astral Foods Limited

We have audited the annual financial statements and group annual financial statements of AstralFoods Limited, which comprise the directors’ report, the balance sheet and the consolidated balancesheet as at 30 September 2007, the income statement and the consolidated income statement, thestatement of changes in equity and the consolidated statement of changes in equity, the cash flowstatement and the consolidated cash flow statement for the year then ended, and a summary ofsignificant accounting policies and other explanatory notes, as set out on pages 32 to 83.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTSThe company’s directors are responsible for the preparation and fair presentation of these financialstatements in accordance with International Financial Reporting Standards and in the manner required bythe Companies Act of South Africa. This responsibility includes: designing, implementing andmaintaining internal control relevant to the preparation and fair presentation of financial statements thatare free from material misstatement, whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that are reasonable in the circumstances.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with International Standards on Auditing. Those standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgement, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, aswell 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 basisfor our audit opinion.

OPINIONIn our opinion, the financial statements present fairly, in all material respects, the financial position ofthe company and of the group as of 30 September 2007, and their financial performance and theircash flows for the year then ended in accordance with International Financial Reporting Standards andin the manner required by the Companies Act of South Africa.

PricewaterhouseCoopers Inc Director: DJ FouchéRegistered Auditor Johannesburg8 November 2007

Independent auditor’s report


Directors’ report

The directors’ report is presented, which forms part of the audited financial statements of thecompany and the group for the year ended 30 September 2007.

1. NATURE OF BUSINESSThe company holds investments in subsidiary and joint venture companies, with key activities inanimal feeds, animal feed pre-mixes, broiler genetic breeding, broiler operations, and theproduction and sale of day-old broilers and hatching eggs.

2. BUSINESS REVIEWProfit for the year at R546 million showed a 6% increase over the corresponding period despite asignificant increase in the prices of all agricultural input commodities.

Revenue increased by 22% from R5,184 million to R6,329 million and operating profit by 6%from R766 million to R808 million. Poultry operating profit was down 4% whilst Animal Nutritionshowed an increase of 22% on last year. The group’s operating margin of 12,8% was down onlast year’s 14,8%.

Cash generated for the year of R88 million was impacted by abnormally higher debtor levels dueto the financial year ending on a Sunday.

Headline earnings per share increased by 7% from 1 286 cents to 1 381 cents per share.

The financial position of the group for the financial year ended 30 September 2007 can besummarised as follows:

2007 2006R'000 R'000

Operating resultsRevenue 6 329 311 5 183 664

Operating profit 808 238 765 953 Net finance (costs)/income (1 591) 4 884

Profit before income tax 806 647 770 837 Income tax expense (261 089) (254 339)

Profit for the year 545 558 516 498

Attributable to:Equity holders of the company 537 858 509 517 Minority interests 7 700 6 981

545 558 516 498

Financial positionNon-current assets 1 416 775 1 183 199 Current assets 1 449 933 989 541

Total assets 2 866 708 2 172 740

Total equity 1 307 513 1 120 954 Non-current liabilities 327 014 245 538Current liabilities 1 232 181 806 248

Total equity and liabilities 2 866 708 2 172 740


2. BUSINESS REVIEW (continued)

Segment analysisA segment analysis of the revenue, operating profit and liabilities is set out on page 39 of theannual financial statements.

AcquisitionsNo major acquisitions took place during the reporting period.

3. SHARE CAPITALDetail of share capital is reflected under note 9 of the financial statements.

At the annual general meeting of shareholders held on 15 February 2007, shareholders passed aspecial resolution authorising the company, or a subsidiary, to acquire the company’s own ordinaryshares.

In terms of the share repurchase programme a total of 1 036 886 (2006: 2 344 247) shares wereacquired at a cost of R115 million (2006: R190 million) and subsequently cancelled.

In terms of the group’s share incentive scheme, 547 100 (2006: 724 251) options were exercised.

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

4. SUBSIDIARIES AND JOINTLY CONTROLLED ENTITIESDetails of the jointly controlled entities and subsidiaries of Astral Foods Limited are set out in notes30 and 31 respectively of the annual financial statements.

The attributable interest of the company in the profits and losses of its subsidiaries and jointventures for the year ended 30 September 2007 is as follows:

2007 2006R'000 R'000

SubsidiariesTotal profit after tax 564 526 534 913 Total loss 677 –

Joint venturesTotal profit after tax 9 999 7 579

5. DIVIDENDSThe following ordinary dividends were declared:

Interim dividend (No. 13) of 260 cents per share (2006: 225 cents per share) 112 026 97 138 Less: Dividends received on treasury shares held by a subsidiary (11 248) (9 961) Final dividend (No. 14) of 440 cents per share(declared post year end) (2006: 360 cents per share) 188 005 155 651 Less: Dividends receivable on treasury shares held by a subsidiary (18 782) (15 577)

Total dividend at 700 cents per share (2006: 585 cents per share) 270 001 227 251

Directors’ report (continued)



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

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

7. DIRECTORSThe names of the directors who currently hold office are set out on pages 7, 8 and 9 of thisreport. Two additional directors, namely Drs T Eloff and N Tsengwa, were appointed on 8 May2007 and in terms of article 13.2 of the company’s articles of association, Drs Eloff and Tsengwaretire as directors at the annual general meeting of shareholders and are eligible for re-election. Interms of Article 14 of the company’s articles of association, Messrs JL van den Berg, MA Kingstonand CE Schutte retire by rotation at the annual general meeting of shareholders and are eligiblefor re-election. No director holds more than 1% of the ordinary shares in the company. Thedirectors beneficially and non-beneficially hold 334 512 (2006: 406 412) ordinary shares in thecompany – see directors’ remuneration report on page 38 for details.

Mr T Pritchard retired as financial director of the company on 31 August 2007.

Particulars of the company secretary and her business and postal address appear on page 90 ofthis report.

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

8. RESOLUTIONSNo special resolutions (other than the special resolution referred to under Item 3 relating to therepurchase of shares), the nature of which might be significant to members in their appreciationof the state of affairs of the group, were passed by any subsidiary companies during the periodcovered by this report.

9. SHARE INCENTIVE SCHEMEThe number of shares put under the control of the directors by the shareholders for purposes ofthe company’s employee share incentive scheme was limited to 10% of the issued share capital ofAstral Foods Limited from time to time. The directors have decided to limit this to about 7,5% ofthe issued share capital.

As at 30 September 2007, options in respect of 855 416 shares remained outstanding, being2% of issued share capital.

Details of the dates and prices at which the options were granted are given in note 10 to thefinancial statements.

10. SHAREHOLDERSDetails of shareholders are set out on page 84 of the annual financial statements.

11. EVENTS SUBSEQUENT TO BALANCE SHEET DATENo events took place between year end and the date of the report that would have a materialeffect on the financial statements as disclosed.


12. LITIGATIONThe board is not aware of any legal or arbitration proceedings, pending or threatening, that mayhave or have had a material effect on the group’s financial position.

13. TRADING WEEKSThe reporting period for the poultry segment ends on the last Saturday of the financial year,resulting in a 53 week reporting period for 2007 (2006: 52 weeks). The extra trading weekyielded additional revenue and operating profit of R78 million and R6 million respectively.

14. DATE FOR AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTSThe financial statements have been authorised for issue by the board of directors on 8 November2007. No authority was given to anyone to amend the financial statements after the date ofissue.



Directors’ remuneration report

EMOLUMENTSOther

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

Salary bonus tributions ances 2007 2006R'000 R'000 R'000 R'000 R'000 R'000

Executive directorsFor managerial servicesNC Wentzel 2 527 1 988 452 161 5 128 4 996MA Kingston 1 476 1 208 354 210 3 248 3 021CE Schutte 1 072 899 216 212 2 399 2 182T Pritchard @ 1 198 – 210 53 1 461 2 537CA du Toit @ 255 – 72 32 359 3 380

6 528 4 095 1 304 668 12 595 16 116

Non-executive directors' feesFor services as directorsJL van den Berg 410 695 Dr T Eloff **# 62 –JJ Geldenhuys 215 304 M Macdonald 235 332 TCC Mampane 175 237 Dr Tsengwa # 62 –CG van Veyeren 175 267

1 334 1 835

Total paid to directors by the company and its subsidiaries 13 929 17 951

Performance related bonuses based on accrual for the current year. Previous year’s figures wererestated from payment basis to accrual basis# Remuneration from date of appointment as directors@ Remuneration to date of retirement/resignation** Director’s fee paid to the North West University

Summary of benefits received from options exercisedShare

Share appreciationoption option 2007 2006

scheme scheme Total TotalR’000 R’000 R’000 R’000

NC Wentzel 23 871 6 779 30 650 18 084MA Kingston 4 900 – 4 900 –CE Schutte 1 003 2 711 3 714 759T Pritchard 11 872 2 711 14 583 1 336CA du Toit – – – 1 198

41 646 12 201 53 847 21 377

For the year ended 30 September 2007


SHARE INCENTIVE SCHEME INTERESTSShare option schemeOptions outstanding Number of options

Grant date Exercise price 2007 2006

NC Wentzel 17 April 2001 R7,75 17 716 237 716 28 August 2007 R122,00 81 100 –

MA Kingston 5 July 2001 R7,75 – 51 600 28 August 2007 R122,00 49 400 –

CE Schutte 2 May 2002 R11,80 – 8 400 28 August 2007 R122,00 33 600 –

T Pritchard 17 April 2001 R7,75 – 121 600

181 816 419 316

Options exercised Benefit received 2007 2006

Number Average price R'000 R'000

NC Wentzel 220 000 R114,50 23 871 18 084 MA Kingston 51 600 R102,50 4 900 –CE Schutte 8 400 R131,23 1 003 759 T Pritchard 121 600 R105,39 11 872 1 336 CA du Toit – 1 198

41 646 21 377

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 dateof granting the option.

Any balance not exercised after ten years for the 2001 and 2002 grants, and seven years for the 2007grants 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 2007 2006

NC Wentzel 85 000 160 000

19 August 2004 R33,82 – 75 000 15 July 2005 R63,87 45 000 45 000 15 July 2006 R77,75 40 000 40 000

MA Kingston 87 000 87 000

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

CE Schutte 32 500 62 500

19 August 2004 R33,82 – 30 000 15 July 2005 R63,87 17 400 17 400 15 July 2006 R77,75 15 100 15 100

T Pritchard – 67 600

19 August 2004 R33,82 – 30 000 15 July 2005 R63,87 – 20 000 15 July 2006 R77,75 – 17 600

CA du Toit – 68 000

19 November 2004 R47,52 – 39 000 15 July 2005 R63,87 – 29 000

204 500 445 100

Directors’ remuneration report (continued)For the year ended 30 September 2007


Options exercised Benefit received2007 2006

Number Average price R'000 R'000

NC Wentzel 75 000 R124,20 6 779 – CE Schutte 30 000 R124,20 2 711 – T Pritchard 30 000 R124,20 2 711 –

12 201 –

The scheme provides incentive remuneration based on the increase in the value of shares of thecompany.

The right to receive payment based on the options granted, vests after three years and lapses afterfive years from the grant date.

The benefit received includes the value of the share options exercised. (Details of options granted andoutstanding are set out in note 10.)

