|
AFR
AFR
AFR - AFGRI Limited - Unaudited condensed consolidated financial results for the
six months ended 31 December 2008 and cash dividend declaration
AFGRI LIMITED (Incorporated in the Republic of South Africa)
(Registration number: 1995/004030/06)
ISIN number: ZAE000040549
Share code: AFR
Unaudited condensed consolidated financial results for the six months ended 31
December 2008 and cash dividend declaration
- Sales from continuing operations up 18,5%
- Profit before tax from continuing operations up 64,3% (including
negative goodwill of R29,6 million representing 15,1% of this increase)
- Loss from discontinued operations - R67 million (2007: R13 million)
- Earnings per share up 5,3% to 39,4 cents per share
- Average income tax rate 28,7%
- Headline earnings per share up 11,3% to 43,5 cents per share
- Dividend declared of 19,7 cents per share
Group income statement (R`millions)
Note 6 months 6 months 16 months
ended ended ended
31 December 31 December 30 June
Unaudited Unaudited Audited
2008 2007 2008
Continuing operations
Sales of goods and services 4 645 3 894 9 799
Interest on trade receivables 305 283 719
Total sales 4 950 4 177 10 518
Cost of sales (3 664) (3 136) (8 077)
Gross profit 1 286 1 041 2 441
Other operating income 63 44 132
Other operating expenses (687) (603) (1 534)
Operating profit 662 482 1 039
Finance costs 3 (370) (287) (625)
Share of profit of associates 30 1 -
Profit before income tax 322 196 414
Income tax expenses (64) (19) (32)
Profit for the period from 258 177 382
continuing operations
Discontinued operations -
Loss for the period from (67) (13) (84)
discontinued operations
Profit for the period 191 164 298
Profit for the period
attributable to:
Equity holders of the Company 126 119 220
Minority interest - Agri Sizwe 59 43 74
partners
- Other minorities 6 2 4
Profit for the period 191 164 298
Weighted average number of 320,7 318,2 317,4
shares in issue (`m)
Diluted weighted average 341,8 341,2 341,2
number of shares in issue (`m)
Earnings per share from 54,6 41,8 89,0
continuing operations (cents)
Earnings per share from (15,2) (4,4) (19,4)
discontinued operations
(cents)
Earnings per share from all 39,4 37,4 69,6
operations (cents)
Diluted earnings per share 51,2 38,9 82,7
from continuing operations
(cents)
Diluted earnings per share (14,3) (4,1) (18,1)
from discontinued operations
(cents)
Diluted earnings per share 36,9 34,8 64,6
from all operations (cents)
Headline earnings per share 4 43,5 39,1 73,7
from all operations (cents)
Diluted headline earnings per 4 40,9 36,5 68,5
share from all operations
(cents)
Group balance sheet (R`millions)
Note 31 December 31 December 30 June
Unaudited Unaudited Audited
2008 2007 2008
ASSETS
Non-current assets 1 966 1 628 1 804
Property, plant and 2 1 292 1 108 1 175
equipment
Goodwill 2 38 29 45
Other intangible assets 2 192 190 220
Investments in associates 33 5 3
Available-for-sale financial 36 1 37
assets
Financial receivables 232 165 165
Deferred income tax assets 143 130 159
Current assets 8 421 6 253 7 363
Inventories 1 273 1 059 1 102
Biological assets 42 67 61
Trade and other receivables 1 114 1 755 904
Trade receivables financed 6 2 498 2 698 2 698
by Land Bank
Trade receivables financed 6 2 404 - 965
by other banks
Derivative financial 68 48 274
instruments
Current income tax assets 109 91 65
Cash and cash equivalents 913 535 1 294
and cash collateral deposits
Cash collateral deposits 702 400 554
Cash and cash equivalents 211 135 740
Non-current assets 29 - 7
classified as held for sale
Total assets 10 416 7 881 9 174
EQUITY
Capital and reserves 1 449 1 291 1 379
attributable to equity
holders
Share capital - - -
Treasury shares (90) (155) (155)
Incentive trust shares (190) (127) (124)
Fair value and other 52 29 80
reserves
Retained earnings 1 677 1 544 1 578
Minority interests 629 582 612
Total equity 2 078 1 873 1 991
LIABILITIES
Non-current liabilities 344 298 322
