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Unaudited financial results for the six months ended 31 December 2012.
AFGRI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1995/004030/06)
ISIN number: ZAE000040549
Share code: AFR
Unaudited condensed consolidated financial results
for the six months ended 31 December 2012 and cash dividend declaration
The overall performance was overshadowed by a challenging trading environment in the Foods segment,
characterised by input cost inflation, a drop in consumer demand and an oversupplied market on the
back of significant poultry imports into the local economy as well as margin squeeze in the Retail
business unit.
Chris Venter CEO
- Revenue from all operations up 17,5%
- HEPS and DPS from all operations down 15,2% to 31,3 cents (2011: 36,9 cents) and 15,65 cents
(2011:18,45 cents) respectively
- Strong performance from Agri Services and Financial Services segments
- Improvement in gearing with debt to equity ratio of 1,7 (2011: 1,8)
- High feed prices and record levels of poultry imports result in a loss making Poultry business unit
Commentary
The directors of AFGRI Limited (AFGRI) are pleased to present the unaudited condensed consolidated
financial results of the AFGRI Group of companies (the Group) for the six months ended 31 December 2012.
Operations Review
The financial year began with an earlier than expected 2012 summer crop and a high maize price. The maize
price remained high during the period under review which had a positive impact on farmer spending. However,
margins in the Foods segment remained under pressure as a result of the high maize price. These lower margins,
coupled with a poultry industry in distress, were the main drivers of the Groups results for the period
under review.
AFGRI focuses its activities in three segments Agri Services, Financial Services, and Foods. Within these
segments are divisions which in turn consist of business units. Included within Agri Services is the Equipment
and International division as well as the Grain Management division. Financial Services only contains business
units of which Unigro and GroCapital are most significant. Foods includes the Animal Protein division and the
Oil, Milling and Protein division.
Agri Services
The Equipment business unit, within the Equipment and International division, delivered a good performance.
With a steady growth in market share and a growing contribution from its recently established Zimbabwean
operations, the Equipment business delivered a 7,7% increase in profit before taxation for the period under
review.
The Grain Management division started the year with high opening stock levels accompanied by the earlier than
expected 2012 summer crop. Average storage days per ton remained constant and closing stock was 23% higher on
a comparative basis.
In line with its growth strategy into the continent, the Group acquired 51% of the issued share capital of BNOT Harel
Nigeria Limited, a company registered in Nigeria, on 1 November 2012. The company is a service and inputs
provider to the poultry industry in Nigeria.
The Retail business unit, which is subject to a merger and as a result included under discontinued operations,
experienced lower consumer demand in its retail products putting pressure on both volumes and margins as a result
of the intensely competitive retail environment.
Financial Services
A focus on fee-driven business and a stronger balance sheet following the sale of its farmer lending and
corporate debtors books, underpin the excellent performance in this segment. Unigro managed to increase
the debtors book under management by R1,5 billion, allowing an increase in fee income to compensate for
lost margin. This was made possible by a wider product offering and the upturn in equipment sales within the
Equipment business unit. A more volatile commodity market fuelled volumes in the broking business of GroCapital.
GroCapital increased its market share in the trade finance space reporting a 41% increase in related fee income.
The non-farmer portion of its insurance business unit was sold, resulting in a capital profit of
R5,0 million.
Foods
The Animal Protein division currently faces major challenges within its Poultry business. High commodity prices
together with the strong rand fuelled record levels of imports which resulted in a heavily oversupplied local poultry
market. This, together with high feed prices, resulted in lost margin. AFGRI is working with industry bodies and the
Department of Trade and Industry to find a solution to the industry problem. AFGRI Poultry managed to keep operational
costs at bay focusing on efficiencies and cost reduction initiatives to counter the impact of market forces.
Withstanding these efforts, the Poultry business unit reported a loss before taxation of R35,7 million (2011:R24,7 million).