ISSUED SHARE CAPITAL INTERESTDirectly held Indirectly heldno of shares no of shares

2007 2006 2007 2006

Beneficial interestsNon-executive directorsJL van den Berg – – 146 219 146 219 M Macdonald – – 60 000 60 000 CG van Veyeren 4 860 4 860 – Executive directorsNC Wentzel 75 833 65 833 15 000 15 000 MA Kingston 17 500 17 500 – – CE Schutte 15 100 11 000 – – T Pritchard – 50 000 – – CA du Toit – 36 000 – –

113 293 185 193 221 219 221 219

Directors’ remuneration report (continued)For the year ended 30 September 2007


2007 2006 2007 2006R'000 R'000 R'000 R'000

Revenue Operating profitAnimal Nutrition 3 530 610 2 669 705 332 707 272 265

– South Africa 3 347 738 2 500 371 294 752 235 085 – Other Africa 182 872 169 334 37 955 37 180

Poultry– South Africa and Swaziland 4 382 651 3 623 545 475 531 493 688

7 913 261 6 293 250 Intergroup revenue (1 583 950) (1 109 586)

6 329 311 5 183 664 808 238 765 953

Assets Liabilities Animal Nutrition 923 615 778 942 686 724 533 606

– South Africa 826 690 696 356 640 684 487 559 – Other Africa 96 925 82 586 46 040 46 047

Poultry– South Africa and Swaziland 2 097 183 1 530 174 1 026 561 654 556 Set-off of intergroup balances (154 090) (136 376) (154 090) (136 376)

2 866 708 2 172 740 1 559 195 1 051 786

Capital expenditure Depreciation Animal Nutrition 30 292 44 368 28 236 23 385

– South Africa 26 055 29 326 25 965 21 332 – Other Africa 4 237 15 042 2 271 2 053

Poultry– South Africa and Swaziland 291 457 253 138 78 057 65 350

321 749 297 506 106 293 88 735

Segment report – groupFor the year ended 30 September 2007

Poultry0

1 000

2 000

3 000

4 000

5 000

Animal Nutrition

RevenueRm 2007

2006

Poultry0

100

300

500

600

Animal Nutrition

Operating profitRm

400

200

2007

2006


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financialstatements are set out below. These policies have been consistently applied to all the yearspresented, unless otherwise stated.

2. BASIS OF PREPARATION

The consolidated financial statements of Astral Foods Limited Group have been prepared inaccordance with International Financial Reporting Standards (IFRS). The consolidated financialstatements have been prepared under the historical cost convention, as modified by therevaluation of financial assets and financial liabilities (including derivative instruments) at fairvalue through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain criticalaccounting estimates. It also requires management to exercise its judgment in the process ofapplying the group’s accounting policies. The areas involving a higher degree of judgment orcomplexity, or areas where assumptions and estimates are significant to the consolidated financialstatements, are disclosed in paragraph 24 of the accounting policies.

Standards, interpretations and amendments to published standards that are not yet effective.

Certain new standards, amendments and interpretations to existing standards have beenpublished that are mandatory for the group’s accounting periods beginning on or after 1 January2007 or later periods but which the group has not early adopted. The group’s assessment of theimpact of these new standards and interpretations is set out below:

a) Standards, amendments and interpretations effective in 2007

• IFRS 7, Financial instruments: Disclosures, and the complementary amendment to IAS 1,Presentation of financial statements – Capital disclosures, introduces new disclosuresrelating to financial instruments and does not have any impact on the classification andvaluation of the group’s financial instruments, or the disclosures to taxation and trade andother payables.

• IFRIC 8, Scope of IFRS 2, requires consideration of transactions involving the issuance ofequity instruments where the identifiable consideration received is less than the fair value ofthe equity instruments issued in order to establish whether or not they fall within the scopeof IFRS 2. This standard does not have any impact on the group’s financial statements.

• IFRIC 10, Interim financial reporting and impairment, prohibits the impairment lossesrecognised in an interim period on goodwill and investments in equity instruments and infinancial assets carried at cost to be reversed at a subsequent balance sheet date. Thestandard does not have any impact on the group’s financial statements.

b) Interpretation early adopted by the group

• IFRIC 11, IFRS 2 – Group and treasury share transactions, was early adopted in 2007. IFRIC 11 provides guidance on whether share-based transactions involving treasury sharesor involving group entities (for example, options over a parent’s shares) should beaccounted for as equity-settled or cash-settled share-based payment transactions in thestand-alone accounts of the parent and group companies. This interpretation does nothave an impact on the group’s financial statements.

Accounting policiesFor the year ended 30 September 2007


2. BASIS OF PREPARATION (continued)

c) Standards, amendments and interpretations effective in 2007 but not relevant

The following standards, amendments and interpretations to published standards aremandatory for accounting periods beginning on or after 1 January 2007 but they are notrelevant to the group’s operations:

• IFRS 4, Insurance contracts;• IFRIC 7, Applying the restatement approach under IAS 29, Financial reporting in

hyperinflationary economies; and• IFRIC 9, Re-assessment of embedded derivatives.

d) Standards, amendments and interpretations to existing standards that are not yet effective and

have not been early adopted by the group

The following standards, amendments and interpretations to existing standards have beenpublished and are mandatory for the group’s accounting periods beginning on or after1 January 2008 or later periods, but the group has not early adopted them:

• IAS 23 (Amendment), Borrowing costs (effective from 1 January 2009). The amendment tothe standard is still subject to endorsement by the European Union. It requires an entity tocapitalise borrowing costs directly attributable to the acquisition, construction or productionof a qualifying asset (one that takes a substantial period of time to get ready for use orsale) as part of the cost of the asset. The option of immediately expensing those borrowingcosts will be removed. The group will apply IAS 23 (Amended) from 1 October 2009.

• IFRS 8, Operating segments (effective from 1 January 2009). IFRS 8 replaces IAS 14 andaligns segment reporting with the requirements of the US standard SFAS 131, “Disclosuresabout segments of an enterprise and related information”. The new standard requires a“management approach”, under which segment information is presented on the samebases as that used for internal reporting purposes. The group will apply IFRS 8 from1 October 2009. This statement will not have an impact on the group’s financial statements.

• IFRIC 14, IAS 19 – The limit on a defined benefit asset, minimum funding requirementsand their interaction (effective from 1 January 2008). IFRIC 14 provides guidance onassessing the limit in IAS 19 on the amount of the surplus that can be recognised as anasset. It also explains how the pension asset or liability may be affected by a statutory orcontractual minimum funding requirement. The group will apply IFRIC 14 from 1 October2008, but it is not expected to have any impact on the group’s accounts.

e) Interpretations to existing standards that are not yet effective and not relevant for the group’s

operations.

The following interpretations to existing standards have been published and are mandatoryfor the group’s accounting periods beginning on or after 1 January 2008 or later periods butare not relevant for the group’s operations:

Accounting policies (continued)For the year ended 30 September 2007


2. BASIS OF PREPARATION (continued)

• IFRIC 12, Service concession arrangements (effective from 1 January 2008). IFRIC 12applies to contractual arrangements whereby a private sector operator participates in thedevelopment, financing, operation and maintenance of infrastructure for public sectorservices. IFRIC 12 is not relevant to the group’s operations because none of the group’scompanies provide for public sector services.

• IFRIC 13, Customer loyalty programmes (effective from 1 July 2008). IFRIC 13 clarifies thatwhere goods or services are sold together with a customer loyalty incentive (for example,loyalty points or free products), the arrangement is a multiple element arrangement andthe consideration receivable from the customer is allocated between the components ofthe arrangement in using fair values. IFRIC 13 is not relevant to the group’s operationsbecause none of the group’s companies operate any loyalty programmes.

3. CONSOLIDATION

SubsidiariesSubsidiaries are all entities (including special purpose entities) over which the group has the powerto govern the financial and operating policies generally accompanying a shareholding of morethan one half of the voting rights.

Subsidiaries are fully consolidated from the date on which control is transferred to the group. Theyare de-consolidated from the date on which control ceases. The purchase method of accounting isused to account for the acquisition of subsidiaries by the group. The cost of an acquisition ismeasured as the fair value of the assets given, equity instruments issued and liabilities incurred orassumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiableassets acquired and liabilities and contingent liabilities assumed in a business combination aremeasured initially at their fair values at the acquisition date, irrespective of the extent of anyminority interest. The excess of the cost of acquisition over the fair value of the group’s share ofthe identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than thefair value of the group’s share of the net assets of the subsidiary acquired, the difference isrecognised directly in the income statement. Inter-company transactions, balances and unrealisedgains on transactions between group companies are eliminated. Unrealised losses are alsoeliminated but considered an impairment indicator of the asset transferred.

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

Jointly controlled entitiesThe 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 expenses,assets and liabilities and cash flows on a line-by-line basis with similar items in the group’sfinancial statements.

The group recognises the portion of gains or losses on the sale of assets by the group to the jointlycontrolled entities that is attributable to the other ventures. The group does not recognise its shareof profits or losses from the jointly controlled entities that result from the group’s purchase ofassets from these entities until it resells the assets to an independent party. A loss on thetransaction is recognised immediately if it provides evidence of a reduction in the net realisablevalue of current assets, or an impairment loss. Jointly controlled entities’ accounting policies havebeen changed where necessary to ensure consistency with the policies adopted by the group.



3. CONSOLIDATION (continued)

Transaction and minority interest

The group applies a policy of treating transactions with minority interests as transactions withparties external to the group. Disposals to minority interests results in gains and losses for thegroup that are recorded in the income statement. Purchases from minority interests result ingoodwill, being the difference between any consideration paid and the relevant share acquired ofthe carrying value of net assets of the subsidiary.

4. SEGMENT REPORTING

The primary segment is a group of assets and operations engaged in providing products orservices that are subject to risks and returns that are different from those of other businesssegments.

The secondary geographical segment is in respect of providing products in an economicenvironment that are subject to risks and returns that are different from other economicenvironments.

5. FOREIGN CURRENCY TRANSLATION

Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using thecurrency of the primary economic environment in which the entity operates (the functionalcurrency). The consolidated financial statements are presented in Rand, which is the company’sfunctional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the prevailingexchange rate at the date of the transaction.

Foreign exchange gains and losses resulting from the settlement of foreign currency transactionsand from the translation at the year end exchange rate of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement, except where hedgeaccounting is applied.

Changes in the fair value of monetary securities denominated in foreign currency classified asavailable-for-sale are analysed between translation differences related to changes in the amortisedcost resulting from changes in the amortised cost of the security, and other changes in thecarrying amount of the security. Translation differences related to changes in the amortised costare recognised in profit or loss, and other changes in carrying amount are recognised in equity.Translation differences on non-monetary financial assets and liabilities are reported as part of thefair value gain or loss. Translation differences on non-monetary financial assets and liabilities suchas 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 equitiesclassified as available-for-sale are included in the fair value reserve in equity.

Group companies

The results and financial position of all group entities (none of which has the currency of ahyperinflationary economy) that have a functional currency different from the presentationcurrency are translated into the presentation currency as follows:



5. FOREIGN CURRENCY TRANSLATION (continued)

(i) Assets and liabilities for each balance sheet presented are translated at the closing rate atthe date of that balance sheet;

(ii) Income and expenses for each income statement are translated at average exchange rates(unless this average is not a reasonable approximation of the cumulative effect of the ratesprevailing on the transaction dates, in which case income and expenses are translated at thedates of the transactions); and

(iii) All resulting exchange differences are recognised as a separate component of equity(cumulative translation adjustment).

On consolidation, exchange differences arising from the translation of the net investment inforeign operations, and of borrowings and other currency instruments designated as hedges ofsuch investments, are taken to shareholders’ equity.

When a foreign operation is sold, exchange differences are recognised in the income statement aspart of the gain or loss on sale.

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

6. PROPERTY, PLANT AND EQUIPMENT

Land and buildings comprise mainly factories, poultry farms and offices. All property, plant andequipment (PPE) is shown at historical cost less subsequent depreciation and impairment, exceptfor land, which is shown at cost. Cost includes expenditure that is directly attributable to theacquisition of the items. The cost of PPE includes the net expense/income on maturity of forwardcurrency contracts used to hedge the purchase of PPE. Subsequent costs are included in theasset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probablethat future economic benefits associated with the item will flow to the group and the cost of theitem can be measured reliably. All other repairs and maintenance costs are charged to the incomestatement during the financial period in which they are incurred.

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

• Buildings 20 – 25 years• Plant and machinery 5 – 15 years• Equipment and motor vehicles 5 – 10 years

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

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at eachbalance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’scarrying amount is greater than its estimated recoverable amount.

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



6. PROPERTY, PLANT AND EQUIPMENT (continued)

Borrowing costs incurred for the construction of any qualifying assets are capitalised during theperiod of time that is required to complete and prepare the asset for its intended use. Otherborrowing costs are expensed.

7. INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the group’sshare of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwillon acquisition of subsidiaries is included in intangible assets.