Borrowings 144 111 129
Deferred income tax 200 172 193
liabilities
Provisions for other - 15 -
liabilities and charges
Current liabilities 7 994 5 710 6 861
Trade and other payables 1 834 1 846 2 015
Derivative financial 53 - 75
instruments
Current income tax 33 13 10
liabilities
Short-term borrowings - - 15
Call loans and bank 1 172 1 153 1 083
overdrafts
Land Bank borrowings to 6 2 498 2 698 2 698
finance trade receivables
Other bank borrowings to 6 2 404 - 965
finance trade receivables
Total liabilities 8 338 6 008 7 183
Total equity and liabilities 10 416 7 881 9 174
Net asset value per share 424 378 404
attributable to equity
holders (cents)
Group cash flow statement (R`millions)
6 months 6 months 16 months
ended ended ended
31 December 31 December 30 June
Unaudited Unaudited Audited
2008 2007 2008
Operating activities
Net profit before tax 283 193 304
Changes in working capital (359) (191) (477)
Other non-cash flow items (43) (15) 36
Tax paid (47) (17) (6)
Net cash utilised in (166) (30) (143)
operating activities
Net cash utilised in (384) (148) (425)
investing activities
Net cash (utilised (68) (78) 366
in)/generated from financing
activities
Net decrease in cash and (618) (256) (202)
cash equivalents
Cash and cash equivalents at (343) (762) (141)
the beginning of year
Cash and cash equivalents at (961) (1 018) (343)
the end of the period
Cash collateral deposits 702 400 554
Cash and cash equivalents (259) (618) 211
and cash collateral deposits
Group statement of changes in equity (R`millions)
Share Fair value Retained Treasury
capital and other earnings shares
reserves
Balance 30 June - 29 1 464 (155)
2007 (unaudited)
Net profit - - 119 -
Payment to - - - -
minorities
Currency - (5) - -
translation
differences
Share-based - 5 - -
payments
Dividends paid - - (39) -
Disposal of - - - -
incentive shares
Balance 31 - 29 1 544 (155)
December 2007
(unaudited)
Net profit - - 108 -
Payment to - - - -
minorities
Currency - 50 - -
translation
differences
Share-based - 1 - -
payments
Dividends paid - - (74) -
Disposal of - - - -
incentive shares
Balance 30 June - 80 1 578 (155)
2008 (audited)
Net profit - - 126 -
Payment to - - - -
minorities
Currency - (31) - -
translation
differences
Share-based - 3 - -
payments
Dividends paid - - (27) -
Purchase of - - - -
incentive shares
Transfer of Group - - - 65
shares
Balance 31 - 52 1 677 (90)
December 2008
(unaudited)
Group statement of changes in equity (R`millions) (continued)
Incentive Agri Sizwe Other Total
trust partners minorities
share
Balance 30 June (151) 564 21 1 772
2007 (unaudited)
Net profit - 43 2 164
Payment to - (48) - (48)
minorities
Currency - - - (5)
translation
differences
Share-based - - - 5
payments
Dividends paid - - - (39)
Disposal of 24 - - 24
incentive shares
Balance 31 (127) 559 23 1 873
December 2007
(unaudited)
Net profit - 36 2 146
Payment to - (2) (6) (8)
minorities
Currency - - - 50
translation
differences
Share-based - - - 1
payments
Dividends paid - - - (74)
Disposal of 3 - - 3
incentive shares
Balance 30 June (124) 593 19 1 991
2008 (audited)
Net profit - 59 6 191
Payment to - (48) - (48)
minorities
Currency - - - (31)
translation
differences
Share-based - - - 3
payments
Dividends paid - - - (27)
Purchase of (1) - - (1)
incentive shares
Transfer of Group (65) - - -
shares
Balance 31 (190) 604 25 2 078
December 2008
(unaudited)
Segmental analysis (R`millions)
AFGRI Financial Services
Capital Broking
2008 2007 2008 2007
Revenue 469 431 16 22
- sale of goods and services 164 148 16 22
- interest 305 283 - -
Operating profit/(loss) (before 252 235 6 9
the items below)
- other operating income 45 31 - -
- impairment of goodwill - - - -
- depreciation and amortisation (3) (1) - -
- allocation of Corporate costs (13) (7) (2) (3)
Operating profit/(loss) 281 258 4 6
Other items of profit and loss - 1 - -
- share of profit of associates - 1 - -
Profit/(loss) before finance 281 259 4 6