Other units within the Foods segment delivered solid results despite the difficult trading conditions and higher energy
costs which placed margins under pressure. The Animal Feeds business unit experienced a decrease in gross profit on the
back of high commodity prices but managed to keep operational expenditure under control. It was able to reduce finance
costs with a dedicated focus on working capital management. The new preparation and extraction plants at Nedan are progressing
well and the planned commercialisation date is expected to be 1 July 2013. The Milling business continues to perform well,
maintaining gross profit margins over the last six months amid difficult market conditions.
Financial Review
Headline earnings per share (HEPS) decreased by 15,2% to 31,3 cents (2011: 36,9 cents) for the six months ended 31
December 2012. The performance was overshadowed by the challenging trading environment in the Foods segment.
Revenue from all operations is up 17,5%1, mainly driven by higher commodity prices and the increase in market share of
the Equipment business unit both domestically as well as in the rest of Africa.
Selling and administration expenses increased by 15,9%2. Factors affecting the increase include above inflation
increases in energy-related costs, the impact of foreign exchange translation, retrenchment costs, as well as startup
costs relating to the diversification of the Groups Zambian operations. These factors, together with the impact of
acquisitions, represent 9,0% of the increase in selling and administration expenses.
The sale of the farmer lending and corporate debtors books in the previous financial year and the conversion of
short-term facilities into long-term facilities in June 2012 resulted in the Groups finance costs declining by 12% to
R176 million (2011: R200 million). Included in finance costs is an amount of R41 million (2011: R39 million), relating
to the finance charge on the borrowings associated with the Groups B-BBEE ownership structure.
Profit from continuing operations of R124 million is 7,8% higher than the prior period3. This result is analysed in
the Groups business segment results. The announced merger of the Groups retail business with that of Senwes resulted in
the need to reflect it as a discontinued operation. Profit for the period from all operations is down 13,4% on the
prior period4, mainly due to the pressures in the poultry environment as well as the downturn in the retail environment.
Net asset value per share increased to 515 cents per share (2011: 486 cents). A focus on working capital management
led to an increase in inventories being well contained given the impact of high commodity prices on inventory values.
Trade and other receivables decreased by R91 million, with trade and other payables up R77 million. The Groups debt to
equity ratio improved further from 1,8 in June 2012 to 1,7 at period end.
As a result of the distressed industry the Board is continuously monitoring the valuation of the Poultry business unit.
Our half-year impairment testing indicated that, considering the current capital expansions in progress, no impairment
is currently needed. However, should the proposed additional tariffs and anti-dumping initiatives
by government not materialise in the near future, an impairment of the Groups Poultry business unit is inevitable. The
net asset value (including goodwill and other intangibles) of the Poultry business unit was R 293,4 million on 31 December
2012.
The Group generated cash of R270 million from its operating activities, which was mainly applied toward capital
expenditure, the acquisition of the Nigerian business and dividend distributions. Capital expenditure is analysed
in the Groups business segment results. The Groups net cash inflow for the period was R25 million (2011: outflow
of R103 million).
Refinancing of the BEE structure
The negotiations regarding the refinancing of the BEE ownership structure are ongoing. The Land Bank has in the interim
extended the maturity date of the Land Bank loan in terms of the agreements previously approved by shareholders as part of
the BEE transaction.
Interim dividend
The interim dividend decreased by 15,2% to 15,65 cents per share (2011: 18,45 cents per share).
Changes to the Board of Directors
Jan van der Schyff resigned as Financial Director effective 4 September 2012. Johan Geel was appointed acting
Financial Director on the same date and on 24 October 2012 appointed permanently to the position as Financial
Director.
Nyeleti Shirilele resigned from the Board of Directors with effect from 13 November 2012 due to other commitments.
In line with the Board succession plan, Linda de Beer was appointed deputy chairman of the Board effective from 21
November 2012.
Outlook
Higher closing stock together with an expected increase of 4% in crop size for 2013 will provide the Grain Management
division with a strong foundation for the next six months. Continued sales growth is expected on farming mechanisation
with the Groups growing footprint into the rest of the continent.
AFGRI remains committed to its focus to ensure that costs are well managed and cost reduction opportunities are
implemented.