Separately recognised goodwill is tested annually for impairment and carried at cost lessaccumulated impairment losses. Impairment losses on goodwill are not reversed. Goodwill isallocated to cash-generating units for the purpose of impairment testing. The allocation is madeto those cash-generating units or groups of cash-generating units that are expected to benefitfrom the business combination in which the goodwill arose.

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating tothe entity sold.

Computer software

Acquired computer software licences are capitalised on the basis of the costs incurred to acquireand bring to use 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 asan expense as incurred.

Costs that are directly associated with the production of identifiable and unique softwareproducts controlled by the group, and that will probably generate economic benefits exceedingcosts beyond one year, are recognised as intangible assets. Direct costs include the costs ofsoftware development employees and an appropriate portion of relevant overheads.

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

Research and development

Research expenditure is recognised as an expense as incurred. Costs incurred on developmentprojects (relating to the design and testing of new or improved products) are recognised asintangible assets when it is probable that the project will be a success, considering its commercialand technological feasibility, and costs can be measured reliably. Other development expendituresare recognised as an expense as incurred. Development costs previously recognised as an expenseare not recognised as an asset in a subsequent period. Development costs that have a finite usefullife and that have been capitalised are amortised from the commencement of the commercialproduction of the product on a straight-line basis over the period of its expected benefit, notexceeding five years.



8. IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets that have an indefinite useful life are not subject to amortisation and are tested annuallyfor impairment and whenever events or changes in circumstance indicate that the carryingamount may not be recoverable. Assets that are subject to amortisation are tested for impairmentwhenever events or changes in circumstance indicate that the carrying amount may not berecoverable. An impairment loss is recognised for the amount by which the asset’s carryingamount 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 aregrouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment arereviewed for possible reversal of the impairment at each reporting date.

9. FINANCIAL ASSETS

The group classifies its financial assets in the following categories: At fair value through profit andloss, loans and receivables, and available-for-sale.

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

Financial assets at fair value through profit or loss

Financial assets at fair value through profit and loss are financial assets held for trading. A financialasset is classified in this category if acquired principally for the purpose of selling in the short termor if so designated by management. Derivatives are also categorised as held for trading unlessthey are designated as hedges. Assets in this category are classified as current if they are eitherheld for trading or are expected to be realised within 12 months of the balance sheet date.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market. They are included in current assets, except for maturitiesgreater than 12 months after the balance sheet date. These are classified as non-current assets.Loans and receivables are classified as “trade and other receivables” in the balance sheet.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category ornot classified in any of the other categories. They are included in non-current assets unlessmanagement intends to dispose of the investment within 12 months of the balance sheet date.

Regular purchases and sales of financial assets are recognised on trade date – the date on whichthe group commits to purchase or sell the asset. Investments are initially recognised at fair valueplus transaction costs for all financial assets not carried at fair value through profit or loss.Financial assets carried at fair value through profit and loss are initially recognised at fair value andtransaction costs are expensed in the income statement. Financial assets are derecognised whenthe rights to receive cash flows from the investments have expired or have been transferred andthe group has transferred substantially all risks and rewards of ownership.

Available-for-sale financial assets and financial assets at fair value through profit or loss aresubsequently carried at fair value.

Loans and receivables and held-to-maturity investments are carried at amortised cost using theeffective interest method.



9. FINANCIAL ASSETS (continued)

Gains or losses arising from changes in the fair value of the “Financial assets at fair value throughprofit or loss” category are included in the income statement within “other (losses) gains – net”in the period in which they arise. Dividend income from financial assets at fair value throughprofit or loss is recognised in the income statement as part of other income when the right toreceive payment is established.

Changes in the fair value of monetary securities denominated in a foreign currency and classifiedas available-for-sale are analysed between translation differences resulting from changes inamortised cost of the security and other changes in the carrying amount of the security. Thetranslation differences are recognised in profit or loss, and other changes in the carrying amountare recognised in equity. Changes in the fair value of monetary securities classified as available-for-sale and non-monetary securities classified as available-for-sale are recognised in equity.

The fair values of quoted investments are based on current bid prices. If the market for a financialasset is not active (and for unlisted securities), the group establishes fair value by using valuationtechniques. These include the use of recent arm’s length transactions, reference to other instrumentsthat are substantially the same, discounted cash flow analysis and option pricing models makingmaximum use of market inputs and relying as little as possible on entity specific inputs. The groupassesses at each balance sheet date whether there is objective evidence that a financial asset or agroup of financial assets is impaired. In the case of equity securities classified as available-for-sale, asignificant or prolonged decline in the fair value of the security below its cost is considered as anindicator that the securities are impaired. If any such evidence exists for available-for-sale financialassets, the cumulative loss – measured as the difference between the acquisition cost and thecurrent fair value, less any impairment loss on the financial asset previously recognised in profit orloss – is removed from equity and recognised in the income statement. Impairment losses recognisedin the income statement on equity instruments are not reversed through the income statement.

Impairment testing of trade receivables is described in note 7.

10. INVENTORIES

Inventories are stated at the lower of cost and net realisable value. Cost is determined using thefirst-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises designcosts, raw materials, direct labour, other direct costs and related production overheads (based onnormal operating capacity). It excludes borrowing costs.

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

11. BIOLOGICAL ASSETS

Live broiler chicks and hatching eggs are assessed based on fair values less estimated point-of-salecosts at appropriate reporting dates. Gains and losses arising from changes in the fair values arerecorded in net profit or loss for the period in which they arise. The determination of fair value isbased on market values on active markets, where appropriate, or management’s assessment ofthe fair value based on available data and benchmarking statistics.

Breeding stock includes grandparent breeding and parent rearing and laying stock. Breeding stockis capitalised at cost at the beginning of its productive cycle and is amortised on a straight-linemethod over the anticipated productive cycle, to its estimated net realisable value.



11. BIOLOGICAL ASSETS (continued)

All the expenses incurred in establishing and maintaining the assets are recognised in the incomestatement. All costs incurred in acquiring biological assets are capitalised.

12. TRADE RECEIVABLES

Trade receivables are recognised initially at fair value and subsequently measured at amortisedcost using the effective interest method, less provision for impairment.

A provision for impairment of trade receivables is established when there is objective evidence thatthe group will not be able to collect all amounts due according to the original terms of thereceivables.

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy orfinancial reorganisation, and default or delinquency in payments are considered indicators thatthe trade receivable is impaired. The amount of the provision is the difference between the asset’scarrying amount and the present value of estimated future cash flows, discounted at the effectiveinterest rate. The amount of the provision is recognised in the income statement within sellingand marketing costs. Recoveries of amounts previously written off are credited against selling andmarketing costs in the income statement.

13. CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bankoverdrafts.

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

14. SHARE CAPITAL

Ordinary shares are classified as equity.

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

Where any group company purchases the company’s equity share capital (treasury shares), theconsideration paid, including any directly incremental costs net of income tax, is deducted fromequity attributable to the Company’s equity holders until the shares are cancelled, reissued ordisposed of.

Where such shares are subsequently sold or reissued, any consideration received, net of anydirectly attributable incremental transaction costs and the related income tax effects, is included inequity attributable to the company’s equity holders.

15. TRADE PAYABLES

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



16. BORROWINGS

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings aresubsequently stated at amortised cost; any difference between the proceeds (net of transactioncosts) and the redemption value is recognised in the income statement over the period of theborrowings using the effective interest method. Borrowings are classified as current liabilitiesunless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

17. ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Derivatives are initially recognised at fair value on the date a derivative contract is entered intoand are subsequently remeasured at their fair value. The method of recognising the resulting gainor loss depends on whether the derivative is designated as a hedging instrument, and if so, thenature of the item being hedged. The group designates certain derivatives as either hedges of thefair value of recognised assets or liabilities or a firm commitment (fair value hedge); hedges ofhighly probable forecast transactions (cash flow hedge); or hedges of net investments in foreignoperations. The group documents at the inception of the transaction the relationship betweenhedging instruments and hedged items, as well as its risk management objective and strategy forundertaking various hedge transactions. The group also documents its assessment, both at hedgeinception and on an ongoing basis, of whether the derivatives that are used in hedgingtransactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges arerecorded under other income/expenses in the income statement, together with any changes inthe fair value of the hedged asset or liability that are attributable to the hedged risk.

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify ascash flow hedges are recognised in equity. The gain or loss relating to the ineffective portion isrecognised immediately under other income/expenses in the income statement. Amountsaccumulated in equity are recycled in the income statement in the periods when the hedged itemwill affect profit or loss (for example, when the forecast sale that is hedged takes place). However,when the forecast transaction that is hedged results in the recognition of a non-financial asset(for example, inventory) or a liability, the gains and losses previously deferred in equity aretransferred from equity and included in the initial measurement of the cost of the asset or 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 equityand is recognised when the forecast transaction is ultimately recognised in the income statement.When a forecast transaction is no longer expected to occur, the cumulative gain or loss that wasreported in equity is immediately transferred to the income statement.

Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Such derivatives are classifiedas at fair value through profit or loss, and changes in the fair value of any derivative instrumentsthat do not qualify for hedge accounting are recognised immediately under otherincome/expenses in the income statement.



17. ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

(continued)

Over-the-counter (OTC) contracts

The group enters into over-the-counter (OTC) forward purchases for the purchase of commoditiesfor own use. These contracts are settled by taking physical delivery in the normal course ofbusiness and are therefore not regarded as financial instruments.Fair value estimation

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

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. The group uses a variety ofmethods and makes assumptions that are based on market conditions existing at each balancesheet date. Quoted market prices or dealer quotes for similar instruments are used for long-termdebt. Other techniques, such as estimated discounted cash flows, are used to determine fair valuefor the remaining financial instruments. The fair value of interest-rate swaps is calculated as thepresent value of the estimated future cash flows. The fair value of forward foreign exchangecontracts is determined using forward exchange market rates at the balance sheet date.

The nominal value less estimated credit adjustments of trade receivables is assumed toapproximate their fair values. The fair value of financial liabilities for disclosure purposes isestimated by discounting the future contractual cash flows at the current market interest rate thatis available to the group for similar financial instruments.

18. DEFERRED INCOME TAX

Deferred income tax is provided in full, using the liability method, on temporary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in the consolidatedfinancial statements. The deferred income tax is not accounted for if it arises from initialrecognition of an asset or liability in a transaction, other than a business combination, that at thetime of the transaction affects neither accounting nor taxable profit or loss. Deferred income taxis determined using tax rates (and laws) that have been enacted or substantially enacted by thebalance sheet date and are expected to apply when the related deferred income tax asset isrealised or the deferred income tax liability is settled.

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

Deferred income tax is provided on temporary differences arising on investments in subsidiaries,joint ventures and associates, except where the timing of the reversal of the temporary differencewill not reverse in the foreseeable future.

19. EMPLOYEE BENEFITS

Pension obligations

The group operates defined contribution retirement schemes.

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



19. EMPLOYEE BENEFITS (continued)The group has no legal or constructive obligations to pay further contributions if the fund doesnot hold sufficient assets to pay all employees the benefits relating to employee service in thecurrent and prior periods.

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

Actuarial gains and losses arising from experience adjustments, and changes in actuarialassumptions, are charged or credited to income as they arise. These obligations are valued everythree years, and the assumptions are reviewed annually, by independent qualified actuaries.

Termination benefitsTermination benefits are payable when employment is terminated by the group before the normalretirement date, or when an employee accepts voluntary redundancy in exchange for thesebenefits. The group recognises termination benefits when it is demonstrably committed to either:terminating the employment of current employees according to a detailed formal plan withoutpossibility of withdrawal; or providing termination benefits as a result of an offer made toencourage voluntary redundancy. Benefits falling due more than 12 months after balance sheetdate are discounted to present value.

Profit-sharing and bonus plansThe group recognises a liability and an expense for bonuses and profit-sharing, based on aformula that takes into consideration the profit attributable to the company’s shareholders.

The group recognises a provision where contractually obliged or where there is a past practicethat has created a constructive obligation.

These profit-sharing and bonus plans are approved annually by the board.

