AUDITED CONDENSED CONSOLIDATED FINANCIAL ... - AFGRI

AUDITED CONDENSED CONSOLIDATED 

FINANCIAL RESULTS 

for the year ended 30 June 2012 

and cash dividend declaration 

AFGRI LIMITED 

(Incorporated in the Republic of South Africa) 

(Registration number: 1995/004030/06) 

ISIN number: ZAE000040549 Share code: AFR

Directorate 

Non-executive 

JPR Mbau (Chairman), DD Barber, L de Beer, LM Koyana 

BA Mabuza, NL Shirilele, CT Vorster, NC Wentzel 

Executive 

CP Venter (Chief Executive Officer) 

JA van der Schyff (Financial Director) 

This announcement is available on SENS and 

AFGRI’S website at 

www.afgri.co.za 

Administration 

Business address and registered office 

AFGRI Building, 12 Byls Bridge Boulevard 

Highveld Ext 73, Centurion, 0157 

Tel 011 063 2347 

Fax 087 942 5010 

Income tax reference number 

9217/001/71/9 

Company Secretary 

Ms M Shikwinya 

PO Box 11054 

Centurion, 0046 

Bankers 

ABSA Bank Limited 

FirstRand Bank Limited 

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, Menlyn Park, 0102 

PO Box 35296, Menlo Park, 0102 

Tel 012 429 0000 

Transfer secretaries 

Computershare Investor Services Proprietary Limited 

70 Marshall Street, Johannesburg, 2001 

PO Box 61051, Marshalltown, 2107 

Tel: 011 370 5000 

Sponsor 

Investec Bank Limited 

100 Grayston Drive, Sandton, 2196 

PO Box 785700 

Sandton, 2146 

Tel 011 286 7000

OUR RESULTS AT A GLANCE 

Revenue from all operations 28,2% 

HEPS from all operations 3,5% to 56,6 cents 

(2011: 54,7 cents) 

AFGRI Poultry under pressure on the back of high 

import volumes and high feed prices 

Expansion into the Foods sector continues with 

conclusion of the Pride Milling acquisition 

Improved gearing with Debt to equity ratio 

of 1.8 (2011: 2.9) 

Excellent results from the Agri Services Segment 

page 1 

Audited condensed consolidated financial results for the year ended 30 June 2012 and cash dividend declaration

COMMENTARY 

The directors of AFGRI Limited (“AFGRI”) are pleased to present 

the audited condensed consolidated financial results of the 

AFGRI Group of companies (“the Group”) for the year ended 

30 June 2012. 

Operational review 

Maize prices reached record levels during the year, increasing 

from approximately R1 400/ton in March 2011 to over 

R2 700/ton during 2012. The higher maize price encouraged 

farmer spending on mechanisation and other farming 

requisites, leading to improved results from the Group’s retail 

and equipment division. The high maize price plus the early 

harvest supported the Agri Services Segment to end the year 

in a strong position. Unfortunately the higher maize price 

had a negative impact on margins in the Foods Segment. 

In particular, higher raw material prices and increased 

competitiveness in the market negatively affected the animal 

protein division’s results. An average 17% increase in feed 

prices, driven primarily by maize prices, placed margins 

under pressure at AFGRI Poultry which could only realise a 

7% increase in average selling prices. This, together with high 

volumes of imports, continued to negatively impact the poultry 

industry. 

AFGRI continues to focus its activities in three segments – Agri 

Services, Financial Services and Foods. The acquisition of the 

yellow grits and by-products milling business of Pride Milling 

was approved by the Competition Commission and the results 

of this operation have been included from 1 December 2011 

under the renamed oil, milling and protein division. 

The results of the Group’s Zambian and Australian operations 

are reported under the retail and equipment division. 

AFGRI’s John Deere dealership increased its market share for 

the year from 23% to 32%. This was achieved through record 

sales of tractors. AFGRI entered the mechanisation market in 

Zimbabwe by establishing a John Deere dealership in which 

AFGRI owns 49%. 

Sales in the Group’s retail stores strengthened and margins 

were maintained. 

The grain management division improved profits on the back 

of the early 2012 summer crop harvest and high maize prices. 

The opening stock stored in AFGRI silos was 600 000 tons lower 

than the previous year due to a smaller summer crop and high 

export activity. The lower stock levels of the first half of the 

year have been offset by an earlier than normal 2012 summer 

crop harvest with 73% (2011: 44%) of the crop already received 

at 30 June 2012. This is from an estimated 2012 summer crop 

of 3,3 million (2011: 2,9 million) tons in the AFGRI area. Closing 

stock was therefore 861 000 tons higher than the prior year. 

On 1 December 2011, AFGRI successfully concluded the 

sale of its farmer lending book to the Land and Agricultural 

Development Bank of South Africa (hereafter “Land Bank”). 

This resulted in R1,57 billion of farmer debtors being sold and 

a concomitant reduction in the Group’s liabilities by a similar 

amount. A similar transaction for AFGRI’s corporate debtor 

book was implemented on 29 June 2012. These transactions 

provide AFGRI with a solid foundation to grow its financial 

services offering to the agricultural sector. 

The Financial Services Segment posted an increase in fee 

income which resulted in an improved profitability. With the 

sale of the farmer lending book and the corporate debtor book 

the focus was to implement the fee driven business model 

which proved to be very successful. AFGRI also managed 

to renegotiate some of its existing facilities and converted 

short-term facilities into long-term facilities. This, together 

with the unwinding of its Rabo Bank debt securitisation 

structure, resulted in a reduction in cash collateral deposits 

of R71 million. 

Despite the current challenging trading environment for the 

Foods Segment, other sectors in the Group remain strong. The 

Group remains committed to growing its representation in the 

industrial foods processing sector. The planning and design 

of the new preparation and extraction plants at Nedan, to be 

commissioned in April 2013, is progressing well. 

The results of AFGRI Poultry for the year are disappointing. 

The main causes were high volumes of imports and high feed 

prices. Operational inefficiencies received serious attention. 

To this end, the management team at AFGRI Poultry has 

been strengthened by the appointment of Izaak Breitenbach, 

as Managing Director. Izaak has 25 years’ experience in the 

poultry industry. 

Financial review 

Higher commodity prices, in particular maize, drove the 

Group’s revenue from all operations up by 28,2% to R9,4 billion 

(2011: R7,4 billion). Increased raw material and feed cost could 

not be fully recouped from customers resulting in lower gross 

margin percentages, particularly in the animal protein division. 

However, gross margins were maintained in the retail and 

equipment division. 

page 2 


The lower interest rates and the sale of the farmer lending 

book saw interest on trade receivables decline during the 

year. The finance cost of R350 million (2011: R372 million) 

does not reflect a commensurate reduction due to increased 

borrowings resulting from the Group’s Pride Milling acquisition 

and the Group’s capital expenditure of R393 million 

(2011: R295 million). Included with finance cost is an amount of 

R80 million (2011: R81 million), relating to the finance charge 

on the borrowings associated with the Group’s B-BBEE 

ownership structure. 

Selling and administration expenses increased by 16%. The 

inclusion of Rossgro for the full year (2011: four months) 

and AFGRI Milling for seven months represents 5,2% of the 

increase apart from normal inflation. Other factors affecting 

the increase are foreign exchange translation losses, increased 

depreciation, higher fuel and energy cost. 

Profit for the year from continuing operations of R182 million 

is 10% lower than the comparative period’s R203 million. This 

decrease of R21 million is analysed in the Group’s business 

segment results. The recently announced proposed merger 

with Senwes of the Group’s retail business, excluding its 

equipment business, where the retail businesses of both 

AFGRI and Senwes will be sold to a “Newco” in which each will 

own a 50% joint venture shareholding, resulted in the need to 

reflect the retail business as a discontinued business. Profit for 

the period from all operations is 3% higher than the prior year. 

Headline earnings per share from all operations for the period 

reflect an increase of 3,5% from 54,7 cents to 56,6 cents and 

earnings per share from all operations of 58,3 cents, reflects an 

increase of 0,5% from 58,0 cents. 