costs
Finance costs (258) (230) - -
Profit/(loss) before income tax 23 29 4 6
Income tax
Profit/(loss) after tax
Assets 6 184 4 141 - 1
Non-current assets 281 189 - -
Other current assets 313 95 - -
Trade and other receivables 4 983 3 588 - -
Cash and cash equivalents 607 269 - 1
Liabilities 5 277 2 925 8 (23)
Non-current liabilities 109 108 - -
Other current liabilities 85 89 8 (23)
Borrowings to finance trade 4 902 2 698 - -
receivables
Call loans and overdrafts 181 30 - -
Capital expenditure 20 9 - -
Segmental analysis (R`millions) (continued)
AFGRI Agri Services
Logistic Services
Logistics Trading
2008 2007 2008 2007
Revenue 226 131 82 43
- sale of goods and services 226 131 82 43
- interest - - - -
Operating profit/(loss) (before 124 51 14 (15)
the items below)
- other operating income - - - -
- impairment of goodwill - - - -
- depreciation and amortisation (7) (3) - -
- allocation of Corporate costs (13) (8) (4) (1)
Operating profit/(loss) 104 40 10 (16)
Other items of profit and loss - - - -
- share of profit of associates - - - -
Profit/(loss) before finance 104 40 10 (16)
costs
Finance costs (14) (3) (5) 7
Profit/(loss) before income tax 90 37 5 (9)
Income tax
Profit/(loss) after tax
Assets 403 330 295 334
Non-current assets 298 280 48 45
Other current assets 25 22 110 40
Trade and other receivables 79 28 93 154
Cash and cash equivalents 1 - 44 95
Liabilities 60 41 702 409
Non-current liabilities - 15 1 5
Other current liabilities 60 26 701 404
Borrowings to finance trade - - - -
receivables
Call loans and overdrafts - - - -
Capital expenditure 5 11 - -
Segmental analysis (R`millions) (continued)
AFGRI Agri Services
Producer Services
Primary Inputs Retail
2008 2007 2008 2007
Revenue 756 777 1 933 1 598
- sale of goods and services 756 777 1 933 1 598
- interest - - - -
Operating profit/(loss) (before 48 39 119 60
the items below)
- other operating income - - - -
- impairment of goodwill - - - -
- depreciation and amortisation (2) (3) (6)
(8)
- allocation of Corporate costs (4) (3) (10) (9)
Operating profit/(loss) 42 33 101 45
Other items of profit and loss - - 30 -
- share of profit of associates - - 30 -
Profit/(loss) before finance 42 33 131 45
costs
Finance costs (12) (10) (35) (27)
Profit/(loss) before income tax 30 23 96 18
Income tax
Profit/(loss) after tax
Assets 557 464 1 399 1 101
Non-current assets 55 82 321 298
Other current assets 277 174 883 664
Trade and other receivables 206 179 136 86
Cash and cash equivalents 19 29 59 53
Liabilities 378 207 658 462
Non-current liabilities 5 - 6 6
Other current liabilities 373 207 649 455
Borrowings to finance trade - - - -
receivables
Call loans and overdrafts - - 3 1
Capital expenditure 6 3 24 9
Segmental analysis (R`millions) (continued)
AFGRI Foods
Animal protein Oil and protein
2008 2007 2008 2007
Revenue 1 287 1 300 260 203
- sale of goods and services 1 287 1 300 260 203
- interest - - - -
Operating profit/(loss) (before 122 120 20 17
the items below)
- other operating income - - - -
- impairment of goodwill - - - -
- depreciation and amortisation (25) (21) (3) (2)
- allocation of Corporate costs (9) (8) (3) (2)
Operating profit/(loss) 88 91 14 13
Other items of profit and loss - - - -
- share of profit of associates - - - -
Profit/(loss) before finance 88 91 14 13
costs
Finance costs (33) (16) (1) (1)
Profit/(loss) before income tax 55 75 13 12
Income tax
Profit/(loss) after tax
Assets 1 337 1 053 315 295
Non-current assets 750 537 109 112
Other current assets 257 200 77 69
Trade and other receivables 314 289 101 90
Cash and cash equivalents 16 27 28 24
Liabilities 611 612 89 117
Non-current liabilities 118 99 12 15
Other current liabilities 493 513 77 102
Borrowings to finance trade - - - -
receivables
Call loans and overdrafts - - - -
Capital expenditure 144 59 1 3
Segmental analysis (R`millions) (continued)
Others
Corporate Group eliminations
2008 2007 2008 2007