Share-based plansThe group’s management awards share options, from time to time, on a discretionary basis. Thefair value of the employee service received in exchange for the grant of the options is recognisedas an expense with a corresponding increase in equity. The total amount to be expensed over thevesting period is determined by reference to the fair value of the options granted, excluding theimpact of any non-market conditions. Non-market conditions are included in assumptions aboutthe 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 option scheme which is equity settled, provides the right to purchase shares in thecompany at the exercise price. The contractual life of options granted are between seven and10 years. The options vest one third after each of the third, fourth and fifth year for date ofgranting of the option. No compensation cost is recognised for the fair value of the optionsgranted before the effective date of accounting for share-based payments in terms of IFRS 2. Theproceeds received net of any directly attributable transaction costs are credited to share capital(nominal value) and share premium when the options are exercised. The share appreciation optionscheme, which is cash settled, is subject to a three year service vesting condition, and changes tothe fair value, which are revisited at balance sheet date, are recognised in the income statementwith a corresponding liability on the balance sheet.



20. PROVISIONS

Provisions for environmental restoration, restructuring costs and legal claims are recognised when:the group has a present legal or constructive obligation as a result of past events; it is more likelythan not that an outflow of resources will be required to settle the obligation; and the amounthas been reliably estimated. Restructuring provisions comprise lease termination penalties andemployee termination payments. Provisions are not recognised for future operating losses. Wherethere are a number of similar obligations, the likelihood that an outflow will be required insettlement is determined by considering the class of obligations as a whole. A provision isrecognised even if the likelihood of an outflow with respect to any one item included in the sameclass of obligations may be small.

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

21. REVENUE RECOGNITION

Revenue comprises the fair value of the consideration received or receivable for the sale of goodsand services in the ordinary course of the group’s activities. Revenue is shown net of value-addedtax, returns, rebates and discounts and after eliminating sales within the group. The grouprecognises revenue when the amount of revenue can be reliably measured, it is probable thatfuture economic benefits will flow to the entity and specific criteria have been met for each of thegroup’s activities as described below. The amount of revenue is not considered to be reliablymeasurable until all contingencies relating to the sale have been resolved. The group bases itsestimates on historical results, taking into consideration the type of customer, the type oftransaction and the specifics of each arrangement.

Revenue is recognised as follows:

Sales of goods

Sales of goods are recognised when a group entity has delivered products to the customer, thecustomer has accepted the products; and collectibility of the related receivables is reasonablyassured.

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

Dividend income

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

Interest income

Interest income is recognised on a time-proportion basis using the effective interest method.When a receivable is impaired, the group reduces the carrying amount to its recoverable amount,being the estimated future cash flow discounted at the original effective interest rate of theinstrument, and continues unwinding the discount as interest income. Interest income onimpaired loans is recognised using the original effective interest rate.



22. LEASES

Leases of property, plant and equipment where the group has substantially all the risks andrewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’sinception at the lower of the fair value of the leased property and the present value of theminimum lease payments. Each lease payment is allocated between the liability and financecharges so as to achieve a constant rate on the finance balance outstanding. The correspondingrental 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 toproduce a constant periodic rate of interest on the remaining balance of the liability for eachperiod. The property, plant and equipment acquired under finance leases is depreciated over theshorter of the asset’s useful life and the lease term.

Leases where the lessor retains substantially all the risks and rewards of ownership are classifiedas operating leases. Payments made under operating leases are charged to the income statementon a straight-line basis over the period of the lease.

23. DIVIDEND DISTRIBUTION

Dividend distribution to the company’s shareholders is recognised as a liability in the group’sfinancial statements in the period in which the shareholders are entitled to the dividend.

24. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of the financial statements in accordance with IFRS requires the use of certaincritical accounting estimates. It requires management to exercise its judgment in the process ofapplying the group’s accounting policies. The areas involving a higher degree of judgment orcomplexity, or areas where assumptions and estimates are significant to the financial statements,are mainly the impairment of tangible and intangible assets (note 2); the estimation of useful livesof property, plant and equipment and intangible assets (paragraph 6 of accounting policies), andestablishing uniform depreciation and amortisation methods; the fair value assessment ofbiological assets (paragraph 11 of the accounting policies); and fair value of retirement benefits(note 14). The key estimates and assumptions relating to these areas are disclosed in the relevantnotes to the financial statements.

All estimates and underlying assumptions are based on historical experience and various otherfactors that management believe are reasonable under the circumstances. The results of theseestimates form the basis of judgments about the carrying value of assets and liabilities that arenot readily apparent from other sources. Actual results may differ from these estimates. Theestimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised and any affected futureperiods.


Balance sheetAt 30 September 2007

GROUP COMPANY2007 2006 2007 2006

Notes R’000 R’000 R’000 R’000

ASSETSNon-current assetsProperty, plant and equipment 1 1 254 028 1 038 328 – – Intangible assets 2 139 266 141 725 – – Investment in subsidiaries and joint ventures 3 – – 228 520 240 820 Investments and loans 2 873 1 394 – – Derivative financial instruments 4 15 549 – – Deferred income tax asset 13 5 059 1 752 1 220 –

1 416 775 1 183 199 229 740 240 820

Current assetsInventories 5 249 368 198 228 – – Biological assets 6 282 308 214 354 – – Trade and other receivables 7 772 490 448 031 23 6 Current income tax asset 22 318 – 74 – Derivative financial instruments 4 16 555 – – – Cash and cash equivalents 8 106 894 128 928 – –

1 449 933 989 541 97 6

Total assets 2 866 708 2 172 740 229 837 240 826

EQUITYCapital and reserves attributable to equity holders of the companyOrdinary shares 9 427 432 427 432 Share premium 9 5 757 120 195 5 757 120 195 Other reserves (437) 993 503 – Treasury shares (211 231) (215 539) – – Retained earnings 1 492 547 1 195 541 182 779 116 241

1 287 063 1 101 622 189 466 236 868 Minority interest in equity 11 20 450 19 332 – –

Total equity 1 307 513 1 120 954 189 466 236 868

LIABILITIESNon-current liabilitiesBorrowings 12 6 228 9 600 – – Deferred income tax liabilities 13 256 326 171 906 – – Retirement benefit obligations 14 64 460 64 032 – –

327 014 245 538 – –

Current liabilitiesTrade and other payables 15 957 326 737 694 285 480 Due to subsidiary – – 33 137 – Current income tax liabilities 14 651 55 787 – 10 Borrowings 12 259 415 12 012 6 160 2 713 Shareholders for dividend 789 755 789 755

1 232 181 806 248 40 371 3 958

Total liabilities 1 559 195 1 051 786 40 371 3 958

Total equity and liabilities 2 866 708 2 172 740 229 837 240 826



GROUP COMPANY2007 2006 2007 2006

Notes R’000 R’000 R’000 R’000

Revenue 17 6 329 311 5 183 664 – – Cost of goods sold (4 915 311) (3 856 545) – –

Gross profit 1 414 000 1 327 119 – – Administrative expenses (302 248) (280 791) (1 239) (1 857)Distribution costs (257 497) (226 111) – – Marketing expenditure (61 929) (69 858) – – Other income 21 5 393 11 007 362 505 339 023 Other gains/(losses) 22 10 519 4 587 (26) –

Operating profit 808 238 765 953 361 240 337 166 Finance income 23 9 407 6 301 58 420 Finance expense 23 (10 998) (1 417) (13) –

Profit before income tax 806 647 770 837 361 285 337 586 Income tax expense 24 (261 089) (254 339) (27 070) (24 557)

Profit for the year 545 558 516 498 334 215 313 029

Attributable to:Equity holders of the company 537 858 509 517 334 215 313 029 Minority interest 7 700 6 981 – –

545 558 516 498 334 215 313 029

Earnings per share for profit attributable to the equity holders of the company during the year:

Earnings per ordinary share (cents) 25 1 387 1 285Diluted earnings per share (cents) 25 1 385 1 268

Income statementFor the year ended 30 September 2007


Review of operat ions

Attributable to ordinary shareholders of Astral Foods Limited Minority Total interest equity

Share Equity 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

Group

Balance at 1 October 2005 278 327 19 – (188 767) 877 024 966 603 16 589 983 192 Shares issued(share options exercised) 6 117 – – – – 6 117 – 6 117 Purchase of treasury shares – – – (26 772) – (26 772) – (26 772)Shares bought back and cancelled (163 817) – – – – (163 817) – (163 817)Profit for the year – – – – 509 517 509 517 6 981 516 498 Dividends declared – – – (191 000) (191 000) (4 238) (195 238)Currency translation differences arising in year – 974 – – – 974 – 974

Balance at 30 September 2006 120 627 993 – (215 539) 1 195 541 1 101 622 19 332 1 120 954

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

Company

Balance at 1 October 2005 278 327 – – – 15 483 293 810 Shares issued (share options exercised) 6 117 – – – – 6 117 Shares bought back and cancelled (163 817) – – – – (163 817)Profit for the year – – – – 313 029 313 029 Dividends declared – – – – (212 271) (212 271)

Balance at 30 September 2006 120 627 – – – 116 241 236 868

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

Statement of changes in equityFor the year ended 30 September 2007


Cash flow statementFor the year ended 30 September 2007

GROUP COMPANY2007 2006 2007 2006

Notes R’000 R’000 R’000 R’000

Cash flows from operating activities

Cash operating profit A 913 454 863 644 361 240 337 166 Changes in working capital B (221 711) 84 384 (212) 288

Cash generated from operations 691 743 948 028 361 028 337 454 Interest received 9 407 6 301 58 420 Interest paid (10 998) (1 417) (13) – Income tax paid C (243 790) (234 434) (28 374) (24 306)

Cash generated from operating activities 446 362 718 478 332 699 313 568

Cash used in investing activities (358 266) (293 633) – –

Purchase of property, plant and equipment to expand operations (240 070) (212 247) – – Purchase of property, plant and equipment tomaintain operations (79 676) (81 547) – – Costs incurred on intangibles (2 003) (3 712) – – Proceeds on disposal of property, plant and equipment 2 344 3 572 – – Cost of acquisition of subsidiary E (4 518) – – – (Increase)/decrease in loans and investments (1 479) 301 – – Investment in derivative instruments (32 864) – – –

Cash generated for the year 88 096 424 845 332 699 313 568

Cash flows from financing activities (361 822) (372 173) (336 146) (325 262)

Proceeds from issue of shares 4 736 6 117 4 736 6 117 Buy–back of shares (114 871) (190 589) (119 179) (163 817)Dividends paid to the company's shareholders D (240 818) (190 876) (267 643) (212 147)Payments to minority interests (8 289) (4 238) – – Loan payments received from subsidiary – – 45 940 44 585 Increase in borrowings (2 580) 7 413 – –

Loans received – 9 226 – – Payment of capital element of long–term borrowings (2 438) (1 458) – – Payment of capital element of finance lease liabilities (142) (355) – –

Net (decrease)/increase in cash and cash equivalents (273 726) 52 672 (3 447) (11 694)Effects of exchange rate changes (1 912) 2 694 – – Cash and cash equivalents from acquisition of subsidiary E 5 974 – – – Cash and cash equivalents at beginning of year 119 623 64 257 (2 713) 8 981

Cash and cash equivalents at end of year 8 (150 041) 119 623 (6 160) (2 713)



GROUP COMPANY2007 2006 2007 2006R’000 R’000 R’000 R’000

A. CASH OPERATING PROFITOperating profit 808 238 765 953 361 240 337 166 Adjustments for:Depreciation and amortisation 106 293 88 735 – – Profit on disposal of fixed assets (746) (300) – – (Decrease)/increase in provision for retirement benefit obligations (467) 6 456 – – Other non-cash flow items 136 2 800 – –

Cash operating profit 913 454 863 644 361 240 337 166

B. CHANGES IN WORKING CAPITALIncrease in inventories (50 174) (43 028) – – Increase in biological assets (67 954) (15 880) – – (Increase)/decrease in trade and other receivables (323 698) (19 528) (17) 36 Increase/(decrease) in trade and other payables 220 115 162 820 (195) 252

