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AFR
AFR
AFR - Afgri - Audited condensed consolidated financial results for the year
ended 30 June 2009 and cash dividend declaration
AFGRI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1995/004030/06)
ISIN number: ZAE000040549 Share code: AFR
Audited condensed consolidated financial results for the year ended 30 June
2009 and cash dividend declaration
- Good agricultural year leads to good results from AFGRI Agri Services
- Total pre-tax profit + 47%
- Continuing pre-tax profit + 33%
- Underperforming assets disposed of at a loss of R93 million
- Group profit + 18% to R354 million
- Cash generated of R227 million
Group income statement (R`millions)
Note Year 16 months
ended ended
30 June 30 June
Audited Audited
2009 2008
Continuing operations
Sales of goods and services 8 173 9 239
Interest on trade receivables 607 719
Total revenue 8 780 9 958
Cost of sales (6 328) (7 601)
Gross profit 2 452 2 357
Other operating income 119 132
Other operating expenses (1 331) (1 463)
Operating profit 1 240 1 026
Finance costs 3 (720) (610)
Share of profit of associates 33 -
Profit before income tax 553 416
Income tax expense (106) (32)
Profit for the period from continuing 447 384
operations
Discontinued operations
Loss for the period from discontinued (93) (85)
operations
Profit for the period 354 299
Profit for the period attributable to:
Equityholders of the Company 233 221
Minority interest - Agri Sizwe partners 110 74
- Other minorities 11 4
Profit for the period 354 299
Weighted average number of shares in 320,7 317,4
issue (`m)
Diluted weighted average number of 346,1 341,2
shares in issue (`m)
Earnings per share from continuing 93,8 89,2
operations (cents)
Loss per share from discontinued (21,1) (19,7)
operations (cents)
Earnings per share from all operations 72,7 69,5
(cents)
Diluted earnings per share from 86,9 82,9
continuing operations (cents)
Diluted loss per share from (19,6) (18,3)
discontinued operations (cents)
Diluted earnings per share from all 67,3 64,6
operations (cents)
Group statement of comprehensive income (R`millions)
Year
ended 16 months
30 June ended
Audited 30 June
2009 Audited
2008
Profit for the period 354 299
Other comprehensive income
Exchange differences on translating (51) 61
foreign operations
Cash flow hedges 10 -
Other comprehensive (loss)/income for the (41) 61
period, net of tax
Total comprehensive income for the period 313 360
Total comprehensive income attributable
to:
Equityholders of the Company 192 282
Minority interest - Agri Sizwe partners 110 74
- Other minorities 11 4
313 360
Group balance sheet (R`millions)
Note 30 June 30 June
Audited Audited
2009 2008
ASSETS
Non-current assets 2 121 1 804
Property, plant and equipment 2 1 346 1 175
Goodwill 2 38 45
Other intangible assets 2 237 220
Investments in associates 36 3
Available-for-sale financial assets 41 37
Financial receivables 266 165
Deferred income tax assets 157 159
Current assets 7 547 7 363
Inventories 1 023 1 102
Biological assets 53 61
Trade and other receivables 483 904
Trade receivables financed by banks 6 5 015 3 663
Derivative financial instruments 108 274
Current income tax assets 21 65
Cash and cash equivalents and cash 844 1 294
collateral deposits
Cash collateral deposits 597 554
Cash and cash equivalents 247 740
Assets of disposal groups classified as 157 7
held-for-sale
Total assets 9 825 9 174
EQUITY
Capital and reserves attributable to 1 487 1 379
equityholders
Share capital - -
Treasury shares (90) (155)
Incentive trust shares (192) (124)
Fair value and other reserves 47 80
Retained earnings 1 722 1 578
Minority interests 646 612
Total equity 2 133 1 991
LIABILITIES
Non-current liabilities 329 322
Borrowings 128 129
Deferred income tax liabilities 201 193
Current liabilities 7 318 6 861
Trade and other payables 1 797 2 015
Derivative financial instruments 89 75
Current income tax liabilities 6 10
Short-term borrowings 59 15
Call loans and bank overdrafts 363 1 083
Bank borrowings to finance trade 6 5 004 3 663
receivables
Liabilities of disposal groups classified 45 -
as held-for-sale
