AUDITED CONDENSED CONSOLIDATED FINANCIAL ... - AFGRI

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