The current environment in the poultry industry is of major concern and AFGRI Poultrys profitability will remain
under pressure. Early indications from industry bodies are that the Department of Trade and Industry will
impose import tariffs which will bring some relief to the industry. The extent and timing of the import tariffs
remains unclear and it is not expected to provide any relief for the remainder of the financial year. AFGRI expects
the current environment to have a significant negative impact on the Group's performance.
By order of the Board
JPR Mbau CP Venter
Chairman Chief Executive Officer
12 March 2013
1. 11,6% on a comparative basis excluding acquisitions.
2. 10,4% on a comparative basis excluding acquisitions.
3. Flat on a comparative basis excluding acquisitions.
4. 20,0% on a comparative basis excluding acquisitions.
Group balance sheet
31 December 30 June
31 December Unaudited Audited
Unaudited 2011 2012
(Rmillions) Note 2012 restated* restated*
Assets
Non-current assets 2 882 2 744 2 783
Property, plant and equipment 2 100 1 842 2 001
Goodwill 180 248 170
Other intangible assets 163 256 180
Investments in associates 47 48 47
Investments in joint ventures 20 5 11
Derivative financial instruments 3 - 6
Other financial assets 41 41 41
Financial receivables 184 180 180
Biological assets 8 8 8
Deferred income tax assets 136 116 139
Current assets 3 812 4 284 3 737
Inventories 1 206 1 227 1 013
Biological assets 48 39 89
Trade and other receivables 10 2 011 612 2 199
Trade receivables financed by banks 5 224 1 895 127
Derivative financial instruments 44 44 53
Other financial assets 22 - 9
Current income tax assets 18 22 16
Cash and cash equivalents and cash collateral deposits 239 445 231
Cash collateral deposits 81 54 76
Cash and cash equivalents 158 391 155
Assets of disposal groups classified as held-for-sale 637 7 664
Total assets 7 331 7 035 7 184
Equity
Capital and reserves attributable to equityholders 1 841 1 734 1 750
Share capital - - -
Treasury shares (86) (86) (86)
Incentive trust shares (123) (130) (123)
Fair value and other reserves (10) (22) (23)
Retained earnings 2 060 1 972 1 982
Non-controlling interest 11 5 4
Total equity 1 852 1 739 1 754
Liabilities
Non-current liabilities 2 092 770 2 130
Borrowings 1 886 572 1 909
Derivative financial instruments 4 - 4
Deferred income tax liabilities 202 183 201
Other liabilities - 15 16
Current liabilities 3 237 4 526 3 154
Trade and other payables 1 579 1 393 1 609
Derivative financial instruments 80 44 64
Current income tax liabilities 13 7 4
Short-term portion of long-term borrowings 673 - 678
Call loans and bank overdrafts 650 1 187 664
Bank borrowings to finance trade receivables 5 242 1 895 135
Liabilities of disposal groups classified as held-for-sale 150 - 146
Total liabilities 5 479 5 296 5 430
Total equity and liabilities 7 331 7 035 7 184
Net asset value per share attributable to equityholders (cents) 515 486 491
* Prior year information has been restated. Refer to notes 9 and 11.
