| Wed 14 May 2003, 12:31 | | AFGRI - Audited Results for the year ended 28 Febr |
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Afgri Limited
(formerly OTKHoldings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1995/004030/06)
ISIN number: ZAE000040549 Share code: AFR
REVENUE FROM CONTINUING OPERATIONS UP BY 36,0%
All of the Group"s pillars of operation experienced top line growth. This was
achieved by improving market share through concentrated marketing efforts
including in new geographical areas through acquisitions. Revenues from existing
customers also grew through the introduction of a range of innovative products
and services.
EARNINGS PER SHARE UP BY 25,1%
HEADLINE EARNINGS PER SHARE UP BY 22,1%
The growth in earnings was achieved through profitable top line growth and
improved efficiencies in most of the Group"s businesses.
Profitability was also positively affected by:
* increased utilisation of storage facilities as a result of good grain crops;
* increased volumes in all business divisions;
* expansion into new areas and initiatives to increase the customer base;
* development of new product offerings and joint ventures; and
* the acquisition of Laeveld Korporatiewe Beleggings and T & H Walton Stores.
As detailed under "Audited Business Segments", during the year significant
losses were reported in the Grain Trading division as a result of mismatched
grain hedges contrary to the Group"s trading policy. All mismatches were
corrected during the year and the losses fully absorbed. As a result the
division suffered an after-tax loss of R67 million compared to a reported after
tax profit of R11 million in the previous year. Following these incidents the
Group has replaced key personnel and upgraded control procedures and systems.
The results for the broiler business were disappointing in the first half of the
year but improved realisations in the second half had a positive impact on this
joint venture"s results, which were only marginally lower than the previous
year.
NET CASH AT YEAR END R246 million positive
The Group"s positive cash flow from operating activities and realisation of
discontinued operations were utilised for net fixed asset acquisitions of R84
million, share repurchases of R64 million and the acquisition of shares in
subsidiaries in an amount of R203 million.
DIVIDEND UP BY 64,7%
For the year under review, AFGRI will pay a final dividend of 22,609 cents per
share. Together with the interim dividend of 15,2 cents per share, the total
dividend for the 2003-year will be 37,809 cents per share. This compares to a
total dividend of 22,95 cents per share for 2002. The total dividend per share
is based on a dividend cover of 2,25 against 3,0 in the previous year.
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2003
PROFILE
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 new name, and new
corporate identity, reflect AFGRI"s ongoing transformation from a regional
agricultural co-operative to a global, world-class agricultural services
business.
The businesses of the Group are structured into the following pillars of
operation:
* AFGRI Products bridges the value chain between the producers and processors of
agricultural products. It manages the grading, handling, storage, trading and
hedging of agricultural products through its silo complexes and trading and risk
management businesses. Included in this pillar are the Group"s Broiler, Seed,
Cotton and Animal Feed businesses.
* AFGRI Requisites markets an extensive range of products and services,
including heavy and light duty agricultural equipment, spares and workshop
services through strategically placed outlets. AFGRI Requisites also houses the
Group"s Crop Care and precision farming businesses.
* AFGRI Capital provides business, financial and risk management solutions to
farmers, traders and processors of agricultural products. An effective,
strategically positioned service infrastructure has been established to better
cater for customer needs.
* AFGRI Services is a centre for developing agricultural excellence to assist
producers and processors of agricultural products in meeting the expectations of
retailers and consumers. It offers clients innovative and value-adding business
and logistical solutions in agronomy, horticulture, biotechnology and animal
production. This pillar has also recently become involved in the processing of
fresh fruit for the local and international retail market.
Comments
During the year the restructured Group focused on driving profitable top line
growth and improving margins. Considerable progress was also made in extending
the Group"s footprint into new markets and territories. The acquisition of
Laeveld Korporatiewe Beleggings Beperk, an agri business in Mpumalanga
specialising in providing services to tobacco, citrus and sugar farmers, is in
line with the Group"s diversification strategy. The purchase of T & H Walton
Stores, the leading John Deere dealership in Western Australia, is the Group"s
first acquisition outside Africa and will act as a beachhead for further
expansion into Australian markets.
