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Audited summarised consolidated financial results for the year ended 30 June 2013 and cash dividend declaration
AFGRI LIMITED (Incorporated in the Republic of South Africa)
(Registration number: 1995/004030/06)
ISIN number: ZAE000040549
Share code: AFR
Audited summarised consolidated financial results for the year ended
30 June 2013 and cash dividend declaration
Revenue from all operations up 10%
HEPS from all operations down 32,9% to 38,0 cents (2012: 56,6 cents)
Strong performance from Agri Services and Financial Services Segments
BEE ownership structure has been successfully extended and refinanced
AFGRI Poultry reporting R229,2 million loss before taxation, after impairing R116,8 million amid a distressed industry
R642 million increase in cash and cash equivalents
Debt to equity ratio improves further to 0,86 times (2012: 1,80 times)
Commentary
The directors of AFGRI Limited (AFGRI) are pleased to present the audited summarised consolidated annual financial
results of the AFGRI Group of companies (the Group) for the year ended 30 June 2013.
The Groups performance reflects a decline in profitability from R196 million to R99 million following the economic
downturn and the significant and unabated imports of cheap poultry products, which led to the Poultry business unit
incurring a loss of R229,2 million (including an impairment of R117 million). Results were further marked by less than
pleasing results delivered by the Animal Feeds business, due to high raw material costs, and the Retail business given lower
consumer demand in the current economic climate.
The remaining business units performed very well. Grain Management and Equipment produced similar results with record
grain deliveries received and smaller format tractors selling extremely well especially in Africa. The Financial
Services business unit, now operating effectively on an agency model, increased fee income underpinning the strategy
implemented. Milestones reached include further African expansion, now present or operating in seven countries, the
implementation of the merger of the retail businesses with that of Senwes, the extension and refinancing of the Groups
BEE structure as well as the restructure of the International business unit which will house all international investments
including those in Africa and Australia.
Operation environment
The dynamic surrounding AFGRI Poultry remains of great concern with the industry facing challenges of crisis
proportion. The sector has been adversely affected by massive imports of poultry products from Latin America and the European
Union. Consequently, decisive and effective government tariff protection against poultry dumping is imperative if the
sector is to avoid a calamity.
Financial review
Headline earnings per share (HEPS) decreased by 32,9% to 38,0 cents (2012: 56,6 cents) for the year ended 30 June 2013
and earnings per share (EPS) decreasing by 50,3% to 29,0 cents (2012: 58,3 cents). The main drivers for these results
were the poor performance of the Groups Protein division and the Australian operations as well as an impairment of R22
million on trade and other receivables due to the outcome of legal arbitration on a dispute with a debtor subsequent to
year end (refer to note 15). Significant headline earnings adjustments include the profit recorded on the merger of the
Groups retail business with Senwes of R110,2 million, which was offset by the impairments of R139 million relating to
the Poultry and Australian business units.
Revenue from continuing operations increased by 13% to R8 573 million. This increase is partially attributable to the
impact of the weaker Rand on the translation of the revenue of the Groups foreign operations, the impact of the
acquisition of the Nigerian business on 1 November 2012 and the inclusion of both AFGRI Equipment in Zimbabwe and AFGRI Milling
for a full year (2012: 10 months and 7 months respectively). Excluding these factors, revenue increased by 10,4% marked
by increased tractor sales, higher volumes through both the Groups storage facilities, the Nedan production plant and
the impact of higher commodity prices on products.
The Groups selling and administrative expenses increased by 15,8% to R1 630 million. Eliminating the impact of
foreign exchange translation and the acquisitions already mentioned, selling and administrative expenses increased by 11,2%.
This increase is largely attributable to the R139 million increase in the Groups impairment charge for the year which
contributes 9,6% of the increase. Other factors are the above inflation increases in energy-related costs, as well as
start-up costs relating to the diversification of the Groups operations across the continent.
The finalisation of the Groups fee-based business model within its Financial Services segment and the conversion of
short-term facilities into long-term facilities in June 2012 resulted in the Groups finance costs declining by 30% to
R233 million (2012: R331 million).
Profit after taxation for the year from continuing operations was R27 million (2012: R182 million) which 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 for 11 months of the year despite the fact that the Group retains
a 50% shareholding in the joint venture. The profit realised with the merger of R110,2 million was also reported under
discontinued operations. Profit after taxation from all operations decreased by 49% to R99 million.