Group income statement
6 months
6 months ended Year ended
ended 31 December 30 June
31 December Unaudited Audited
Unaudited 2011 2012
(Rmillions) Note 2012 restated* restated*
Continuing operations
Sales of goods and rendering of services 4 300 3 494 7 370
Interest on trade receivables 83 134 195
Total revenue 4 383 3 628 7 565
Cost of sales (3 308) (2 649) (5 568)
Gross profit 1 075 979 1 997
Other operating income 6 8 14
Other operating expenses (744) (642) (1 429)
Operating profit 337 345 582
Interest received 2 10 10 23
Finance costs 2 (167) (194) (350)
Share of profit of associates - 7 6
Share of losses of joint ventures (2) - (2)
Profit before income tax 178 168 259
Income tax expense (54) (53) (77)
Profit for the period from continuing operations 124 115 182
Discontinued operations
(Loss)/profit for the period from discontinued operations (8) 19 14
Profit for the period 116 134 196
Profit for the period attributable to:
Equityholders of the Company 113 133 195
Non-controlling interest 3 1 1
Profit for the period 116 134 196
Number of shares in issue (m) 375,5 375,5 375,5
Weighted average number of shares in issue (m) 335,8 333,3 333,6
Diluted weighted average number of shares in issue (m) 357,4 356,7 357,0
Earnings per share from continuing operations (cents) 35,2 35,3 55,3
(Losses)/earnings per share from discontinued operations (cents) (1,7) 4,4 3,0
Earnings per share from all operations (cents) 33,5 39,7 58,3
Diluted earnings per share from continuing operations (cents) 33,0 33,0 51,6
Diluted (losses)/earnings per share from discontinued operations (cents) (1,5) 4,1 2,8
Diluted earnings per share from all operations (cents) 31,5 37,1 54,4
* Prior year information has been restated. Refer to note 8, 9 and 11.
Group statement of comprehensive income
6 months
6 months ended
ended 31 December 30 June
31 December Unaudited Audited
Unaudited 2011 2012
(Rmillions) 2012 restated* restated*
Profit for the period 116 134 196
Other comprehensive income
Exchange differences on translating foreign operations 15 31 36
Cash flow hedges (4) (4) (4)
Share of comprehensive income of joint ventures (2) 4 4
Other comprehensive profit for the period, net of tax 9 31 36
Total comprehensive income for the period 125 165 232
Total comprehensive income attributable to:
Equityholders of the Company 122 164 231
Non-controlling interest 3 1 1
125 165 232
* Prior year information has been restated. Refer to note 11.
Business segment results
Six months ended 31 December 2012 and six months ended 31 December 2011
Agri Services
Equipment and Grain Financial
International Management services
(R'millions) 2012 2011* 2012 2011* 2012 2011*
Revenue 1 320 1 064 281 252 189 201
- Sale of goods and services 1 314 1 057 281 252 112 74
- Interest 6 7 - - 77 127
Operating profit/(loss) (before items
listed below) 59 57 143 130 107 117
- other operating income - - - - 1 3
- depreciation and amortisation (6) (6) (10) (10) (8) (12)
Operating profit/(loss) 53 51 133 120 100 108
Other items of profit and loss - 7 - - (1) -
- share of (loss)/profit of joint ventures - - - (1) -
- share of profit/(loss) of associates - 7 - - - -
Profit/(loss) before finance costs 53 58 133 120 99 108
Net finance costs (14) (16) (8) (14) (46) (73)
Profit/(loss) before income tax 39 42 125 106 53 35
Income tax
Profit after tax
Assets 2 121 1 612 789 882 1 303 2 023
Non-current assets 273 296 417 397 233 327
Other current assets 1 431 836 123 98 40 32
Trade and other receivables 371 387 240 371 944 1 597
Cash and cash equivalents 46 93 9 16 86 67
Liabilities 668 512 396 237 532 1 600
Non-current liabilities 5 6 5 2 15 20
Other current liabilities 564 493 391 235 275 222
Borrowings to finance trade receivables - - - - 242 1 358
Call loans and bank overdrafts 99 13 - - - -
Net assets 1 453 1 100 393 645 771 423
Capital expenditure 24 38 20 10 4 -
* Prior year information has been restated. Refer to notes 8, 9 and 11.
