| Wed 24 Nov 2004, 10:14 | | Afgri Reports 69% Growth In EPS At Interim Stage |
|
Afgri Reports 69% Growth In EPS At Interim Stage, Announces Bee Transaction
AFGRI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1995/004030/06)
Share Code: AFR
ISIN : ZAE000040549
(`AFGRI` or `the company`)
HIGHLIGHTS
* Revenue up 14%
* Earnings per share up 69%
* Headline earnings per share unchanged
* Cash generated by operating activities R79 million
* Tangible net asset value per share up 15%
* Agri Sizwe Empowerment Trust acquires 26.77% of Afgri Operations for R502
million cash
* Dividend and proposed special distribution 128,8 cents per share
Agricultural services group Afgri reported a 69% increase in earnings per share
on a 14% rise in revenue for the six months ended 31 August 2004 and a net
capital profit on the disposal of Earlybird Farm and other businesses.
Managing director Jeff Wright says he is satisfied with the results,
particularly in light of the difficult conditions facing the agricultural
sector, notably lower commodity prices and the impact of the strong rand. `The
strong rand had a negative impact on commodity prices and margins over the
interim reporting period. Despite this, the group`s cash generating ability was
markedly improved over the previous period, and we are satisfied with the
overall performance in what were very trying circumstances.
Turnover for the six months increased by 14,2% to R 2,9 billion (2003: R2,5
billion), boosted by the acquisition of Natal Agricultural Co-operative Limited
(Natalagri) and the sale of farming equipment in South Africa, Australia and
Zambia. Revenue in the group`s retail business was marginally up on the previous
year, while the cotton business remained under pressure due to lower world
cotton prices, a surplus of lint and the stronger rand. This was compensated
for by improved performances in the Animal Feeds & Protein and Finance Services
businesses.
Cash generated from operating activities remained strong, at R79 million after
paying dividends of R80 million. This represents a R161 million reversal of the
previous period`s negative cash flow of R82 million. The net cash position for
the period was R162 million, down from R235 million at 29 February 2004, after a
number of key acquisitions and investments.
Investments during the period comprised the purchase of Natalagri for R29
million on 1 July 2004, with a further R16 million invested in an insolvent
lemon oil processing business in the Lowveld, and some R50 million invested in
factory upgrades, new technology, a shrimp feed facility and a joint animal feed
venture with Eastern Cape Agricultural Co-operative.
Natalagri and the lemon oil business will be restored to profitability over the
next 12 months.
Two disposals were made: the group sold its 50% shareholding in Earlybird Farm
to Astral Foods, as well as its 49% stake in the Western Cape commodity trading
business, Bester Voer en Graanbeurs. The net profit on the disposal of these
joint ventures was R55 million.
Wright says slow growth in headline earnings is as a result of poor performances
by the Group`s Cotton and Requisites businesses which were negatively affected
by the strengthening rand. These poor performances were offset by great results
in Afgri Financial Services , Afgri Handling and Storage, Afgri Animal Feeds and
the group`s Australian business.
Outlook and dividend
Wright says the focus for the next six months will be on the integration of
Natalagri and the reduction of fixed overheads in the group`s retail division.
`However, the effects of the strong rand and the resultant low commodity prices
as well as the late summer rains, are expected to have a negative effect on the
Group`s earnings in the second half,` concludes Wright.
Afgri will pay an interim cash dividend of 18.3 cents per share as well as a
proposed special distribution of 110,5 cents per share (BEE transaction).
BEE transaction
Afgri has also announced a groundbreaking Black Economic Empowerment (BEE)
transaction, whereby Agri Sizwe Empowerment Trust has acquired 26.77% of Afgri
Operations, Afgri Ltd unlisted subsidiary for R502 million cash
Shareholders will benefit by way of a R368 million special distribution of the
proceeds in the form of 110.5c per share dividend. Afgri Limited will cede R100
million as refundable collateral to the Land Bank, who is funding the
transaction.
Afgri Operations will continue to manage the business in terms of a partnership
agreement concluded with the Trust. Wright says the intention is to convert the
Trust`s interest in Afgri Operations into a 25.1% direct shareholding in Afgri
Limited once the Land Bank loan is repaid within eight years.
The Trust comprises a combination of black business leaders and broad-based BEE
entities. The Trust beneficiaries are Agri Sizwe, Afgri Operations Empowerment
Scheme, the National African Farmers Union (NAWU), the South African
Agricultural Plantation and Allied Workers Union (SAAPAWU), represented by
Basebenzi Investments, the National Emergent Red Meat Producers Organisation
(NERPO) and women`s group Bunang Investments.
Ends
ISSUED AFGRI LIMITED
FOR:
CONTACT: Jeff Wright, MD, 082 806 1284 or De Wet
Goosen, financial director,
082 770 7859
FAX NO: 011 463 4139
E-MAIL: jwright@afgri.co.za or
idgoosen@afgri.co.za
WEBSITE: www.afgri.co.za
ISSUED BY: TISH STEWART PR ASSOCIATES
CONTACT: Tish Stewart 011 325 4195 / 082 443
6399
FAX NO: 011 325 4199
E-MAIL: tish@tspr.co.za
DATE: 24 November 2004
Date: 24/11/2004 09:01:03 AM
Produced by the JSE SENS Department