The Group’s net asset value per share has increased by 11% 

during the year from 30 June 2011. Inventory levels have been 

well controlled with the increase in inventory values being the 

result of higher commodity prices and the consolidation of 

AFGRI Milling’s inventory. 

Furthermore, the Group’s borrowing profile improved with 

long-term debt as a percentage of total debt rising from 11% to 

56%. The Land Bank borrowings associated with the Group’s 

B-BBEE ownership structure of R0,5 billion which is included 

in short-term debt (2011 part of long-term debt). The net cash 

flow for the year is R200 million after accounting for the sale of 

the farmer lending and corporate debtor books, capex and the 

acquisition of the AFGRI Milling business. 

Changes to the Board of Directors and Company 

Secretary 

Marion Shikwinya was appointed as AFGRI’s Company 

Secretary with effect from 1 February 2012, replacing 

Niki van Wyk. 

On 13 February 2012, AFGRI announced the appointment of 

Nick Wentzel as an independent Non-executive Director to the 

Board of AFGRI with effect from 9 February 2012. 

Prospects 

The 2012 summer crop estimate indicates a 16% higher maize 

crop. The 2012 storage periods are expected to be slightly 

longer than 2011. Maize prices are expected to remain high, 

following international prices and poor growing conditions in 

the USA. This will result in continued margin pressure in the 

Foods Segment. The animal protein division, especially AFGRI 

Poultry, is expected to remain under pressure in the new 

financial year with the remainder of AFGRI’s performance 

expected to be in line with the market prospects for the 

various business units. 

Sales of farming mechanisation units are expected to remain 

strong in the coming year. AFGRI Financial Services has the 

platform and the requisite funding stream from which to 

expand its offerings. 

The focus for AFGRI in the coming year is to ensure that 

costs are well managed and cost reduction opportunities are 

implemented. 

Trade and other receivables (including trade receivables 

financed by banks) have decreased by R1,5 billion from 

30 June 2011 due to the sale of the farmer and corporate 

debtors books. Bank borrowings reflect a similar reduction. 

These transactions have allowed AFGRI to reduce its debt to 

equity ratio to 1,8 at year end (2011: 2,9). 

By order of the Board 

JPR Mbau 

Chairman 

4 September 2012 

CP Venter 

Chief Executive Officer 

page 3 


Group balance sheet (R’millions) 

Note 

30 June 

Audited 

2012 

30 June 

Audited 

2011 

ASSETS 

Non-current assets 2 768 2 471 

Property, plant and equipment 2 2 022 1 699 

Goodwill 2 170 118 

Other intangible assets 2 180 269 

Investments in associates 47 41 

Derivative financial instruments 6 – 

Other financial assets 41 41 

Financial receivables 154 164 

Biological assets* 8 7 

Deferred income tax assets 140 132 

Current assets 3 764 5 467 

Inventories 1 023 1 024 

Biological assets* 89 46 

Trade and other receivables 2 208 450 

Trade receivables financed by banks 6 127 3 425 

Derivative financial instruments 53 91 

Other financial assets 9 – 

Current income tax assets 16 26 

Cash and cash equivalents and cash collateral deposits 239 405 

Cash collateral deposits 76 147 

Cash and cash equivalents 163 258 

Assets of disposal groups classified as held-for-sale 9 664 40 

Total assets 7 196 7 978 

EQUITY 

Capital and reserves attributable to equity holders 1 750 1 571 

Share capital # – – 

Treasury shares (86) (90) 

Incentive trust shares (123) (133) 

Fair value and other reserves (23) (64) 

Retained earnings 1 982 1 858 

Non-controlling interest 4 4 

Total equity 1 754 1 575 

LIABILITIES 

Non-current liabilities 2 130 748 

Borrowings 1 909 560 

Derivative financial instruments 4 – 

Deferred income tax liabilities 201 188 

Other liabilities 16 – 

Current liabilities 3 166 5 648 

Trade and other payables 1 621 1 221 

Derivative financial instruments 64 41 

Current income tax liabilities 4 2 

Short-term portion of long-term borrowings 678 10 

Call loans and bank overdrafts 664 951 

Bank borrowings to finance trade receivables 6 135 3 423 

Liabilities of disposal groups classified as held-for-sale 9 146 7 

Total liabilities 5 442 6 403 

Total equity and liabilities 7 196 7 978 

Net asset value per share attributable to equity holders (cents) 491 441 

# Share capital issued to the value of R3 755 (2011: R3 755). 

* Prior year information has been reclassified. Refer note 11. 

page 4 


BUSINESS SEGMENT RESULTS (R’millions) 

Agri Services 

Retail and 

equipment 

Grain 

management 

R'million 

2012 

Rm 

2011 

Rm 

2012 

Rm 

2011 

Rm 

Revenue 2 274 1 486 492 396 

– Sale of goods and services 2 273 1 483 492 396 

– Interest 1 3 – – 

Operating profit/(loss) (before items 

listed below)* 97 16 239 192 

Other amounts included in operating profit (9) (7) (19) (17) 

– other operating income – – – – 

– depreciation and amortisation (9) (7) (19) (17) 

Operating profit/(loss) 88 9 220 175 

Other items of profit and loss 7 – 1 1 

– fair value adjustment to disposal group assets – – – – 

– share of profit/(loss) of associates 7 – 1 1 

Profit/(loss) before finance costs 95 9 221 176 

Net finance costs* (26) (20) (27) (8) 

Profit/(loss) before income tax 69 (11) 194 168 

Income tax 

Profit after tax 

Assets 2 039 1 406 1 094 961 

Non-current assets* 225 244 419 401 

Other current assets* 1 345 757 208 183 

Trade and other receivables 427 357 462 280 

Cash and cash equivalents 42 48 5 97 

Liabilities 708 458 424 406 

Non-current liabilities 4 3 6 2 

Other current liabilities 679 444 418 404 

Borrowings to finance trade receivables – – – – 

Call loans and bank overdrafts 25 11 – – 

Capital expenditure 75 22 47 39 

* Prior year information has been reclassified. Refer to note 11. 

page 5 


Financial Services 

FOODS 

Animal protein 

Oil, milling and protein 

2012 

Rm 

2011 

Rm 

2012 

Rm 

2011 

Rm 

2012 

Rm 

2011 

Rm 

406 408 3 580 2 929 1 087 514 

212 119 3 580 2 929 1 087 514 

194 289 – – – – 

173 230 183 293 59 36 

(13) (9) (73) (65) (12) (6) 

4 15 – – – – 

(17) (24) (73) (65) (12) (6) 

160 221 110 228 47 30 

(2) – – – – – 

– – – – – – 

(2) – – – – – 

158 221 110 228 47 30 

(100) (177) (70) (65) (25) (6) 

58 44 40 163 22 24 

1 280 3 553 1 984 1 877 697 302 

231 345 1 199 1 098 430 97 

158 137 301 247 94 131 

804 2 919 481 519 172 74 

87 152 3 13 1 – 

408 3 024 1 298 677 349 168 

15 20 509 118 37 7 

257 133 581 559 147 161 

135 2 871 – – – – 

1 – 208 – 165 – 

19 30 145 86 100 25 

page 6 


OTHER 

Corporate BEE SPVs Inter-group eliminations 

2012 

Rm 

2011 

Rm 

2012 

Rm 

2011 

Rm 

2012 

Rm 

2011 

Rm 

– – – – (227) (69) 

– – – – (227) (69) 

– – – – – – 

(29) (40) – – – – 

(17) (6) – – – – 

10 12 – – – – 

(27) (18) – – – – 

(46) (46) – – – – 

– – – – – – 

– – – – – – 

– – – – – – 

(46) (46) – – – – 

1 6 (80) (81) – – 

(45) (40) (80) (81) – – 

448 500 (38) (33) (308) (588) 

256 319 8 (33) – – 

56 39 – – (308) (267) 

35 47 (46) – – (321) 

101 95 – – – – 

1 898 1 621 557 538 (200) (489) 

1 559 64 – 534 – – 

74 65 557 4 (200) (489) 