Business segment results (continued)
Six months ended 31 December 2012 and six months ended 31 December 2011
Foods
Animal Protein Oil, Milling and Protein Corporate
(R'millions) 2012 2011* 2012 2011* 2012 2011*
Revenue 2 012 1 779 683 379 - -
- Sale of goods and services 2 012 1 779 683 379 - -
- Interest - - - - -
Operating profit/(loss) (before items
listed below) 74 100 46 23 (18) (9)
- other operating income - - - - 5 5
- depreciation and amortisation (34) (36) (10) (4) (9) (13)
Operating profit/(loss) 40 64 36 19 (22) (17)
Other items of profit and loss (1) - - - -
- share of (loss)/profit of joint ventures (1) - - - - -
- share of profit/(loss) of associates - - - - - -
Profit/(loss) before finance costs 39 64 36 19 (22) (17)
Net finance costs (34) (31) (14) (8) - (3)
Profit/(loss) before income tax 5 33 22 11 (22) (20)
Income tax
Profit after tax
Assets 2 135 1 938 748 720 467 653
Non-current assets 1 229 1 128 475 337 251 302
Other current assets 377 253 107 177 83 39
Trade and other receivables 526 529 166 206 38 71
Cash and cash equivalents 3 28 - - 95 241
Liabilities 1 381 750 331 294 1 682 1 856
Non-current liabilities 485 97 23 22 1 563 65
Other current liabilities 583 653 142 272 47 80
Borrowings to finance trade receivables - - - - - 537
Call loans and bank overdrafts 313 - 166 - 72 1 174
Net assets 754 1 188 417 426 (1 215) (1 203)
Capital expenditure 57 48 55 9 1 6
* Prior year information has been restated. Refer to notes 8, 9 and 11.
Business segment results (continued)
Six months ended 31 December 2012 and six months ended 31 December 2011
Other Totals
BEE SPVs Inter-group Continuing
eliminations operations
(R'millions) 2012 2011* 2012 2011* 2012 2011*
Revenue - - (102) (47) 4 383 3 628
- Sale of goods and services - - (102) (47) 4 300 3 494
- Interest - - - - 83 134
Operating profit/(loss) (before items
listed below) (3) - - - 408 418
- other operating income - - - - 6 8
- depreciation and amortisation - - - - (77) (81)
Operating profit/(loss) (3) - - - 337 345
Other items of profit and loss - - - - (2) 7
- share of (loss)/profit of joint ventures - - - - (2) -
- share of profit/(loss) of associates - - - - - 7
Profit/(loss) before finance costs (3) - - - 335 352
Net finance costs (41) (39) - - (157) (184)
Profit/(loss) before income tax (44) (39) - - 178 168
Income tax (54) (53)
Profit after tax 124 115
Assets (46) (43) (186) (750) 7 331 7 035
Non-current assets 4 (43) - - 2 882 2 744
Other current assets - - (186) (96) 1 975 1 339
Trade and other receivables (50) - - (654) 2 235 2 507
Cash and cash equivalents - - - - 239 445
Liabilities 567 558 (78) (511) 5 479 5 296
Non-current liabilities - 558 (4) - 2 092 770
Other current liabilities 567 - (74) (511) 2 495 1 444
Borrowings to finance trade receivables - - - - 242 1 895
Call loans and bank overdrafts - - - - 650 1 187
Net assets (613) (601) (108) (239) 1 852 1 739
Capital expenditure - - - - 161 111
* Prior year information has been restated. Refer to notes 8, 9 and 11.
Business segment results (continued)
Six months ended 31 December 2012 and six months ended 31 December 2011
Totals Total
Discontinued All
operations operations
(R'millions) 2012 2011* 2012 2011*
Revenue 998 950 5 381 4 578
- Sale of goods and services 998 950 5 298 4 444
- Interest - - 83 134
Operating profit/(loss) (before items
listed below) 1 26 409 444
- other operating income - - 6 8
- depreciation and amortisation (2) (2) (79) (83)
Operating profit/(loss) (1) 24 336 369
Other items of profit and loss - - (2) 7
- share of (loss)/profit of joint ventures - - (2) -
- share of profit/(loss) of associates - - - 7
Profit/(loss) before finance costs (1) 24 334 376
Net finance costs (9) (4) (166) (188)
Profit/(loss) before income tax (10) 20 168 188
Income tax 2 (1) (52) (54)
Profit after tax (8) 19 116 134
Assets 7 331 7 035
Non-current assets 2 882 2 744
Other current assets 1 975 1 339
Trade and other receivables 2 235 2 507
Cash and cash equivalents 239 445
Liabilities 5 479 5 296
Non-current liabilities 2 092 770
Other current liabilities 2 495 1 444
Borrowings to finance trade receivables 242 1 895
Call loans and bank overdrafts 650 1 187
Net assets 1 852 1 739
Capital expenditure 161 111
* Prior year information has been restated. Refer to notes 8, 9 and 11.