Total liabilities 7 692 7 183
Total equity and liabilities 9 825 9 174
Net asset value per share attributable to 430 404
equityholders (cents)
Group cash flow statement (R`millions)
Year 16 months
ended ended
30 June 30 June
Audited Audited
2009 2008
Operating activities
Net profit before tax 492 340
Changes in working capital 535 (477)
Other non cash flow items (99) 1
Tax paid (53) (7)
Net cash generated by/(utilised in) 875 (143)
operating activities
Net cash utilised in investing (454) (425)
activities
Net cash (utilised in)/generated from (194) 366
financing activities
Net increase/(decrease) in cash and 227 (202)
cash equivalents
Cash and cash equivalents at the (343) (141)
beginning of year
Cash and cash equivalents at the end of (116) (343)
the period
Cash collateral deposits 597 554
Cash and cash equivalents and cash 481 211
collateral deposits
Group statement of changes in equity (R`millions)
Share Fair Retained Treasury
capital value earnings shares
and
other
reserves
Balance 28 February 2007 - 10 1 527 (155)
(audited)
Total comprehensive income - 61 221 -
Disposal of incentive shares - - - -
Dividends paid - - (170) -
Payment to minorities - - - -
Share-based payments - 9 - -
Balance 30 June 2008 (audited) - 80 1 578 (155)
Total comprehensive income - (41) 233 -
Payment to minorities - - - -
Share-based payments - 8 - -
Dividends paid - - (89) -
Transfer of Group shares - - - 65
Purchase of incentive shares - - - -
Balance 30 June 2009 (audited) - 47 1 722 (90)
Group statement of changes in equity (R`millions)
Incentive Agri Other Total
trust Sizwe minor-
share partners ities
Balance 28 February 2007 (151) 564 25 1 820
(audited)
Total comprehensive income - 74 4 360
Disposal of incentive shares 27 - - 27
Dividends paid - - - (170)
Payment to minorities - (44) (11) (55)
Share-based payments - - - 9
Balance 30 June 2008 (audited) (124) 594 18 1 991
Total comprehensive income - 110 11 313
Payment to minorities - (85) (2) (87)
Share-based payments - - - 8
Dividends paid - - - (89)
Transfer of Group shares (65) - - -
Purchase of incentive shares (3) - - (3)
Balance 30 June 2009 (audited) (192) 619 27 2 133
Declaration of final cash dividend
Notice is hereby given that the directors of AFGRI have declared a
final cash dividend of 16,70 cents per share for the year ended 30
June 2009. In accordance with settlement procedures of STRATE, the
following dates will apply to the final dividend:
Last day to trade cum the dividend Friday, 13 November 2009
Trading ex dividend commences Monday, 16 November 2009
Record date Friday, 20 November 2009
Dividend payment date Monday, 23 November 2009
There will be no dematerialisation or rematerialisation of AFGRI
shares between Monday, 16 November 2009 and Friday, 20 November 2009,
both dates inclusive.
By order of the Board
N van Wyk (Group Company Secretary)
Centurion
Audited business segment results (R`millions)
year ended 30 June 2009 and 16 months ended 30 June 2008
AFGRI Financial Services
Capital Broking
2009 2008 2009 2008
Revenue 878 1 135 9 54
- sale of goods and 271 416 9 54
services
- interest on trade 607 719 - -
receivables
Operating profit/(loss) 486 518 6 24
(before the items below)
- other operating income 84 97 - -
- pension fund surplus - - - -
- depreciation and (12) (5) - -
amortisation
- allocation of Corporate (33) (18) (5) -
costs
Operating profit/(loss) 525 592 1 24
Other items of profit and - - - -
loss
- fair value adjustment to - - - -
disposal group assets
- share of profit/(loss) of - - - -
associates
Profit/(loss) before 525 592 1 24
finance costs
Finance costs (534) (551) - -
Profit/(loss) before income (9) 41 1 24
tax
Income tax
Profit after tax
Assets 5 333 4 915 1 1
Non-current assets 328 199 - -
Other current assets 91 334 - -
Trade and other receivables 4 338 3 430 - -
Cash and cash equivalents 576 952 1 1
Liabilities 4 628 4 365 - (17)
Non-current liabilities 114 116 - -
Other current liabilities 400 581 - (17)
Borrowings to finance trade 4 114 3 663 - -
receivables
Call loans and overdrafts - 5 - -
Capital expenditure 168 19 - -
Audited business segment results (R`millions)