– 552 – – – – 

265 940 – – – – 

7 93 – – – – 

page 7 


Totals 

Total 

Continuing operations Discontinued operations All operations 

2012 

Rm 

2011 

Rm 

2012 

Rm 

2011 

Rm 

2012 

Rm 

2011 

Rm 

7 612 5 664 1 809 1 685 9 421 7 349 

7 417 5 372 1 809 1 685 9 226 7 057 

195 292 – – 195 292 

722 727 34 17 756 744 

(143) (110) (7) (12) (150) (122) 

14 27 – – 14 27 

(157) (137) (7) (12) (164) (149) 

579 617 27 5 606 622 

6 1 – (2) 6 (1) 

– – – (2) – (2) 

6 1 – – 6 1 

585 618 27 3 612 621 

(327) (351) (11) (23) (338) (374) 

258 267 16 (20) 274 247 

(76) (64) (2) 8 (78) (56) 

182 203 14 (12) 196 191 

7 196 7 978 7 196 7 978 

2 768 2 471 2 768 2 471 

1 854 1 227 1 854 1 227 

2 335 3 875 2 335 3 875 

239 405 239 405 

5 442 6 403 5 442 6 403 

2 130 748 2 130 748 

2 513 1 281 2 513 1 281 

135 3 423 135 3 423 

664 951 664 951 

393 295 393 295 

page 8 


Group income statements (R’millions) 

Note 

Year ended 

30 June 

Audited 

2012 

Year ended 

30 June 

Audited 

2011 

Continuing operations 

Sales of goods and services 7 417 5 372 

Interest on trade receivables 195 292 

Total sales 7 612 5 664 

Cost of sales (5 611) (3 832) 

Gross profit 2 001 1 832 

Other operating income 14 27 

Selling and administration expenses* (1 436) (1 242) 

Operating profit 579 617 

Interest income* 3.2 23 21 

Finance costs 3.1 (350) (372) 

Share of profit of associates 6 1 

Profit before income tax 258 267 

Income tax expenses (76) (64) 

Profit for the year from continuing operations 182 203 

Discontinued operations 

Profit/(Loss) for the year from discontinued operations 9 14 (12) 

Profit for the year 196 191 

Profit for the year attributable to: 

Equity holders of the Company 195 190 

Non-controlling interest – Other non-controlling interest 1 1 


Number of shares in issue (‘m) 375,5 375,5 

Weighted average number of shares in issue (‘m) 333,6 328,5 

Diluted weighted average number of shares in issue (‘m) 357,0 356,5 

Earnings per share from continuing operations (cents) 55,3 60,6 

Earnings/(Losses) per share from discontinued operations (cents) 3,0 (2,6) 

Earnings per share from all operations (cents) 58,3 58,0 

Diluted earnings per share from continuing operations (cents) 51,6 55,8 

Diluted earnings/(losses) per share from discontinued operations (cents) 2,8 (2,4) 

Diluted earnings per share from all operations (cents) 54,4 53,4 

* Prior year information has been reclassified. Refer to note 11. 

Group statement of comprehensive income (R’millions) 

Year ended 

30 June 

Audited 

2012 

Year ended 

30 June 

Audited 

2011 


Other comprehensive income 

Exchange differences on translating foreign operations 40 8 

Cash flow hedges (4) 7 

Other comprehensive income for the year, net of tax 36 15 

Total comprehensive income for the year 232 206 

Total comprehensive income attributable to: 

Equity holders of the Company 231 205 

Non-controlling interest – Other non-controlling interest 1 1 

232 206 

page 9 


GROUP CASH FLOW STATEMENT (R’millions) 

Year ended 

30 June 

Audited 

2012 

Year ended 

30 June 

Audited 

2011 

Operating activities 

Cash generated by operations before changes in working capital 

and tax paid 442 381 

Changes in working capital (1 538) (360) 

Tax paid (60) (48) 

Net cash utilised in operating activities (1 156) (27) 

Net cash utilised in investing activities (594) (467) 

Net cash generated from/(utilised in) financing activities 1 950 (467) 

Net increase/(decrease) in cash and cash equivalents 200 (961) 

Cash and cash equivalents at the beginning of year (693) 268 

Cash and cash equivalents at the end of the year (493) (693) 

Cash collateral deposits 76 147 

Cash and cash equivalents and cash collateral deposits (417) (546) 

– Included in cash, cash equivalents and cash collateral deposits (425) (546) 

– Included in assets of disposal group classified as held-for-sale 8 – 

DECLARATION OF CASH DIVIDEND 

Notice is hereby given that the directors of AFGRI, in terms of section 46 of the South African Companies Act (Act 71 of 2008), 

have declared a final gross cash dividend of 9,85 cents per share (8,3725 cents per share net of dividend withholding tax, where 

applicable) for the year ended 30 June 2012. The dividend has been declared from income reserves and no secondary tax on 

companies credits has been used. A dividend withholding tax of 15% will be applicable to all shareholders who are not exempt. In 

accordance with settlement procedures of STRATE, the following dates will apply to the final dividend: 

Last day to trade cum the dividend Friday, 16 November 2012 

Trading ex dividend commences Monday, 19 November 2012 

Record date Friday, 23 November 2012 

Dividend payment date Monday, 26 November 2012 

There will be no dematerialisation or rematerialisation of AFGRI shares between Monday, 19 November 2012 and Friday, 

23 November 2012, both dates inclusive. 

By order of the Board 

M Shikwinya 

Group Company Secretary 

Centurion 

page 10 


GROUP STATEMENT OF CHANGES IN EQUITY (R’millions) 

Share 

capital 

Fair value 

and other 

reserves 

Retained 

earnings 

Treasury 

shares 

Incentive 

trust 

shares 

Total 

shareholders 

equity 

BEE 

partners 

Other 

noncontrolling 

interests 

Balance 30 June 2010 (audited) – 43 1 820 (90) (171) 1 602 670 13 2 285 

Profit for the year – – 190 – – 190 – 1 191 


for the year – 15 – – – 15 – – 15 

Disposal of incentive shares – – – – 38 38 – – 38 

Dividends paid – – (137) – – (137) – – (137) 

Payment to non-controlling 

interests – – – – – – – (10) (10) 

Share-based payments – 6 – – – 6 – – 6 

Transaction with non-controlling 

interests – – (23) – – (23) – – (23) 

Consolidation of BEE SPVs – (120) – – – (120) (670) – (790) 

BEE partners share to 

non-distributable reserve – (8) 8 – – – – – – 

Balance 30 June 2011 (audited) – (64) 1 858 (90) (133) 1 571 – 4 1 575 

Profit for the year – – 195 – – 195 – 1 196 


for the year – 36 – – – 36 – – 36 

Disposal of incentive shares – – – – 16 16 – – 16 

Executive Award Scheme shares – – – – (6) (6) – – (6) 

Dividends paid – – (73) – – (73) – – (73) 

Payment to non-controlling 

interests – – – – – – – (1) (1) 

Treasury shares issued as 

Executive Award Scheme shares – – – 4 – 4 – – 4 

Share-based payments – 7 – – – 7 – – 7 

BEE partners share to 

non-distributable reserve – (2) 2 – – – – – – 

Balance 30 June 2012 (audited) – (23) 1 982 (86) (123) 1 750 – 4 1 754 

Total 

page 11 


NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 

1. Basis of preparation and accounting policies 

The directors of AFGRI Limited (“AFGRI” or “the Company”) present these audited condensed consolidated financial results 

of the AFGRI group of companies (“the Group”) for the year ended 30 June 2012. 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 71 of 2008) as amended, on a basis 

consistent with that of the prior year. The preparation of the condensed consolidated annual financial statements has been 

supervised by the Group Financial Director, JA van der Schyff CA(SA). 

