Welcome to Astral Foods Limited final audited results for the year ended 30 September 2022. I would like to welcome Chris and his team and Dr. Theuns Eloff, Chairman of Astral, as well as Anita Cupido. Welcome, guys. I'm going to leave it to Chris to introduce you to the Astral team. We're quite a big team. Chris, just a couple of household rules. There'll be parking tickets at the end of the presentation or when you came in, you would have received one. Just for the participants on the webcast, you can post your questions at the end by using the question tab. For the audience, if you've got any questions, please wait. I'll bring you a microphone and, so that everyone can hear the questions. Chris, over to you to take us through this excellent set of results.
Thank you, Marlies. As Marlies said, welcome to Theuns, my chairman for many years now. 14?
No, no. Not that.
12 years.
13.9.
Anita, a member of our team, and then the management team, you know, Gary, Frans, Michael, Obed, Dries, and then Dan. Also Dan, as most of you know, Dan is reaching his retirement age. He actually stayed on a year longer. By the time of the AGM next year, it will be Dan's last day with us, and he's asked Dries to present on his behalf in this last reporting period where Dan is involved. Dan, just to thank you for being a super colleague. What you've done over the past 21 years in Astral is... all I can say is a great show. Well done. Thank you for that. Thank you to everybody else. We've got a bit of a rent-a-crowd. I can't sing well, Anthony, in front of small crowds.
Thank you for everybody here. You know the Astral format. There's one or two new slides in. We moved a couple around, but all the information that you've seen over the past 20 years is contained in here, either in the front or in the back, and you'll get it on your website, or you'll get a printed copy here. Thank you for taking interest in Astral and coming here to listen to what we've been up to over the past year. Unfortunately, it's the first time that I or we had to stand here and report on a set of results what's been the second-best in our 21 history under very difficult situation. A lot of pressure, a lot of headwinds, and we still made a fair or decent profit whilst investing a hell of a lot of CapEx.
At the same time, I'm gonna have to tell you, closer to the end, that the future is a bit bleak. I think if one person know exactly why is Nasreen, Anthony, Michael Townsend. Good to see you again. You know exactly what's gonna happen there. We'll talk about it. Let's just focus on the bit more positive we have here about the past year. That's what this presentation is about. I'll do the business overview. Gary will cover all the operational issues. Dries will try to do the financial overview, I will do the outlook, additional information is at the back. You can look there if you have any questions about it. Let's rock and roll. Feed input costs increased sharply over the period. Everybody knows that by now.
You will see some of Gary's slide that shows you there were two levels over the past three, four years, and then the last one, for a year, it just kept on going north, and it's still heading north. Every time we think there's a bit of relief, then Anthony Clark says, "No, it's not gonna be like. I will tell you what it's gonna be." He did so, and he's fairly good with that. Broiler production efficiency, it's a focus area. That's the part that we can control in the business. The raw material, we can't control. The currency, we can't. The load shedding, we can't. The imports, we can't control. What happens with AI across the globe. Those five key drivers in the poultry business is almost outside of our control, and that combined almost make up 80% of our total cost.
The bit we can control, we focus on intensely and to optimize your efficiencies or the genetic potential of the bird. That's the part where we believe that for the moment we've got a bit of a headstart on our competitors. That again improved for the year. Excellent results. Poultry margins improved as higher feed costs were recovered for part of the year. There is a slide that will illustrate that the price increases we had during the year, four of them, most of them was to recover the input cost of the prior year. We always lag the raw material price movement. Anthony, you can't move up poultry selling prices before the raw material or at the same time, so there's always a lag.
People see this full price increase, and they think you're gonna make this massive profit, but you still lag the past 18 months continuous increase of your feed input cost. Extraordinary cost. We all know about this. We talk about it a lot. In the poultry industry, load shedding is not the same as for Langeberg making canned fruit or somebody running a different kind of business. In livestock, you've got a production program. Ours is two and a half years long. If you want 10 chickens more a year, you need to plan for that two and a half years ago with your genetic material and go through three stages of breeding and rearing and hatching, and eventually the bird gets into the abattoir. We've got this plan.
Remember we expanded and invested close on ZAR 100 million in expansion on ZAR 1 billion in Olifantsfontein. Those birds were planned and placed and they're on their way. They're coming. You can't stop it. If you now have load shedding, stage two, for two hours of the day you can't slaughter. It goes to three and to four and to stage five, and then for a prolonged period to stage six and you lose half your production time. What do you do with those birds that are in the pipeline? It's a live animal. You can't tell it, "Wait. Stop. Stop the machine." It's coming thick and fast. That cost us an arm and a leg, the load shedding.
We had to go to extreme measurements to try and manage it, like selling live birds outside to our competitors, which is unheard of. Like taking eggs out the incubators, break them. You've incurred all this cost, three generations, and then you break the egg. For all that cost, you've got no recovery. load shedding in a high volume business like ours is not good. Record level unemployment, it's always gonna be a problem. We are fortunate in some way that we're in the right space. That is what people buy. If they buy down from beef or lamb, they buy into chicken. If they buy up from maize or soya, they buy into chicken. We like the space. We believe that's the place you want to be in Africa, in that space if you wanna produce meat protein.
We concluded this deal selling Swaziland and Mozambique. Same reasons that we struggle with here. Lack of infrastructure, problems with tax, no growth, and very funny legislation and tax laws. We out of there. We're now only in Zambia. Poultry imports unabated, although down year-on-year. Gary has got a graph that he will explain to you. With all the challenges, we believe it was a fairly good performance, not losing sight of what's gonna happen in the future. For this period we did well. To the Astral team, thank you. It wasn't easy, but it's there. Key indicators: Revenue up 22%. This is all external revenue. Profit before interest, ZAR 1.4 billion. ZAR 103. Our profit for the period, ZAR 126 up. Headline earnings, ZAR 27, up ZAR 125. The dividend.
Full year dividend at ZAR 13.80. Last year it was ZAR 7, up 97%. You will see if you look at the cover, this is a full year cover of 2 times cover. In the first half looked very different from the second half. The cover was 1.8. To get back to our stated, let's call it policy on dividends, the second half was a 2.3 cover to average out on a 2 times cover. Still a healthy dividend, and I hope everybody will be fairly happy with that. Just on the divisions, raw material cost up in the feed sharply. Internal feed requirements increased. We placed more birds during the period, an additional 400,000 birds per week, part of the Woolies expansion. We also managed to increase our external sales volumes.