Acquisitions
During the year under review, AFGRI acquired:
* with effect from 1 September 2002, all the issued shares in Laeveld
Korporatiewe Beleggings Beperk, for a total purchase consideration of R82,3
million. This Group of companies is involved in providing products and services
to farmers in the Lowveld region of Mpumalanga Province; and
* with effect from 1 October 2002, all the issued shares in T & H Walton Stores,
a John Deere dealership based in Western Australia, for a purchase consideration
of R59,0 million. This acquisition is part of the Group"s selective global
expansion strategy.
Prospects
Notwithstanding that lower agri-commodity prices, mainly as a result of the
stronger rand, will have an adverse effect on certain areas of its business, the
Group"s diversification, recent acquisitions and geographical expansion,
together with further improved operational and procurement efficiencies should
ensure that it achieves its financial targets for the year ahead. The Board is
confident that the Group will once again exceed its EVA targets.
Annual Report
The annual report will be posted to shareholders and be available on AFGRI"s
website on 31 May 2003.
Directorate
During the year Messrs C A du Toit and B M Moshal resigned from the Board of
Directors and Dr S C Marais did not stand for re-election.
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 dividend
Notice is hereby given that the directors of AFGRI declared a final dividend of
22,609 cents per share for the year ended 28 February 2003. The last day to
trade cum dividend will be Friday, 30 May 2003. AFGRI`s shares will commence
trading ex dividend from the commencement of business on Monday, 2 June 2003.
The record date will be Friday, 6 June 2003. Payment will be made on Monday, 9
June 2003. There will be no dematerialisation or rematerialisation of AFGRI
shares between Monday, 2 June and Friday, 6 June 2003, both dates inclusive.
By order of the Board
Ms S L Reynolds, Group Company Secretary
13 May 2003, Johannesburg
Audited Group balance sheet
Year ended Year ended
28 February 28 February
2003 2002
Note Rm Rm
ASSETS
Non-current assets 761 683
Property, plant and equipment 4 517 410
Intangible assets 4 49 39
Interest in associates 3 -
Investments available for sale 16 15
AFGRI Limited Trust 58 49
Non-current assets 33 87
Deferred tax assets 85 83
Current assets 2 716 1 827
Inventories 699 370
Receivables and prepayments 903 1 058
Financial assets 213 -
Current tax assets 30 -
Cash and cash equivalents 871 399
Total assets 3 477 2 510
EQUITY AND LIABILITIES
Capital and reserves 1 331 1 386
Share capital 5 - -
Share premium 6 52 26
Reserves 365 459
Retained earnings 1 027 950
Treasury shares (113) (49)
Minority interests 1 -
Non-current liabilities 79 82
Long-term debts 25 27
Deferred tax liabilities 54 55
Current liabilities 2 066 1 042
Trade and other payables 1 228 857
Financial liabilities 213 -
Current tax liabilities - 34
Bank overdraft and short-term loans 625 151
Total equity and liabilities 3 477 2 510
Net tangible asset value
per share (cents) 391 403
Audited business segments
Operating
Revenue profit Assets Liabilities
28 February 2003 Rm Rm Rm Rm
AFGRI Products 3 184 195 1 636 781
Grain 413 38 658 287
Cotton 608 37 361 108
Animal Feed and Protein 2 163 120 617 386
AFGRI Requisites 2 728 82 713 609
AFGRI Capital 227 73 842 636
AFGRI Services 19 10 71 23
Other - 8 215 97
Consolidated 6 158 368 3 477 2 146
Operating
Revenue profit Assets Liabilities
28 February 2002 Rm Rm Rm Rm
AFGRI Products 2 473 265 1 507 696
Grain 304 113 438 204
Cotton 676 62 367 45
Animal Feed and Protein 1 493 90 702 447
AFGRI Requisites 1 856 41 275 213
AFGRI Capital 115 37 453 7
AFGRI Services 17 (1) 61 12
Other 12 (18) 214 197
Consolidated 4 473 324 2 510 1 125
Audited business segments (continued)
Capital ex- Depre- Amorti-
penditure ciation sation
Rm Rm Rm
AFGRI Products 61 42 5
Grain 18 9 2
Cotton 9 8 3
Animal Feed and Protein 34 25 -
AFGRI Requisites 15 7 -
AFGRI Capital 24 - -
AFGRI Services 12 5 -
Other - 1 1
Consolidated 112 55 6
Capital ex- Depre- Amorti-
penditure ciation sation
Rm Rm Rm
AFGRI Products 78 44 3
Grain 15 26 -
Cotton 35 8 3
Animal Feed and Protein 28 10 -
AFGRI Requisites 12 5 -