Property, plant 

and equipment 

Other intangible 

assets and goodwill 

(R’millions) 

Year 

ended 

30 June 

2012 

Year 

ended 

30 June 

2011 

Year 

ended 

30 June 

2012 

Year 

ended 

30 June 

2011 

2. Property, plant and equipment, other intangible assets and 

goodwill 

Carrying value beginning of year 1 699 1 394 387 278 

Additions 388 223 5 72 

Borrowing costs capitalised 5 1 – 2 

Disposals at book value (18) (49) – – 

Foreign currency differences 10 3 2 1 

Depreciation/amortisation (122) (103) (42) (46) 

Purchase of subsidiaries 154 255 83 80 

Net sale of subsidiary (including assets held for sale) (94) (25) (76) – 

Impairment – – (9) – 

Carrying value end of year 2 022 1 699 350 387 


3. Finance costs and interest Income 

3.1 Finance costs 

Year 

ended 

30 June 

2012 

Year 

ended 

30 June 

2011 

Interest paid on bank borrowings used to finance trade 

receivables (174) (205) 

Other interest paid to financial institutions (101) (89) 

Other interest paid to financial institutions as a result of the consolidation of the 

BEE SPVs (80) (81) 

Finance cost – continuing operations (355) (375) 

Less: Borrowing costs capitalised on qualifying assets 5 3 

Finance cost – continuing operations (per income statement) (350) (372) 

Finance cost – discontinued operations (13) (27) 

Finance cost – total (363) (399) 

3.2 Interest income 

Interest received from financial institutions 3 3 

Interest received from independent third parties 20 18 

Interest income – continuing operations (per income statement) 23 21 

Interest income – discontinued operations 2 4 

Interest income – total 25 25 

page 12

(Cents) 

4. Reconciliation of headline earnings per share 

Year 

ended 

30 June 

2012 

Year 

ended 

30 June 

2011 

Earnings 58,3 58,0 

Impairment of assets 2,5 0,3 

(Profit)/Loss of the sale of business – (1,0) 

Profit on disposal of assets (4,2) (2,6) 

Headline earnings 56,6 54,7 

Diluted headline earnings 52,9 50,4 

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 share of profits. Operating profits after finance costs are shown after a charge for internal interest 

based on each business unit’s net assets throughout the year. With the exception of the acquisition of the yellow grits and 

by-products maize milling business of Pride Milling (included under the renamed Oil, Milling and Protein division), no other 

significant changes to the Group’s structure and operations have occurred during the year. 

6. Trade receivables financed by banks and related liability 

The only security for the liability is the trade receivables and in certain cases, additional cash collateral deposits of 0% 

(2011: 20%) and/or cash trade receivables of up to 10% (2011: 15%). The Group carries the risk of loss on these trade 

receivables. The total value of additional debtors encumbered for these facilities is R13 million (2011: R363 million). 

7. Agency agreements 

The Group manages agri debtors on behalf of third party financial institutions to the amount of R4,2 billion (2011: R1,4 billion). 

Administration and management fees are paid by these third parties to the Group for services rendered in accordance with 

the service level agreements. 

On 1 December 2011 and 29 June 2012 respectively the Group sold its farmer debtors- and corporate debtors book at book 

value to the Land Bank for a purchase consideration of R1,57 billion and R1,12 billion (of which R922 million relates to internal 

debtors) respectively. Part of these transactions were the origination of a service level agreement under which the Group 

will manage, administer and service the farmer debtors- and corporate debtors book on behalf of the Land Bank. Under 

this agreement the Group is only liable for bad debts on a second loss basis to the maximum of between 0,7% and 0,5%. 

In accordance with IFRS, and as a result of the residual risk retained in the books sold, R12,0 million of the farmer debtors 

and R1,0 million of the external corporate debtors were not derecognised as part of the sale. A further R4,3 million guarantee 

provisions, R4,0 million relating to the farmer debtors book and R0,3 million relating to the corporate debtors book were 

raised to accommodate the potential second loss in the books sold. Shareholders are referred to the announcements on 

SENS on 5 December 2011 and 3 July 2012 for further details regarding these transactions. 

On all other service level agreements, the Group is liable for bad debts to a maximum of between 5% and 10% of specific 

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 R5,3 billion (2011: R3,4 billion). 

8. Business combinations 

On 1 December 2011 the Group acquired the yellow grits and by-products milling business of Pride Milling Company 

Proprietary Limited, conducted at Ermelo, Kinross and Bethal, as a going concern. Purchase consideration amounted to 

R242 million, which includes contingent consideration of R20 million, plus net working capital on effective date. Contingent 

consideration is payable should certain profit targets be met on 30 November 2013. The initial accounting for this business 

combination in terms of IFRS 3 is complete and the fair values of the assets and liabilities acquired were determined as 

follows: property, plant and equipment of R153,7 million, intangible assets of R23,2 million, inventory of R25,3 million, trade 

and other receivables of R76,8 million and trade and other payables of R51,4 million. Goodwill of R60,3 million arose as the 

difference between the fair value of purchase consideration and the fair value of the net assets acquired. Since 1 December 

2011 this business unit generated revenue of R282,6 million and a net profit before tax of R24,3 million (before the allocation 

of internal interest) which were included in the current year results. 

page 13 


NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 

continued 

9. Assets of disposal groups classified as held-for-sale and discontinued operations 

On 31 July 2012 the Group and Senwes Limited (“Senwes”) entered into binding sale of business agreements with Business 

Venture Investments No 1658 Proprietary Limited (“Newco”) in terms of which the Group and Senwes will merge their 

respective agricultural retail businesses, as well as the Partrite business of AFGRI. 

In terms of the sale of business agreements, the Group will sell its retail agricultural business as well as its shareholding in 

Partrite (Pty) Limited and Dormanco (Pty) Limited to Newco as a going concern. Senwes will sell to Newco its agricultural 

retail business as a going concern, including Senwes Capital Proprietary Limited. The respective values of the AFGRI Retail 

Business and the Senwes Retail Business will be determined and the party whose business’s value is the lower of the two 

shall contribute a cash adjustment to the other party to ensure that the respective values of the businesses are equal. This 

will ensure that upon completion of the transaction each party will hold 50% of the issued shares in Newco. The transaction 

is subject to the fulfilment of various suspensive conditions, in particular the unconditional approval of the South African 

Competition Authorities, both parties’ satisfaction with the results of financial, legal and technical due diligence and the 

determination of the respective values of both parties’ retail businesses. Further details regarding this transaction were 

published on SENS on 31 July 2012. 

As a result of this transaction, this group of assets (“disposal group”) are disclosed as a disposal group held-for-sale as at 

30 June 2012 as its carrying values will be recovered principally through a sales transaction rather than through continuing 

use under the conditions specified in IFRS 5. It also meets the definition of a discontinued operation, as it is a separate major 

line of business which will be disposed of in a single transaction. Comparatives have been restated to ensure comparability. 

During the year the Group entered into various discussions regarding the sale of its intellectual property right, trademark and 

patent on automated banking machines registered as “Deposita” together with its 46% investment in Deposita Systems (Pty) 

Limited. A number of indicative offers were received and final negotiations are underway. In accordance with IFRS5, these 

assets were disclosed as held-for-sale at 30 June 2012, as all conditions within IFRS5 have been met. 

During the prior financial year the Group concluded a sale agreement of one of its poultry breeder farms “Uitkyk”, situated 

near Mokopane, with Mike’s Chicken (Pty) Limited. The affected assets and liabilities were disclosed as held-for-sale. 

The prior year further includes the loss on the remeasurement of assets of the poultry breeder farm “Uitkyk” to fair value 

due to its held-for-sale classification. The prior year also includes the loss from the discontinued business unit in the Group’s 

trading division which were closed in 2011. 

10. Subsequent event 

On 31 July 2012 the Group and Senwes Limited (“Senwes”) entered into binding sale of business agreements with Business 

Venture Investments No 1658 Proprietary Limited (“Newco”) in terms of which the Group and Senwes will merge their 

respective agricultural retail businesses, as well as the Partrite business of AFGRI. 

Although this represents a non-adjustable event after balance sheet date in terms of IAS10, the conditions for held-forsale 

classification under IFRS5 have all been met as at 30 June 2012 resulting in the affected assets and liabilities of the 

Group’s affected businesses being disclosed as held-for-sale as at 30 June 2012. Please refer to note 9 for more detail on this 

transaction. 