Group cash flow statement
6 months
6 months ended Year ended
ended 31 December 30 June
31 December Unaudited Audited
Unaudited 2011 2012
(Rmillions) 2012 restated* restated*
Operating activities
Cash generated by operations before changes in working capital and tax paid 238 259 443
Changes in working capital 73 (322) (1 531)
Taxation paid (41) (27) (60)
Net cash generated from/(utilised in) operating activities 270 (90) (1 148)
Net cash utilised in investing activities (183) (300) (610)
Net cash (utilised in)/generated from financing activities (62) 287 1 950
Net increase/(decrease) in cash and cash equivalents 25 (103) 192
Cash and cash equivalents at the beginning of the period (501) (693) (693)
Cash and cash equivalents at the end of the period (476) (796) (501)
Cash collateral deposits 81 54 76
Cash and cash equivalents and cash collateral deposits (395) (742) (425)
- Included in cash and cash equivalents and cash collateral deposits (411) (742) (433)
- Included in assets from disposal groups classified as held-for-sale 16 - 8
*Prior year information has been restated. Refer to note 11.
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 an interim gross cash dividend of 15,65 cents per share (13,3025 cents per share net of dividend
withholding tax, where applicable) for the six months ended 31 December 2012. The dividend has been declared from
income reserves and no secondary tax on companies credits have 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 interim dividend:
Last day to trade cum the dividend Friday, 5 April 2013
Trading ex dividend commences Monday, 8 April 2013
Record date Friday,12 April 2013
Dividend payment date Monday,15 April 2013
There will be no dematerialisation or rematerialisation of AFGRI shares between Monday, 8 April 2013 and
Friday, 12 April 2013, both dates inclusive.
By order of the Board
M Shikwinya
Group Company Secretary
Centurion
Group statement of changes in equity
Other
Total non-
Fair value Incentive share- con-
Share and other Retained Treasury trust holders BEE trolling
(Rmillions) capital reserves earnings shares share equity partners interest Total
Balance 30 June 2011 (audited) - (64) 1 858 (90) (133) 1 571 - 4 1 575
Profit for the period - - 133 - - 133 - 1 134
Other comprehensive income - 31 - - - 31 - - 31
for the period
Dividends paid - - (10) - - (10) - - (10)
Share-based payments - 2 - - - 2 - - 2
Sale of incentive shares - - - - 7 7 - - 7
Transfer of Group shares - - - 4 (4) - - - -
BEE partners share to NDR - 9 (9) - - - - - -
Balance 31 December 2011
(unaudited) - (22) 1 972 (86) (130) 1 734 - 5 1 739
Profit for the period - - 62 - - 62 - - 62
Other comprehensive income
for the period - 5 - - - 5 - - 5
Payment to non-controlling - - - - - - - (1) (1)
interests
Dividends paid - - (63) - - (63) - - (63)
Share-based payments - 5 - - - 5 - - 5
Sale of incentive shares - - - - 9 9 - - 9
Transfer of Group shares - - - (4) 4 - - - -
Executive Share Award
Scheme shares - - - - (6) (6) - - (6)
Treasury shares issued to
Executive Share Award Scheme - - - 4 - 4 - - 4
BEE partners share to NDR - (11) 11 - - - - - -
Balance 30 June 2012 (audited) - (23) 1 982 (86) (123) 1 750 - 4 1 754
Profit for the period - - 113 - - 113 - 3 116
Other comprehensive income
for the period - 9 - - - 9 - - 9
Dividends paid - - (34) - - (34) - - (34)
Share-based payments - 3 - - - 3 - - 3
Non-controlling interest arising - - - - - - - 4 4
on business combination
BEE partners share to NDR - 1 (1) - - - - - -
Balance 31 December 2012 (unaudited) - (10) 2 060 (86) (123) 1 841 - 11 1 852
Notes to the condensed consolidated annual financial statements
1. Basis of preparation and accounting policies
These condensed consolidated interim 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 period, except for the change in
accounting policies as disclosed in note 11. The preparation of the condensed consolidated annual financial statements has
been supervised by the Group Financial Director, GJ Geel CA(SA).