AFGRI Capital 1 - -
AFGRI Services 15 - -
Other 3 6 -
Consolidated 109 55 3
The Group"s business segments have been classified in four pillars of operation,
namely Products, Requisites, Capital and Services. Each pillar represents the
main business sector of the operations classified thereunder. The Products
pillar is divided into three business segments, namely Grain, Cotton and Animal
Feed and Protein. The Grain segment consists of Grain Handling and Storage,
Grain Trading and Seed. During the year a significant loss was reported in the
Grain Trading division as a result of mismatched grain hedges. The net loss of
the division which include the mismatching is:
R"m
Loss included in segment operating profit 95
Tax 28
Net loss after tax 67
Segment assets include property, plant and equipment, intangible assets, other
investments, inventories, receivables and cash equivalents. Segment liabilities
include all operating liabilities, short-term borrowings, non-current
liabilities and minority interests. Tax liabilities are included in the segment
"Other". Capital expenditure comprises additions to property, plant and
equipment and intangible assets.
Audited Group statement of changes in equity
Share Share Retained
capital premium Reserves
Rm Rm Rm
Balance 2001 7 666 459
Net profit - - -
Issue of shares
- share incentive trust - 26 -
Special capital distribution (7) (666) -
Dividend for 2002 - - -
Purchase of treasury shares - - -
Balance 2002 - 26 459
Effect of adopting AC 133 - - -
Effect of reclassification
of foreign businesses as
entities in terms of AC 112 - - (9)
Adjusted balance 2002 - 26 450
Net profit - - -
Issue of shares - share incentive trust - 26 -
Currency translation
differences - - (69)
Valuation differences on cash flow hedges - -
(16)
Dividend for 2003 - - -
Purchase of treasury shares - - -
Balance 2003 - 52 365
Audited Group statement of changes in equity (continued)
Retained Treasury
earnings shares Total
Rm Rm Rm
Balance 2001 949 (6) 2 075
Net profit 229 - 229
Issue of shares
- share incentive trust - - 26
Special capital distribution (159) - (832)
Dividend for 2002 (69) - (69)
Purchase of treasury shares - (43) (43)
Balance 2002 950 (49) 1 386
Effect of adopting AC 133 (110) - (110)
Effect of reclassification of
foreign businesses as
entities in terms of AC 112 - -
(9)
Adjusted balance 2002 840 (49) 1 267
Net profit 279 - 279
Issue of shares - share incentive trust - -
26
Currency translation differences - - (69)
Valuation differences on cash flow hedges - -
(16)
Dividend for 2003 (92) - (92)
Purchase of treasury shares - (64) (64)
Balance 2003 1 027 (113) 1 331
Audited Group income statement
Year ended Year ended
28 February 28 February
2003 2002
Note Rm Rm
Revenue 6 158 4 473
Cost of goods and services (5 188) (3 655)
Gross profit 970 818
Dividend income 8 4
Other operating expenses (607) (488)
Operating profit from
continuing operations 7 371 334
Loss from discontinued operations (5) (10)
Group operating profit 366 324
Share of operating results
of associates 2 -
Profit before tax 368 324
Tax (89) (95)
Net profit from ordinary activities 279 229
Weighted average number of
shares in issue (`m) 328,3 337,5
Earnings per share (cents) 84,9 67,9
Headline earnings
per share (cents) 8 85,2 69,8
Audited Group cash flow statement
Year ended Year ended
28 February 28 February
2003 2002
Note Rm Rm
Operating activities
Net operating profit 368 324
Changes in working capital 65 (9)
Sale of debtors book - 916
Other non-cash flow items 31 48
Dividends paid (92) (228)
Tax paid (108) (105)
Net cash generated from
operating activities 264 946
Investing activities
Purchase of property, plant
and equipment (112) (109)
Purchase of trademarks
and goodwill (2) (16)
Proceeds from sale of property,
plant and equipment 30 63
Acquisition of investments - (55)
Disposal of investments
and loans repaid 90 108
Acquisition of shares in
subsidiaries and
oint ventures 9 (203) (10)
Net cash utilised in
investing activities (197) (19)
Financing activities
Purchase of treasury shares (64) (43)
Capital distribution - (673)
(Repayment of)/proceeds
from long term borrowings (5) 14
Net cash utilised in
financing activities (69) (702)
Net (decrease)/increase in