11. Comparative figures 

During the current financial year interest income was separately disclosed on the face of the income statement. The prior 

year information has been reclassified to ensure comparability and a total amount of R24.7 million has been reclassified from 

selling and administration expenses to interest income due to an incorrect classification in the prior year. 

The Group also disclosed the non-current portion of biological assets for the year ended 30 June 2012. The prior year 

information has also been reclassified from current to non-current due to its incorrect classification in the prior year, to the 

value of R7,4 million. 

12. 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 2013, the working capital available to AFGRI will be sufficient to 

meet its requirements for the next 12 months. 

13. Corporate governance and JSE Limited (JSE) compliance 

The Group applied the principles of good corporate governance as set out in King III and 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. Annual financial statements 

A copy of the Group’s annual financial statements for the year ended 30 June 2012 is available at the Group’s registered 

office and can be obtained from company secretary, Ms M Shikwinya. The Group’s Integrated Report will be distributed to 

shareholders on or before 18 September 2012. 


Year 

ended 

30 June 

2012 

Year 

ended 

30 June 

2011 

16. Capital commitments 

Contracted for additions to property, plant and equipment and intangibles 44 12 

Authorised but not yet contracted for additions to property, plant and equipment 91 18 

135 30 

page 14

RESULTS 

PRESENTATION 

page 15 


Final Results Presentation 

5 & 6 September 2012 

Agenda 

Overview 

Segmental overview 

Consolidated financial overview 

Prospects 

Questions and answers 

Appendix 

page 16 


1 

Overview 

Financial highlights 

All operations * 

• Revenue 

28.2% 

• To R 9.4bn 

• Profit for the period 

• HEPS 

• Full year dividend 

2.6% 

3.5% 

3.5% 

• To 196m 

• To 56.6cps 

• To 28.3cps 

* Accounting treatment for the retail transaction – discontinued operations 

4 

page 17 


Trading conditions 

• Challenges for the year 

• Negative impact of high raw material prices on Foods segment 

• Margin pressure continued on Foods segment 

• Poultry industry 

• Positive influences for the year 

• Continued balance sheet strengthening 

• Exceptional performance from Financial Services and Agri Services 

• Good crop, received early 

• Cost reduction focus 

• Retail transaction 

5 

Where is AFGRI? 

• Corporate actions undertaken and completed during the year 

• Farmer lending book sale to Land Bank 

• Corporate lending book sale to Land Bank 

• Resulting in improved debt:equity ratio of 1.8 (2001: 2.9) 

• Long-term funding facility in place (3,5 & 7 years) 

• Pride Milling purchase concluded and integrated into AFGRI Milling 

• Completed integration of Rossgro 

• Retail transaction underway 

• Signed sale of business agreement between AFGRI, Senwes and 

NewCo 

6 

page 18 


2 

Segmental overview 

Agri-Services - overview 

Retail 

Equipment 

33 Town&Country | 4 FarmCity stores | Senwes transaction 

John Deere franchise | largest in Africa | farm equipment | not 

included in Senwes transaction 

Grain Management 

- Storage 

- Procurement 

- CMI 

4.4m ton storage capacity | 65 silo’s | 11 bunkers 

Procured 2.2m tons on back of secured mandates 

1.7m tons managed on behalf of 3 rd parties 

Africa 

Australia 

Zambia(1 bunker) | Zimbabwe | Congo Brazzaville(silo bag 

facility) | new storage capacity 

3 John Deere outlets in Western Australia 

8 

page 19 


Agri-Services – overall environment 

• High commodity prices 

Ending stocks to total use (%) 

USA Global 

• Reduction in world grain 

reserves 

• Drought in USA 

17 17 

15 

12 

17 

13 

18 

14 

17 

13 

14 

15 15 

14 

• World stocks availability 

9 

9 

7 

5 

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 

Global Market Research, Commonwealth Bank, July 2012 

9 

Yellow and white maize price 

R / ton 

3100 

2900 

2700 

2500 

2300 

2100 

1900 

1700 

1500 

1300 

1100 

900 

2007/11/02 

R2 774 as at 

31 July 2012 

2008/01/02 

2008/03/02 

2008/05/02 

2008/07/02 

2008/09/02 

2008/11/02 

2009/01/02 

2009/03/02 

2009/05/02 

2009/07/02 

2009/09/02 

2009/11/02 

2010/01/02 

2010/03/02 

2010/05/02 

2010/07/02 

2010/09/02 

2010/11/02 

2011/01/02 

2011/03/02 

2011/05/02 

2011/07/02 

2011/09/02 

2011/11/02 

2012/01/02 

2012/03/02 

2012/05/02 

2012/07/02 

2012/09/02 

2012/11/02 

2013/01/02 

2013/03/02 

2013/05/02 

WMAZ 

YMAZ 

Source: JSE , SAGIS & I-Net 

10 

Year White maize (ave) Yellow maize (ave) 

2008 1 830 1 844 

2009 1 565 1 445 

2010 1 201 1 263 

2011 1 885 1 895 

2012 (June) 2 366 2 299 

2012 (July) 2 538 2 513 

21% increase in 

maize price for the 

year under review 

page 20 


Import and export price parity 

PRICES OF USA YELLOW MAIZE DELIVERED IN DEC 2012 (RANDFONTEIN) 

3 800 

3 600 

3 400 

3 200 

3 000 

2 800 

2 600 

R/ton 

2 400 

2 200 

2 000 

1 800 

1 600 

1 400 

Source: SAFEX 

Maize exports (total) 

450 

400 

350 

300 

‘000 tons 

250 

200 

150 

100 

50 

0 

May-10 

Jun-10 

Jul-10 

Aug-10 

Sep-10 

Oct-10 

Nov-10 

Dec-10 

Jan-11 

Feb-11 

Mar-11 

Apr-11 

May-11 

Jun-11 

Jul-11 

Aug-11 

Sep-11 

Oct-11 

Nov-11 

Dec-11 

Jan-12 

Feb-12 

Mar-12 

Apr-12 

May-12 

Jun-12 

Jul-12 

1-Jun-11 

1-Jul-11 

31-Jul-11 

30-Aug-11 

29-Sep-11 

29-Oct-11 

28-Nov-11 

28-Dec-11 

27-Jan-12 

26-Feb-12 

27-Mar-12 

26-Apr-12 

26-May-12 

25-Jun-12 

25-Jul-12 

SAFEX YM Dec'12 Invoer Pariteit/ Import Parity Uitvoer Pariteit/ Export Parity 

11 

Source: SA Grain Information Service 

12 

page 21 


Agri-Services - operations 

• Retail 

• Strong maize price boosted revenue 

• Sales strengthened and gross margins maintained 

• Bulk direct sales to farmers declined year-on-year 

• Increased competition 

• Increased credit extension 

• Announcement of retail transaction 

• Equipment 

• Strong maize price increased revenue 

• AFGRI’s John Deere dealership market share increased to 32% 

(2011: 23%) 

• Best year ever in AFGRI 

• New smaller John Deere tractor proved to be profitable, especially in 

Africa 

13 

Tractor sales 

9 000 

8 000 

National AFGRI area AFGRI (SA) AFGRI (Africa) 

8 106 

8 437 

7 000 

6 000 

5 631 

6 571 

6 183 

5 889 

6 268 

5 000 

4 000 

4 091 

4 461 

5 154 

4 753 

3 000 

2 000 

1 000 

0 

2 737 

2 269 

1 834 

1 757 

1 418 

1 537 1 549 

1 554 1 498 

1 245 1 193 

1 271 

906 

464 509 580 722 

282 

305 421 

263 

478 

508 401 408 

270 

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Source: AFGRI data 

Sales value of AFGRI (SA) tractors sold: * 

2012 R515m 

2011 R235m 

* Number reflects tractor sales only 

and excludes combine harvesters and 

other equipment 

* Value of tractors sold only includes new tractors sold 

14 

page 22 



• Improved silo volumes - 861 000 higher than 30 June 2011 

• 73% of crop received by 30 June 2012 

• Exports continued during the six months 

• Plantings – AFGRI operating area 

• Total production estimate 14% increase to 3.3m tons (2011: 2.9m tons) 