The extension and refinancing of the Groups BEE transaction resulted in a more simplified structure with shareholding
at an AFGRI Operations Limited level of 26,76%. The Group no longer consolidates the structure, which has resulted in a
decrease in debt of R561 million and a net increase in equity of R625 million. Shareholders are referred to the
previous SENS announcements released on 31 July 2012, 4 December 2012, 12 April 2013 and 3 June 2013 respectively.
The Groups continued focus on working capital management helped to contain the impact of high commodity prices on
inventory values. Overall the Group reported a R503 million improvement in net working capital.
The Group generated cash of R802 million from its operating activities, which was mainly applied toward capital
expenditure and dividend distributions. Capital expenditure is analysed in the Groups business segment results. The Groups
net cash inflow for the year was R642 million (2012: R192 million).
Operations review
AFGRI focuses activities in three segments - Agri Services, Financial Services, and Foods. Agri Services comprises the
Retail and Equipment division as well as the Grain Management division. The Financial Services segment contains the
business units of Unigro and GroCapital which are the most significant, and the Foods segment includes the Animal Protein
division, made up of Poultry and Animal Feeds and the Oil, Milling and Protein division.
Agri Services
AFGRI Agri Services experienced a good year, marked by high opening stock levels in the silo business coupled with
good tractor sales across the continent.
Tractor sales remained strong throughout the year with the Equipment business unit recording a record number of
tractors and combine harvesters sold. The continued focus on enhanced equipment sales on the continent was rewarded with
increased tractor sales of 50% to 401 units compared to the sale of 267 units in 2012.
Results from the Australian operation were disappointing. Difficult trading conditions and the longer than expected
turnaround implementation contributed to the decision to impair the R22,1 million goodwill in this operation. An overall
loss before taxation of R34,7 million (2012: R5,1 million loss) was reported for the year. The operation has been
restructured and rebranded, creating an improved platform for the 2014 financial year.
The Retail business unit experienced lower consumer demand and an intensely competitive retail environment putting
pressure on both volumes and margins. The merger of this unit with the retail business of Senwes, where AFGRI retains a 50%
shareholding in the joint venture, was successfully concluded on 1 June 2013 and branded as Hinterland, retaining the
AFGRI Town & Country as well as the Senwes Village brand to ensure customers continuity.
Opening stock levels in the Grain Management division were 69% higher than the prior year, accompanied by an 11%
decrease in receipts over the year with closing stock 18% higher on a comparative basis. Average storage days per ton
decreased by 19% year-on-year.
Grain managements results were negatively impacted by the already mentioned R22 million impairment due to the outcome
of legal arbitration with a debtor subsequent to year end.
Financial Services
The Financial Services segment focused efforts on fee income generating business, and returned a stellar performance
on the back of a broader product offering.
The finalisation of the fee-based business model in the previous financial year allowed Unigro to focus on generating
top line growth. With a renewed sales focus and a wider product offering Unigro managed to grow the average debtors
book under management, on behalf of the Land Bank, by 71% to R2,9 billion (2012: R1,7 billion). This growth was supported
by the upturn in equipment sales within the Equipment business unit.
Volatility in the commodity market, together with new hedging products offered to clients, fuelled volumes in the
broking business of GroCapital. This translated to an increase of 19% in fee-based income compared to the prior year.
Foods
This was a disappointing year for AFGRI Foods. A poultry industry in distress, high feed prices and a heavily
oversupplied local poultry market contributed to reduced margin. Consequently a loss before the impairment of R112,4 million
(2012: R89,3 million loss) was reported for the year.
Although AFGRI Poultry managed to improve efficiencies and implement cost savings initiatives to soften the impact of
lost margin, a decision was taken to impair goodwill and other intangible assets to the value of R116,8 million given the
current circumstances. This resulted in an overall loss before taxation of R229,2 million (2012: loss of R89,3 million) for AFGRI
Poultry, a deterioration of 157%.
The remaining units within the Foods segment delivered satisfactory results despite the difficult trading conditions
and higher energy costs which placed margins under pressure. Cost inflation was managed down to a minimum at AFGRI Animal
Feeds and with a dedicated focus on working capital management, this unit reduced finance charges for the year but lost
margin as a result of the high raw material prices. AFGRI Milling had its first full year as part of the Group and
continued to deliver a good performance. Revenue was up 91% to R540 million (12% on a comparative basis), with profit before
taxation reaching R22 million (2012: R14 million). Nedan had a good year, with profits returning to levels last seen in
2011. This unit reported an increase of 151% in profit before taxation to R20 million (2012: R8 million).
Final dividend
A final dividend of 3,30 cents per share (2012: 9,85 cents per share) was declared bringing the total dividend for the
year to 18,95 cents per share, a decrease of 33,0%.