Expenses in the feed division, critical, up in line with inflation, not above. We again, for the umpteenth year, improved our rand per ton margin. To all the feed people here, well done. I think it's mainly because of the way you recover your input cost and how you control your expenses. Good there. On the poultry side, the broiler performance, the physical performance on farm, further improvement. Sales volumes up. Broiler sales price up. We had the cost of load shedding. The broiler net margin improved. This is broilers, not the poultry division. Last year our broiler net margin was 0.2%. It's nothing. This year at 3.5%, a small increase. If you think 3.5% is sufficient, it is simply not for a high-risk business like Astral.
Being in the poultry industry, some of your investors will say to cover all the risk you have, you need at least a double-digit margin. At a 3.5% margin with all our efficiencies and volumes, you have your second best result in history. Anthony, just imagine if you can get back to something between 7.5% and 10%, which is not excessive. At one stage, the dtic visited my office and I asked them, "What do you think my margin is?" They said, "Ja, if you wanna look after the consumer, it should not be more than 15%." I said, "I'll take it. Thank you. Good night, good luck and goodbye." What I told them at the time, I says, "I'll stick to 10%.
The minute we go over 10%, we'll take that and put it in a fund somewhere to develop upcoming farmers. We're sitting at 0.1% and they tell us we're profiteering. They are not going to introduce anti-dumping hearings because we're profiteering. The facts is the facts. Other Africa, this is almost just Zambia now going forward. Zambia they had excellent results, almost doubled up its profit. Gary, you will talk on that. This is also a area where we're going to invest some CapEx. The money we took out of Swaziland and Mozambique indirectly we will channel to Zambia. Good government, fairly good. The currency's strong. It's now stronger than the rand. You'll see some of the profit derived from the currency change.
Zambia is the place where we're gonna also most probably decided on the strategic plans, most probably also venture into broiler production and a abattoir over the next year or two. This is the graph that tells the whole picture. If you understand this, not if, when. After I explain, then you will know this is the story about poultry production. The yellow part, it's not actual price, is the movement month-on-month for the same period in the broiler feed input cost. The yellow block. That's why it's yellow maize. The blue lines or bars is the change in the broiler selling price year-on-year. You can see exactly what happened here. If you go in our history, you go and check our figures. This was a very bad period for us.
Maize prices moved more than the movement. This was actually negative year-on-year. If you look at the period that we report on now, look in the first half, Anthony. Exactly. The maize price year-on-year didn't move at the same rate as the price increases, so good performance in the first half. Yeah. This is what's happened now. Look at that, and we can't keep up with prices. That's why the warning, the stern warning about at least the first half of the next period. You cannot catch up that... Look at that incline there. We've never seen that in maize prices. This is now of the broiler price which includes maize and soy that makes up about 75% of the ration or 70% of the total cost to produce a chicken. This tells the story.
If you understand this, you will know what happens with your margins. This is a relative new slide, and what we try to depict here is, of course, the change in the broiler feed price. It's a index. Look at continuously over the past eight, nine years continuously moving up. Then you have to adapt your sales price to that, and it's not always easy because there's dumping, there's this, there's that. Look at the volatility in the margin, the broiler net margin. We don't put percentages to that, but this is actual, Astral's actual. Here you can see where the change in the broiler feed price take a hike like that, your margin just drop off. Then here when this comes down and you now try to recover the price, then you can keep it, you make that margin.
That margin there was 14% net margin on broilers. This keep on going up and your margin drop because you can't move your sales price. Here's the concern. Look at the steep incline of your broiler feed from that period onwards. It just erodes your margin completely. This is the first half. The margin was 4.8% for broilers. In the second half, 2.4%. Purely on the back of that. Sales prices did go up but it was not at the same rate as what poultry feed cost go up. This is still going north. There is trouble here. Big trouble. We're actually already in that situation where we can't recover at the same rate, recover the feed input cost. These two slides together tells the whole story of Astral.
Just on the movement, how we moved from last year, the profit of ZAR 711 to this year's ZAR 1,440. This is movement. This is not actual cost. This is the cost move from the prior year. That was our profit. Last year, this is up 103%. Broiler raw material cost, that is the movement. Feed conversion efficiency, broiler feed changed more than that, so that was Gary and his team and Obed changed to adapt to the higher input cost and the net benefit was there. The increase in sales volumes, and then this massive attempt to claw back your raw material costs. If you're gonna take the previous year's similar graph, you will see this was actually to pick up on the prior year's massive red line.
The lag gives you the price here and not there, so it's a peak, and that's why the profit this year so much better than the prior year. The effort to move prices was based on the already steep incline in feed cost in the prior year. If feed costs reduce in the second half of our new year, and you can keep these prices, that margin will open up. Currently, the two lines have crossed one another. Dries has got a slide to explain that. This is all the other combination of all other costs, positive, negatives, and the net effect of that, and that's how we got to that. That...
Sorry, just go back, this is the cost of water and load shedding. The movement, not the real cost, was ZAR 150. ZAR 150 million for the year. How many chickens you must rear and plan to make ZAR 150 million, and then you just splash it out on defunct infrastructure. That's the story. We're going to go over to Gary now to go through the three operations, and then Dries will do the finance.
Thank you, Chris. Good morning. I'll apologize up front for my voice. I've got a little bit of a cold. The closest we have to a doctor on our team is a veterinarian. I went to him yesterday afternoon for some help. He was too busy taking pictures of the seagulls out of his bedroom window and concerning himself with AI, bird flu, and not my health. Didn't get any help there. Welcome everyone. I'm going to just take us through the operational overview, of course, we need to talk about raw material input costs. It's the largest cost driver in our business, making up 70% of the cost of producing a live broiler. The story is well known, we know about the three good crops we've had locally in South Africa.
We have another good crop in the making, which we'll harvest next year. Four good crops. Unfortunately, our market is not trading these crops at all or any of the local fundamentals. If you speak to Anthony, he'll tell you the whole story 'cause he follows this very closely. We are at the mercy of what's happening on the global markets. There's a very tight balance sheet for coarse grains globally. The U.S. has a tight balance sheet. The demand is still there. The demand side is there. There's weather concerns. We had crop failure in Europe now over the past season, and in the U.S. That dented somewhat the crops that were produced out of Europe and the U.S.