• Total national crop estimate – 11.2m tons 

• Successfully continue to expand Collateral Management International 

footprint (operating in seven African countries and managing 1.7m tons) 

15 

AFGRI closing silo stocks (‘000) 

3 000 000 

Grain Management: Silo volumes 2003 to 2012 

2 500 000 

2 000 000 

Tons 

1 500 000 

1 000 000 

500 000 

- 

Jul-03 

Oct-03 

Jan-04 

Apr-04 

Jul-04 

Oct-04 

Jan-05 

Apr-05 

Jul-05 

Oct-05 

Jan-06 

Apr-06 

Jul-06 

Oct-06 

Jan-07 

Apr-07 

Jul-07 

Oct-07 

Jan-08 

Apr-08 

Jul-08 

Oct-08 

Jan-09 

Apr-09 

Jul-09 

Oct-09 

Jan-10 

Apr-10 

Jul-10 

Oct-10 

Jan-11 

Apr-11 

Jul-11 

Oct-11 

Jan-12 

Apr-12 

Source: AFGRI 

16 

page 23 


AFGRI closing silo stocks (‘000) Dec ‘10 – Jun ‘12 

2 500 000 

2 000 000 

1 838 000 

66% more volume 

than June 2011 

2 169 000 

1 691 000 

Tons 

1 500 000 

1 463 000 

1 207 000 

1 308 000 

1 460 000 

1 231 000 

1 482 000 

1 090 000 

1 000 000 

932 000 

915 000 

686 000 

705 000 

719 000 

500 000 

573 000 

550 000 

424 000 

567 000 

- 

Dec-10 

Jan-11 

Feb-11 

Mar-11 

Apr-11 

May-11 

Jun-11 

Jul-11 

Aug-11 

Sep-11 

Oct-11 

Nov-11 

Dec-11 

Jan-12 

Feb-12 

Mar-12 

Apr-12 

May-12 

Jun-12 


Improved silo volumes due to earlier summer crop harvest 

17 

Agri-Services - Africa 

• Africa 

• Tractor sales: 

• Zimbabwe – 70 

• One John Deere dealership in Harare, Zimbabwe (49% AFGRI owned) 

• Cash sales, limited finance available in country 

• Zambia – 200 

• One dealership signed, in final stages of implementation (Ghana) 

• One additional dealership being negotiated with John Deere 

• Congo Brazzaville farmers planted 842 ha of maize 

• New season planting expected to cover >1 200 ha 

• Potential off-take far exceeds production 

18 

page 24 


The retail transaction 

Equipment 

Partrite 

Retail 

Production 

Grain 

Management 

Industrial 

Processing 

Restructure underway 

Completed 

Insurance 

Farmer 

Lending 

GroCapital 

19 

The retail transaction 

• Rationale 

• Opportunity to create a focussed retail business 

• Expected increase in volumes through increased footprint 

• AFGRI retains a 50% interest in a larger retail entity 

• In future the 50% shareholding will be equity accounted 

• John Deere franchise is excluded 

• Assets included in transaction 

• Retail stores 

• FarmCity stores 

• Direct business 

• Advantages to AFGRI 

• Better working capital management 

• Lower costs 

• Better stock management resulting in improved returns 

• Expected finalisation date – Q1 2013 

Creation of a focused retail platform for future growth 

20 

page 25 


Location of stores 

Lydenburg 

Cullinan 

Belfast 

Nelspruit 

Pierre Vrynveld 

Middleburg 

Bronkhorstspruit 

Carlolina 

Lichtenburg 

Woodlands Pretoria Witbank 

Ventersdorp 

Ogies 

Emelo 

Oberholzer 

Nigel 

Ruimsig Heidelberg Delmas 

Balfour Kinross 

Delareyville Vereeniging 

Bethal 

Amersfoot 

Hartbeesfontein Potchefstroom 

Grootvlei Val 

Standerton 

Ottosdale 

Parys 

Klerksdorp 

Volksrust 

Schweizer-Reneke Wolmaranstad Viljoenskroon Koppies 

Bothaville Heilbron 

Kroonstad 

Newcastle 

Vryheid 

Hartswater Hoopstad 

Wesselbron 

Dundee 

Jan Kempdorp 

Odendaalrus 

Eeram 

Ladysmith 

Tierfontein Welkom 

Afrikaskop 

Hertzogville 

Bethlehem Harrismith 

Bergville 

Bultfontein 

Partrite 

Winterton 

Theunissen Senekel 

Marquard 

Petrus 

Bloemfontein 

21 

Agri-Services – Retail & Equipment (total) 

Description – R’m Jun 2012 

% 

Contribution 

Jun 2011 

% 

Contribution 

Revenue – Retail 1 884 46.1% 1 697 54.5% 

Revenue – Equipment 1 317 32.3% 768 24.7% 

Revenue – Africa 391 9.6% 277 8.9% 

Revenue – Australia 491 12.0% 370 11.9% 

Total revenue 4,083 100.00% 3,112 100.00% 

PBT – Retail 26 30.6% 21 140.0% 

PBT – Equipment 53 62.3% 10 66.7% 

PBT – Africa 11 13.0% -1 -6.7% 

PBT – Australia -5 -5.9% -15 -100.0% 

Total PBT 85 100.00% 15 100.00% 

Net Profit – Retail 1.4% 1.2% 

Net Profit – Equipment 4.0% 1.3% 

Net Profit – Africa 2.8% -0.4% 

Net Profit – Australia -1.0% -4.1% 

Net profit margin 2.1% 0.5% 

NewCo will be 

equity accounted 

at 50% in future 

22 

page 26 


Agri-Services segment 

Revenue (R’m) 

Profit before tax (R’m) 

Retail & Equipment 


1 809 

Retail & Equipment Grain Management 

194 

184 

168 

153 

99 

4 216 

365 

3 642 

587 492 

3 277 

1 626 

1 486 

16 

396 492 

2 274 

80 

129 

98 

26 

-11 

69 

2008 2009 2010 2011 2012 

2008 2009 2010 2011 2012 

Audited (R’m) Retail & Equipment Grain Management 

2012 2011 2012 2011 

Operating profit 115 * 45 * 220 175 

Operating profit margin 2.8% * 1.5% * 44.7% 44.2% 

Profit/(loss) before finance costs 122 * 45 * 221 176 

Net finance costs -37 * -31 * -27 -8 

Assets 2 039 1 406 1 094 961 

Liabilities 708 458 424 406 

(*) Including discontinued operations 

23 

Financial Services - overview 

GroCapital 

Focus on corporate market and AFGRI | Land Bank 

- Financial products 

- Treasury 

SAFEX broking unit | structured & corporate finance | trade finance 

balance sheet management 

Internal focus on AFGRI 

Unigro 

- Farmer Lending 

- Insurance 

Focus on farmers | Land Bank 

Originate farmer finance | R2.2m lent per season | product tailored 

to agriculture 

Products tailored to agriculture| short-term insurance | commercial, 

industrial, agri insurance | personal lines | crop insurance | credit 

life insurance 

GroCat 

Commodity JV with Macsteel International | act as principle taking 

only credit risk on the back of credit insurance (CGIC) 

24 

page 27 


Financial services segment 

• Strengthening of balance sheet 

• Sale of farmer and corporate lending books to Land Bank 

• AFGRI retains relationship with farmer and corporate clients 

• Excellent relationship maintained with Land Bank 

AFGRI – before 

AFGRI - after 

Debt:equity ratio – 2.9 Debt:equity ratio – 1.8 

Originator of debt 

Relationship with farmer and corporate client (credit 

evaluation and extension of debt facility) 

Financed on the AFGRI balance sheet 

Debtor owned by AFGRI 

Margin interest income: net margin between borrowing and 

lending cost 

Risk: complete risk on entire book 

Originator of debt 

Relationship with farmer and corporate client (credit 

evaluation and extension of debt facility) 

