| Tue 29 Oct 2002, 16:11 | | Afgri - Unaudited Interim Results For The Six Mon |
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Afgri - Unaudited interim results for the six months ended 31 August 2002
AFGRI Limited
(formerly OTK Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1995/004030/06)
ISIN number:ZAE000040549 Share code: AFR
Group at a glance
AFGRI is a leading South African agricultural services business offering a wide
range of physical and intellectual inputs to farmers, processors and users of
agricultural products. During the period under review the name of the company
was changed from OTK Holdings Limited to AFGRI Limited. The reasons for this new
corporate identity are to reflect AFGRI`s transformation from a regional
agricultural co-operative to a world-class agricultural services business and to
affirm the group`s expanding geographic role. The business of the group is
structured around the following pillars:
AFGRI PRODUCTS
AFGRI Products bridges the value chain between the producers and processors of
agricultural commodities. It manages the grading, handling, storage, trading and
hedging of agricultural products through its logistics, trading and risk
management businesses.
AFGRI REQUISITES
AFGRI Requisites markets an extensive range of products and services, including
heavy and light duty agricultural equipment, spares and workshop services
through its 59 retail outlets which
are supported by an infrastructure of Key Account Managers.
AFGRI CAPITAL
AFGRI Capital provides financial and risk management solutions to farmers,
traders and agricultural processors. An effective service infrastructure has
been established where strategically positioned service offices can timeously
assess customer credit ratings.
AFGRI SERVICES
AFGRI Services forms a vital bond with the farming community, providing leading-
edge technology and agricultural science to the community which includes
agronomic, horticultural, biotechnology, animal production and business
solutions.
Management has initiated the necessary changes to align AFGRI`s business to the
challenges facing agriculture in South Africa today. AFGRI is now in the
position to exploit its full potential in the agricultural service industry.
Revenue up by 38,1%
The growth was mainly achieved through increases in the market shares of AFGRI
Products (particularly Animal Feeds) and AFGRI Requisites. The Animal Feeds
growth in revenue was influenced by the substantial increases in commodity
prices compared to the previous period. AFGRI Requisites achieved its growth
through its expansion into new areas and the upgrading of its stores and
services. AFGRI`s customer base was leveraged both by AFGRI Requisites and AFGRI
Capital to increase revenue. The Board anticipates that the current level of
revenue growth can be maintained for the remainder of the financial year.
Headline earnings per share up 20,1%
The growth in earnings was achieved in AFGRI Products through the increased
utilisation of storage facilities as a result of a good maize crop, increased
volumes in Grain and Safex trading on behalf of third parties and increased
Animal Feed volumes, AFGRI Requisites by the move into new areas and the roll-
out of a Key Account Manager infrastructure and new initiatives by AFGRI Capital
to increase its customer base and establish new markets.
Earlybird Farm (Pty) Ltd, which is jointly owned with Astral Foods Limited, has
had disappointing results due to an over supply position in the market place and
higher feed prices as a result of increases in maize and other commodity prices.
A recent improvement in realisations has had a positive impact on the joint
venture`s results subsequent to 31 August 2002.
The Board is confident that the increase for the six months in headline earnings
can be maintained for the full year.
Net asset value per share increased by 12,5%
The increase in the tangible net asset value per share was achieved through
AFGRI`s various operating activities and the repurchase of AFGRI shares. The
repurchase of shares decreased the actual number of shares in issue by 13,2
million compared to the previous interim period.
Positive cash flow of R159 million
The positive cash inflow was achieved through profitability, working capital
management and the collection of amounts owing for businesses sold in the prior
year. The positive cash flow is subsequent to capital expenditure (net) of R49
million and the repurchase of AFGRI shares amounting to R51 million.
Interim dividend up by 54,3%
AFGRI will pay an interim dividend of 15,2 cents per share based on a dividend
cover of 2,5 against 3,0 of the previous year.