Total change in working capital (221 711) 84 384 (212) 288

C. TAX PAIDBalance at beginning of year (55 787) (58 965) (10) (207)Normal tax provision (147 635) (204 744) (12) (74)Secondary tax on companies provision (30 542) (24 673) (28 278) (24 035)Withholding tax (1 823) – – – Acquisition of subsidiary (984) – – – Translation differences 648 (1 839) – – Net balance at end of year (7 667) 55 787 (74) 10

Total tax paid (243 790) (234 434) (28 374) (24 306)

Notes to the cash flow statementFor the year ended 30 September 2007


Notes to the cash flow statement (continued)For the year ended 30 September 2007

GROUP COMPANY2007 2006 2007 2006R’000 R’000 R’000 R’000

D. DIVIDENDS PAIDBalance at beginning of year (755) (631) (755) (631)Per statement of changes in equity (240 852) (191 000) (267 677) (212 271)Balance at end of year 789 755 789 755

Total dividends paid (240 818) (190 876) (267 643) (212 147)

E. ACQUISITION OF SUBSIDIARYProperty, plant and equipment (734) – – – Intangible assets (6) – – – Inventory (966) – – – Trade and other receivables (761) – – – Trade and other payables 412 – – – Tax liabilities 984 – – – Minority interest 1 407 – – – Cash and cash equivalents (5 974) – – –

Net assets acquired (5 638) – – – Excess net asset value over purchase consideration 1 120 – – –

Total purchase consideration and related costs for interest in subsidiary (4 518) – – – Cash and cash equivalents acquired 5 974 – – –

Cash flow on acquisition, net of cash acquired 1 456 – – –



Land and Plant and Capitalisedbuildings equipment Vehicles leased assets Total

R’000 R’000 R’000 R’000 R’000

1. PROPERTY, PLANT AND EQUIPMENTGroup2006Balance at 1 October 2005:Cost 576 955 793 229 110 553 1 918 1 482 655Accumulated depreciation (176 697) (404 790) (66 807) (884) (649 178)

Net book amount at 1 October 2005 400 258 388 439 43 746 1 034 833 477Changes for the year ended 30 September 2006:Exchange differences 18 54 23 – 95Additions – Expansion 112 310 91 926 8 011 – 212 247Additions – Replacement 7 533 53 523 20 491 – 81 547Disposals (247) (1 896) (928) (201) (3 272)Depreciation charge (24 926) (52 747) (7 893) (200) (85 766)

Closing net book amount 94 688 90 860 19 704 (401) 204 851

Balance at 30 September 2006:Cost 695 948 924 354 131 806 1 453 1 753 561Accumulated depreciation (201 002) (445 055) (68 356) (820) (715 233)

Closing net book amount 494 946 479 299 63 450 633 1 038 328

2007Net 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 678Acquisition of subsidiary 446 288 – – 734Disposals (79) (1 236) (285) – (1 600)Depreciation charge (29 069) (61 698) (10 981) (70) (101 818)


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


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 R10 696 000 (2006: R11 170 000) are pledged as security for secured borrowings of R8 708 000 (2006: R12 307 000) (refer note 12).

Notes to the annual financial statementsFor the year ended 30 September 2007


Notes to the annual financial statements (continued)For the year ended 30 September 2007

Goodwill Software TotalR’000 R'000 R’000

2. INTANGIBLE ASSETSGroup2006Balance at 1 October 2005Cost 131 393 18 480 149 873Accumulated amortisation (7 845) (1 046) (8 891)

Net book amount at 1 October 2005 123 548 17 434 140 982Changes for the year ended 30 September 2006:Exchange differences – (30) (30)Capitalisation of software costs – 3 742 3 742Amortisation – (2 969) (2 969)

Closing net book amount 123 548 18 177 141 725

Balance at 30 September 2006:Cost 131 393 22 194 153 587Accumulated amortisation (7 845) (4 017) (11 862)


2007Net book amount at 1 October 2006 123 548 18 177 141 725Changes for the year ended 30 September 2007Capitalisation of software costs – 2 010 2 010Acquisition of subsidiary – 6 6Amortisation – (4 475) (4 475)


Balance at 30 September 2007:Cost 131 393 24 210 155 603Accumulated amortisation (7 845) (8 492) (16 337)




GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

2. INTANGIBLE ASSETS (continued)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 11 997 11 990Poultry 111 558 111 558

123 555 123 548

The recoverable amount of the cash-generating units is determined based on value-in-use calculations. These calculations use cash flow projections per strategic plan forecasts. These plans are revisited every year and are compiled after considering market conditions and the strategic positioning of the business units within the markets in which they operate. Growth rates up to 10% (2006: 5%) were used, and cash flows were discounted to present values at 13,5% (2006:13%).

If the discount rate applied to the discounted cash flows increased by 1%, there would be a goodwill impairment of R3 million.

3. INVESTMENTS IN SUBSIDIARIES AND JOINTLY CONTROLLED ENTITIESShares at cost:Subsidiaries 217 218 216 772Jointly controlled entities 11 302 11 289Indebtedness:By subsidiaries – 12 759By jointly controlled entities – –

Total 228 520 240 820

Details of jointly controlled entities and subsidiaries are given in notes 30 and 31 respectively.

4. DERIVATIVE FINANCIAL INSTRUMENTEquity call option 32 104 – – –

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

A wholly owned subsidiary entered into cash settled call option contracts on the shares of the company. These contracts are recognised at fair value. Changes in the fair values to the amount are recognised in the income statement under other gains/losses.

The current year’s adjustment was a loss of R760 000 (2006: nil).

The derivative financial instruments are classified as held for trading.




GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

5. INVENTORIESRaw materials 141 083 95 855 – –Finished goods and merchandise 70 948 71 038 – –Consumable stores 37 337 31 335 –

249 368 198 228 – –

Egg Breeding Broilerstock stock stock Total

R’000 R’000 R’000 R’000

6. BIOLOGICAL ASSETSGroup2006Balance at 1 October 2005 at cost 24 831 116 007 46 199 187 037Increase due to established costs 67 069 254 889 737 309 1 059 267Decrease due to harvest/sales (63 166) (241 272) (739 659) (1 044 097)

Balance at 30 September 2006 at cost 28 734 129 624 43 849 202 207Gain arising from changes in fair value due to physical changes less point-of-sale cost 2 843 – 9 304 12 147

Fair value at 30 September 2006 31 577 129 624 53 153 214 354

2007Balance at 1 October 2006 at cost 28 734 129 624 43 849 202 207Increase due to established costs 113 108 327 611 978 629 1 419 348Decrease due to harvest/sales (100 880) (291 732) (961 339) (1 353 951)

Balance at 30 September 2007 at cost 40 962 165 503 61 139 267 604Gain arising from changes in fair value due to physical changes less point-of-sale cost 5 343 – 9 361 14 704

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



GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

7. TRADE AND OTHER RECEIVABLESTrade receivables 679 277 408 556 – –Less: provision for impairment of receivables (13 579) (17 152) – –

665 698 391 404 – –Prepayments 5 514 3 229 – –Other receivables 101 278 53 398 23 6

772 490 448 031 23 6

A jointly controlled entity of the group ceded trade receivableswith a book value of R3 477 000 (2006: R3 648 000) as security for its available bank facilities (refer note 12).

The fair values of trade and other receivables equal 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:SA Rand 760 039 439 460 23 6Zambia Kwacha 3 018 3 929 – –Mozambique Meticals 2 572 – – –Mauritius Rupees 6 861 4 642 – –

772 490 448 031 23 6

8. CASH AND CASH EQUIVALENTSCash at bank and in hand 92 388 110 028 – –Short-term bank deposits 14 506 18 900 – –

106 894 128 928 – –

Short-term bank deposits are invested on call account at an interest rate linked to the daily bank rate. Previous year’s deposits were denominated in Zambian Kwacha, at an average interest rate of 2% which was linked to the daily bank rate.

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 106 894 128 928 – –Bank overdrafts (note 12) (256 935) (9 305) (6 160) (2 713)

Cash and cash equivalents per cashflow statement (150 041) 119 623 (6 160) (2 713)



GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

9. SHARE CAPITALAuthorised share capital75 000 000 ordinary shares of 1 cent each (2006: 75 000 000 ordinary shares of 1 cent each) 750 750 750 750

Issued share capital 42 728 369 ordinary shares of 1 cent each 427 432 427 432 (2006: 43 276 569 ordinary shares of 1 cent each) Share premium 5 757 120 195 5 757 120 195

Total issued share capital and premium 6 184 120 627 6 184 120 627

All issued shares are fully paid. Number of Number of Number of Number of

Number of shares effectively in issue shares shares shares shares

Issued shares Shares at beginning of year 43 276 569 44 519 913 43 276 569 44 519 913 Shares issued (share options exercised) 547 100 724 251 547 100 724 251 Shares cancelled (1 095 300) (1 967 595) (1 095 300) (1 967 595)

– Shares bought back and cancelled (1 036 886) (1 967 595) (1 095 300) (1 967 595)– Treasury shares held by subsidiary cancelled (58 414) – – –

42 728 369 43 276 569 42 728 369 43 276 569 Treasury shares held by subsidiary (4 268 577) (4 326 991) – –

– Treasury shares at beginning of the year (4 326 991) (3 950 339) – Treasury shares transferred to holding company and cancelled 58 414 – – Shares bought back during the year – (376 652)

Shares at end of year 38 459 792 38 949 578 42 728 369 43 276 569

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

Buy-back of shares The group bought back 1 036 886 (2006: 2 344 247) of the company's shares at a cost of R114 669 565 (2006:R190 184 937) during the year (average cost per share: R110,59). These shares were subsequently delisted and cancelled.

The number of shares which could be bought-back during the year by the company and its subsidiary was limited to20% of the total number of shares issued.



GROUP COMPANY2007 2006 2007 2006

Number of Number of Number of Number ofshares shares shares shares

9. SHARE CAPITAL (continued)Unissued share capital The number of shares available to be utilised for purposes of the share option scheme: Number of share options available at beginning of year 3 695 384 2 844 433 3 695 384 2 844 433 Number of share options allocated (815 500) – (815 500) – Number of share options forfeited 10 000 126 700 10 000 126 700 Number of share options exercised to date 547 100 724 251 547 100 724 251

Number of share options available at end of year 3 436 984 3 695 384 3 436 984 3 695 384 Number of share options outstanding at end of year 855 416 597 016 855 416 597 016

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

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

10. SHARE-BASED PAYMENTSDuring the year the group had two share-based payment arrangements:

Share option schemeThe scheme, an equity settled incentive remuneration scheme, provides the right to purchase shares in the company atthe exercise price.

The contractual life of options granted prior to 28 August 2007 is 10 years. Options not taken up will lapse on thetenth anniversary of the option date.

The contractual life of options granted on 28 August 2007 is seven years. Options not taken up will lapse on theseventh anniversary of the option date.

The scheme allows one third of the share options to be exercised per year after each of the third, fourth and fifth yearfrom 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.




10. 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 of options 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 R7,75 359 316 – – (339 600) 19 716 19 716 5 July 2001 R7,75 157 100 – – (157 100) – – 1 July 2001 R11,60 6 800 – – (6 800) – – 10 November 2001 R13,55 10 000 – – (10 000) – – 2 January 2002 R13,70 5 000 – – (5 000) – – 2 May 2002 R11,80 8 400 – – (8 400) – – 22 May 2003 R15,00 50 400 – (10 000) (20 200) 20 200 – 28 August 2007 R122,00 815 500 – – 815 500

597 016 815 500 (10 000) (547 100) 855 416 19 716

The weighted average share price in respect of options exercised was R110,48.

Value of share options outstanding at the end of the year at the exercise price amounts to R99 946 799 (2006: R5 140 224).

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

Date of grant 18 August 2007Share price at date of the grant R122,00 Exercise price R122,00 Historic volatility 27%Initial dividend yield 3,42%Risk free interest rate 10,48%Contractual life from grant date 7 yearsThe estimated average value of the options granted – per option R28,81 The total service cost to be recognised over the contractual life of the options (seven years) amounts to R23 473 371.

The service cost recognised in the current year in return for share options granted to employees and directors amountsto R496 000 (2006: nil). No compensation cost has been recognised for the fair value of the options granted before theeffective date of accounting for share-based payments in terms of IFRS 2.

