AUDITED CONDENSED CONSOLIDATED FINANCIAL ... - AFGRI

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