Acquisitions
AFGRI has made a cash offer in terms of section 311 of the Companies Act (scheme
of arrangement) to acquire all the shares in the issued capital of Laeveld
Korporatiewe Beleggings Beperk, the total offer value being R59 million. At
present AFGRI has received irrevocable undertakings from shareholders holding
79,9 % of the issued share capital approving the transaction. However, the
transaction is subject to the fulfilment of the following suspensive conditions:
- Approval of the transaction by the Competition Tribunal; and
- The Court having sanctioned the scheme of arrangement.
Directorate
The following changes were made on 28 October 2002: Mr GA L Ebedes has been
appointed Executive Vice-Chairman and Mr J D Wright has been appointed Managing
Director.
By order of the Board
Mr P F Erasmus (Non-Executive Chairman)
Mr G A L Ebedes (Executive Vice-Chairman)
Mr J D Wright (Managing Director)
Notice of interim dividend
Notice is hereby given that the directors of AFGRI have resolved to declare a
dividend of 15,2 cents per share for the interim period ended 31 August 2002.
The last day to trade cum the dividend will be Friday, 15 November 2002. The
shares of AFGRI will commence trading ex the dividend from the commencement of
business on Monday, 18 November 2002. The record date will be Friday, 22
November 2002. Payment will be made on Monday, 25 November 2002. There will be
no dematerialisation or rematerialisation of AFGRI shares between Monday, 18
November and Friday, 22 November 2002, both dates inclusive.
By order of the Board
Ms S L Reynolds (Group Company Secretary)
29 October 2002 - Johannesburg
Clear direction
provides the roadmap for success in today`s economy
Participative Communication
by all parties brings about growth and development
Dynamic Leadership
in shifting markets creates vibrant and successful entities
quality products and service
pave the way to successful relationships
Knowledge is key
AFGRI (formerly OTK) is a leading South African business offering a wide range
of services to farmers, processors and users of agricultural products
Group balance sheet
Six months ended Year ended
31 August 28 February
(reviewed) (audited)
Actual Actual Actual
R millions 2002 2001 2002
ASSETS
Non-current assets 623 604 683
Property, plant and equipment 431 368 410
Intangible assets 37 20 39
Investments 15 15 15
AFGRI Holdings Trust 42 54 49
Other financial assets 25 95 87
Deferred tax assets 73 52 83
Current assets 1 901 1 733 1 827
Inventories 558 442 370
Trade and other receivables 876 855 1 058
Cash and cash equivalents 467 436 399
Total assets 2 524 2 337 2 510
EQUITY AND LIABILITIES
Capital and reserves 1 416 1 294 1 386
Share capital - - -
Share premium 26 26 26
Reserves 459 459 459
Accumulated profits 931 809 901
Non-current liabilities 80 55 82
Long-term liabilities 25 10 27
Deferred tax liabilities 55 45 55
Current liabilities 1 028 988 1 042
Trade and other payables 924 779 857
Current tax liabilities 44 34 34
Bank overdraft and short-term loans 60 175 151
Total equity and liabilities 2 524 2 337 2 510
Net tangible asset value
per share (cents) 424 377 403
Group income statement
Six months ended Year ended
31 August 28 February
(reviewed) (audited)
Actual Actual Actual
R millions 2002 2001 2002
Revenue 2 516 1 823 4 473
Operating profit from continuing
operations 174 137 334
Loss from discontinued operations - - (10)
Profit before tax 174 137 324
Tax 50 49 95
Net profit 124 88 229
Weighted average number of
shares in issue (`m) 330,80 336,50 337,50
Earnings per share (cents) 37,42 26,15 67,90
Headline earnings per share (cents) 37,42 31,15 75,0
Group cash flow statement
Six months ended Year ended
31 August 28 February
(reviewed) (audited)
R millions 2002 2001 2002