Share appreciation option schemeThe 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 in theincome 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.



10. 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 options options options options options

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

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

19 August 2004 R33,82 481 900 (40 500) (302 700) 138 700 138 700 19 November 2004 R47,52 102 500 (77 000) 25 500 18 July 2005 R63,87 380 600 (94 400) 286 200 15 July 2006 R77,75 379 100 (75 000) 304 100

1 344 100 (286 900) (302 700) 754 500 138 700

The weighted average share price in respect of share appreciation options exercised was R124,02.

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

2007 2006R’000 R’000

Closing balance of liability for share appreciation option scheme 28 044 19 000 (disclosed under Trade and other payables – note 15)Fair value adjustment of cash settled share-based payments to employees and directors 36 349 14 111

11. MINORITY INTERESTOutside shareholders interest in equity of subsidiaries 19 406 14 082 Loan due to outside shareholder 1 044 5 250

20 450 19 332

The loan due to the outside shareholder is interest free and has no specified repayment date.




GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

12. BORROWINGSNon-currentCapitalised finance leases 14 156 – – Secured loans 8 694 12 151 – –

Total 8 708 12 307 – – Less: Portion payable within one year (2 480) (2 707) – –

6 228 9 600 – –

CurrentBank overdrafts 256 935 9 305 6 160 2 713 Portion of non-current borrowings payable within one year 2 480 2 707 – –

259 415 12 012 6 160 2 713

Total borrowings 265 643 21 612 6 160 2 713

The carrying amounts of the group's borrowings are denominated in the following currencies:SA Rand 254 697 7 799 US Dollar 7 674 10 473 Mauritius Rupees 3 272 3 340

265 643 21 612

All borrowings are linked to the bank prime overdraft rate, ranging between 13,5% and 10,5% during the year.

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

Liabilities are secured over assets with the following book values (refer note 1);Property 10 485 10 537 – – Capitalised finance leases 211 633 – –

Maturity of long-term borrowings:Less than 1 yearCapitalised finance leases 14 142 – – Secured loans 2 466 2 565 – – Between 1 and 5 yearsCapitalised finance leases – – – – Secured loans 6 228 9 600 – –

8 708 12 307 – –

Borrowing facilitiesThe group has the following general borrowing facilities at floating interest rates 505 000 502 500 – –

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.



GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

13. DEFERRED INCOME TAX Deferred income tax is calculated on all temporary differences under the liability method, using a principal tax rate of 29%(2006: 29%).

Deferred tax assets have been recognised in respect of available STC credits.

Movement on the deferred income tax asset account is as follows:At beginning of year 1 752 259 – 448 (Decrease)/increase in deferred tax asset on STC credit (25) 797 1 220 (448)Credit to the income statement 3 332 696 – –

At end of year 5 059 1 752 1 220 –

Analysis of deferred income tax assets:Accelerated tax depreciation (5 453) (476) – – Lower tax value for livestock and farming consumables (1 460) (708) – – Non-tax deductible provisions 512 – – – Assessed losses utilised to reduce deferred tax 10 227 1 393 – – STC credits 1 220 1 245 1 220 – Other temporary differences 13 298 – –

5 059 1 752 1 220 –

Deferred income tax asset to be recovered with in 12 months 5 059 1 752 1 220 –

Movement on the deferred income tax liability account is as follows:At beginning of year (171 906) (145 491) – 448Exchange differences (24) – – –(Decrease)/increase in deferred tax asset on STC credit – 797 1 220 (448)Charged to the income statement (84 396) (27 212) – –

At end of year (256 326) (171 906) 1 220 –

Analysis of deferred income tax liabilities:Accelerated tax depreciation (218 565) (164 579) – –Lower tax value for livestock and farming consumables (82 349) (62 942) – –Non-tax deductible provisions 46 537 54 376 – –Assessed losses utilised to reduce deferred tax 23 (1 393) – –Other temporary differences (1 972) 2 632 – –

(256 326) (171 906) – –

Deferred income tax liabilities to be recovered after more than 12 months (256 326) (171 906) – –Unutilised income tax losses available for set off against future normal and deferred income tax liabilities – 12 839 – –




GROUP2007 2006

R’000 R’000

14. RETIREMENT BENEFIT INFORMATIONPost-employment medical benefitsThe group operates a post-employment medical benefit scheme and costs incurred in respect of this liability are charged against profits.

Provision for liability at balance sheet date 64 460 64 032

Amounts recognised in the income statement:Contributions paid 2 051 2 055 Increase in the provision for the liability 428 2 608

The liability recognised in the financial statements was actuarially valued at 30 September 2007 (previous valuation was at 1 April 2006). The liability was valued using the projected unit credit method.

Discount rate 8,5% 7,5%Healthcare inflation rate 7,25% 6,5%

Present value of funded obligations per actuarial valuation at 30 September 2007 R’000 R’000

Balance at beginning of year 64 032 61 424Current service cost 2 629 1 880 Interest costs 7 011 6 908 Actuarial gains (6 274) (4 266)Expected benefits payments (2 938) (1 914)

Balance at end of year 64 460 64 032

The effect of a 1% movement in the assumed medical cost trend rate is as follows: Decrease Increase Accrued liability at 30 September 2007 7 432 7 890 Current service and interest costs 886 954

GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

15. TRADE AND OTHER PAYABLESTrade payables 629 256 413 079 – –Accruals and other payables 300 026 305 615 285 480Provision for share-based payments 28 044 19 000 – –

957 326 737 694 285 480



GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

16. CONTINGENCIES AND COMMITMENTSCapital commitmentsCapital expenditure approved not contracted 72 782 58 557 – –

Capital expenditure contracted but not recognised in the financial statements 83 893 65 628 – –

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 54 216 37 785 – –Later than I year and not later than 5 years 228 650 107 876 – –Later than 5 years 91 278 22 725 – –

374 144 168 386 – –

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.

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: 348 145 386 579 – –

The company guaranteed the payment obligations of itssubsidiary, Astral Operations Limited, in respect of raw material purchases.

The group entered into a feed supply agreement whereby an agreed quantity of its raw materials will be procured from a supplier over a period of seven years at market related prices.

Contingent liabilitiesThe group has a contingent liability in respect of a guarantee given to a third party. 7 875 – – –




GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

17. REVENUERevenue from the sale of goods:Revenue of South African operations 6 104 608 4 979 867 – –Revenue of foreign operations, denominated in local currency 224 703 203 797 – –

6 329 311 5 183 664 – –

Excluded intergroup revenue 1 583 950 1 109 586 – –Revenue is disclosed net of value-added tax, normal discounts and rebates, and returns.

18. EXPENSES BY NATUREThe following expense items by nature have been included in arriving at operating profit:Auditors’ remuneration 3 902 3 503 – –

Audit fees 3 766 3 384 – –Management consulting services – 67 – –Taxation services 20 20 – –Expenses 116 32 – –

Fees paid for managerial, secretarial and technical services 7 803 6 984 104 120Amortisation of intangible assets 4 475 2 969 – –Depreciation on property, plant and equipment 101 818 85 766 – –

Buildings 29 069 24 926 – –Plant and equipment 61 698 52 747 – –Vehicles 10 981 7 893 – –Leased assets under finance leases 70 200 – –

Operating lease payments 54 980 26 538 – –

Property 12 962 10 822 – –Plant and machinery 2 392 3 471 – –Vehicles 39 626 12 245 – –

Research and development expenditure 4 573 5 252 – –Decrease in carrying value of investments – (589) – –Biological assets – movement in fair value adjustment 2 557 710 – –Directors’ remuneration (note 19) 13 929 17 951 924 1 339Employee benefit expense (note 20) 621 384 582 291 – –Fair value adjustment of provision for cash settled share-based payments to employees and directors 36 349 14 111 – –Cost recognised for share options granted to employees and directors 496 – – –



GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

19. DIRECTORS’ REMUNERATIONExecutive directorsSalaries 6 528 7 274Performance related bonuses 4 095 6 410Retirement fund contributions 1 304 1 578Other benefits 668 854

12 595 16 116Non-executive directorsFees 1 334 1 835

Total directors’ remuneration 13 929 17 951Less: Paid by subsidiary (13 005) (16 612)

924 1 339

164 100 share options in terms of the share option scheme were granted to the executive directors of the company during the year (2006: nil).

No options in terms of the share appreciation option scheme were granted to the executive directors of the company during the year (2006: 135 400 options granted at a weighted average share price of R77,75 per share).

Refer note 10 for details of the share-based payment schemes.

20. EMPLOYEE BENEFIT EXPENSEWages and salaries 569 485 530 671 – –Termination benefits 2 385 3 258 – –Retirement fund contributions 47 463 46 232 – –Post-retirement benefits 2 051 2 130 – –

621 384 582 291 – –

Number of employees– Permanent employees: 7 889 (2006: 7 791)– Contracted labour: 872 (2006: 654)

21. OTHER INCOMEDividends received from subsidiaries – – 362 505 339 023Short-term insurance premiums refunded – 9 666 – –Scrap sold 390 1 074 – –Storage fee income 3 859 – – –Rental received 1 144 267 – –

5 393 11 007 362 505 339 023




GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

22. OTHER GAINS/(LOSSES)Foreign exchange forward contract losses (613) (390) – –Net foreign exchange gains/(losses) 696 – (26) –Profit on sale of property, plant and equipment 746 410 – –Fair value adjustment on financial instruments and raw material contracts in respect of procurement not qualifying as effective hedges (1 322) – – –Realised profits on financial instruments and contracts in respect of raw material procurement not qualifying as effective hedges 3 779 – – –Fair value adjustment on equity call options (760) – – –Investment previously written off now reversed 714Excess of the fair value of interest acquired in a subsidiary over cost 1 120 – – –Net of other gains and losses 6 159 4 567 – –

10 519 4 587 (26) –

23. NET FINANCE (COSTS)/INCOMEBank borrowings 21 534 3 616 – –Finance leases and loans 116 34 – –Creditors and other 1 657 209 13 –

23 307 3 859 13 –Less: Interest capitalised (12 309) (2 442) – –

Finance costs 10 998 1 417 13 –

Finance income 9 407 6 301 58 420

Net finance (costs)/income (1 591) 4 884 45 420



GROUP COMPANY2007 2006 2007 2006

R’000 R’000 R’000 R’000

24. INCOME TAX EXPENSECurrent tax 149 085 203 830 13 122Deferred tax 81 687 17 563 – –

230 772 221 393 13 122Tax – prior year (1 450) (341) (1) (48)Deferred tax – prior year (623) 8 156 – –Withholding tax 1 823 1 255 – –Secondary tax on companies paid 30 542 24 673 28 278 24 035Secondary tax on companies deferred reversed/(raised) 25 (797) (1 220) 448

261 089 254 339 27 070 24 557

The tax on the group's profit before tax differs from the theoretical amount that would arise using the basic tax rate of South Africa:Profit before tax 806 647 770 837 361 285 337 586

Tax calculated at a tax rate of 29% (2006: 29%) 233 928 223 543 104 773 97 900Minority interest in tax charge of consolidated entity (917) (736) – –Effect of different tax rates in other countries 1 042 1 728 – –Expenses not deductible for tax purposes – 1 148 366 538Current tax losses not utilised to reduce normal tax – 2 571 – –Utilisation of tax losses against normal and deferred tax provision 288 (6 861) – –Adjustments to prior year's normal tax provision (1 450) (341) (1) (48)Adjustments to prior year's tax base of assets and provisions (3 581) 8 156 – –Income not subject to tax (611) – (105 126) (98 316)Withholding tax 1 823 1 255 – –Secondary tax on companies 30 567 23 876 27 058 24 483

Tax charge per income statement 261 089 254 339 27 070 24 557

Further information about deferred tax is presented in note 13.