cash and cash equivalents (2) 225
Movement in cash and cash equivalents
Beginning of year 248 23
Net (decrease)/increase (2) 225
End of year 246 248
Audited notes to the Group results
1. Accounting policies
The consolidated annual 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 annual
financial statements are prepared under the historical cost convention as
modified by the revaluation of available for sale securities, financial assets
and liabilities held for trading and all derivative contracts. The principal
accounting policies, which were adopted in the preparation of these consolidated
annual financial statements, correspond with those applied in the latest annual
financial statements, except for the changes in accounting policies relating to
the adoption of AC 133 and the treatment of foreign businesses in terms of AC
112.
2. Changes in accounting policies
In the year the Group decided to adopt AC 133 a year before its required
implementation. All cash flow hedges that do not meet the criteria of hedge
accounting are charged directly to the income statement. In terms of the
transitional arrangements of AC 133, the effect of the change in the accounting
policy in prior year figures is accounted for as an adjustment in opening
equity.
This adjustment is:
Decrease equity on 1 March 2002 - R110 million
3. Reclassification of foreign businesses
All foreign businesses were previously treated as foreign operations. The Group
progressed with its decision taken in the prior year to transfer its primary
ginning activities out of South Africa, into other African countries. As at the
commencement of this year, these foreign businesses have been viewed as
autonomous business activities because the offshore earnings substantially
exceed SA based income and these businesses are self sufficient in terms of cash
requirements and have thus been classified as foreign entities.
The accounting for differences arising on translation of foreign currencies at
year-end is shown as a "Foreign currency translation reserve" in equity. The
effect of this reclassification is:
Decrease equity on 1 March 2002 R9 million
4. Property, plant and equipment and intangible assets
Property, plant Intangible
and equipment assets
Rm Rm
Carrying value beginning of year 410 39
Additions 112 2
Disposals (22) -
Foreign currency differences (24) -
Depreciation/amortisation (55) (6)
Purchase of subsidiaries/joint
ventures 96 14
Carrying value end of year 517 49
5. Share capital
Number Rm Rm
2003 2002 2003 2002
Beginning of year 334 368 042 338 148 767 - 7
Shares issued to share
incentive trust 5 262 510 7 304 433 - -
Treasury shares purchased (11 870 001) (11 085 158) - -
Capital reduction - - - (7)
Number of shares with
voting rights 327 760 551 334 368 042 - -
The treasury shares were purchased by a subsidiary in terms of a general
authorisation at an average price of R5,37 (2002: R3,86). At 28 February 2003 a
total of 24 501 959 treasury shares had been purchased by a subsidiary and are
disclosed as a reduction of equity in the "Statement of Changes to Equity".
6. Share premium
2003 2002
Rm Rm
Beginning of year 26 666
Premium on shares issued to share incentive scheme 26 26
Special capital distribution - (666)
End of year 52 26
7. Net profit is stated after taking into account the following:
2003 2002
Rm Rm
Net profit on disposal of property, plant
and equipment 7 1
Net finance (cost)/income (1) 2
Interest paid to independent third parties (73) (41)
Interest received from independent third parties 51 24
Dividend income 8 4
Foreign currency profits 13 15
Fair value losses on financial instrument
transactions not qualifying as hedges (107) -
Auditors" remuneration (5) (6)
Directors" remuneration (10) (9)
Depreciation on property, plant and equipment (55) (55)
Amortisation of goodwill (3) -
Amortisation of trademarks (3) (3)
Staff costs (475) (389)
8. Reconciliation of headline earnings per share
2003 2002
cents cents
Earnings 84,9 67,9
Loss from discontinued operations 1,1 1,8
Goodwill written off 1,1 -
Profit on disposal of assets (1,9) 0,1
Headline earnings 85,2 69,8
The headline earnings of the prior year have been
adjusted to conform with the requirements of
GAAP Circular 7/2002, issued in December 2002.