Operating activities
Net operating profit 174 137 324
Changes in working capital 61 97 (9)
Sale of debtors book - - 916
Non-cash flow items 31 30 48
Dividends paid (43) (37) (228)
Tax paid (31) (34) (105)
Net cash generated from
operating activities 192 193 946
Investing activities
Purchase of property, plant
and equipment (64) (32) (109)
Purchase of trademarks and goodwill - - (16)
Proceeds from sale of property,
plant and equipment 15 56 63
Acquisition of investments (1) (65) (55)
Disposal of investments and
loans repaid 70 35 108
Acquisition of shares in subsidiaries
and joint ventures - (10) (10)
Net cash derived from/(utilised in)
investing activities 20 (16) (19)
Financing activities
Shares repurchased (51) (25) (43)
Capital distribution - - (673)
Proceeds from long-term borrowings (2) (5) 14
Net cash utilised in financing
activities (53) (30) (702)
Net increase in cash and cash
equivalents 159 147 225
Movement in cash and cash equivalents
Beginning of period 248 114 23
Net increase 159 147 225
End of period 407 261 248
Segmental information
REVENUE
Six months Year
ended ended
31 August 28 February
(reviewed) (audited)
R millions 2002 2001 2002
AFGRI Products 1 428 1 057 2 473
Grain 141 120 304
Cotton 250 247 676
Animal Feed and Protein 1 037 690 1 493
AFGRI Requisites 1 003 698 1 856
AFGRI Capital 74 59 115
AFGRI Services 8 7 17
Other 3 2 12
Total 2 516 1 823 4 473
OPERATING PROFIT
Six months Year
ended ended
31 August 28 February
(reviewed) (audited)
R millions 2002 2001* 2002*
AFGRI Products 127 112 265
Grain 86 44 113
Cotton 18 20 62
Animal Feed and Protein 23 48 90
AFGRI Requisites 23 15 41
AFGRI Capital 22 20 37
AFGRI Services 1 - (1)
Other 1 (3) 1
Total 174 144 343
NET ASSETS
Six months Year
ended ended
31 August 28 February
(reviewed) (audited)
R millions 2002 2001 2002
AFGRI Products 587 611 811
Grain 29 65 234
Cotton 315 299 322
Animal Feed and Protein 243 247 255
AFGRI Requisites 200 202 103
AFGRI Capital 556 431 447
AFGRI Services 8 - 8
Other 65 50 17
Total 1 416 1 294 1 386
*The operating profit is shown after taking into account the pre-tax headline
earnings adjustments. The reason for this is to make the segmental profit more
comparable after the restructuring of the Group, which includes the sale of
certain businesses.
Group statement of changes in equity
Share Share Accumulated
R millions capital premium Reserves profits Total
Balance
28 February 2001
(audited) 7 666 459 942 2 074
Net profit - - - 88 88
Issue of shares:
share incentive trust - 26 - - 26
Share repurchase - - - (25) (25)
Special distribution (7) (666) - (159) (832)
Dividend on shares - - - (37) (37)
Balance
31 August 2001
(reviewed) - 26 459 809 1 294
Net profit - - - 143 143
Dividend on shares - - - (33) (33)
Share repurchase - - - (18) (18)
Balance
28 February 2002
(audited) - 26 459 901 1 386
Net profit - - - 124 124
Dividend on shares - - - (43) (43)
Share repurchase - - - (51) (51)
Balance
31 August 2002
(reviewed) - 26 459 931 1 416
Notes to the Group Interim Results
1. Reconciliation of headline earnings per share
Six months ended Year ended
31 August 28 February
(reviewed) (audited)
Actual Actual Actual
R millions 2002 2001 2002
Earnings (cents) 37,42 26,15 67,90
Loss from discontinued operations - - 1,70
Personnel restructuring costs - 1,50 1,80
Tax on special distribution - 3,50 3,50
Profit on disposal
(assets/investments) - - 0,10
Headline earnings (cents) 37,42 31,15 75,00
2. Accounting policies
The consolidated interim financial statements are prepared in accordance with
and comply with South African Statements of Generally Accepted Accounting
Practice and with the requirements of the Companies Act. The consolidated
interim financial statements are prepared under the historical cost convention.
