Wrap Text
Interim results and dividend declaration
CROOKES BROTHERS LIMITED
Registration number: 1913/000290/06
Share code: CKS
ISIN: ZAE000001434
("Crookes" or "the company" or "the group")
INTERIM RESULTS AND DIVIDEND DECLARATION
CONDENSED CONSOLIDATED STATEMENT OF
PROFIT OR LOSS
Unaudited Unaudited Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2015 2014 2015
Notes R'000 R'000 R'000
Revenue 353 162 310 406 526 087
Operating profit 39 344 14 543 61 109
Share of profit of associate companies - - 655
Dividend income - - 166
Net finance costs 1 (4 693) (2 293) (4 271)
Capital items - - 251
Profit before taxation 34 651 12 250 57 910
Income tax expense (10 794) (2 906) (14 774)
Profit for the period 23 857 9 344 43 136
Profit attributable to:
Shareholders of the company 22 744 8 434 40 697
Non-controlling interests 1 113 910 2 439
23 857 9 344 43 136
Earnings per share
Basic (cents) 180.8 67.2 323.9
Diluted (cents) 177.5 66.2 317.9
Headline earnings per share
Basic (cents) 181.4 66.0 330.6
Diluted (cents) 178.1 65.0 324.5
Dividend per share
Interim (cents) 35.0 65.0 65.0
Final (cents) - - 85.0
CONDENSED CONSOLIDATED STATEMENT OF
OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
Net profit for the period 23 857 9 344 43 136
Other comprehensive (loss)/income (8 661) 1 895 (1 224)
Items that may not be reclassified subsequently to profit or loss, net of tax:
Remeasurement of defined benefit asset - - 1 962
Remeasurement of post-employment medical aid obligation - - (876)
Items that may be reclassified subsequently to profit or loss, net of tax:
Net fair value (loss)/gain on available-for-sale financial assets - (18) 15
Reclassification adjustments on available-for-sale financial assets disposed of during the period - 28 (204)
Exchange differences on translating foreign operations (8 661) 1 885 (2 121)
Total comprehensive income for the period 15 196 11 239 41 912
Total comprehensive income for the period attributable to:
Shareholders of the company 14 083 10 329 39 473
Non-controlling interests 1 113 910 2 439
15 196 11 239 41 912
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
Unaudited Unaudited Audited
30 September 30 September 31 March
2015 2014 2015
Notes R'000 R'000 R'000
ASSETS
Non-current assets 829 978 747 890 798 048
Property, plant and equipment 515 489 503 555 514 116
Bearer biological assets 284 891 218 280 254 234
Unlisted investments 627 842 727
Investment in associates 19 336 18 683 19 336
Retirement benefit surplus 9 095 5 990 9 095
Unsecured loans: long-term 540 540 540-
Current assets 297 312 322 973 313 937
Inventories 28 917 21 435 60 655
Biological assets: crops and livestock 127 906 134 818 184 864
Trade and other receivables 123 050 127 574 45 659
Taxation 786 2 987 9 686
Other financial assets 6 221 17 314 -
Cash and cash equivalents 10 432 18 845 13 073
Total assets 1 127 290 1 070 863 1 111 985
EQUITY AND LIABILITIES
Capital and reserves 788 109 760 860 783 603
Share capital and premium 13 009 13 009 13 009
Investment revaluation reserve 869 1 068 869
Foreign currency translation reserve (5 936) 6 731 2 725
Share-based payment reserve 1 036 792 1 036
Retained earnings 773 410 736 180 761 356
Equity attributable to owners of the company 782 388 757 780 778 995
Non-controlling interests 5 721 3 080 4 608
Non-current liabilities 223 864 206 671 213 500
Deferred taxation 116 543 109 550 118 320
Long-term borrowings: interest-bearing 47 492 43 022 39 162
Long-term liability: interest-free 49 259 44 789 45 082
Post-employment medical aid obligation 10 570 9 310 10 936
Current liabilities 115 317 103 332 114 882
Trade, other payables and provisions 26 223 43 328 21 298
Short-term borrowings: interest-bearing 85 845 59 503 91 653