On-sell debtor to Land Bank and financed on Land Bank 

balance sheet 

Debtor owned by Land Bank 

Fee income: monthly administration fee + origination fee 

Risk: limited to second loss only 

25 

GroCapital 

• Conclusion of sale of corporate lending book 

• GroCapital continues to originate corporate debt on behalf of the Land 

Bank 

• Well positioned as a service provider to other agricultural companies 

• Overberg Agri / MKB transaction 

• GroCapital is provider of finance 

26 

page 28 


Unigro 

• Successful implementation of famer debtor book sale 

• Improved financial position and gearing with excellent profitability 

• Operational expenses well managed 

• Active drive to increase debtors to be sold to Land Bank and Wesbank 

• Position new brand to support creation of national footprint 

6 000 

5 000 

4 000 

Farm debtors under management (R’m) 

Intended strategy 

Intended strategy 

896 

3 000 

2 000 

1 000 

0 

5 389 

4 864 

3 965 

3 325 

2009 2010 2011 2012 


R104m received from new season 

27 

GroCat 

• Joint venture with Macsteel International 

• Established 1950, employs 7,000 people in 30 countries worldwide with 141 

offices 

• Annual sales of >US$10bn 

• Making use of AFGRI’s grain management expertise coupled with Macsteel 

logistics and resources expertise spanning 26 trading offices 

• Move commodities around Africa daily 

• Allows AFGRI to extract value from coal mines in Mpumalanga 

• 10 of AFGRI’s silo complexes are positioned in and around the coal mines 

• All AFGRI silo’s have well maintained rail infrastructure 

• Currently move 10,000 tons of coal per month 

28 

page 29 


Financial services segment 





970 

848 

58 

33 

44 

58 

507 

408 406 

-19 

2008 2009 2010 2011 2012 

2008 2009 2010 2011 2012 

Audited (R’m) 


2012 2011 

Profit/(loss) before tax 58 44 

Assets 1 280 3 553 

Liabilities 408 3 024 

29 

Foods - overview 

Animal Protein 

- Animal Feeds 

Production capacity of approximately 1,2m tons at 8 mills country wide 

- Poultry 

1.1m birds processed weekly | Parent stock (Ross) | eggs | day-old 

chicks | broilers | contract growers 

Oil, Milling and Protein 

- Nedan 

- Milling 

Oil extraction and protein plant in Mokopane (Limpopo) | sunflower, soya 

and cotton crushing capability 

Yellow maize by-products | 3 mills at Ermelo, Kinross and Bethal 

- Labworld Laboratory equipment 

30 

page 30 


Foods segment – overall environment 

31 

• Record high raw material prices 

• Specifically maize and soya beans 

• Imports continue 

• South African poultry industry lodged anti dumping case with ITAC 

• Challenged by Brazil 

• Brazil accounts for ± 95% MDM chicken and 45% whole chicken imports 

• Effect of imports on the SA Poultry industry 

• Equivalent of 5m chickens per week imported 

• Equates to approximately 12 900 potential jobs (excluding jobs in grain 

production and other suppliers) 

• Rapid rise in imports - collectively single largest supplier to the market 

• Transformational opportunity for contract production being lost 

• Poultry industry under severe pressure 

• Brine volumes remain unresolved 

• Restructuring in the industry continues 

Source: SAPA 


• Animal Feeds 

• Maize price increased year-on-year by 21% 

• Perpetuation of external market factors 

• External customers under pressure 

• Milk farmers reducing herd size 

• Continually assessing improved technology to reduce costs 

• Poultry 

• Increased raw material price – continues to impact margins 

• Feed price increase by 17% year-on-year 

• Net Sales Value (NSV) increased by 7% year-on-year 

• Imports increased by 40% year-on-year 

• Internal efficiency factors a huge focus area 

• New management expertise making a visible difference 

• Implementation of Ross breed to be completed early 2013 

• Objective review of all efficiencies 

• Continued focus on cost reduction 

32 

page 31 


Broiler pricing 

16 

15 

14 

R / kg 

13 

12 

11 

10 

9 

Jan-07 

Mar-07 

May-07 

Jul-07 

Sep-07 

Nov-07 

Jan-08 

Mar-08 

May-08 

Jul-08 

Sep-08 

Nov-08 

Jan-09 

Mar-09 

May-09 

Jul-09 

Sep-09 

Nov-09 

Jan-10 

Mar-10 

May-10 

Jul-10 

Sep-10 

Nov-10 

Jan-11 

Mar-11 

May-11 

Jul-11 

Sep-11 

Nov-11 

Jan-12 

Mar-12 

May-12 

Source: SAPA 

33 

Broiler price vs food price inflation 

34 

page 32 


Poultry imports – chicken & turkey 

+40% 

Source: SARS, SAPA 

35 

Producer price comparison – SA protein 

Estimated monthly prices (c/kg) March 2008 – April 2012 

5000 

Sheep 

4500 

4000 

3500 

3000 

+39% 

Beef 

2500 

2000 

Pork 

1500 

Chicken 

1000 

Source: SARS & FNB 

Chicken Pork Beef Sheep 

Feed Conversion Rate 1.7 2.2 5.5 5.0 

Per Capita Consumption 35.8kg 4.6kg 16.6kg 2.7kg 

36 

page 33 



• AFGRI Milling 

• Seven months inclusion of yellow maize milling business revenue 

• Higher raw material price 

• Margins remain under pressure 

• Nedan 

• Nedan expansion project progressing well 

• Highest price ever for soya at R6 000 per ton 

• Crush margin under pressure 

• Increased capacity projects under review 

37 

Foods segment 



Oil, Milling & Protein 


Oil, Milling & Protein 


2 566 2 582 2 627 

2 929 

3 580 

120 

154 

178 

163 

518 501 544 514 

1087 

27 

14 

27 24 22 

40 

2008 2009 2010 2011 2012 

2008 2009 2010 2011 2012 

Audited (R’m) Animal Protein Oil, Milling & Protein 

2012 2011 2012 2011 

Operating profit 110 228 47 30 

Operating profit margin 3.1% 7.8% 4.3% 5.8% 

Profit/(loss) before finance costs 110 228 47 30 

Net finance costs -70 -65 -25 -6 

Assets 1 984 1 877 697 302 

Liabilities 1 298 677 349 168 

R14m (PBT) 

attributable to AFGRI 

Milling 

38 

page 34 


Animal Protein segment vs maize price 

2500 

200 

178 

2 299 

180 

R / ton of yellow maize (ave) 

2000 

1500 

1000 

500 

1 844 

120 

154 

1 445 

1 263 

163 

1 895 

40 

160 

140 

120 

100 

80 

60 

40 

Animal Protein PBT (R’m) 

20 

0 

2008 2009 2010 2011 2012 

Maize price (yellow) 

Animal Protein PBT (R'm) 

0 

Source: AFGRI & SAGIS 

39 

3 

Consolidated financial 

overview 

page 35 


Consolidated income statement 

Description – R’m Jun 2012 Jun 2011 Change 

Continuing operations 1 

7 612 5 664 34.4% 

Cost of sales 2 

-5 611 -3 832 46.4% 

Gross Profit 2 001 1 832 9.2% 

Other operating income 14 27 -48.2% 

Other operating expenses 2 

-1 436 -1 242 15.6% 

Operating profit 579 617 -6.2% 

Finance cost / associate profit -321 -350 -8.3% 

Profit before taxation - continuing 258 267 -3.4% 

Taxation 3 

-76 -64 18.8% 

Profit for continuing operations 182 203 -10.3% 

Discontinued operations 14 -12 216.7% 

Profit for the period 196 191 2.6% 

Diluted weighted average no of shares in 

issue (‘m) 

357.0 356.5 0.1% 

Diluted EPS (cents) (all ops) 54.4 53.4 1.9% 

HEPS (cents) (continuing ops) 4 

56.6 54.7 3.5% 

1 

Strong performance by Retail & 

Equipment and Financial 

Services. Increase in Foods 

division selling prices as a 

result of increased commodity 

prices. 