year ended 30 June 2009 and 16 months ended 30 June 2008
AFGRI Agri Services
Producer Services Logistic Services
Primary Retail Logistics Trading
inputs
2009 2008 2009 2008 2009 2008 2009 2008
Revenue 1 235 1 634 3 131 3 457 431 343 157 130
- sale of goods 1 235 1 634 3 131 3 457 431 343 157 130
and services
- interest on - - - - - - - -
trade receivables
Operating 75 61 198 91 207 118 28 14
profit/(loss)
(before the items
below)
- other operating - - - - - - - -
income
- pension fund - - - - - - - -
surplus
- depreciation (5) (7) (17) (20) (15) (11) - -
and amortisation
- allocation of (9) (12) (24) (27) (32) (31) (9) (9)
Corporate costs
Operating 61 42 157 44 160 76 19 5
profit/(loss)
Other items of - - 32 - 1 - - -
profit and loss
- fair value - - - - - - - -
adjustment to
disposal group
assets
- share of - - 32 - 1 - - -
profit/(loss) of
associates
Profit/(loss) 61 42 189 44 161 76 19 5
before finance
costs
Finance costs (24) 1 (51) (18) (23) (2) (4) (1)
Profit/(loss) 37 43 138 26 138 74 15 4
before income tax
Income tax
Profit after tax
Assets 255 364 1 557 1 194 390 355 796 720
Non-current 57 99 285 295 322 305 39 57
assets
Other current 123 166 945 767 9 8 172 300
assets
Trade and other 59 88 304 72 59 42 527 298
receivables
Cash and cash 16 11 23 60 - - 58 65
equivalents
Liabilities 146 226 890 663 54 52 487 1 997
Non-current 4 4 5 5 - - - 1
liabilities
Other current 142 222 885 658 54 52 487 1 996
liabilities
Borrowings to - - - - - - - -
finance trade
receivables
Call loans and - - - - - - - -
overdrafts
Capital 14 36 38 73 26 42 3 2
expenditure
Audited business segment results (R`millions)
year ended 30 June 2009 and 16 months ended 30 June 2008
AFGRI foods and other
Foods Other
Animal Oil and Corporate Group
protein protein eliminations
2009 2008 2009 2008 2009 2008 2009 2008
Revenue 2 582 3 252 501 664 3 3 (147) (714)
- sale of goods 2 582 3 252 501 664 3 3 (147) (714)
and services
- interest on - - - - - - - -
trade
receivables
Operating 278 234 30 45 (130) (98) - -
profit/(loss)
(before the
items below)
- other - - - - 35 35 - -
operating
income
- pension fund - - - - 59 - - -
surplus
- depreciation (51) (54) (6) (11) (10) (5) - -
and
amortisation
- allocation of (22) (15) (9) (11) 143 123 - -
Corporate costs
Operating 205 165 15 23 97 55 - -
profit/(loss)
Other items of - - - - - - - -
profit and loss
- fair value - - - - - - - -
adjustment to
disposal group
assets
- share of - - - - - - - -
profit/(loss)
of associates
Profit/(loss) 205 165 15 23 97 55 - -
before finance
costs
Finance costs (51) (14) (1) 2 (32) (27) - -
Profit/(loss) 154 151 14 25 65 28 - -
before income
tax
Income tax
Profit after
tax
Assets 1 430 1 130 253 359 549 552 (739) (416)
Non-current 812 617 104 138 174 101 - -
assets
Other current 264 202 67 81 104 61 (413) (416)
assets
Trade and other 347 288 78 117 112 232 (326) -
receivables
Cash and cash 7 23 4 23 159 158 - -
equivalents
Liabilities 662 616 122 146 1 402 1 189 (699) (2 054)
Non-current 141 109 9 13 56 74 - -
liabilities
Other current 521 507 113 133 93 37 (699) (2 054)
liabilities
Borrowings to - - - - 890 - - -
finance trade
receivables
Call loans and - - - - 363 1 078 - -
overdrafts
Capital 212 190 4 18 10 19 - -
expenditure
Audited business segment results (R`millions)
year ended 30 June 2009 and 16 months ended 30 June 2008
Total
Continuing Discontinued All operations
operations operations
2009 2008 2009 2008 2009 2008
Revenue 8 780 9 958 484 732 9 264 10 690
- sale of goods and services 8 173 9 239 484 732 8 657 9 971
- interest on trade 607 719 - - 607 719
receivables
Operating profit/(loss) 1 178 1 007 (21) (42) 1 157 965
(before the items below)
- other operating income 119 132 - - 119 132
- pension fund surplus 59 - - - 59 -
- depreciation and (116) (113) (2) (5) (118) (118)
amortisation
- allocation of Corporate - - - - - -
costs
Operating profit/(loss) 1 240 1 026 (23) (47) 1 217 979
Other items of profit and 33 - (47) (13) (14) (13)
loss
- fair value adjustment to - - (46) (10) (46) (10)
disposal group assets
- share of profit/(loss) of 33 - (1) (3) 32 (3)
associates