Revenue 1 1 (80) (329)
- sale of goods and services 1 1 (80) (329)
- interest - - - -
Operating profit/(loss) (before (54) (40) - -
the items below)
- other operating income 18 13 - -
- impairment of goodwill - - - -
- depreciation and amortisation (4) (2) - -
- allocation of Corporate costs 58 41 - -
Operating profit/(loss) 18 12 - -
Other items of profit and loss - - - -
- share of profit of associates - - - -
Profit/(loss) before finance 18 12 - -
costs
Finance costs (12) (7) - -
Profit/(loss) before income tax 6 5 - -
Income tax
Profit/(loss) after tax
Assets 485 255 (559) (93)
Non-current assets 104 85 - -
Other current assets 138 94 (559) (93)
Trade and other receivables 104 39 - -
Cash and cash equivalents 139 37 - -
Liabilities 1 137 1 152 (582) 106
Non-current liabilities 93 50 - -
Other current liabilities 56 (20) (582) 106
Borrowings to finance trade - - - -
receivables
Call loans and overdrafts 988 1 122 - -
Capital expenditure 9 9 - -
Segmental analysis (R`millions) (continued)
Total
Continuing Discontinued
operations operations
2008 2007 2008 2007
Revenue 4 950 4 177 82 112
- sale of goods and services 4 645 3 894 82 112
- interest 305 283 - -
Operating profit/(loss) 651 476 (66) (4)
(before the items below)
- other operating income 63 44 - -
- impairment of goodwill - - - -
- depreciation and (52) (38) (3) (3)
amortisation
- allocation of Corporate - - - -
costs
Operating profit/(loss) 662 482 (69) (7)
Other items of profit and 30 1 - -
loss
- share of profit of 30 1 - -
associates
Profit/(loss) before finance 692 483 (69) (7)
costs
Finance costs (370) (287) (11) (12)
Profit/(loss) before income 322 196 (80) (19)
tax
Income tax (64) (19) 13 6
Profit/(loss) after tax 258 177 (67) (13)
Assets 10 416 7 881
Non-current assets 1 966 1 628
Other current assets 1 521 1 265
Trade and other receivables 6 016 4 453
Cash and cash equivalents 913 535
Liabilities 8 338 6 008
Non-current liabilities 344 298
Other current liabilities 1 920 1 859
Borrowings to finance trade 4 902 2 698
receivables
Call loans and overdrafts 1 172 1 153
Capital expenditure 209 103
Segmental analysis (R`millions) (continued)
Total
All
operations
2008 2007
Revenue 5 032 4 289
- sale of goods and services 4 727 4 006
- interest 305 283
Operating profit/(loss) 585 472
(before the items below)
- other operating income 63 44
- impairment of goodwill - -
- depreciation and (55) (41)
amortisation
- allocation of Corporate - -
costs
Operating profit/(loss) 593 475
Other items of profit and 30 1
loss
- share of profit of 30 1
associates
Profit/(loss) before finance 623 476
costs
Finance costs (381) (299)
Profit/(loss) before income 242 177
tax
Income tax (51) (13)
Profit/(loss) after tax 191 164
Assets 10 416 7 881
Non-current assets 1 966 1 628
Other current assets 1 521 1 265
Trade and other receivables 6 016 4 453
Cash and cash equivalents 913 535
Liabilities 8 338 6 008
Non-current liabilities 344 298
Other current liabilities 1 920 1 859
Borrowings to finance trade 4 902 2 698
receivables
Call loans and overdrafts 1 172 1 153
Capital expenditure 209 103
Notes to the Group interim results
1. Basis of preparation and accounting policies
These condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 and the South African Companies Act,
as amended ("Companies Act") and under the historical cost convention,
as modified by the revaluation of available-for-sale financial assets
and financial liabilities (including derivative financial instruments)
and biological assets at fair value through profit or loss. The
accounting policies conform to International Financial Reporting
Standards ("IFRS") and are consistent with those applied in the
corresponding prior period. Because of the change in the Group`s year-
end in the prior year, the comparative information provided is for the
same period of the prior calendar year (and not any of the previously
published periods).