Outside shareholders' loan 624 501 538
Taxation 2 590 - 330
Dividend withholding taxation 35 - 1 063
Total equity and liabilities 1 127 290 1 070 863 1 111 985
Net asset value per share 6 266 6 050 6 231
Number of shares
In issue 12 576 817 12 576 817 12 576 817
Weighted average (basic) 12 576 817 12 551 079 12 563 913
Weighted average (diluted) 12 812 817 12 747 079 12 799 913
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
Unaudited Unaudited Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2015 2014* 2015
R'000 R'000 R'000
Operating profit for the period 39 344 14 543 61 109
Other comprehensive income - - 1 508
Depreciation 15 963 14 522 30 502
Change in fair value of biological assets - crops and livestock (excluding expansions) 40 957 35 903 (15 689)
Other non-cash items 5 011 197 (3 117)
Operating cash flows before movements in working capital 101 275 65 165 74 313
Net outflow from changes in working capital (40 856) (37 558) (12 205)
Interest received* 178 970 3 045
Finance costs (4 871) (3 263) (7 316)
Taxation paid (1 500) (13 333) (21 134)
Net cash flows from operating activities 54 226 11 981 36 703
Net investing activities
Net proceeds on redemption of investments 100 116 14 636
Consideration on disposal of property, plant and equipment 1 078 1 080 1 178
Investment in expansion of area under crop (13 591) - (38 569)
Other net investment activities* (32 175) (57 445) (84 141)
Net cash flows before dividends and financing activities 9 638 (44 268) (70 193)
Dividends paid (10 690) (15 056) (23 231)
Proceeds from issue of equity instruments of the company - 899 900
Net (decrease)/increase in borrowings (1 589) 48 423 76 750
Net decrease in cash and cash equivalents (2 641) (10 002) (15 774)
Cash and cash equivalents at beginning of the period 13 073 28 847 28 847
Cash and cash equivalents at end of the period 10 432 18 845 13 073
* Prior period restated to reclassify interest received as an operating activity and occupational interest received as an investing activity.
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Unaudited Unaudited Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
Balance at beginning of period 783 603 763 778 763 778
Share-based payment reserve movement - - 244
Total comprehensive income for the period 15 196 11 239 41 912
Dividends declared and paid (10 690) (15 056) (23 231)
Exercise of share options and scrip dividend - 899 900
Total equity 788 109 760 860 783 603
CONDENSED CONSOLIDATED
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2015 2014** 2015
R'000 R'000 R'000
Revenue
Sugar cane 222 740 186 650 281 281
Deciduous fruit 69 424 80 308 141 851
Bananas 49 035 34 295 84 930
Other operations* 11 963 9 153 18 025
353 162 310 406 526 087
Operating profit
Sugar cane 55 594 43 391 73 366
Deciduous fruit (7 153) (5 901) 16 183
Bananas 9 934 2 168 15 949
Macadamias** (5 330) (7 953) (5 183)
Other operations/sundry income* 6 164 4 411 7 630
Group administration (19 865) (21 573) (46 836)
39 344 14 543 61 109
* Information reported to the directors for the purposes of resource allocation and assessment of
segment performance, focuses on the agricultural and farming operations of the group.
Whilst the directors of the company have chosen to organise the group on the basis of its revenue
generating crops, other revenue streams that have no direct bearing on crop performance have been
aggregated under "other operations".
For the purposes of these interim results, "other operations" represents the aggregation
of the following operating segments:
- Grain and vegetables;
- Travel and tourism from the company's Crocworld facility;
- Plant nursery business;
- Sand and stone business; and
- Rental of buildings and housing.