Profit/(loss) before finance 1 273 1 026 (70) (60) 1 203 966
costs
Finance costs (720) (610) (30) (48) (750) (658)
Profit/(loss) before income 553 416 (100) (108) 453 308
tax
Income tax (106) (32) 7 23 (99) (9)
Profit after tax 447 384 (93) (85) 354 299
Assets 9 825 9 174
Non-current assets 2 121 1 811
Other current assets 1 362 1 503
Trade and other receivables 5 498 4 567
Cash and cash equivalents 844 1 293
Liabilities 7 692 7 183
Non-current liabilities 329 322
Other current liabilities 1 996 2 115
Borrowings to finance trade 5 004 3 663
receivables
Call loans and overdrafts 363 1 083
Capital expenditure 475 399
Unaudited business segment results (R`millions)
12 months ended 30 June 2009 and 12 months ended 30 June 2008
AFGRI Financial Services
Capital Broking
2009 2008 2009 2008
Revenue 878 928 9 42
- sale of goods and services 271 333 9 42
- interest on trade receivables 607 595 - -
Operating profit/(loss) 486 416 6 16
(before the items below)
- other operating income 84 74 - -
- pension fund surplus - - - -
- depreciation and amortisation (12) (4) - -
- allocation of Corporate costs (33) (12) (5) -
Operating profit/(loss) 525 474 1 16
Other items of profit and loss - 3 - -
- fair value adjustment to disposal group - - - -
assets
- share of profit/(loss) of associates - 3 - -
Profit/(loss) before finance costs 525 477 1 16
Finance costs (534) (435) - -
Profit/(loss) before income tax (9) 42 1 16
Income tax
Profit after tax
Assets 5 333 4 915 1 1
Non-current assets 328 199 - -
Other current assets 91 334 - -
Trade and other receivables 4 338 3 430 - -
Cash and cash equivalents 576 952 1 1
Liabilities 4 628 4 365 - (17)
Non-current liabilities 114 116 - -
Other current liabilities 400 581 - (17)
Borrowings to finance trade receivables 4 114 3 663 - -
Call loans and overdrafts - 5 - -
Capital expenditure 168 10 - -
AFGRI Financial Services
contains the Group`s lending
operation (Capital) and
commodity broking activities.
Included in the Capital
operating unit is the Group`s
Treasury function and its
Insurance Broking service unit.
Unaudited business segment results (R`millions)
12 months ended 30 June 2009 and 12 months ended 30 June 2008
AFGRI Agri Services
Producer Services Logistic Services
Primary Retail Logistics Trading
inputs
2009 2008 2009 2008 2009 2008 2009 2008
Revenue 1 235 1 400 3 131 2 816 431 272 157 93
- sale of goods 1 235 1 400 3 131 2 816 431 272 157 93
and services
- interest on - - - - - - - -
trade
receivables
Operating 75 66 198 75 207 104 28 34
profit/(loss)
(before the
items below)
- other - - - - - - - -
operating income
- pension fund - - - - - - - -
surplus
- depreciation (5) (6) (17) (12) (15) (8) -
and amortisation
- allocation of (9) (8) (24) (18) (32) (21) (9) (5)
Corporate costs
Operating 61 52 157 45 160 75 19 29
profit/(loss)
Other items of - - 32 - 1 - - -
profit and loss
- fair value - - - - - - - -
adjustment to
disposal group
assets
- share of - - 32 - 1 - - -
profit/(loss) of
associates
Profit/(loss) 61 52 189 45 161 75 19 29
before finance
costs
Finance costs (24) (3) (51) (13) (23) - (4) (4)
Profit/(loss) 37 49 138 32 138 75 15 25
before income
tax
Income tax
Profit after tax
Assets 255 364 1 557 1 194 390 355 796 720
Non-current 57 99 285 295 322 305 39 57
assets
Other current 123 166 945 767 9 8 172 300
assets
Trade and other 59 88 304 72 59 42 527 298
receivables
Cash and cash 16 11 23 60 - - 58 65
equivalents
Liabilities 146 226 890 663 54 52 487 1 997
Non-current 4 4 5 5 - - - 1
liabilities
Other current 142 222 885 658 54 52 487 1 996
liabilities
Borrowings to - - - - - - - -
finance trade
receivables
Call loans and - - - - - - - -
overdrafts
Capital 14 32 38 47 26 35 3 2
expenditure
AFGRI Producer Services AFGRI Logistic Services
consist of two operating includes both the Handling and
units: Primary Inputs and Storage and Logistic Services
Retail. The Retail unit divisions. The Trading
includes Farm City stores operation matches physical
and Australia. Together supply and demand of grain
AFGRI Logistics Services commodities in a fully hedged
and AFGRI Producer environment.
Services represent AFGRI
Agri Services.