2. Property, plant and equipment, intangible assets and goodwill
Property, plant and Intangible assets and
equipment goodwill
(R`millions) 31 December 31 December 31 December 31 December
2008 2007 2008 2007
Carrying value 1 175 1 069 265 190
beginning of year
Additions 190 64 19 39
Disposals at book value (7) (7) (0) -
Foreign currency (8) 3 (3) (1)
differences
Depreciation/amorti- (42) (32) (13) (9)
sation
Purchase of - 11 - -
subsidiaries
Net sale of subsidiary (14) - (15) -
(including assets held
for sale)
Impairment (2) - (23) -
Carrying value end of 1 292 1 108 230 219
period
3. Finance costs
(R`millions) 31 December 31 December
2008 2007
Interest paid on Land Bank borrowings (168) (210)
Interest paid on other banks` borrowings used to (142) -
finance debtors
Other interest paid to financial institutions (60) (77)
Finance cost - Continuing operations (per income (370) (287)
statement)
Finance cost - Discontinued operations (11) (12)
Finance cost - Total (381) (299)
4. Headline earnings per share
(cents) 31 December 31 December
2008 2007
Earnings 39,4 37,4
Loss from discontinued operations 9,8 1,8
Impairment of assets 1,1 -
Negative goodwill on acquisition of share of (6,8) -
associate
Profit on disposal of assets 0,0 (0,1)
Headline earnings 43,5 39,1
Diluted headline earnings 40,9 36,5
5. Business segment results
The pre-tax segment results are presented without taking into account
any headline earnings adjustments and before the allocation of any
minority (including the Agri Sizwe) share of profits. Operating profits
after finance costs are shown after the allocation of a cost of capital
based on each operating unit`s net assets.
Changes have been made to the aggregation of operating units into
reportable segments since the presentation of the prior year financial
statements. Changes have also been made to the format of the Business
Segment Results.
The comparative figures have been prepared on the same basis and are
therefore comparable.
6. Trade receivables financed by the Land Bank
The only security for the liability is the trade receivables and a cash
collateral deposit amounting to 10% of the liability. There is a
legally enforceable right to set-off and the intention and practice are
to settle the liability simultaneously as the asset is realised. The
Group bears the risk of losses on these debtors.
(R`millions) 31 December 31 December
2008 2007
Assets - Trade receivables 2 498 2 698
Liability - Land Bank 2 498 2 698
Trade receivables financed by other banks The opportunity to grow the
debtors financing business combined with the strategy to diversify
funding lines and generate capacity for further growth resulted in the
need for alternative financing structures. As a result, new facilities
were negotiated with other banks. The Group bears a 100% risk on these
facilities, but is in the process of restructuring the facilities to
reduce the cost of funding, the risk and the reliance on individual
lenders.
(R`millions) 31 December 31 December
2008 2007
Assets - Trade receivables 2 404 -
Liability - other banks 2 404 -
7. Agency agreements
The Group manages agri debtors on behalf of third party financial
institutions to the amount of R1 007 million (2007: R807 million).
Management fees are paid by these third parties. The Group is liable
for bad debts to a maximum of between 5% and 10% of the value of
debtors administered. The Group receives a fee for the handling,
grading, storing and administration of commodities on behalf of third
parties. The value of these commodities is R3 372 million (2007: R1 657
million).
8. Business combinations
On 25 September 2008 the Group acquired a 45% shareholding in LTP
Holdings Limited for nil consideration. LTP Holdings Limited is a
property holding company which leases a processing site to a pool of
farmers for the processing of tobacco. AFGRI manages this process. In
terms of IFRS the associate company`s underlying net assets, consisting
of property, plant and equipment, were fair valued and negative
goodwill of R29,6 million (after tax) identified. The fair value
includes a notional liability for an onerous lease contract over the
property. The gain has been recognised in the income statement under
the heading "Share of profit of associates".
9. Discontinued operations
The Seed operation has undergone a process of rationalisation with the
view to discontinuing and disposing of the underlying assets. The
comparative reclassification between continuing and discontinued
operations in the income statement and the Business Segment Results has
been made.