** Prior period restated to reclassify macadamias as a separate operating segment.
CONDENSED CONSOLIDATED
NOTES
Unaudited Unaudited Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
1. NET FINANCE COSTS
Interest paid (4 871) (3 263) (7 316)
Interest received 178 970 3 045
(4 693) (2 293) (4 271)
2. CAPITAL EXPENDITURE
Capital expenditure
- Incurred 25 955 55 697 88 081
Capital commitments
- Contracted 5 940 20 935 15 623
- Authorised but not contracted 7 914 24 195 26 457
13 854 45 130 42 080
3. HEADLINE EARNINGS
Profit for the period attributable to owners of the company 22 744 8 434 40 697
Adjusted for:
Gain on disposal of shares - - (251)
Tax effect of the disposal of shares - - 33
Loss/(profit) on disposal of plant and equipment 53 (212) 1 165
Tax effect of the adjustments 23 59 (113)
Headline earnings 22 820 8 281 41 531
4. GUARANTEES AND CONTINGENT LIABILITIES
Guarantees 86 56 86
5. EXCHANGE RATES
Rand/US Dollar closing 13.90 11.16 12.16
Rand/US Dollar average 12.55 10.58 11.08
Rand/Metical closing 0.33 0.36 0.34
Rand/Metical average 0.33 0.34 0.35
Rand/Kwacha closing 1.24 1.80 1.59
Rand/Kwacha average 1.58 1.70 1.72
6. EVENTS AFTER THE REPORTING PERIOD
6.1 Joint venture
On 6 November 2015, an agreement was concluded with the community owners of a large part of the leased Komatipoort estate to
establish a 20 year joint venture for the operation of the farm. The company will terminate its current 10 year lease four years ahead
of schedule, in return for participation in the joint venture for the extended term. The estimated financial effect cannot be quantified
at the reporting period.
6.2 Claw-back offer
A R215 million claw-back offer was approved at a general meeting convened on 30 July 2015, to be concluded on
21 December 2015. This will result in a further 2 687 500 shares issued at a price of R80 per share.
Following the finalisation of the claw-back issue, there will be 15 264 317 ordinary shares in issue.
7. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated unaudited results for the half-year ended 30 September 2015 have been prepared in accordance with
the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS),
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncements as
issued by the Financial Reporting Standards Council, the information as required by International Accounting Standard 34 Interim
Financial Reporting and the requirements of the Companies Act of South Africa, as amended.
The report has been prepared using accounting policies that comply with IFRS which are consistent with those applied in the financial
statements for the year ended 31 March 2015 and were prepared by Mr N Naidoo CA (SA) under the supervision of the Group
Financial Director, Mr P J Barker BA, ACMA, CGMA.
Crookes Brothers Limited has adopted all the new or revised accounting pronouncements as issued by the IASB which were effective
for Crookes Brothers Limited from 1 January 2015. The adoption of these standards had no recognition and measurement impact on
the financial results.
Commentary
Earnings
Earnings for the first half of the financial year have been impacted favourably by a number of factors,
which have resulted in profit for the period increasing by 155% to R23.8 million, compared to R9.3
million in the corresponding prior period. Operating cash flow of R101.2 million is 55% higher than
that of the previous period.
However, the board cautions against using interim results to project full year earnings due to the effect
of seasonality of crop revenues on profitability.
Operations
Sugar cane:
Production on all of the group's cane farms has been impacted by the prolonged drought affecting
most of Southern Africa. If the drought continues through the 2015/16 summer, the resulting reduced
valuation of the standing crop at year end will have a material negative impact on the full year's results
for the current year.
The South African cane operations in aggregate realised an improvement in operating profit of
R11.2m, mainly due to a 16% increase in the RV price and the cane harvesting season starting earlier
than the previous year.
Operating profit from the Swaziland operation is R4.5m higher than the corresponding prior period,
which was affected by prolonged strike action.
Zambia operations have been severely hampered by the weakening of the kwacha against the rand
and persistent drought conditions, which have resulted in a decrease in operating profit of R3.5m.
Bananas:
The recently completed banana replant program continues to yield positive results in terms of both
production and quality, generating an improvement in operating profit of R7.8m.
Deciduous fruit:
Early indications are for a good crop in the 2016 season, supported by firm prices, driven by currency
weakness, improved quality and international demand pressures. However, profits for the six month
period ended 30 September 2015 are lower than the corresponding prior period, mainly due to greater
first half crop costs incurred.
Macadamias:
Despite numerous logistical and start up difficulties, typical for a greenfield agricultural development,
the macadamia orchards under development in northern Mozambique continue to make good
progress, with the first commercial crop expected in March 2017.
Claw-back offer
The R215 million claw-back offer approved at a general meeting on 30 July 2015 will be
concluded on 21 December 2015 and will result in a further 2 687 500 shares issued at a price of R80
per share. Following the finalisation of the claw-back issue there will be 15 264 317 ordinary shares in
issue.