Of course, we've got the Ukraine issue, where the Black Sea corridor was closed for a period of time. That, as you know, has been opened up, but it remains a very volatile situation. Where we should be trading at a carryout of 12%, where we should be trading a maize price of around ZAR 3,200 a ton based on the stock-to-use ratio and the modeling that Professor Chris does for us, we're not trading that, and you'll see it on the next graph. This is a story of the South African SAFEX yellow maize price, just a one-way road. Of course, we are experiencing the pains now of this dramatic increase in the price of yellow maize. We're still seeing further increases.
Although there's volatility day-to-day, we've got the weakening rand, which is difficult at the moment to predict. It is very volatile. Again, at the mercy of what's happening with the U.S. dollar. We are seeing big demand for white maize exports out of South Africa. Mexico and now Kenya, who have lifted their 20% import tariff on our maize, are pulling our white maize. We are exporting a lot of maize, and our white maize stock-to-use ratio is tightening. That is pulling up yellow maize prices. White maize is pricing out of feed. It's pricing into exports, and we're seeing an escalation in the yellow maize price at the same time, and that's notwithstanding the good crops. We're at the mercy of what's happening around us, and that is not a positive story.
This is the most dramatic rise that we've ever seen in the price of yellow maize. Of course, soybeans also pulled up by the global fundamentals, and we see soy meal at record highs as well. This into feed. The soy products and maize making up approximately 90% of the average broiler ration. This is for 2022. This is an average broiler feed in Astral for 2022, making up approximately 76% of the cost of a broiler feed ration. That part we don't have a lot of control over. We have to try and read the markets. We buy as best we can. We have to buy, and we've got a pipeline to keep full, and we try and do that at the best of our ability. We are exposed to what happens around us.
76% of the cost of a broiler ration, soy products and maize. Of course, I've said already that this makes up 70% of the cost of producing a live broiler. The Feed division, headed up by Michael Schmitz. The Feed division, stable performance, as we're used to from them, posting a profit of just under ZAR 600 million. Let's call it ZAR 600 million, up 13% on the prior year. Net margin of 6%, so down on 2021, but we don't place a lot of emphasis on this percentage. It's influenced by revenue, which is influenced by the price of raw materials. With escalating raw material costs, although our rand per ton margins have improved, the percentage is down slightly. Rand per ton margin's up 6%.
Expenses were well controlled and in line with inflation. We'll talk about that now. The Feed division did benefit from higher internal feed sales, 8.7%. That is on the back of our expansion in broiler volumes. The new capacity that we brought online, we filled up that capacity during the year, not completely, partially. Brought an extra on average 400,000 broilers a week into the market. That drove the demand for feed from the Feed division. External feed sales up 3.4%. The Feed division managed to increase their volumes year-on-year. We'll look at the breakdown of that now. Expenses well controlled at around 7% up, in line with inflation for the year. We've spoken about the margin.
The elephant in the room has to be, of course, this massive increase in the price of yellow maize, up on average ZAR 740 a ton over our reporting period. That's a big increase in the price of our major inputs. This is a split, so you can see the demand for feed internally increasing both as a % and volume wise of the sales mix in the Feed division. The other species relatively flat. We did see an increased demand for poultry feed from the external market. The Poultry division, looking at it from a consolidated view. Operating profit of ZAR 763 million. Up substantially on the prior year at ZAR 147 million, and this was largely driven by the increase in volumes.
Higher broiler production numbers, we managed to sell that into the market. Volumes up just under 9%. You've seen the selling price with the selling prices that were up 12.5%. One has to measure that against... Don't know what happened there. Sorry. One has to measure that against the broiler feed price increase of 11.6%. I think what's important is what Chris Hart said earlier on, that we have been playing a little bit of catch up here on the selling price. If you look at this same slide last year, we lagged the input cost for feed. We've already spoken about the higher broiler slaughter volumes. Of course, that does bring some economies of scale. More birds through the same infrastructure has improved our fixed cost per kilo produced.
Economies of scale benefits there. Unfortunately, the situation we find ourselves in now, and Chris will talk about it later, one has to look at cutbacks, and that comes at a cost. Broiler margins have been spoken about off, and Chris has got a word, paltry. Paltry level of 0.2%. 3.5% for the year, but very thin. Of course, on rapidly rising input costs, that can be eroded quite quickly. The margins benefited from an improvement in the sales mix. The capacity brought online at Festive, as we stated when we sold the business case for that expansion, we wanted to improve volumes of fresh and our value-added products.
Frans and his team have managed to do that, those products bringing slightly better margins and improving the overall margin in that sales mix. Operating expenses negatively impacted. Chris has spoken of this. The biggest one there is load shedding. The water interruptions at Festive have cost us close on ZAR 10 million for the year. That's a lot of money. Then we had one case of highly pathogenic bird flu in KZN, which came at a cost of ZAR 5 million to the group for the year. This is the sales mix. We've spoken of this already. You can see the value adding increase on higher volumes. That percentage and the sales mix increasing. That's good news for the sales mix.
Fresh still at 12% and IQF remaining at 55% of the sales mix, but on higher sales volumes for the year. Well-balanced sales mix and growth in areas that we wanted to see growth on the back of our expansion. On the agriculture side, we again saw good demand for the Ross breed. Our capacity in Ross Poultry Breeders is full. We're at capacity. We sold out, and you'll see later on a slide that Dries will present, we are investing into that space now. That's the beginning of the integration. It's a two-and-a-half year breeding program. If we want to expand our volumes later in years to come, we need to make an investment now in parent stock capacity, and Dries will talk a little bit more about that later. Feed input costs increase. We've spoken of that.
70% of the live bird production cost. We did improve broiler production efficiencies, and I'll talk to those graphs, I believe. Non-feed costs increase. We had the higher number of birds that were on farm. Our non-feed costs did increase, but of course, there was a recovery in the sale of those birds and the selling price. We have seen an above-inflation increase in energy costs through the year. Coal, and particularly LPG in the Western Cape, have increased significantly in cost. We all know what's happened to diesel, but we do burn LPG and coal to heat the broiler houses and breeders, so that comes at a significant cost now. Of course, AI. It remains a risk. There have been a few commercial cases over the past year.
I think the South African industry was left somewhat untouched this past season by AI. I like to think it's on the back of the good biosecurity protocols that the industry has in place, but this is rampant around the world now. The EU and the U.S. are experiencing a rapid escalation in infection numbers as we speak. What you want to see here is an improvement in the average daily gain of the bird. Although the weight for age did increase, you want to see this improvement in average daily gain. Now at around 56, just over 56 g per bird per day. There was two things here. There was a conscious effort to increase the bird slaughter weights.