Unaudited business segment results (R`millions)
12 months ended 30 June 2009 and 12 months ended 30 June 2008
AFGRI foods and other
Foods Other
Animal Oil and Corporate Group
protein protein eliminations
2009 2008 2009 2008 2009 2008 2009 2008
Revenue 2 582 2 566 501 519 3 2 (147) (585)
- sale of goods 2 582 2 566 501 519 3 2 (147) (585)
and services
- interest on - - - - - - - -
trade
receivables
Operating 278 191 30 40 (130) (65) - -
profit/(loss)
(before the
items below)
- other - - - - 35 25 - -
operating
income
- pension fund - - - - 59 - - -
surplus
- depreciation (51) (42) (6) (8) (10) (4) - -
and
amortisation
- allocation of (22) (15) (9) (8) 143 87 - -
Corporate costs
Operating 205 134 15 24 97 43 - -
profit/(loss)
Other items of - - - - - - - -
profit and loss
- fair value - - - - - - - -
adjustment to
disposal group
assets
- share of - - - - - - - -
profit/(loss)
of associates
Profit/(loss) 205 134 15 24 97 43 - -
before finance
costs
Finance costs (51) (15) (1) 3 (32) (21) - -
Profit/(loss) 154 119 14 27 65 22 - -
before income
tax
Income tax
Profit after
tax
Assets 1 430 1 130 253 359 549 552 (739) (416)
Non-current 812 617 104 138 174 101 - -
assets
Other current 264 202 67 81 104 61 (413) (416)
assets
Trade and other 347 288 78 117 112 232 (326) -
receivables
Cash and cash 7 23 4 23 159 158 - -
equivalents
Liabilities 662 616 122 146 1 402 1 189 (699) (2 054)
Non-current 141 109 9 13 56 74 - -
liabilities
Other current 521 507 113 133 93 37 (699) (2 054)
liabilities
Borrowings to - - - - 890 - - -
finance trade
receivables
Call loans and - - - - 363 1 078 - -
overdrafts
Capital 212 160 4 16 10 14 - -
expenditure
AFGRI Foods includes Animal The Corporate office houses
Protein, consisting of the certain of the Group`s
Animal Feed and Daybreak financing structures, CSI,
Farms operating units. The compliance and internal audit
Oil and Protein division functions, treasury and
produces vegetable oil for incentive shares, and
human consumption and incubates new projects.
associated by-products. Corporate costs are allocated
to the divisions where
appropriate.
Unaudited business segment results (R`millions)
12 months ended 30 June 2009 and 12 months ended 30 June 2008
Totals
Continuing Discontinued All operations
operations operations
2009 2008 2009 2008 2009 2008
Revenue 8 780 8 053 484 606 9 264 8 659
- sale of goods and 8 173 7 458 484 606 8 657 8 064
services
- interest on trade 607 595 - - 607 595
receivables
Operating 1 178 877 (21) (21) 1 157 856
profit/(loss)
(before the items
below)
- other operating 119 99 - - 119 99
income
- pension fund 59 - - - 59 -
surplus
- depreciation and (116) (84) (2) (4) (118) (88)
amortisation
- allocation of - - - - - -
Corporate costs
Operating 1 240 892 (23) (25) 1 217 867
profit/(loss)
Other items of 33 3 (47) (13) (14) (10)
profit and loss
- fair value - - (46) (10) (46) (10)
adjustment to
disposal group
assets
- share of 33 3 (1) (3) 32 -
profit/(loss) of
associates
Profit/(loss) 1 273 895 (70) (38) 1 203 857
before finance
costs
Finance costs (720) (488) (30) (51) (750) (539)
Profit/(loss) 553 407 (100) (89) 453 318
before income tax
Income tax (106) (25) 7 18 (99) (7)
Profit after tax 447 382 (93) (71) 354 311
Assets 9 825 9 174
Non-current assets 2 121 1 811
Other current 1 362 1 503
assets
Trade and other 5 498 4 567
receivables
Cash and cash 844 1 293
equivalents
Liabilities 7 692 7 183
Non-current 329 322
liabilities
Other current 1 996 2 115
liabilities
Borrowings to 5 004 3 663
finance trade
receivables
Call loans and 363 1 083
overdrafts
Capital expenditure 475 316
Notes to the condensed consolidated annual financial statements
1. Basis of preparation and accounting policies
These condensed consolidated annual financial statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") IAS 34 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 Listings Requirements of the JSE Limited ("JSE") and the
South African Companies Act, (Act 61 of 1973) as amended, on a basis
consistent with that of the corresponding prior period except for the
early adoption of IAS 1 (Revised) and IFRS 8, neither of which have
an impact on the results but provide additional disclosure in the
annual financial statements.