Total: 28.2% 

Continuing: 34.4% 

2 

Cost of sales attributable to 

input cost and volume 

increases 

3 

Taxation rate: 

Total: 28.5% (2011: 22.7%) 

Continuing: 29.4% (2011: 23.9%) 

4 

HEPS primarily impacted by 

the Foods segment 

41 

Consolidated balance sheet 

Description – R’m Jun 2012 Jun 2011 

Assets 

Non-current assets 2 768 2 471 

Property, plant & equipment 1 

2 022 1 699 

Goodwill 2 

170 118 

Financial receivables 154 164 

Other items 422 490 

1 

2 

Capex spend and Milling 

acquisition 

Milling: R60m 

Current assets 3 764 5 467 

Inventories 1 023 1 024 

Trade & other receivables 3 

2 335 3 875 

Cash & cash equivalents 239 405 


Non-current assets (held for sale) 4 

664 40 

Total assets 7 196 7 978 

3 

Reduction attributable to 

sale of farmer & corporate 

lending books 

4 

Refers to retail transaction 

42 

page 36 


Consolidated balance sheet 

Description – R’m Jun 2012 Jun 2011 

Equity and Liabilities 

Capital and reserves attributable to equity 

holders 

1 750 1 571 

Retained earnings 1 

1 982 1 858 

Other items -232 -287 

Non-controlling interest 4 4 

Non-current liabilities 2 130 748 

Borrowings 1 909 560 


Current liabilities 3 166 5 648 

Trade & other payables 1 

1 621 1 221 

Short-term borrowings 1 

678 10 

Call loans & bank overdrafts 664 951 

Borrowings from banks to finance trade 

receivables 

1 

135 3 423 


Liabilities of disposal group - held for sale 146 7 

Total equities and liabilities 7 196 7 978 

1 

• Long-term funding 

facility with Land Bank 

of R1.5bn 

• Sale of farmer lending 

book (R1.4bn) 

• Sale of corporate 

lending book (R1.1bn of 

which R0.9bn is internal 

debtors) 

• Still on balance sheet: 

• BEE, SADC, 

internal and some 

external debtors 

43 

Cash flow statement 

30 June 2012 

R’m 

30 June 2011 

R’m 

752 

Cash generated from ops 

723 

-1 538 

Working capital utilised 

-360 

-310 

Net finance costs 

-342 

-60 

Taxation 

-48 

-594 

Investments made 

-467 

1 950 

Finance activities 

-467 

-2 000 -1 000 - 1 000 2 000 3 000 

-1 000 -500 - 500 1 000 

200 

(693) 

76 

(417) 

Net (decrease)/increase in cash 

Cash beginning of period 

Cash collateral deposits 

Cash end of period 

(961) 

268 

147 

(546) 

44 

page 37 


Capital expenditure 

Project / expenditure Rm Comments / notes 

AGRI Services 

Retail & Equipment 75 

Zambian bunker 

Mechanical workshop infrastructure 

Grain Management 47 

Two additional bunkers 

Long-term maintenance 

Financial Services 19 

Foods 

Animal Protein 145 

Poultry expansions to accommodate KFC supply 

and other efficiencies, electrical 


100 Oil extraction facility expansion (sunflower) 

Corporate 7 

45 

4 

Prospects 

page 38 


Prospects 

• Agri-Services 

• Retail and Equipment 

• Maize price is expected to remain high 

• Sale of farming equipment expected to remain strong 

• Implement retail transaction 

• Grain Management 

• Continue to roll out additional grain storage capacity 

• Expect slightly longer storage periods than 2011 

• Grow CMI footprint 

• Expand procurement footprint 

47 

Prospects 

• Financial Services 

• Originate debt on both farmer and corporate level 

• Grow service offering to farmer and corporate clients 

48 

page 39 


Prospects 

49 

• Foods 

• Animal Protein 

• Emphasis on cost cutting remains in place 

• Efficiencies continue to be assessed and extracted 

• External pressure expected to remain 

• Expect maize prices to remain high (depending on international 

prices) 

• Continued strong focus on raw material procurement 

• Oil, Milling and Protein 

• High maize price and fluctuating exchange rates expected to 

remain 

• Negative crush margin expected to remain if sunflower price 

continues to remain high 

• Preparation and extraction plant expansion progressing well 

• Plant commissioning still planned for April 2013 

Future pricing 

7 000 

6 000 

5 995 5 995 6 060 

5 625 

5 000 

4 965 

R / ton 

4 000 

3 000 

2 632 2 632 2 671 2 670 

2 405 2 355 

2 000 

1 000 

0 

Spot Sep-12 Dec-12 Mar-13 May-13 Jul-13 

Yellow maize 

Soya 

Source: Reuters 

50 

page 40 


Maize price influences 

3100 

2900 

High maize price positive for: 

• Retail & Equipment 

R / ton 

2700 

2500 

2300 

2100 

1900 

Low maize price positive for: 


• Poultry 

• Nedan and 

• Milling 

• Grain 

Management 

(can also be 

influenced by 

crop size, 

timing of crop / 

harvest and 

exports) 

Business in 

balance for 

AFGRI 

1700 

1500 

1300 

High maize price negative for: 


• Poultry 

• Nedan and 

• Milling 

1100 

900 

Low maize price is negative for: 

• Retail & Equipment 

• Financial Services (possible defaults) 

2007/11/02 

2008/05/02 

2008/11/02 

2009/05/02 

2009/11/02 

2010/05/02 

2010/11/02 

2011/05/02 

2011/11/02 

2012/05/02 

WMAZ 

YMAZ 

51 

5 

Questions and answers 

page 41 


6 

Appendix 

Long-term debt facility 

• Long-term funding facility with silo’s as collateral 

• Financing facility – not a sale 

• R1.5 billion term loan with Land Bank (3, 5, 7 year tranches) 

• Convert short-term loans to long-term facilities 

• Rationale: 

• Reduce liquidity risk 

• Avoid extensive raising fees 

• Limit mismatch between assets and liabilities 

• Certain silo’s are ring fenced in a SPV 

• No bunker facilities are included in the transaction 

• AFGRI has option to add more silo’s to the transaction 

• Costs will be capitalised and amortised over life of loan 

• A further transaction to improve gearing 

Rationale is to have in place a long-term funding programme for AFGRI 

(long-term debt paper programme) with silo’s as collateral 

54 

page 42 


Long-term debt facility (cont) 

Selected AFGRI silo’s used as collateral 

Selected AFGRI silo’s at market value of 

R2.4 bn 

Loan:value ratio 

70% 

AFGRI has agreement with Land Bank on the 

transaction to the value of R1.5 bn 

Funded as follows: 

• R500m in 3 years 

• R500m in 5 years and 

• R500m 7 years 

55 

Influences – Agri Services 

Division 

Retail 

John Deere franchise 

Equipment 

Influence 

• Commodity price 

• Retail margins 

• Farmer balance sheet 

• Size of crop 







56 

page 43 


Influences – Agri Services 

Division 


Influence 

• Silo volumes 

• Average storage time 

• Crop size 

• Quality of crop 


57 

Influences – Financial Services 

Division 

GroCapital 

Influence 

• Access to affordable funding 

• Service levels 

Unigro Farmer Lending 

• Access to affordable funding 

• Service levels 

• Maize prices 

58 

page 44 


Influences – Foods 

Division 

Poultry 

Influence 

• Feed price 

• Brine injection rate 

• Imports / oversupply in market 

• Market selling price 

• Import tariffs 

59 


Division 

Animal Feeds 

Influence 


• Poultry and milk industries 

• Volumes 

60 

page 45 



Division 

Milling 

Influence 

• Yellow maize price 

• Exchange rate 

• Quality of product 

61 


Division 

Nedan 

Influence 

• Crush margin 


• Quality of product 

62 

page 46 


NOtes 

page 47 


NOtes 

page 48 


BASTION GRAPHICS

COMMENTARY 

AFGRI Limited 

PO Box 11054 

Centurion 

0046 

Tel: +27 11 063 2347 

Fax: +27 87 942 5010 

E-mail: afgri@afgri.co.za 

www.afgri.co.za 

AFGRI Operations Limited 

PO Box 11054 

Centurion 

0046 

Tel: +27 11 063 2347 

Fax: +27 87 942 5010 

E-mail: afgri@afgri.co.za 

page 50

AUDITED CONDENSED CONSOLIDATED FINANCIAL ... - AFGRI

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