We've got the capacity to do it, so we increased the age slightly to get a heavier bird and sell those volumes into the market. Load shedding does play a role here. When you can't process the birds, they stay on farm longer, the age goes out, and the weight goes out. Mostly a load shedding impact here, but partly a conscious decision to increase the weights as well. What happened to the PAF? Well, the PAF improved year-on-year. I think we must bear in mind that in February last year, we introduced a lower density feeding program, and we've still managed to improve the broiler performance efficiencies, even though we are now feeding a lower density diet. A good performance from the agriculture team. Mortality is down for the year, what you want to see, and feed conversion relatively flat.
Other Africa, Chris has already spoken about this, but Zambia did produce a good performance. We saw good demand for day-old chicks in the country and feed. Although they had an increase in raw material costs as well, they recovered that in the selling prices and posted a good performance. Some translation effects here in the currency. The kwacha now is in fact stronger than the rand, and I don't think it wasn't too long ago that any of us would have thought that that could happen. It's a fact. Zambia is producing good set of results, and we are looking at further investment there. We, as you know, are embarking on replacing the feed mill in Zambia. Industry matters quickly.
The story of imports, if we look at this graph, the first half of the year remained relatively high with a spike into March, that was importers filling out the U.S. AGOA quota. We've seen this drop off in recent months. There's two things. We know there's port delays, we don't know what's in the ports, we don't know what's on the water. These stats are always about two months old that they come out of SARS. We do know that the importers are experiencing delays in the port. The other thing is that in August, they anticipated that Minister Patel would announce a permanent anti-dumping duty. I think there was a conscious decision there to slow down on imports with him not being sure of what his decision was going to be and at what level he had pitched that duty.
Of course, that didn't transpire because as we know, that's been delayed by at least 12 months. We met with Minister Patel last week on the back of the Poultry Sector Master Plan, he gave us assurances that the anti-dumping duty will be implemented. That would be for a period of 5 years. Effectively, we've carved off 12 months here. If he does implement it within 12 months, we will have a duty for 4 years. The duty will be implemented at the levels that have been published. We just don't know when. He said he would engage with industry at that time, and he's looking for some signals and food price inflation.
Unfortunately, I don't think he's gonna see them, not with the current situation that we face. Imports, as you see on the graph, down year-on-year, just over 12%, but with the industry now producing 21.3 million birds a week, off around an average of 20.6 million same time last year. I'm now gonna hand over to Dries, who's gonna take you through the financials. Thank you.
Good morning, everyone. Certainly the highlight for Astral for this year is our income statement performance. We had a solid performance on the external revenue, up at ZAR 19.3 billion, driven mainly by the volume increases in poultry as well as feeds, as well as the sales price recoveries that we managed to get through in the market. Basically pushed up by the fact that the record high raw material costs had to be absorbed into the business. That left us with operating profit up 103% at ZAR 1.4 billion. Included in the ZAR 1.4 billion is the profit or the gain on the disposal of our interests in our foreign subsidiaries at ZAR 29 million, as well as the payment of Mountain Valley, ZAR 16 million.
It left us with an operating profit margin of 7.4%, which is up nicely on the prior year of 4.5%. Net finance income, ZAR 17 million. We generally had higher cash balances, as you would have noticed in our half year report as well, as well as the higher interest rates that supported the interest income. Lease finance charges, two effects there. We did manage to negotiate a better lease structure, which resulted in cost savings, and that obviously will flow through into a lower lease finance cost, as well as the fact that we had that contract only negotiated halfway through the year. There's an annualization effect to that as well. Jumping ahead, profit from continuing operations at ZAR 1.055 billion, up 129%.
Our EPS up 127%, and our headline earnings per share up 125% at ZAR 27.62 per share. This shows Astral's revenue all the way from 2001 when Astral first listed. What you'll notice here is there was only one period where the revenue came under pressure, the red line depicting the external revenue. There's a relatively consistent increase over time in the revenue. You'll see that the blue bars depict the poultry revenue. The gold bars depict the feed revenue, and then other Africa at the top there. What's important to note here is that despite the volatility of the input costs, Astral manages to maintain an upward trajectory on its revenue. I'll unpack that a little bit more. That translates into quite a volatile operating profit.
As you can see, the bars depict the actual rand value of the operating profit, blue being poultry, gold feed, other Africa, then we've got the purple sections there. The red line depicts the margin of the group, and that's driven by the volatility that we experience from the input costs and how we recover that based off the previous slide. Astral managed to deliver on ZAR 1.4 billion, which is our second-best operating profit in the history of Astral. On a 7.4% margin, you can see it's only the 10th-best margin that we achieved. The rand value of operating profit supported strongly by the increased volumes that we managed to push into the market. The margin, however, under pressure because of the higher input cost that we have to absorb.
There's clearly pressure on the margin if you look at the history of Astral because of the high input cost that Gary and Chris has outlined also. Poultry bouncing back nicely with a ZAR 763 million operating profit for the year and a consistent performance if you look at the gold bars from Feed over many, many years. On this slide, what we depict is the half and half movement in the various operating profits, but specifically also wanna outline the response in the operating profit. You'll notice on the blue bars, the poultry profits, where the changes in the feed prices depicted by the red line and the changes in the selling prices depicted by the green bar, how that translates into operating profit in poultry. You'll notice that the feed prices where they come off result in strong profits.
Where the feed prices increase, as Chris also outlined, there's a lag in the recovery in the for the selling prices, that typically places pressure on the poultry profit margins. What is spilling out bad news for us as Astral in the, in the short term is the fact that the red line here has actually crossed the green line in this, in the second half of the year, that is depicted depicting the pressure that we have in recovering the high or the record high input costs for soft commodities from the market. On the balance sheet. Astral's foundation for absorbing all these volatilities in the market, it basically creates the base for us to weather the short-term storms until we recover the margins and the input costs from the market.
On the non-current assets, up 1%. That is the productive assets of the group. I will touch on that just now in the following slides, we spent ZAR 258 million of CapEx. What goes under the radar often is the fact that we spend in the region of ZAR 500 million a year on maintenance of our installed capacity. This is a very important aspect for Astral to maintain our productive capacity. Non-current assets, the right-of-use assets. You can see that that came down year-over-year, and that depicts that cost saving that we negotiated mainly on our logistics business, our logistics contract.