2. Property, plant and equipment, other intangible assets and goodwill
(R`millions)
Property, plant Other intangible
and equipment assets and
goodwill
Year 16 Year 16 months
ended months ended ended
30 June ended 30 June 30 June
2009 30 June 2009 2008
2008
Carrying value beginning of 1 175 1 018 265 171
period
Additions 384 296 91 103
Disposals at book value (72) (61) - 2
Foreign currency differences (9) 15 (3) 4
Depreciation/amortisation (86) (89) (32) (29)
Purchase of subsidiaries - 12 - 14
Net sale of subsidiary (39) (6) (23) -
(including assets held for sale)
Impairment (7) (10) (23) -
Carrying value end of period 1 346 1 175 275 265
3. Finance costs (R`millions)
Year 16 months
ended ended
30 June 30 June
2009 2008
Interest paid on bank borrowings used to finance (554) (484)
trade receivables
Other interest paid to financial institutions (166) (126)
Finance cost - Continuing operations (per income (720) (610)
statement)
Finance cost - Discontinued operations (30) (48)
Finance cost - Total (750) (658)
4. Reconciliation of headline earnings per share
(cents)
Year 16 months
ended ended
30 June 30 June
2009 2008
Earnings 72,7 69,5
Loss from discontinued operations 9,0 3,2
Impairment of assets 2,7 2,2
Negative goodwill on acquisition of share of (7,2) (0,1)
associate
Loss of the sale of business 3,9 -
Profit on disposal of assets (6,7) (1,1)
Headline earnings 74,4 73,7
Diluted headline earnings 68,9 68,5
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 Agri Sizwe) share of profits. Profits or losses
before income tax are shown after a charge for internal interest
based on each operating unit`s net assets throughout the period.
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 with the exception of the differing reporting
period (12 months in 2009 vs 16 months in 2008). Refer to note 15 for
more information.
6. Trade receivables financed by banks and related liability
The only security for the liability is the trade receivables
themselves, and in certain cases, additional cash collateral deposits
or cash trade receivables of between 10% and 15% of the facility. The
Group carries the risk of loss on these trade receivables.
7. Agency agreements
The Group manages agri debtors on behalf of third party financial
institutions to the amount of R1 007 million (2008: R938 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 466 million (2008: R4 440 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.
In terms of IFRS the associate company`s underlying assets,
consisting of property, plant and equipment, were fair valued and
negative goodwill of R30 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 underwent 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 Business Segment Results has
been made. A sale agreement was finalised and approval of the
competition authorities received subsequent to year-end. This sale
agreement would have had no effect on the results reported herein.
During 2008 a total of four operations were sold or discontinued.
Losses from the finalisation of these sales or closures are also
included in the current year`s loss from discontinued operations.
10. Subsequent event
Subsequent to the year-end the Group disposed of 11 of its retail
stores in the Lowveld region. At 30 June 2009 these assets were
identified as a disposal group and included under assets held-for-
sale and their results included under discontinued operations. These
assets contributed R408 million (2008: R560 million) to the Group`s
revenue and R4 million (2008: Loss of R2 million) to the Group`s
profit before tax. A profit of approximately R9 million will be
realised on the disposal.
More details regarding this transaction were published on SENS on 22
July 2009.
11. Going concern
The Board of Directors is satisfied that, after taking into account
the current banking facilities, its utilisation thereof and the
budgeted profit and cash flows for the year ending 30 June 2010, the
working capital available to AFGRI will be sufficient to meet its
requirements for the next 12 months.
12. Contingent liability
In the prior year the Company and SARS were in disagreement over the
treatment of certain trading losses which could result in an income
tax liability. During the current year this dispute was resolved in
AFGRI`s favour and a refund of provisional tax was received.
13. Corporate governance and JSE compliance
The principles of good corporate governance were adhered to. The
Group complies with the JSE Listings Requirements regarding the
contents of the condensed consolidated annual financial statements.
14. Audit opinion
These condensed consolidated financial results have been audited by
our auditors, PricewaterhouseCoopers Inc., who have performed their
audit in accordance with the International Standards on Auditing. A
copy of their unqualified audit report is available for inspection at
the registered office of the Company.
15. Supplementary unaudited business segment results
The change in the Group`s year-end from 28 February to 30 June during
the 2008 financial period necessitated the restatement of the
internally used management accounts in order to draw comparisons
between the 16-month and 12-month periods. As such, and in line with
the adoption of a new Business Segment Results format, comparative
figures have been prepared and are presented here to assist the users
of this financial information draw comparisons. The comparative
information provided for the 12-month period to 30 June 2008 has not
been audited.
Management also intend to publish the results presentation provided
to the investment community during the results road show on the
Group`s website at www.afgri.co.za.
Commentary
The directors of AFGRI Limited ("AFGRI" or "the Company") are pleased to
present the audited condensed consolidated financial results of the AFGRI
group of companies ("the Group") for the year ended 30 June 2009. The
consolidated earnings attributable to equityholders reflect a 5%
improvement over the 16 months of the previous financial period.
In a very difficult year for the financial services segment of the Group
and an extensive "clean out" of underperforming assets (after-tax loss of
R93 million), AFGRI`s improved performance for the year ended 30 June 2009
was underpinned by strong performances from its traditional agri-services
activities resulting from a near record maize crop, a generally improved
farming environment and improved operational efficiencies. Continued
contributions from the Food segment and certain once-off gains (after-tax
profit of R72 million) allowed the Group to post an 18% improvement in
profits over those of the comparative
16-month prior period.