A reconciliation of this is:
Headline earnings previously reported 5,0
Personnel restructuring costs (1,7)
STC on special distribution (3,5)
Adjusted headline earnings for 2002 69,8
9. Acquisition of shares in subsidiaries and joint ventures
2003 2002
Rm Rm
Property, plant and equipment 96 15
Investments 14 -
Inventories 106 9
Receivables and prepayments 134 11
Trade and other payables (153) (26)
Goodwill 14 6
Long-term debt (3) (5)
Foreign currency differences (5) -
Cash and cash equivalents (60) -
Total purchase consideration 143 10
Cash and cash equivalents 60 -
Net cash outflow on acquisition 203 10
10. AGENCY AGREEMENTS
10.1 Debtors administered on behalf of third parties
The Group manages agri debtors on behalf of the following third parties:
2003 2002
Rm Rm
Landbank 1 506 1 097
WesBank 311 227
Rand Merchant Bank 539 -
ABSA Bank 91 -
2 447 1 324
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.
10.2 Commodities administered on behalf of third parties
The following is the value of commodities handled, stored and managed on behalf
of third parties:
2003 2002
Rm Rm
Rand Merchant Bank 516 498
ABSA Bank 137 164
Other commodity users 406 312
Producers 119 49
1 178 1 023
The Group receives a fee for the handling, grading, storing and administration
of these commodities. AFGRI has a right of first refusal to purchase R653
million of the commodities at market value.
11. Corporate governance and JSE Securities Exchange SA (JSE) compliance
The principles of corporate governance were adhered to. The Group complied with
the regulations of the JSE regarding the contents of the annual financial
results.
12. Comparative numbers
Where necessary, comparative numbers have been adjusted to conform with changes
in presentation in the current year.
Audit report of the independent auditors
-which should be read in conjunction with the audited financial statements
We have audited the Group annual financial statements of AFGRI Limited for the
year ended 28 February 2003. These financial statements are the responsibility
of the company"s directors.
Our responsibility is to express an opinion on these financial statements based
on our audit.
Scope
We conducted our audit in accordance with statements of South African Auditing
Standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance that the financial statements are free of material
misstatement. An audit includes:
* examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements;
* assessing the accounting principles used and significant estimates made by
management; and
* evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Audit opinion
In our opinion, the Group annual financial statements fairly present, in all
material respects, the financial position of the Group at 28 February 2003 and
the results of its operations and cash flows for the year then ended, in
accordance with South African Statements of Generally Accepted Accounting
Practice, and in the manner required by the Companies Act in South Africa.
PricewaterhouseCoopers Inc
Registered Accountants and Auditors
Chartered Accountants (SA)
13 May 2003
Johannesburg
Afgri Limited
(formerly OTKHoldings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1995/004030/06)
ISIN number:ZAE000040549 Share code: AFR
www.afgri.co.za
Business address and registered office:
33 Sloane Street, Knightsbridge Manor, Block B2, Bryanston
Fax (011) 463-4139. Telephone (011) 706-7897
Group Company Secretary:
Ms S L 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. POBox 786273, Sandton 2146
Directorate:
P F Erasmus (59)* BSc Agric (Chairman) G A L Ebedes (55) BSc Agric A C Ball
(44)* BCom (Hons), M Phil, CA (SA) J J Claassen (53)*
N O Davies (67)* CA (SA) J J Ferreira (50)* BSc (Hons) (Civ Eng) I de W
Goosen (55) BCom, CA (SA) E Gutierrez-Garcia (35)* BSc Med (Hons), CA (SA) J
T Jansen van Rensburg (57)* M E King (65)*
BA, LLB, H Dip Tax F J van der Merwe (45)* LLB, MA
J D Wright (45) BAcc, CA (SA)
*Non-executive
Date: 14/05/2003 12:13:49 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