Net working capital up 20%, absorbing the higher input costs as well as the more birds that we have in the system. You can see 18% up on current assets, 17% up on the current liabilities. We have our non-current liabilities. The movement of 9% there is mainly the higher deferred tax liability that we have. Lease liability is also down in line with the non right-of-use assets. We have ZAR 701 million cash on the balance sheet at the end of September, up from ZAR 278 million in the prior year. That leaves us with an equity position of ZAR 4.8 billion.
That is really, as I mentioned at the start of the slide, that is the foundation from where Astral weathers the storm and ultimately that's the base against which we need to deliver our returns. The capital expenditure. Depreciation, ZAR 307 million. It includes the right-of-use assets, depreciation or amortization that is down quite hefty from the prior year. That also again depicting the annualization effect as well as the cost saving. On the property, plant and equipment, ZAR 211 million compared to ZAR 217 million in the prior year. Total CapEx spend, ZAR 258 million, back at normalized levels. ZAR 737 million commitment for capital expenditure for the next 18 months. That's what Gary and Chris also referred to.
The first three items here, the first two, in fact is to do with Ross Poultry. That is the investment Gary made reference to for the long-term strategic nature of the business. We've basically running at full capacity on our genetic side, so we've got great grandparent investment as well as parent stock production capacity. We will be isolating this for the capital expenditure and actually raising ring-fenced finance against that. It's about ZAR 350 million that we'll be putting in place as we roll out those projects. Then we are reinvesting in Zambia ZAR 98 million in a new feed mill, where we will also be doing ring-fenced finance in Zambia for funding that capital expenditure.
Zambia did on the back of very solid performance, rake up quite a healthy cash balance, which will also be reinvested into that business. Included in the other is also quite a big portion of investment into generators and backup water and so forth. Working capital. Oh, sorry, the current assets isolated increased by ZAR 646 million. That's mainly driven by the fact that the raw material cost pushed up strongly in the business and that settled in the biological assets, which increased by ZAR 270 million. Also included in there is the more birds that is placed in the system. We have inventory in poultry, up ZAR 157 million, feed ZAR 86 million and Africa ZAR 14 million.
Trade receivables mainly reflects the last month's sales, just a bit more than that. Very healthy debtors book. Our bad debts write-off for the last year is ZAR 2.3 million. It's really in very good shape. Current liabilities increased by ZAR 346 million. Same reasons, higher raw material costs settling into our current liabilities. Net working capital on the face of the balance sheet increased by ZAR 300 million to ZAR 1.751 billion. On the cash flow, must emphasize that if you look back at Astral's history of recovering selling prices, or the high input cost in our selling prices from the market, it basically sets the basis of turning our profits into cash in a very healthy manner.
This is evident in a ZAR 1.9 billion cash operating profit for the last 12 months. That ZAR 1.9 billion up from last year's ZAR 1.156 billion. We invested on a pure working capital. If you isolate only the inventory debtors and the creditors, ZAR 414 million into our working capital. That leaves us with ZAR 1.49 billion to fund the rest of the business. We paid tax, ZAR 294 million. We paid cash on capital expenditure, which is ZAR 258 million CapEx plus deposits on the pro-program moving forward. Lease payments down ZAR 122 million for the year, and the dividends paid for the year, ZAR 458 million. Leaving us with net cash generated for the year, ZAR 406 million, and a closing cash balance of ZAR 701 million.
Headline earnings per share and dividends per share. Very good performance on the headline earnings. As you can see, second-best performance for Astral in its history. We've reverted back to a 2 times cover. We've drifted into the 1.8 times cover in the recent past, but given the pressures on the infrastructure that we are experiencing, we've made the decision to pull back on the cover to a 2 times cover, preserve some of the cash and redirect that cash into capital expenditure, for example, the generators and the water infrastructure that we need to find backups for. That leaves us then with the total dividend for the year of ZAR 13.80. In summary, revenue up ZAR 19.3 billion for the year, up 21.9% from the prior year.
Our profit before tax at ZAR 1.44 billion, it's 103% higher based on higher volumes and improved margin. Capital expenditure of ZAR 258 million is at normalized levels. The strategic component in our ZAR 737 million commitment on CapEx amounts to ZAR 588 million, and that will be spent over the next 18 months. Cash flow, ZAR 406 million net in, net generated, based on the recovery in the poultry business, higher working capital and raw material costs and poultry sales volumes playing into that. Total dividend for the year, ZAR 13.80. The final dividend of ZAR 5.90, as Chris also pointed out, at a 2.3 times cover to balance the year at a 2 times cover. Thank you.
Thank you, Dries. How did he do for his first time? Nothing. Okay. Dries not so good with ... Thank you, Dries. Very complete and very thorough. We're now going into part but before ... In the outlook, before we do that, can we just celebrate this year for a nanosecond? How can we do that, Nasreen? What do we do? You jump or sing? What? You have a half jack somewhere and you ... Unfortunately, you stand, you wanna celebrate your best, second-best performance ever in the history of Astral and then, a minute later you have to tell the people, blood is in the streets. This is where we at now. We tried to look for positives going into the new year, the only one we found is the fact that we have a strong and resilient balance sheet.
Consistently high unemployment levels, and why we keep on saying that is we have to go and recover the input cost in that market. There's no positive change there. It become more and more difficult to run off and have this fight with the retail and with Pieter Engelbrecht and Pieter Boone or what's your name from Pick n Pay? Boone. To have this constant fight to move prices up because they're really looking after the consumer, I think. The consumer doesn't have money. The disposable income or the discretionary part of the disposable income is under huge threat. That's why we manage that. The record high raw material cost, you've seen all the graphs. You do your own studies. You know it's 70% of our cost that is still going north.
You're gonna have to recover that, and you're now already lag price increases to cover that by about four to six months. If you put those two together, the collapsing municipal infrastructure load shedding is playing havoc. Havoc. We've explained that to you. If you are uncertain what it is, you're welcome to come and visit us and say, "Well, how do we normally slaughter a bird at 33 days?" Now, because you can't slaughter it, you push them back to the farms, and that age goes up to 40. What was the record I had there? Number? 50 days. You now have to feed them with such a weak feed that they don't grow. You keep them. You've got that cost. They eat, but you don't get the weight to sell because you can't slaughter, because you don't have electricity.