Operational review (revenue and profit before income tax)
A new business segment format was presented for the first time with the
interim results released in March 2009 and the Group has early adopted IFRS
8 - Operating Segments. The Group`s management reviews financial
information based on a 12-month comparable prior period using management
information prepared on a basis consistent with the annual financial
statements. With the approval of the JSE, two business segment statements
are presented herein: one reflecting the 16 months audited comparatives;
the other providing unaudited 12-month comparative information. Comments
and comparisons appearing in the following operational review are based on
the unaudited 12-month segment comparative figures:
Continuing operations
AFGRI Financial Services
In a period of decreasing interest rates, interest revenue for the Group`s
financial services division (comprising the Capital and Broking operating
units) increased by 2% due to a larger average debtors book. The worldwide
liquidity crisis during the last quarter of 2008 resulted in the re-pricing
of AFGRI`s underlying facilities. It was not possible to pass on all of
this re-pricing to the Group`s customers, resulting in a reduction in the
net interest margin. Despite the difficult economic environment the strong
South African agricultural sector has meant that the quality of the Group`s
debtors book remains exceptional with bad debt write-offs limited to 0,3%
in the current year. The division`s bad debt impairment allowance has been
increased by R25 million to R124 million.
This segment reported a loss before tax for the year of R8 million compared
to a profit for the prior 12-month period of R58 million. Whilst
profitability was affected by the "credit crunch" the management of
liquidity during this difficult period is commendable, including the
implementation of the R2,5 billion Rabo Bank securitisation.
AFGRI Agri Services
Included within AFGRI Agri Services are the Group`s two main agri-services
segments: AFGRI Producer Services and AFGRI Logistic Services.
The Group`s retail, John Deere dealership and direct farming inputs
business (AFGRI Producer Services) produced an excellent performance driven
by the successful 2007/8 crop season and the large area planted for the
2008/9 crop. Although the retail division closed 22 stores in the prior
year as part of a rationalisation programme, turnover for the segment
increased by some 4% during the period. The division increased its market
share for farming mechanisation equipment during the period. Only the more
urban located Farm City stores suffered from the difficult retail
conditions. Significantly improved margins in the retail operation and the
benefits of the prior year rationalisation resulted in this division
reporting a pre-tax profit of R175 million, a 118% improvement. Included in
this result is a gain arising from the Group`s acquisition of a 45%
interest in an associate, (for nil consideration), 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
assets was established in terms of IFRS and an after-tax negative goodwill
of R30 million identified which is reflected under "Share of profit of
associates" on the face of the income statement. The after-tax effect of
this gain has been excluded when determining the Group`s headline earnings.
Excluding the impact of this negative goodwill, this segment reported an
81% growth in profit before tax.
The grain storage, trading and logistic services segment (AFGRI Logistic
Services) of the Group performed exceptionally well on the back of a second
year of a large maize crop and operational efficiencies within the
logistics operation. Revenue for the Handling and Storage and Logistic
divisions increased by 58% on the comparative 12-month period. This growth
in revenue translated into an 84% growth in profit before tax for the
division to R138 million (2008: R75 million). The Trading division
performed satisfactorily, increasing the total volumes handled by some 124%
and managing approximately 10% of South Africa`s maize exports during the
period. A mark-to-market gain of R31 million, reported in the prior year
under IFRS rules resulted in the Trading division reporting an overall
decline in profitability of 40% to R15 million (2008: R25 million).
AFGRI Foods
The AFGRI Foods division, representing the more industrial elements of the
Group and comprising the Animal Feeds, Daybreak Farms and Nedan business
units continued to perform above expectations. Revenue remained constant in
this division despite a 3% reduction in Animal Feed volumes. The
maintenance of margins and cost control within the Animal Feeds division
resulted in a 21% increase in this division`s pre-tax profit. The Daybreak
Farms operation has been returned to profitability after
a difficult 2008 and this is expected to continue now that its processing
facility has been matched to its production capacity of 650 000 birds per
week. The collapse of soft oil prices during the latter part of 2008 and a
softening in the retail environment resulted in pressure on the margins of
the Nedan operation.
Overall, this segment reported a profit before tax of R168 million (2008:
R146 million), an increase of 15%.
Discontinued operations
The Group`s Seed unit underwent a critical review of its strategy and
operations after several years of 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 post-tax losses of
R61 million (2008: R12 million), and its assets are reflected as assets
held-for-sale. A sale transaction was finalised subsequent to year-end.
The remainder of the post-tax losses from discontinued operations of R32
million represents final losses realised from the discontinued Farming (R18
million); Snacks (R12 million); Citrifruit (R1 million); Deposita (R1
million) and Cotton (R2 million) business units. A post-tax profit of R4
million, being the profit associated with the Lowveld retail stores
disposed of subsequent to year-end is also reflected as a discontinued
operation.