Six months Six months
ended ended
31 December 31 December
(Rmillions) 2012 2011
2. Finance costs and interest income
2.1 Finance costs
Interest paid on bank borrowings used to finance trade receivables (62) (110)
Interest paid to financial institutions (69) (46)
Interest paid to financial institutions due to the consolidation
of the BEE SPVs (41) (39)
Finance cost - continuing operations (172) (195)
Less: Borrowing costs capitalised on qualifying assets 5 1
Finance cost - continuing operations (income statement) (167) (194)
Finance cost - discontinued operations (9) (6)
Finance cost - total (176) (200)
2.2 Interest income
Interest received from financial institutions 2 2
Interest received from independent third parties 8 8
Interest income - continuing operations (per income statement) 10 10
Interest income - discontinued operations - 2
Interest income - total 10 12
Six months Six months
ended ended
31 December 31 December
(Cents) 2012 2011
3. Reconciliation of headline earnings per share
Earnings 33,5 39,7
Reversal of impairment of assets (0,6) 0,0
Profit on the sale of business (1,5) 0,0
Profit on disposal of assets (0,1) (2,8)
Headline earnings 31,3 36,9
Diluted headline earnings 29,5 34,5
4. Business segment results
The pre-tax segment results are presented without taking into account any headline earnings adjustments and before the
allocation of any non-controlling interest share of profits. Operating profits after finance costs are shown after a
charge for internal interest based on each operating units net assets throughout the period. With the exception of the
acquisition of the business in Nigeria (included under the Equipment and International division), no other significant
changes to the Groups structure and operations have occurred during the period. With the inclusion of the Retail
business unit under discontinued operations (refer note 8), the Group changed the name of the Retail and Equipment
division to the Equipment and International division.
5. Trade receivables financed by banks and related liability
The only security for the liability is the trade receivables and, in certain cases, additional cash trade receivables
of up to 15% (2011: additional cash collateral deposits or cash trade receivables of between 10% and 15% of the facility).
The Group carries the risk of loss on these trade receivables. The total value of additional debtors encumbered for these
facilities is R29 million.
6. Agency agreements
The Group manages Agri debtors on behalf of third party financial institutions to the amount of R6 162 million
(2011:R3 532 million). Administration and management fees are paid by these third parties to the Group for services
rendered in accordance with the service level agreements. In the previous financial year the Group sold its farmer
lending and corporate debtors book at carrying value to the Land Bank. 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%. Cash collateral deposits of between 0,5% and 1,5% of the
debtors value administrated are ceded as security for performance under the service level agreement. In accordance
with IFRS, and as a result of the residual risk retained in the books sold, R21,6 million were not derecognised as part
of the sale. A further R9,3 million gaurantee provision was raised to accommodate the potential second loss in the books
sold. On all other service level agreements, the Group is liable for bad debts to a maximum of between 5% and 10% of the
value of the individual 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 R2 701 million
(2011:R3 023 million).
7. Business combinations
On 1 November 2012 the Group acquired 51% of the issued share capital of BNOT Harel Nigeria Limited, a company registered
in Nigeria, as a going concern. The company acts as a service and inputs provider to the poultry industry in Nigeria and
is the sole agent for products of certain entities in Nigeria. The purchase consideration amounted to R22,8 million on
effective date.The initial accounting for this business combination in terms of IFRS 3 is incomplete and fair values were
preliminarily determined as follows: property, plant and equipment of R4,0 million, inventory of R5,7 million, trade and
other receivables of R11,0 million, cash and cash equivalents of R1,0 million and trade and other payables of R12,0 million.