If you look at all those performance indicators Gary show there, those three lines and three line, that's gonna take a nosedive of note in the first half, and maybe even in the second half. We're gonna see a completely different picture to what we've seen here today. It's fact, it's reality. It's already with us. It's been there since July. Anthony, I think in one of your notes you said to the guys, "Why are they now all of a sudden surprised? Why did the share price drop?" Everybody knew this. It was on the cards. Everybody knows the raw material price. They can check or track poultry selling prices. You can see it. This is with us now. Production cutbacks.
All the expansion we did with the ZAR 1 billion expansion, that 400, 600 birds we're now cutting back to make space not to process them. It will come back again. As I said to the guys last night, let's take it on the chin for this first half of F23. Take it on the chin. Do our best and reset and jump in on April, we're not gonna have any material change in the situation that we farm under in the first 6 months. It's gonna be pretty messy. It's gonna be ugly. Very ugly. Like, mother-in-law ugly. We've got the threat of AI. We've been very fortunate, not South Africa, but Astral, with all the biosecurity measures we've put in place. Again, you spend money. We're the only company almost that got insurance again, that because of our strict biosecurity measures.
Dr. Obed Lukhele is heading that up. We were fortunate, and this year hardly anything on AI, while our competitors have struggled with that. We had a small incident in the prior year, Gary. Now Europe, North America pose a big danger to birds traveling here in the winter. The only country, and we want to officially congratulate them, they've got the worst biosecurity measures. We're talking Brazil. Highest dense populated poultry in the world. The biggest exporter. Those guys have never, ever had avian influenza. Official congratulations to them. They export 60% of the chicken. The minute there's one case of AI, that's gone. No export. I'm not exactly sure what happens there. Brazil should've been the first country with AI if you compare it to North America.
This, point number six, Astral will endeavor to increase poultry selling prices to claw back on current and negative broiler margins. That must say it all. You don't have to ask me anything. We are currently in negative broiler margins from July already. Input cost is on the increase, and load shedding is not going to assist us. We're going to go to load stage 5 many times. If we start the generators on the 10th of December, it's going to come at a diesel bill of ZAR 1.5 million every when?
Two days.
Every two days. Thank you government, Eskom, state-owned entities. There's no roads, there's no water. There's no What is that division where all the vets sit, the state vets? DALRRD, gone. Nothing there. We will endeavor to increase poultry prices. You must see that with the first point. How easy or how difficult will it be will depend on what we do over the next three months. A quick cigarette box calculation. Where we are now, we need a further ZAR 3.50 to get to break even. Don't tell anybody. Mr. Clark, you're not gonna write this. I know you won't. Yeah. It is. That's how quickly a 3.5% net margin can disappear. It's just gone. That's We lag this, we are currently lagging the input cost movement.
We need about ZAR 3 to get to break even, ZAR 3.50, depends on your mix. If you want to make a 5% margin, which is still paper thin for a poultry company like this, we're gonna need north of ZAR 4 a kilo. You have to force that onto a consumer that are so stretched at this point in time from a disposable point of income, or the discretionary part of that income. We try to find anything positive here. Our efficiencies will take a nosedive. The currency is all over the show. World global stocks on maize and soya is paper thin. There's a war in Ukraine. There's a World Cup in Qatar. There's whatever. The Boks won a game. All negative stuff. As Chris said, we've got a resilient balance sheet that will help us through this difficult period.
We've seen this many times before. The other day I've been around this kind of volatility for close on 40 years. I've seen this movie before. I've seen it. Can write the script for it. Strong balance sheet, no debt, no gearing, and we can see this through. Please believe me, the first half, without quoting figures, is gonna be nasty, dirty, ugly, messy. You can see it, you can read it here. We're gonna have to guide through that. We've got the people, we've got the breed, we've got the facilities, we've got a good solid board backing us up. We've got everything going for us. Thank you, and thank you for taking interest in Astro. That's our presentation. I believe there's time for questions now. You know what happens with questions.
If somebody sits over here like Nasreen or Michael, they don't wanna ask the real questions. Nasreen has got a tick box exercise. There's a lot of people out there on the webcast that's gonna ask funny questions now because we can't see them. Am I right, Marlies?
Can I-
Yeah. Yeah, sure.
There wasn't enough space on this slide, but there's one other thing that's strong and resilient, and that's the management team. Because we need that. Chris referred to that. Just because it was a bit densely thought we just say it there.
No, there was a one page on my cell phone, we just couldn't fit it in there. Ladies and gentlemen, thank you for this. You're welcome to stay. Let's work through the Q&As. Marlies, you've got them all. Did you receive electronic questions?
Thank you.
Or they didn't understand me, or I explained, or they don't care at all. They're gonna walk out here, sell their share, cry in a year. So remember, everybody who sells a share today, Anthony, somebody's gonna buy it. Nasreen? You wanna do a book over with somebody. Thank you, Marlies. Where's the first question?
The first question is, you said that all the margins.
One too much. Your mic is off, Marlies. I said the poultry margins-
Were negative. They would like to know does that mean that your operating profit for the poultry division is also negative?
Let's try and work this out. Yes. Put feed in, so. Yes. I think if the margin is negative, we'll be in a loss situation. I'm sure of that. Can you confirm that? Yeah. Marlies, so yes.
Yeah, we were just talking margins versus operating profits, so.
Yeah. If you've got a negative margin, operating profit cannot be positive. It will be negative on the broiler side. A bit different on the other divisions, but then what's gonna happen is how much down is poultry, and will it eat up the profits of the other divisions? That's why I tell you, I can't give you figures, I can't give you a forecast, but it's gonna be ugly. Very, very ugly. Most probably worse than what we've seen on one of Trish's graphs. Where is that graph? Gary? The half and half profit with Lizzie. Whatever you've seen there, it could be worse in the first part. This is my, me talking. There's no forecast or we're not keeping something back for you, but go and make your own sums.
Chris?
Michael.
Michael just
Maybe Martin.
No, Mike. Michael.
After... Maybe two... Is it on?
Yeah.
Two questions, Chris. The first one is, the imports have come down significantly. What are the stock levels like in the industry? Do you feel as though you have the pricing power, the ability to push up prices? That's the first question. The second one is, those feed margins, the rand per ton profit, is that holding?