Earnings and headline earnings
Comments and comparisons below are based on the audited financial
statements, using the 16-month audited comparative information.
Profit before tax from continuing operations increased by 33% (R137
million) based on the results reported for the previous 16 months. The
increase in profit from continuing operations includes certain unexpected
once-off gains including the negative goodwill arising on the acquisition
of the share of the tobacco associate and a R59 million gain arising from
the apportionment of the Group`s Pension Fund surplus. Ignoring these once-
off gains, the Group reported a 12% increase in pre-tax profits from
continuing operations for the year when compared to the prior of 16-months
period.
This improved performance did not fully flow through to profit after-tax
due to a 167% increase in the average tax rate. A current year STC charge
of R13 million and the advantage of raising of a R23 million deferred tax
asset in the previous year were the main reasons for the increase in the
tax charge.
Despite the much higher tax charge, and absorbing R93 million in after-tax
losses from discontinued operations the Group`s overall profit for the year
increased by 18% to R354 million.
AFGRI`s earnings attributable to ordinary shareholders grew by 5% to R233
million. The Group achieved earnings per share of 72,7 cents (2008: 69,5
cents).
Cash flow
The 37% (R1,35 billion) significant growth in the Group`s financed debtors
was funded by facilities raised for this specific purpose. The cash
generated from operating activities of R875 million has been applied to
capital expenditure (R475 million), cash collateral deposits to support
growth in the debtors` book (R43 million), distributions to shareholders
and the Agri Sizwe partners (R176 million) and an overall increase in cash
and cash equivalent balances of R227 million.
Changes to the board of directors and Company secretary
Mr JA van der Schyff was appointed as the Group Financial Director on 15
September 2008. Mr CP Venter was appointed to the board of directors in the
position of Chief Executive Officer with effect from 1 October 2008. Ms SL
Reynolds resigned as Company Secretary on 30 November 2008. Mr PJP
Badenhorst acted as interim Company Secretary from 1 December 2008 to 3
March 2009 whereafter Ms N van Wyk was appointed.
Prospects
The difficult global economic conditions have impacted on the Group`s
lending margins and limited the planned growth in its debtors` book. This
has been countered by a strong agricultural year in South Africa. The
Group`s management continues to aggressively control working capital and
cash flows, and has adopted an extensive cost control programme. A Group
strategy review has resulted in a clearer focus and the discontinuance of
underperforming business units has now come to an end. The Financial
Services division has seen off the worst of the "credit crunch" and, with
lessons learnt, emerged a more focused business than before. A further
deterioration in the South African economy may impact the Foods division.
The recently lower grain prices may result in a reduction in the area to be
planted for the summer season, impacting upon the Producer Services
division. The current year`s large crop will support the Logistic
division`s results through the forthcoming financial year.
By order of the Board
DD de Beer (Non-Executive Chairman) CP Venter (Chief Executive
Officer)
1 September 2009
Administration:
Business address and registered office: 1st Floor AFGRI Building, 267 West
Street, Centurion, Fax (012) 643 1768, Tel (012) 643 8000
Company Secretary: Ms N van Wyk, PO Box 11054, Centurion 0046
Bankers: ABSA Bank Limited, Co-?peratieve Centrale Raiffeisen-
Boerenleenbank B.A. trading as Rabo Bank, FirstRand Bank Limited, Hong
Kong and Shanghai Banking Corporation, Investec Bank Limited, Land and
Agricultural Development Bank of SA Limited, Nedcor Limited, Standard Bank
of SA Limited, Standard Chartered Bank
Auditors: PricewaterhouseCoopers Inc., 32 Ida Street, Menlo Park, 0102
Transfer secretaries: Computershare Investor Services (Proprietary)
Limited, 70 Marshall Street, Johannesburg, 2001, PO Box 61051,
Marshalltown, 2107, Tel (011) 370 5000
Sponsor: RAND MERCHANT BANK (a division of FirstRand Bank Limited),
1 Merchant Place, Cnr Fredman Drive & Rivonia Road, Sandton, 2196,
PO Box 786273, Sandton, 2146
Directorate: Non-executive: DD de Beer (Chairman); CA Apsey; JJ Claassen
(Joint Vice-Chairman); JJ Ferreira; JPR Mbau (Joint Vice-Chairman);
MM Moloele; KL Thoka; FJ van der Merwe
Executive: CP Venter (Chief Executive Officer), JA van der Schyff
(Financial Director), MI Mogari (Dr) (Corporate Affairs and New Business
Director)
This announcement is available on Sens and Afgri`s website at:
www.afgri.co.za
Date: 02/09/2009 07:05:22 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.
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