The principal accounting policies which were adopted in the preparation of these
consolidated interim financial statements, correspond with those applied in the
latest annual financial statements.
3. Corporate governance and JSE Securities Exchange SA compliance
The principles of corporate governance were adhered to in all material
instances. The group and the company complied with the regulations of the JSE
regarding the content of the interim financial results.
4. Share capital
4.1 Actual number in issue (ordinary shares)
28 February 2002 347 000 000
Less: Cumulative number of shares repurchased
by a subsidiary 22 160 981
Number of shares with voting rights 31 August 2002 324 839 019
4.2 Changes during the interim period
Shares repurchased by a subsidiary in terms of a
general authorization at an average price
of R5,35 each. This repurchase is included in the
repurchase of 22 160 981 shares shown above 9 529 023
REVIEW REPORT OF THE INDEPENANT AUDITORS
To the AFGRI shareholders
We have reviewed the accompanying condensed consolidated interim
balance sheet of AFGRI Limited and its subsidiaries (the `Group`) as of
31 August 2002 and the related condensed consolidated interim statements of
income and cash flows for the six months then ended.
This condensed consolidated interim financial information is the responsibility
of the Company`s directors. Our responsibility is to issue a report on this
condensed consolidated interim financial information based on our review.
Scope
We conducted our review in accordance with the statement of South African
Auditing Standards applicable to review engagements. This statement requires
that we plan and perform the review to obtain moderate assurance that the
condensed consolidated interim financial information is free of material
misstatement. A review is limited primarily to enquiries of company personnel
and analytical procedures applied to financial data and thus provides less
assurance than an audit. We have not performed an audit and, accordingly, we do
not express an audit opinion.
Review opinion
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying condensed consolidated interim financial information has
not been properly prepared, in all material respects, in accordance with the
South African Statement of Generally Accepted Accounting Practice applicable to
Interim Financial Reporting (AC 127) and the Companies Act in South Africa.
PricewaterhouseCoopers Inc
Registered Accountants and Auditors Johannesburg
Chartered Accountants (SA) 28 October 2002
The signed copy of this review is available for inspection at the registered
office.
Business address and registered office
33 Sloane Street, Knightsbridge Manor, Block B2, Bryanston
Fax (011) 463-4139. Telephone (011) 706-7897
Company Secretary
Ms S Reynolds. PO Box 3559, Cramerview 2060
Bankers
ABSA Bank Limited; First National Bank Limited; Land and Agricultural Bank of SA
Limited; Nedcor Bank Limited and
Standard Bank of SA Limited
Auditors
PricewaterhouseCoopers Incorporated
Transfer secretaries
Computershare Investor Services Limited, 70 Marshall Street, Johannesburg 2001
PO Box 1053, Johannesburg 2000. Telephone (011) 370-5000
Sponsor
Rand Merchant Bank Corporate Finance, 1 Merchant Place,
cnr Fredman Drive and Rivonia Road, Sandton 2196. PO Box 786273, Sandton 2146
Directorate
P F Erasmus* (Chairman) G A L Ebedes (Vice-Chairman)
J D Wright (Managing Director) A C Ball* J J Claassen*
N O Davies* J J Ferreira* I de W Goosen
E Gutierrez-Garcia* J T Jansen van Rensburg* M E King*
B M Moshal* F J van der Merwe* (Alternate Director: J H Mooney)
*Non-Executive
THIS ANNOUNCEMENT IS AVAILABLE ON SENS AND afgri`s WEBSITE at
www.afgri.co.za
Date: 29/10/2002 02:09:24 PM Produced by the JSE SENS Department