Okay. Let's do the first one. The last one first. The rand per ton margin of feed are holding with the increase in the external market. What happens there now is raw materials are so expensive. The guys who've got their backyard feed mills can't don't have the cash flow to buy raw materials, so they run off to the commercial manufacturers, and you can charge a margin, because I'm not gonna give my maize to a guy who's gonna come and run in there. We buy maize for ourself and external customers. A new guy wants to come. He's got to pay replacement cost. I can't take this pool of maize and now give it to a new guy. You would like to keep it for yourself, but we've got this responsibility towards our existing external market.
This normally happens when raw material move up that rapidly, is the guys are under cash flow constraints to buy it and stock it. Then they close and they go and buy outside. That's the one part. The other part I can't remember what I ... Yeah, no. Okay.
Stock.
What we know is that the stock position in South Africa for poultry is manageable. It's at fair levels and even slightly below that. Frans, confirm? There is not a stock builder. The local production has moved up to 21.3 million birds on average per week, and it's all being sold into this market at a bit of a higher price than the prior year and the prior year and the prior year. Not at the level where it should be. The problem we sit here with, we are currently, and that's the wrong word to use, absorbing or subsidizing both our customers and indirectly the consumer. The consumer is not paying the price he's supposed to pay. We behind by ZAR 3.50 to cover up with the input.
The retail, the fight between the red and the blue guys out there in the retail is intense. They subsidize chicken as well. Already off the low base we give them because we lag ZAR 3.50, they also cut this. The consumer is currently buying chicken most probably ZAR 5 a kilo lower than what the price should be. The question here is that we said once that price move up by ZAR 5, what will it do to consumption patterns? We don't know. It's something lurking there that we're very aware of and not sure what reality can bring about there. They use chicken to fight and who's the cheapest on Black Friday and Blue Monday and all that stuff. Chicken is the product to get feet into the store.
That's the space we're in. From time to time it's in our benefit, other times it works against us. If we get a fair balance, it's okay. If Shoprite doesn't grow, we would still producing 2 million birds a week if they don't grow. The same with Boxer and those guys. A lot of our growth was on the back of how professional our retail sectors are, how well they are doing, positioning themselves, building stores. I must say, the Shoprite guys and the Boxer guys are doing an excellent job. Absolutely world-class. We are fortunate that that is two of our biggest customers.
Sometimes, I can remember a while ago, chairman, the board said, "Hey, you're too exposed to Shoprite, you better move away from them." Imagine you do that as a Monday morning strategy, and now they're the only guys growing, and you lost out on that. Shoprite is a big part of this. Boxer is a big part. We're small and QSR, but there's consistent growth. We don't want to sell 50% of our product there. If it goes to 10%, we're happy. Our fresh product is growing, which is exactly what we wanna do. On higher volumes, we keep that percentage. We're still around 14%, 15%, but producing 800,000 birds more, 600,000 birds more a week. There's not a lot of stock around.
In Astral's case, and in some of our competitors, there's some stock on the farms. The stock is not reflected in our finished goods. We've now got a lot of birds backed up on the farms. As they said we slaughtering birds at 50 days now, just imagine how many birds is in the backlog there that we want to try and cut back, make up by first implementing cutbacks. We're gonna cut back close on 5 million birds for the first quarter just to fix that. You can't carry it with you forever. You need to take it on the chin, fix it, take the pain, and then of course start up the generators on the 12th of December with a test run on the 10th of December. It's gonna be a big day.
There's gonna be. What's a lint in English?
Ribbon cutter.
We're gonna cut a ribbon and start it and blow smoke into this air because that is what we are now forced to do. There is no other alternative for abattoir of that size. Renewable energy, all those fancy words, this COP 23 or whatever it is. I mean, Germany is now back on coal. That's what's gonna happen here. We don't have another alternative. We're gonna burn. Did we already mention this? Okay. Frans is gonna burn a hell of a lot of diesel. The net impact on the cost will be better than not be able to slaughter. Sell your birds to your competitors outside live. Break eggs, do that. It will still come at a hell of a price tag, but a better net than everything that we're going through.
We've never been in this position ever. This fight to get the best feed conversion is gone because we now slow the growth down. You don't want the bird to pick up weight, otherwise you can't put it on the shackles. If you now sit with a 40-day old bird and you hamper the growth, you pull it down, you will see what happens to our efficiency graphs in the interim. It's gonna be nasty. You can take it home and read those stories to your children from there or your grandchildren, like I do from my overdraft statement to my grandkids.
Chris Siphelele Mdudu from Matrix Fund Managers would like to know regarding the Eskom and water supply situation.
What other options does management have for solving these two issues, and what investment is required?
Okay. On the load shedding, there's two parts to this. Load shedding you can plan. Stage two. Stage three, four, five, and six, you're dead in the water. If your planning is not enough to do your maintenance while it's in stage two, you're going to stage three, you need additional generating capacity. What we are doing there is we are putting down generators, and we put diesel in eight of them. Can somebody of you put a picture on the screen or not? eight generators of 1,500 kVA each. Just listen, 8 1,500 kVA each. It's a small town. I think they're gonna use it to make movies or whatever because it's really enormous. If you drive past, I believe Friday nights we can have an open night.
The people from town is gonna park there and look at the stuff. Charge a small fee. That is generating. Unfortunately, we are forced to do that. On the water, we are building spare capacity storage. Our problem now is in Olifantsfontein. It moved from Lekwa to Olifantsfontein, but that is purely because of infrastructure. There's a water spillage leakage every day. Imagine this, you've got this pipeline. We've got 38 million birds under management on every second of the day. 38 million. They all need water, light, space, feed, sanitation, care, transport, whatever. They come in a pipe and you have to slaughter them and the electricity is off. You wait, and wait, and wait. Electricity comes off. You have to clean that line. You take all that birds in that process, and you throw them away. Now you start it up.
two hours later, there's no water. Now you've got electricity, but no water. One morning you get both. The municipal infrastructure goes down. Eskom is okay, and the water is okay, but the municipal electricity and their power... What do you call it? Substations. You must see all the photos and videos of the sabotage, the damage, what happens in the real world in where we operate. We're building extra water capacity. We also spend ZAR 50 million on a reverse osmosis plant in Standerton. Of all the water what we get from the system, how does reverse osmosis work? You reverse it. You put it back. You reverse it backwards, and then you bring it through a filters and you clean it.