Goodwill of R17,9 million arose as the difference between the fair value of purchase consideration and the fair value of the
net assets acquired adjusted for non-controlling interest of R4,8 million. Since 1 November 2012 this business unit generated
revenue of R16,0 million and a net profit before tax and non-controlling interest share of profits of R3,0 million (before the
allocation of internal interest) which was included in the current period results.
8. Assets of disposal groups classified as held-for-sale and discontinued operations
As disclosed in the previous financial year the Group and Senwes Limited (Senwes) entered into binding sale of business
agreements on 31 July 2012 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. 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. Details regarding this transaction and its progress were published in SENS on 31 July 2012 and 4 December 2012
respectively. As a result of this transaction, this group of assets (disposal group) are disclosed as a disposal group held
for sale as at 31 December 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. On 23 November 2012 the Group entered into a binding sale of business agreement with G4S Cash Solutions
Business (SA) Proprietary Limited (hereafter G4S) in terms of which the Group will sell its intellectual property right,
trademark and patent on automated banking machines registered as Deposita together with its 46% investment in Deposita Systems
Proprietary Limited for R113,0 million. The transaction was unconditionally approved by the South African Competition Authorities
on 11 December 2012 and as a result the effective date of the transation was 1 January 2013, being the date which G4S took
control over the day-to-day operations of the business. In accordance with IFRS 5, these assets were disclosed as held-for-sale
at 31 December 2012. Details regarding this transaction were published in SENS on 23 November 2012.
9. Comparative figures
During the 2012 financial year interest income was seperately disclosed on the face of the income statement. The prior year
information has been reclassified to ensure comparability and a total amount of R12,2 million has been reclassified from other
operating expenses to interest received for the six months ending 31 December 2011. The Group also disclosed the non-current
portion of biological assets since the year ending 30 June 2012. As a result the pior year information has been reclassified
from current to non-current due to its incorrect classification in the pior year, to the value of R7,7 million.
10. Trade and other receivables
As previously reported, included in trade receivables is an amount of R42,5 million which is disputed by the debtor and has
been referred to legal arbitration. The Group expects the arbitration to be concluded in the current financial year.
11. Change in accounting policy
In anticipation of the impact of IFRS 11 Joint Arrangements (effective June 2014) on the Groups accounting policies, the Group
decided to change the way it accounts for its interests in jointly controlled entities under the current IAS 31 Interests in Joint
Ventures from proportionate consolidation to the equity method of accounting. Comparitives have been restated accordingly and the
impact was as follows:
Jun 2012 Dec 2011
Rm Rm
Balance sheet
Decrease in property, plant and equipment (21) (3)
Increase in investment in joint ventures 11 5
Increase in financial receivables 26 16
Decrease in deferred taxation (1) -
Decrease in inventories (10) -
Decrease in trade and other receivables (9) (18)
Decrease in cash and cash equivalents (8) -
Decrease in trade and other payables (12) -
Income statement
Decrease in sales of goods and rendering of services (47) (1)
Decrease in cost of sales 43 1
Decrease in other operating expenses 7 -
Increase in share of losses of joint ventures (2) -
Decrease in income tax expense (1) -
Statement of comprehensive income
Decrease in exchange differences on translating foreign operations (4) (4)
Increase in share of comprehensive income of joint ventures 4 4
Cash flow statement
Increase in cash generated by operations before changes in working
capital and tax paid 1 -
Increase in changes in working capital 7 18
Decrease in net cash utilised in investing activities (16) (18)
Decrease in cash and cash equivalents at the end of the period (8) -
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
Company Secretary
Ms M Shikwinya, PO Box 11054, Centurion, 0046
Income tax reference number
9217/001/71/9
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
Directorate
Non-executive
JPR Mbau (Chairman), L de Beer (Deputy Chairman),
DD Barber, LM Koyana, BA Mabuza, CT Vorster,
NC Wentzel
Executive
CP Venter (Chief Executive Officer)
GJ Geel (Financial Director)
AFGRI Limited
PO Box 11054
Centurion
0046
Tel: +27 11 063 2347
Fax: +27 87 942 5010
E-mail: afgri@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
www.afgri.co.za
Date: 13/03/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