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.
The Board appointed two independent non-executive directors, Louis von Zeuner and Louisa Stephens effective 1 April
2013, bringing a wealth of corporate and banking experience to the Board.
In line with the Board succession plan, Linda de Beer was appointed Deputy Chairman effective 21 November 2012.
Outlook
AFGRIs agri business prospects for the foreseeable future remain positive. A record summer crop, receiving 3,5
million tons into our storage facilities between March and August coupled with enhanced product diversification is gaining
traction and extending our grain management expertise across the continent. An increased presence in Africa will benefit
the Equipment business unit as well as Collateral Management. The crystallisation of synergies in the retail transaction
with Senwes should contribute positively to the Group.
The success of a repositioned Financial Services business, based on fee income and with new products in place will
further add to the Group.
Challenges faced by the Poultry business unit pertaining to the uncertainty of the imposition of import tariffs and a
lack of clarity on local brining percentages we expect will remain until Government imposes a change. AFGRI continues to
engage with Government and regulatory bodies in this regard. AFGRI does not foresee relief in Animal Feeds input costs
and expects overall margin pressure in the Poultry business unit to remain due to the inability to
recoup costs.
Despite Poultry pressures, finalisation of the Nedan expansion projects and the commissioning of the wheat mill in Harrismith
are positive enhancements for AFGRI.
By order of the Board
JPR Mbau CP Venter
Chairman Chief Executive Officer
3 September 2013
REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF AFGRI
LIMITED
The summarised consolidated financial statements, which comprise the summarised consolidated balance sheet as at 30 June
2013, the summarised consolidated income statement, and the summarised consolidated statements of comprehensive income, changes
in equity and cash flows for the year then ended, and related notes, are derived from the audited consolidated financial
statements of AFGRI Limited for the year ended 30 June 2013. We expressed an unmodified audit opinion on those consolidated
financial statements in our report dated 3 September 2013. Our auditors report on the audited consolidated financial statements
contained an other matter paragraph (refer below).
The summarised consolidated financial statements do not contain all the disclosures required by International Financial
Reporting Standards and the requirements of the Companies Act of South Africa as applicable to annual financial
statements. Reading the summarised consolidated financial statements, therefore, is not a substitute for reading the audited
consolidated financial statements of AFGRI Limited.
Directors responsibility for the summarised consolidated financial statements
The Companys directors are responsible for the preparation of the summarised audited consolidated financial
statements in accordance with the JSE Limiteds (JSE) requirements for summarised financial statements, set out in note 1 to the
summarised consolidated financial statements, and the requirements of the Companies Act of South Africa as applicable to
summarised financial statements.
Auditors responsibility
Our responsibility is to express an opinion on the summarised consolidated financial statements based on our procedures,
which were conducted in accordance with International Standards on Auditing (ISA) 810 - Engagements to Report on Summary
Financial Statements.
Opinion
In our opinion, the summarised consolidated financial statements derived from the audited consolidated financial
statements of AFGRI Limited for the year ended 30 June 2013 are consistent, in all material respects, with those consolidated
financial statements, in accordance with the JSEs requirements for summarised financial statements, set out in note 1 to the
summarised consolidated financial statements, and the requirements of the Companies Act of South Africa as applicable to
summarised financial statements.
The other matter paragraph in our audit report dated 30 June 2013 states that as part of our audit of the consolidated
financial statements for the year ended 30 June 2013, we have read the Directors Report, the Audit and Risk
Committees Report and the Company Secretarys Certificate for the purpose of identifying whether there are material
inconsistencies between these reports and the audited consolidated financial statements. These reports are the responsibility of the
respective preparers. The other matter paragraph states that, based on reading these reports, we have not identified
material inconsistencies between these reports and the audited consolidated financial statements. The paragraph furthermore
states that we have not audited these reports and accordingly do not express an opinion on these reports. The other
matter paragraph does not have an effect on the summarised consolidated financial statements or our opinion thereon.
PricewaterhouseCoopers Inc.