10. Subsequent events
Subsequent to 31 December 2008, Gro Capital Financial Services (Pty)
Limited, ("Gro Capital") a subsidiary of AFGRI Operations Limited
entered into a debtors` securitisation programme arranged by Co-
operatieve Centrale Raiffeinsen-Boerenleenbank B.A., trading as
Rabobank to the value of R2,5 billion. In terms of the structure of the
programme, Gro Capital will sell part of its debtors` book, at book
value, to a SPV company registered for the purposes of the programme.
More details regarding this programme were published on SENS on 19
February 2009.
11. Corporate governance and JSE Limited (JSE) compliance
The principles of good corporate governance, as described in the King
Code of Corporate Governance, were adhered to. The Group complied with
the JSE Listings Requirements regarding the contents of the condensed
consolidated interim financial results.
12. No interim review
These condensed consolidated interim financial results have not been
audited nor reviewed by the Group`s auditors. It is not a requirement
of the JSE Listings Requirements nor IAS 34 that interim results be
subject to an audit or limited review.
Commentary
The directors of AFGRI Limited ("AFGRI") present the unaudited condensed
consolidated interim financial results of the AFGRI group of companies ("the
Group") for the six months ended 31 December 2008. The consolidated interim
earnings attributable to equity holders reflect a 5,9% improvement over the same
period of the previous financial year.
AFGRI`s improved performance for the six months ended December 2008 has been
driven by a near record maize crop resulting in a generally improved farming
environment in the Group`s major operating areas of the Mpumalanga, North West
and Free State provinces. Despite smaller margins on the debtors` book and the
discontinuance of its Seed business, the Group achieved satisfactory results for
the interim period.
Operational Review (Revenue and profit before income tax)
AFGRI is pleased to announce a simplified segmental reporting format which
highlights the Group`s financial services operation and the Group`s agri related
businesses together for ease of understanding and reflects segmental results in
a format similar to the income statement. The segmental report will now
comprise:
- AFGRI Financial Services (comprising the Capital and Broking operating units);
- AFGRI Agri-Services (comprising Logistics and Producer Services divisions);
and
- AFGRI Foods (comprising the Animal Protein and Oil and Protein businesses).
Continuing operations
AFGRI Financial Services
Revenues for the Group`s financial services division (comprising the Capital and
Broking operating units) were restricted to a growth of 7,1% compared to the
comparative period ended 31 December 2007. This was underpinned by a 7,8% growth
in finance income. Financed debtors grew 33,8% to R4,9 billion during the six
months under review. This growth was restricted by the global banking crisis and
focused credit management. Finance costs for this division increased by 12,2%
compared to the six-month period ended 31 December 2007. The division has re-
priced its lending where possible but has not been able to pass on all of the
cost of funds increases. The division reported a 22,9% decline in its profit
before tax.
AFGRI Agri-Services
The grain storage, trading and logistics division (AFGRI Logistic Services) of
the Group has performed exceptionally well on the back of a large maize crop, an
improvement in the trading unit`s results and operational efficiencies within
the logistics operation. Revenue for this division increased by 77,0% on the
comparative six-month period. This growth in revenue translated into a 239,3%
growth in profit before tax for the division for the period under review.
The Group`s retail, John Deere dealership and direct farming inputs business
(AFGRI Producer Services) produced a pleasing performance driven by the
successful 2007/8 crop season. The division increased its market share for
farming mechanisation equipment to 44% during the period. For the six-months
under review, this division`s revenue increased 13,2% to R2,7 billion (2007:
R2,4 billion). Significantly improved margins in the retail operation have been
achieved on the back of increasing commodity prices. In addition, the division
acquired a 45% interest in an associate, LTP Holdings Limited, a property
holding company which provides facilities to a pool of farmers for the
processing of tobacco. The fair value of the company`s underlying net assets was
established in terms of IFRS and an after tax negative goodwill of R29,6 million
identified and is reflected under "Share of profit of associates" on the face of
the income statement. The after tax effect of this gain has also been added back
when determining the Group`s headline earnings. Excluding the impact of this
negative goodwill, this division reported a 134,1% growth in profit before tax
during the period under review.
AFGRI Foods
The AFGRI Foods division, representing the more industrial elements of the Group
and comprising the Animal Feeds, Daybreak Farms and Nedan oil business units
continued to perform above expectations but fell behind its prior year
performance due to increasing pressure on margins as prices of vegetable
proteins declined and an oversupply of poultry in the market as economic
conditions deteriorated. Lower volumes and sales prices resulted in only a 2,9%
growth in revenues for this division. Margin pressure, added to the lower
volumes resulted in a 21,8% reduction in pre-tax profits.