Of every 10 L we draw from the system, 6 L of that we can reuse. It's reduced our dependency on what we should get from the council. It's still not enough. We still have a road train of trucks driving water in. We have now secured, only in Africa, we have now secured a court order and a water license to draw water from the Vaal River. Imagine this. You must build a pipeline over six-
Seven.
7 km, over how many properties, different properties? six or 7. 6 different farms, 7 km. You must now go and get a servitude from seven different farmers to build a pipeline, and the next thing is they'll steal the pipeline. You have to do something with it. We're gonna get our own water from the Vaal River. The Vaal River complex is the best supply of water in the country. We're 7 km away, and we don't have water. Direct pipeline, additional storage capacity in Olifantsfontein as well, reverse osmosis and generators.
Thank you.
Total cost ZAR 220 million.
Thank you, Chris. You said the level of earnings the group expects during the first half will be considerably down against the prior comparative period. How should we interpret considerably down?
Last year in the first half, we made a fine profit based on the ability to recover some of your input costs, having good poultry efficiencies, everything like that. Load shedding, not so severe in the first half. There was a good financial performance. Now, in this year in the first half, it's not gonna be so good. The difference is considerable. A percentage I can't give you. That will be a forecast. That's against the law. It's against the JSE rules. I use words, and if you can't draw your own sums from, it's gonna be dirty, it's gonna be nasty, it's gonna be considerable, it'll be ugly, it'll be, "Ugh!" I can't give you a figure unfortunately. I'm not allowed to.
Thank you.
If you stay afterwards, I'll chat to you. Least all we can say is check the facts. The poultry selling price has not moved in this new period. Raw materials have jumped. On top of that, the impact of load shedding, sitting with birds and all that. You're making a 3.5% margin. You add this on, you see that margin is gone, and it most probably will eat into the feed profits as well. That is immensely... what's the word I used?
Considerably.
Immensely considerable. That's the story. We make a joke of it, but I mean, it's right here in our faces. It's there for everybody to see. We will endeavor to move our prices and maybe in three or four months' time, it will look a bit different if we get a bit of relief, Anthony, from raw materials. We do get two or three or ZAR 3.50 in the pricing. Our own generators are now running. The picture can look very different in the second half. That is not a forecast. There's always a but because we always manage to make plans and sort this out, and we're gonna fight to do it again. We'll do it.
Chris, one from me if I can. Past year end, have you put through any price increases yet?
Today is year end. This way. No. We're in the process. It's a tug-of-war. Retailers don't take price increases October, November, December. The quick answer is no. If we're gonna do it, and it's part of a massive negotiation at top level, not with buyers, at top level. If we get something, it will not be in this first quarter, and it will most probably not impact the profitability before February. Because you, if you get it in on January 1st, you produce, you sell the chicken during, you only get your money at end February for it. Considerably down in the first half, unfortunately. We know it, and we're warning you. We give it to you. We've always given you a line of sight on our business, always been transparent. It's gonna be messy for the first half.
One can use it as excuse or apologize, but it's not necessary. 90% of the things are happening to us. It's not poor management. It's the same company as a year and two years. Actually a stronger company from a balance sheet point of view. Higher volumes, new facilities, expansion, top-class people, the right genetics. It's the same company. Top class. The number one poultry producer according to stats on the continent. Nothing have changed in the company. It's things that happen to us that we have to navigate and sort out at a more of a price tag. That's what you do in Africa. We'll do it. With your money, Michael. With a decent return somewhere. Hello, John.
Hi, Chris. Good morning to you.
Thank you.
Just a question on industry volume. You're taking 5 million birds out of the market. Just can you comment on if I look at your 1st half volumes, double digits, 2nd half, low single digits, and you're taking birds out of the market in the 1st quarter. Can you comment on what prices have done to overall demand in the industry? What are other competitors planning to do under the high cost scenario? I guess that in short, do you see volume growth in poultry over the next 12 months?
Look, we're forced to cut back. We're gonna take ZAR 5 million. It's four-point-something birds out, we just round it off, in the first quarter. The planned expansion in April, the last of those four phases of the expansion, 200, 200, and 200. That one we plan not to put down in April. That was never there, and it's not gonna be there next year. Of the 600 we have expanded, in the first quarter, we'll take ZAR four and a half million out, but they will be placed again. It's a temporary relief just to relieve the pressure on that. Will it have a impact on industry stock levels? Yes, it will.
That might just, and we didn't plan it this way, might just be the lever or the gap you have is to be slightly more forceful on your price increases because there is no stock in the country.
What do you think, any ability on, are you expecting imports to come into the country or maintain these low levels?
No.
going forward?
Imports are down year on year. It's down for a number of reasons. AI and also higher input cost in other countries. It's not so. You don't pick up that chicken so cheap anymore, and the currency went against the importers. Three things there. AI is gonna be with us for a while, you're not gonna see imports from North America most probably. If they do compartmentalization, you might see some from some states. From Europe, you won't see birds in a jiffy. The biggest importer, the bulk of what comes into this country is now from Brazil and Brazil only. They're also struggling with high input cost, the same as we. Their birds are not so cheap anymore. I think there's a... We know there's a backlog in the harbor, there's stock there.
The last three, four months import trend that came down is maybe not a real reflection. There might be stuff in the harbor and some on the sea. We don't expect a massive hike in imports all of a sudden. I think we're gonna most probably average around somewhere between 28,000 and 32,000 tons a month. We've been living with that now for eight to 10 years, so it's been there.
Thank you, Chris. There are no further questions.
Thank you for taking time and taking interest in Astral. We appreciate. I thank you, the Astral team, everybody who made their way here. Thank you very much. We're still here for a day and a half. There's a lot of one-on-one set up. If you have any other questions, please drop it to Marlies and we'll get back to you, anybody, within, couple of months. The sooner we have more certainty. Please drop questions to Marlies. We'll gladly come back to you. We are in a period now where we can talk. The whole world now knows, and it was the best of times, but maybe the worst of times. Is it still on the slide? Somebody said that. Who was it? Dickens. He had a long thing.
I couldn't read, understand most of the words, so I just took that couple and put it on there. It was a hell of a story. Then Dan Ferreira repeated it. Yeah. He got it wrong, so I fixed it. Very good year, and it was the best of times. Ugly first half, and it was the worst of times. Thank you for being here. Please enjoy some coffee and a snack outside. If you wanna chat, you're welcome to talk with the guys. Trish, you've got copies of the budget?
Yeah.
Yeah. Selected people only. Thank you very much. Enjoy. Thank you.