GROUP 2007 2006

25. EARNINGS PER SHARE Number of Number of shares shares

Weighted average number of ordinary shares in issue during the year for calculating earnings per share 38 789 127 39 643 913Adjustments for share options 36 014 534 031

Weighted average number of ordinary shares for calculating diluted earnings per share 38 825 141 40 177 944

R’000 R’000

Profit attributable to equity holders of the company used for calculating earnings per share and diluted earnings per share 537 858 509 517

Basic earnings per ordinary share (cents) 1 387 1 285Diluted earnings per share (cents) 1 385 1 268

Basic earnings per shareBasic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares during the year, reduced by ordinary shares purchased and held as treasury shares.

Diluted earnings per shareDiluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares from the exercise of share options. A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company’s shares) based on the monetary value of the subscriptionrights attached to the outstanding share options. The number of shares calculated is compared with the number of shares that would have been issued assuming the exercise of the share options. No adjustment is made where the issue of share options have no dilutive effect on the number of shares in issue.



GROUP 2007 2006

R’000 R’000

26. HEADLINE EARNINGSNet profit attributable to shareholders 537 858 509 517Adjusted for:Profit on sale of property, plant and equipment (503) (303)Investment written off 589Investment 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 535 521 509 803

Headline earnings per share (cents) 1 381 1 286Diluted headline earnings per share (cents) 1 379 1 269

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

Interim dividend (Dividend no 13) declared on 14 May 2007 in respect of the year ended 30 September 2007 of 260 cents per share (2006: 225 cents per share) – net of treasury shares 100 778 87 177

Final dividend (dividend no 14) declared on 8 November 2007 in respect of the year ended 30 September 2007 of 440 cents per share (2006: 360 cents per share) – net of treasury shares 169 223 140 074

270 001 227 251

28. FINANCIAL RISK MANAGEMENTThe group's activities expose it to a variety of financial risks of which the major risks are mentioned below.

Market risk(i) Foreign currency risk

A portion of the group's income is earned by foreign subsidiaries in foreign currencies. The group has translationrisks arising from the consolidation of these foreign entities into South African Rands. Borrowings by these entitiesin foreign currencies are not hedged as the intention is to repay these from their foreign earned income stream.

Exposure to exchange rate fluctuations on transactions denominated in foreign currencies is managed by utilisingforward exchange contracts. At balance sheet date all material imports and exports were fully covered. All forwardexchange contracts entered into are related to specific balance sheet items. There were no open forward contractsat 30 September 2007.

(ii) Commodity price riskThe group may suffer financial loss when a fluctuating price contract obligation is entered into and the commodityprices increase or when a fixed price agreement is entered into and commodity prices fall. Commodity pricefluctuations are normally caused by factors such as supply conditions, weather, exchange rate fluctuations andother economic conditions.



28. FINANCIAL RISK MANAGEMENT (continued)(ii) Commodity price risk (continued)

These risks are managed through an established process whereby the various conditions which influencecommodity prices are monitored on a daily basis. Decisions on the procurement of raw materials as well as theutilisation of derivative instruments to hedge against these risks are taken by executive management within boardapproved mandates given. Detailed statements of raw material contracts and hedging positions are prepared andsubmitted on a monthly basis to the chief executive officer.

There were no open commodity positions included in trade and other receivables at 30 September 2007(2006: nil).

The prices of commodities used by the group can fluctuate widely and in a competitive market it is not alwayspossible to recover material commodity price increases from broiler customers. This can impact on the group'sprofitability.

(iii) Cash flow and fair value interest rate riskThe group has no significant interest-bearing assets or liabilities, and the group's income and operating cash flowsare substantially independent of changes in market interest rates.

All interest payable on borrowings is at variable rates, which are linked to the bank prime lending rate. Cash flowexposure from interest rate fluctuations is hedged by entering into interest swap agreements when managementregards it prudent.

(iv) Contract growersThe group utilises a number of contract growers to supply a substantial portion of broilers to its processingoperations.

The performance of the contract growers is monitored and managed by a dedicated staff member who advisesand is consulted by the contract growers on various issues, i.e. feed, medication, vaccination and best practices, toensure continuous and maximum delivery of broilers to the processing plants.

(v) Cash settled share-based paymentsPayments in terms of the share appreciation option scheme is exposed to changes in the share price of thecompany. The group entered into a cash settled call option agreement on the shares of the company which offsetthe economic effect of share based payments resulting from changes in the share price.

(vi) Market risk sensitivityChanges in risk variables will not have a material impact on the results of the group in respect of the market risksto which it is exposed on reporting date.

Credit riskCredit risk is managed on a group basis. The group’s main credit risk is concentrated in the aggregate balance ofamounts receivable. Trade receivables comprise a large, widespread customer base. These risks are controlled by theapplication of credit limits and credit controlling procedures. The largest single credit risk amounts to R214 million.The group does not consider there to be any significant concentration of credit risk that has not been adequatelyprovided for at 30 September 2007.

Collateral is held as security in respect of those trade receivables which are regarded by management as high risk.




28. FINANCIAL RISK MANAGEMENT (continued)

Liquidity risksThe group’s liquidity risk consists mainly of the amount borrowed from time to time. The details of borrowings andundrawn facilities are disclosed in note 12. Bank facilities are reviewed on an annual basis. In terms of the articles ofassociation, the group’s borrowing powers are unlimited. Current borrowings are well below the confirmed facilitiesavailable to the group.

The liquidity risk is managed by monitoring the daily borrowing levels and by conducting cash flow forecasts at regularintervals in order to maintain sufficient funds to fund the business from cash generated by operations and fundsavailable from committed credit facilities.

The company intends to finance its current liabilities with dividend income.

Fair valueAt 30 September 2007 the carrying amounts of cash and short-term deposits, trade receivables, trade payables, accruedexpenses and short-term borrowings approximated their fair values due to the short-term maturities of these assets andliabilities.

2007 2006R’000 R’000

29. RELATED PARTY TRANSACTIONS

Sales of goods and servicesThe group had the following related party transactions during the year:Sales to jointly controlled entities 10 996 889Purchases from jointly controlled entities 43 204 28 762

Outstanding balances at year end:Receivables from jointly controlled entities 3 529 440Trade payables to jointly controlled entities 2 090 2 486

Transactions with related parties occur on normal business terms.

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

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 by thehuman resources and remuneration committee.

Details of share options granted to directors are given in note 10 to the financial statements.

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

Principal jointly controlled entities and subsidiary undertakingsDetails of jointly controlled entities and subsidiaries are set out in notes 30 and 31 to the financial statements.




GROUP 2007 2006

% %

30. INTEREST IN JOINTLY CONTROLLED ENTITIESThe principal jointly controlled entities of the group are:

NuTec Southern Africa (Pty) Limited h 50 50 Meaders Feeds Limited (Mauritius) d 33 33

The following amounts represent the group's share of assets and liabilities, revenue and expenses and cash flows of these entities, and are included in the consolidated financial statements:

Assets and liabilities R’000 R’000Non-current assets 17 014 17 577 Current assets 41 834 28 555

Total assets 58 848 46 132

Non-current liabilities 515 1 181

Interest bearing 302 988 Non-interest bearing 213 193

Current liabilities 27 892 18 054

Interest bearing 2 970 2 352 Non-interest bearing 24 922 15 702

Deferred tax liability 882 598

Total liabilities 29 289 19 833

Net assets 29 559 26 299

Revenue and expensesRevenue 118 812 101 970

Profit before tax 14 762 11 144 Income taxes (4 763) (3 565)

Profit after tax 9 999 7 579

Cash flowsCash flow from operating activities 12 042 5 253 Profit distribution/Dividend paid (6 658) (5 963)Investing cash flows (944) (1 917)Financing cash flows (101) 2 244

Net cash flows 4 339 (383)



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

Issued Effective percentage Company's interestordinary capital holding Equity Indebtedness2007 2006 2007 2006 2007 2006 2007 2006

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

Unlisted investmentsDirectly held:Astral Operations Limited a 12 12 100 100 153 183 152 750 – 12 759 National Chicks Limited b 23 720 23 720 100 100 63 993 63 993 – – County Fair Holdings (Pty) Limited c 20 20 100 100 29 29 – – Africa Feeds Limited (Zambia) ^ d 24 24 100 100 13 – – – Indirectly held:Meadow Eastern Cape (Pty) Limited d – – 100 100 Meadow Moçambique LDA * d 8 – 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 Central Analytical Laboratories (Pty) Limited g 133 133 100 100

217 218 216 772 – 12 759

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, b Investment holding f Production and sale of day-oldbroiler operations, production and c Dormant broilers and hatching eggs.sale of day-old broilers and hatching d Animal feed production g Analytical serviceseggs, and retailer of animal health e Broiler genetics and broiler h Animal feed pre-mixesproducts. breeding production




GROUP 2007 2006

R’000 R’000

32. BUSINESS COMBINATIONThe group entered into an agreement in December 2006 to acquire a further 47% of the share capital of Meadow Moçambique Limitada. The write off of the initial 33% interest acquired in previous years has been reversed. The group assumed management control of the company in January 2007. The company is incorporated in Mozambique.

Payment of the purchase consideration was made at the beginning of August 2007, following regulatory approval received from the South African Reserve Bank.

The acquired business was consolidated from August 2007 onwards, contributing the following to the group's results using the group's accounting policies;Revenue 4 472 Operating profit 1 334

If the acquisition had occurred on 1 October 2006, the contribution to the group's results would have been as follows:Revenue 26 509 Operating profit 4 990

Detail of net assets acquired and the cost of the investment is as follows:Purchase consideration 4 461 Direct costs relating to the acquisition 57 Fair value of interest acquired (5 638)

Excess fair value over cost of investment (1 120)

The excess fair value over the cost of the investment is as a result of profits generated during the period managementcontrol was obtained from January 2007 to the effective date of acquisition at the end of July 2007. The excess hasbeen reversed to the income statement under other gains/losses.

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



SHAREHOLDER SPREAD

Number of Number ofshareholders % shares %

1 – 1 000 shares 3 642 72,43 1 266 241 2,961 001 – 10 000 shares 1 079 21,46 3 264 786 7,64

10 001 – 100 000 shares 238 4,73 7 854 980 18,38100 001 – 1 000 000 shares 62 1,23 14 955 088 35,00

1 000 001 shares and over 7 0,14 15 387 274 36,01

5 028 100,00 42 728 369 100,00

DISTRIBUTION OF SHAREHOLDERS


Banks 69 1,37 1 672 999 3,92Close corporations 77 1,53 92 779 0,22Endowment funds 39 0,78 208 478 0,49Individuals 3 587 71,34 4 008 573 9,38Insurance companies 33 0,66 6 382 679 14,94Investment companies 12 0,24 866 636 2,03Medical aid schemes 6 0,12 104 842 0,25Mutual funds 138 2,74 10 608 018 24,83Nominees and trusts 730 14,52 1 621 972 3,80Other corporations 99 1,97 3 010 154 7,04Pension funds 114 2,27 8 954 845 20,96Private companies 113 2,25 549 020 1,28Public companies 10 0,20 4 429 180 10,37Share trusts 1 0,02 218 194 0,51

5 028 100,00 42 728 369 100,00

PUBLIC/NON-PUBLIC SHAREHOLDERS


Non-public shareholders 8 0,16 4 734 226 11,08

Directors and associates of the company holdings 6 0,12 247 455 0,58Own holdings 1 0,02 4 268 577 9,99Share incentive schemes 1 0,02 218 194 0,51

Public shareholders 5 020 99,84 37 994 143 88,92

5 028 100,00 42 728 369 100,00

BENEFICIAL SHAREHOLDERS HOLDING 3% OR MORE

Number ofshares %

Public Investment Corporation 4 934 899 11,55Old Mutual Group 3 672 827 8,60Astral Operations Limited 4 268 577 9,99Liberty Group 1 588 526 3,72

Analysis of ordinary shareholdersAt 30 September 2007


Notice of annual general meeting

SEVENTH ANNUAL GENERAL MEETINGNotice is hereby given that the seventh 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 14 February 2008at 08:00, to transact the following business:

ORDINARY BUSINESS:CONSIDERATION OF ANNUAL FINANCIAL STATEMENTS

Ordinary resolution no. 1To present the annual financial statements for the company and the group for the year ended 30 September 2007, togetherwith the directors’ and auditors’ reports.