Prospects
Following the recent capital raising, the group continues to seek expansion opportunities in Southern
Africa. Several major projects are currently under evaluation, following due consideration by the
board of the need to balance longer term projects with short term cash-generative investments.
It is planned to start a greenfield development of a 300 hectare banana farm in southern Mozambique,
in partnership with Silverlands in 2016. This project offers an attractive return and is considered low
risk because of its proximity to the group's existing banana operation.
The Department of Agriculture recently approved the rezoning of the major part of the group's
Renishaw Estate near Scottburgh for residential, commercial and industrial development. Renishaw
Property Developments plans to launch the first phase residential project early in 2016. Much interest
has been shown in the development by hospital, school and commercial property groups.
With the replanted deciduous orchards rapidly reaching maturity, the macadamia operations due to
start producing from 2017, as well as several promising projects in the pipeline, the medium-term
prospects of the group are promising.
Events after the reporting period
An agreement was recently concluded with the community owners of a large part of the leased
Komatipoort estate to establish a 20 year joint venture for the operation of the farm. The group will
terminate its current 10 year lease four years ahead of schedule, in return for participation in the joint
venture for the extended term. While this will have a negative impact on short-term profitability, the
long-term sustainable benefits for all stakeholders will be significant.
Changes to the board
Chris Chance and Xola Sithole resigned as non-executive directors on 29 May 2015 and 6 June 2015
respectively. Richard Chance, Tim Crookes and Tim Denton (previously alternate director) were
appointed as non-executive directors with effect from 10 July 2015.
Interim Cash Dividend Declaration
The board continues to maintain a conservative dividend policy, given the group's ongoing
reinvestment strategy, as well as the significant downside risk posed by persistent drought conditions
in southern Africa.
A gross interim cash dividend of 35.0 cents (2014: 65,0 cents) per share, for the six-month period ended
to 30 September 2015, has been declared payable to shareholders recorded in the register of the
company at the close of business on the record date, Friday, 18 December 2015.
In respect of the gross interim cash dividend the following further information is provided:
- The dividend has been declared from income reserves;
- The dividend withholding tax rate is 15% resulting in a net dividend of 29.75 cents per share to those
shareholders who are not exempt from the dividend withholding tax;
- The company's tax reference number is 9696/001/71/9; and
- The issued number of shares as at declaration date is 12 576 817.
The interim dividend will be paid on Monday, 21 December 2015 to shareholders recorded in the
register of the company at close of business on the record date Friday, 18 December 2015.
The salient dates of the declaration and payment of these dividends are as follows:
Last day to trade cum-dividend Thursday, 10 December 2015
Shares commence trading ex-dividend Friday, 11 December 2015
Record date Friday, 18 December 2015
Payment date Monday, 21 December 2015
Share certificates may not be dematerialised or re-materialised between Friday, 11 December 2015
and Friday, 18 December 2015, both days inclusive.
Any reference to the group's future financial performance included in this announcement has not
been reviewed nor reported on by the company's auditors.
For and on behalf of the board
J R Barton G S Clarke
(Chairman) (Managing Director)
Mount Edgecombe 26 November 2015
Registered office and postal address Transfer secretaries
170 Flanders Drive, Mount Edgecombe, KwaZulu-Natal Computershare Investor Services (Pty) Ltd.
PO Box 611, Mount Edgecombe, KwaZulu-Natal, 4300 P O Box 61051, Marshalltown, 2107
Sponsor Website
Sasfin Capital www.cbl.co.za
A division of Sasfin Bank Limited
Directors:
J R Barton* (Chairman), G S Clarke (Managing), P J Barker (Financial), R G F Chance*, T J Crookes*,
T K Denton*#, J A F Hewat*, P Mnganga*, M T Rutherford*, R E Stewart*, G Vaughan-Smith*#
* Non-executive director #British
Company secretary:
Highway Corporate Services (Pty) Limited
26 November 2015
Sponsor
SASFIN CAPITAL (a division of SASFIN Bank Limited)
Date: 26/11/2015 05:46:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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