Discontinued operations
The Group`s Seed unit underwent a critical review of its strategy and operations
after several disappointing results. A proposal to impair the operating assets
to fair value and dispose of this business unit was agreed to by the board. The
Seed business reported pre-tax operating losses of R12,2 million (2007: Profit
of R2,9 million) and a further R46,0 million of impairments. These impairments
are included in operating profit from discontinued operations. The remaining
assets are reflected as assets held for sale. A sale transaction is expected to
be concluded in due course.
The remainder of the pre-tax losses from discontinued operations of R21,1
million represents losses realised from the discontinued Farming (R10,9
million); Snacks (R7,6 million); Citrifruit (R1,6 million) and Cotton (R1,0
million) business units.
Earnings and headline earnings
The very satisfying growth in the Group`s profit before tax from continuing
operations of 64,3% was tempered by the losses recorded from discontinued
operations and a significant increase in the average tax rate. The Group`s
average tax rate increased from 10,1% for the comparative period in 2007 to
28,7% for the period under review. A once off foreign deferred tax asset of R20
million raised in the prior year and an STC charge of R11 million in the current
year account for the majority of this year-on-year increase in the average tax
rate. The growth in AFGRI`s earnings attributable to ordinary shareholders grew
by 5,9% to R126 million.
The Group`s headline earnings per share reflect a growth of 11,3% to 43,5 cents.
After considering the current global economic climate and the Group`s results,
the directors have decided to continue with the Group`s policy of distributing
dividends representing 50% of earnings, and have declared a dividend of 19,7
cents per share.
Cash flow
With the exception of R8,1 million, the significant growth in the Group`s
financed debtors was funded by facilities raised for this specific purpose. The
reduction in cash and cash equivalents of R618 million has been applied to
capital expenditure (R209 million), cash collateral deposits to support growth
in the debtors` book (R148 million), and increases in working capital (R359
million). This utilisation of cash is expected during this peak period as
inventories and debtors increase during the growing season. Similarly, positive
cash flow would be expected during the second half of the Group`s financial
year. Subsequent to 31 December the Group entered into a debtors` securitisation
programme arranged by Rabobank to the value of R2,5 billion.
Change to the board of directors and Company Secretary
Mr C P Venter was appointed to the board of directors in the position of
Managing Director with effect from 1 October 2008.
Ms S L Reynolds resigned as Company Secretary on 30 November 2008. Mr PJP
Badenhorst was appointed to the position of Company Secretary with effect from 1
December 2008.
Prospects
The difficult global economic conditions have impacted on the Group`s lending
margins and restricted growth in its debtors` book. Efforts to limit the impact
of the deteriorating world economic environment continue and the Group`s
management is aggressively controlling working capital and has adopted an
extensive cost control programme. A slow down in the South African economy will
negatively impact the Foods division. The recent good rainfall suggests another
satisfactory maize harvest will once again fill the Group`s silos from May 2009
and, provided agri-commodity prices do not decline further, support the
agricultural sector of the local economy. The months leading up to the harvest
(March through May) have traditionally been the quieter months for agricultural
purchases and this is likely to be repeated this year. The sector in which it
operates, together with its diverse product offerings, ensures that AFGRI is
well positioned to meet the challenges posed by both the slowing local economy
and the global financial crisis.
By order of the Board
DD de Beer (Non-Executive Chairman) CP Venter (Managing Director)
3 March 2009
Declaration of interim dividend
Notice is hereby given that the directors of AFGRI have declared an
interim dividend of 19,70 cents per share for the period ended 31
December 2008. In accordance with settlement procedures of STRATE, the
following dates will apply to the interim dividend:
Last day to trade cum the dividend Friday, 15 May 2009
Trading ex dividend commences Monday, 18 May 2009
Record date Friday, 22 May 2009
Dividend payment date Monday, 25 May 2009
There will be no dematerialisation or rematerialisation of AFGRI shares between
Monday, 18 May 2009 and Friday, 22 May 2009, both dates inclusive.
By order of the Board
PJP Badenhorst, Group Company Secretary
Centurion
This announcement is available on sens and AFGRI`s website at:
www.afgri.co.za
Date: 04/03/2009 08:00:04 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