RE-ELECTION OF DIRECTORS

Ordinary resolution no. 2To note that in terms of article 13.2 of the company’s articles of association, Drs T Eloff and N Tsengwa retire at this annualgeneral meeting but being eligible have offered themselves for re-election.

Ordinary resolution no. 3To note that in terms of article 14 of the company’s articles of association, Messrs. JL van den Berg, MA Kingston andCE Schutte retire by rotation at this annual general meeting but being eligible have offered themselves for re-election.

Brief particulars of the qualifications and experience of the above are available on pages 7, 8 and 9 of this report.

NON-EXECUTIVE DIRECTORS’ FEES

Ordinary resolution no. 4To approve that in terms of article 13.5 of the company’s articles of association, with effect from 1 October 2007, 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

2008 2007R’000 R’000

Chairman of the board 300 300 For services as a director 150 125 Chairman of the audit and risk management committee 110 110 Member of the audit and risk management committee 60 60 Chairman of the human resources and remuneration committee 110 90 Member of the human resources and remuneration committee 60 50

The remuneration will be paid quarterly in arrears.

SPECIAL BUSINESSTo consider and, if deemed fit, to pass, with or without modification, the following resolutions in the manner required bythe Companies Act 61 of 1973, as amended (the Act) and subject to the Listing Requirements of the JSE Limited (JSE):



APPROVE THE ALLOTMENT AND ISSUE OF SHARE OPTIONS TO DIRECTORS

Ordinary resolution no. 5“Resolved that the directors referred to below, having been granted options during the year in terms of the Astral FoodsLimited Employee Share Trust (2001), the company hereby approves, in terms of section 222(1)(a) of the Companies Act,1973, as amended, the allotment and issue to the directors of the number of shares set out against their names in so far asthey exercised or may exercise their options in respect to those shares:

Name of NumberDate director of options Exercise price

28 August 2007 NC Wentzel 81 100 R12228 August 2007 MA Kingston 49 400 R12228 August 2007 CE Schutte 33 600 R122

PLACE UNISSUED SHARES UNDER THE CONTROL OF THE DIRECTORS

Ordinary resolution no. 6“Resolved that the ordinary shares of the company (excluding for this purpose those ordinary shares which have specificallybeen placed under the control of the directors for allotment and issue in terms of the Astral Foods share incentive scheme)be placed under the control of the directors as a general authority in terms of section 221(2) of the Act, subject to theprovisions of the Act and the rules and regulations of the JSE, until the next annual general meeting of the company, for theallotment and issue to such persons and on such conditions as the directors deem fit provided the total number of shares soissued will be limited to 3 204 628 (7,5%) of the company’s issued share capital.”

GENERAL AUTHORITY TO ISSUE SHARES FOR CASH

Ordinary resolution no. 7“Resolved that, subject to the renewal of the general authority proposed in terms of ordinary resolution no. 6 above and interms of the Listings Requirements of the JSE, the directors be granted a general authority to issue ordinary shares of 1 centeach for cash as and when suitable situations arise, subject to the following limitations:

• That this authority shall not extend beyond 15 (fifteen) months from the date of this annual general meeting;• That issues will be limited to a class already in issue;• That a paid press announcement giving full details, including the impact on net asset value and earnings per share, will

be published at the time of any issue representing, on a cumulative basis within one year, 5% or more of the number ofshares of that class in issue prior to the issues;

• That issues in the aggregate in any one financial year will not exceed 10% of the number of shares of any class of thecompany’s issued share capital, including instruments which are compulsorily convertible into shares of that class;

• That, in determining the price at which an issue of shares will be made in terms of this authority, the maximum discountpermitted will be 10% of the average traded price of the shares in question, as determined over the 30 days prior to thedate that the price of this issue is determined; and

• That the shares will be issued to the public and not to related parties.”

For this ordinary resolution no. 7 to become effective the approval of a 75% majority of the votes cast by shareholderspresent or represented by proxy at this meeting is required.

GENERAL AUTHORITY TO REPURCHASE SHARES

Special resolution no. 1“Resolved, that the company may, as a general approval in terms of section 85(2) of the Act, acquire from time to time,such of its securities at such price or prices and on such other terms and conditions as the directors may from time to timedetermine, but subject to the following requirements from time to time of the JSE:

Notice of annual general meeting (continued)



• The repurchase of securities shall be effected through the order book operated by the JSE trading system and donewithout any prior understanding or arrangement between the company and the counter party;

• The repurchase of securities is authorised by the company’s articles of association;• The authority shall be valid only until the next annual general meeting of the company or for 15 months from the date

on which this special resolution is passed, whichever is the shorter;• Repurchases may not be made at a price more than 10% above the weighted average of the market value for the

securities for the five business days immediately preceding the date on which the transaction is effected;• At any one point in time, the company may only appoint one agent to effect any repurchase(s) on the company’s behalf;• The company may only undertake a repurchase of the securities if, after such repurchase, it still complies with the Listings

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 defined in the

Listings Requirements of the JSE.”

The reasons and effect of special resolution number 1 is to generally approve, in terms of section 85(2) of the Act, theacquisition by the company of securities issued by it, subject to the Listings Requirements of the JSE. The directors intend toutilise this authority at such time or times, in respect of such number of securities, at such price and on such terms as theymay consider appropriate in the circumstances from time to time, provided that any repurchase of securities should not, inthe aggregate, in this financial year, exceed 20% of the company’s issued securities of the class concerned. Accordingly themethod by which the company intends to acquire its securities, the maximum number of securities which will be acquiredand the price(s) and date(s) at which the acquisition(s) is (are) to take place are not presently known. In considering whetheror not to act in terms of this general authority, the directors will ensure, for a period of 12 months after the date of thenotice 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. For this

purpose, the assets and liabilities will be recognised and measured in accordance with the accounting policies used in thelatest 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 for each3% in aggregate of the initial number of that class acquired thereafter, the company will publish an announcement givingdetails thereof in accordance with Rule 11.27 of the Listings Requirements of the JSE. The company undertakes that it willnot enter the market to repurchase the company’s securities in terms of this general authority until such time as thecompany’s sponsor has provided written confirmation to the JSE regarding the adequacy of the company’s working capitalin accordance with Schedule 25 of the Listings Requirements of the JSE.

Directors’ responsibility statementThe directors collectively and individually accept full responsibility for the accuracy of the information given in the financialstatements and certify that to the best of their knowledge and belief there are no facts that have been omitted whichwould 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 date ofpublication of the company’s annual results on 9 November 2007.



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 on thefinancial position of the company and its subsidiaries, nor is the company aware of any such proceedings that are pendingor threatened.

The general information regarding the company, referred to Paragraph 11.26(b) of the Listings Requirements of the JSE, iscontained elsewhere in this annual report as follows:

Directors of the company and of material subsidiaries, on pages 7, 8, 9 and 90.Major shareholders, on page 84.Material changes since year end, on page 34.Directors’ interest in the company’s shares, on page 38.Company’s share capital, on pages 65 and 66.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 of thenumber of shares he holds or represents, provided that a proxy shall irrespective of the number of members he representshave only 1 (one) vote. On a poll a member who is present in person or represented by proxy shall be entitled to thatproportion of the total votes in the company which the aggregate amount of the nominal value of the shares held by himbears 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 who areunable to attend the annual general meeting and who wish to be represented at the meeting, must complete and returnthe attached form of proxy in accordance with the instructions contained in the form of proxy, so as to be received by theshare registrars, Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street, Johannesburg 2001, (PO Box 61051, Marshalltown 2107) by no later than 08:00 on Wednesday, 13 February 2008.

Holders of Astral shares (whether certificated or dematerialised) through a nominee should timeously make the necessaryarrangements with that nominee or, if applicable, Central Securities Depository Participant (CSDP) or broker to enable themto attend and vote at the annual general meeting or to enable their votes in respect of their Astral shares to be cast at theannual general meeting by that nominee or a proxy or a representative.

By order of the board

MA EloffGroup Company SecretaryPretoria 8 November 2007



Shareholders’ diary

Financial year end 30 September 2007Annual general meeting 14 February 2008

Reports and accountsInterim report for the six months ending 31 March 2008 May 2008Announcement of annual results for the year ending 30 September 2008 November 2008Annual report December 2008

DividendsInterim dividend – March 2008

Declaration May 2008Payment July 2008

Final dividend – September 2008

Declaration November 2008Payment January 2009



ASTRAL FOODS LIMITEDRegistration No 1978/003194/06Share code: ARLISIN number ZAE000029757

REGISTERED OFFICEBlock 9Boardwalk Office Park107 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 Chase Bank, NA(Johannesburg Branch)1 Fricker Road, Cnr Hurlingham RoadIllovo, Johannesburg 2196Private Bag X9936, Sandton 2146Telephone (011) 507 0430

TRANSFER SECRETARIESComputershare Investor Services 2004 (Pty) Limited70 Marshall StreetJohannesburg 2001PO Box 61051, Marshalltown 2107

GROUP COMPANY SECRETARYMA Eloff

MAJOR SUBSIDIARIES AND JOINT VENTURES

Astral Operations LimitedRegistration No. 1947/027453/06Directors: NC Wentzel

LW HansenMA KingstonCE Schutte

Animal Feeds Limited (Zambia)Registration No. 36327Directors: CE Schutte

I Chilufya*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*MA KingstonCP Lea*

*Scottish

NuTec Southern Africa (Pty) LimitedRegistration No. 1996/002008/07Directors: NC Wentzel

AP Drake*R Raterink#

*British#Dutch

Administration

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 their shares or holdown name dematerialised shares, at the seventh annual general meeting of the company to be held at Block 9,Boardwalk Office Park, 107 Haymeadow Crescent, Faerie Glen, Pretoria on Thursday, 14 February 2008 at 08:00

Shareholders who have dematerialised their shares must inform their CSDP or broker of their intention to attend the annualgeneral meeting and request their CSDP or broker to issue them with the necessary authorisation to attend or provide theirCSDP or broker with their voting instructions should they not wish to attend the annual general meeting in person. Suchshareholders 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/herthe chairman of the meeting, as my/our proxy to vote for me/us on my/our behalf at the seventh annual general meeting ofthe company to be held on 14 February 2008 and at any adjournment thereof.

Signed this day of 2008

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 2007

2. (a) To re-elect Dr T Eloff as a director

(b) To re-elect Dr N Tsengwa as a director

3. (a) To re-elect Mr JL van den Berg as a director

(b) To re-elect Mr MA Kingston as a director

(c) To re-elect Mr CE Schutte as a director

4. To approve remuneration payable to directors

SPECIAL BUSINESS5. To approve the allotment and issue of share options to directors

6. To place ordinary shares under the control of the directors

7. To authorise the issuing of shares for cash

8. Special resolution no. 1To approve the acquisition of shares issued by the company

Please refer to the notes on the reverse side of this form.

1. A shareholder may insert the name or the names of two alternative proxies of his/her choice in the space provided, withor without deleting “the chairman of the meeting”. The person whose name stands first on the form of proxy and whois present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.Any such proxy, who need not be a shareholder of the company, is entitled to attend, speak and vote on behalf of theshareholder.

2. A proxy is entitled to one vote on a show of hands and, on a poll, one vote for each share held. A shareholder’sinstructions to the proxy must be indicated in the appropriate spaces.

3. 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.

4. This form of proxy must be received by the transfer secretaries, Computershare Investor Services 2004 (Pty) Limited,Ground Floor, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107) by no later than 08:00 onWednesday, 13 February 2008.

5. 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.

6. 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.

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

8. The chairman of the meeting may accept or reject any form of proxy, which is completed and/or received other than inaccordance with these notes.

9. 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 attendthe annual 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

Contents

Profile, strategy and vision 1

Group activities 2

Financial highlights 4

Group structure 6

Directorate 7

Management 9

Chairman’s review 10

Chief executive officer’s review 12

Corporate governance 16

Sustainability report 22

Value-added statement 25

Seven year review 26

Ratios and statistics 27

Annual financial statements 28

Analysis of ordinary shareholders 84

Notice of annual general meeting 85

Shareholders’ diary 89

Administration 90

Form of proxy Inserted


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