Director: JL Roos
Registered Auditor
Pretoria
3 September 2013
Group balance sheet
at 30 June Note 2013 2012
Rm Rm
Restated*
ASSETS
Non-current assets 3 089 2 757
Property, plant and equipment 2 2 241 2 001
Goodwill 2 74 170
Other intangible assets 2 109 180
Investments in associates 47 47
Investments in joint ventures 301 11
Derivative financial instruments 4 6
Other financial assets 46 41
Financial receivables 49 154
Biological assets 9 8
Deferred income tax assets 209 139
Current assets 4 288 3 763
Inventories 1 141 1 021
Biological assets 98 89
Trade and other receivables 2 162 2 217
Trade receivables financed by banks 141 127
Derivative financial instruments 70 53
Other financial assets 18 9
Income tax assets 17 16
Cash and cash equivalents and cash collateral deposits 641 231
Cash collateral deposits 77 76
Cash and cash equivalents 564 155
Assets of disposal groups classified as held-for-sale 19 664
Total assets 7 396 7 184
EQUITY AND LIABILITIES
Capital and reserves attributable to the Companys equityholders 2 182 1 750
Share capital# - -
Treasury shares (86) (86)
Incentive trust shares (122) (123)
Fair value and other reserves 143 (23)
Retained earnings 2 247 1 982
Non-controlling interest 238 4
Total equity 2 420 1 754
Non-current liabilities 2 295 2 130
Borrowings 2 058 1 909
Derivative financial instruments 2 4
Deferred income tax liabilities 220 201
Other financial liabilities 5 -
Other liabilities 10 16
Current liabilities 2 679 3 154
Trade and other payables 1 889 1 609
Derivative financial instruments 64 64
Other financial liabilities 29 -
Income and other tax liabilities 37 4
Short-term portion of long-term borrowings 96 678
Call loans and bank overdrafts 424 664
Borrowings from banks to finance trade receivables 140 135
Liabilities of disposal groups classified as held-for-sale 2 146
Total liabilities 4 976 5 430
Total equity and liabilities 7 396 7 184
# Share capital issued to the value of R3 755 (2012: R3 755).
* Prior year information has been restated - refer to note 16.
Group income statement
Year ended 30 June Note 2013 2012
Rm Rm
Restated*
Continuing operations:
Sales of goods and rendering of services 8 477 7 415
Interest on trade receivables financed by banks 11 134
Interest on other trade receivables 85 16
Total revenue 8 573 7 565
Cost of sales (6 671) (5 609)
Gross profit 1 902 1 956
Other operating income 13 14
Selling and administration expenses (1 630) (1 407)
Operating profit 285 563
Interest received 3 23 23
Finance costs 3 (233) (331)
Share of loss of joint ventures (2) (2)
Share of profit of associates - 6
Profit before income tax 73 259
Income tax expense (46) (77)
Profit for the year from continuing operations 27 182
Discontinued operations:
Profit for the year from discontinued operations 9 81 14
Loss on remeasurement of assets of disposal groups 9 (9) -
Profit for the year 99 196
Profit for the year attributable to:
Equityholders of the Company 98 195
Non-controlling interest
- BEE partners (2) -
- Other non-controlling interest 3 1
Profit for the year 99 196
Number of shares in issue (million) 375,5 375,5
Weighted average number of shares in issue (million) 335,9 333,6
Diluted weighted average number of shares in issue (million) 357,4 357,0
Earnings per share from continuing operations attributable
to the equityholders of the Company during the year (cents per share) 7,0 55,3
Profit per share from discontinued operations attributable to 22,0 3,0
the equityholders of the Company during the year (cents per share)
Earnings per share from all operations attributable to the 29,0 58,3
equityholders of the Company during the year (cents per share)
Diluted earnings per share from continuing operations attributable to 6,7 51,6
the equityholders of the Company during the year (cents per share)
Diluted profit per share from discontinued operations attributable
to the equityholders of the Company during the year (cents per share) 20,6 2,8
Diluted earnings per share from all operations attributable to the
equityholders of the Company during the year (cents per share) 27,3 54,4
* Prior year information has been restated - refer to note 16.
Business segment Results
Agri Services Financial services
Retail and Equipment Grain Management
2013 2012* 2013 2012* 2013 2012*
Rm Rm Rm Rm Rm Rm
Gross segment revenue 2 264 2 274 790 492 366 368
- Sales of goods and services 2 264 2 273 790 492 270 219
- Interest - 1 - - 96 149
Operating profit/(loss) (before items listed below) 81 97 217 239 120 153
Other amounts included in operating profit/(loss) (35) (9) (22) (19) (12) (13)
- other operating income - - - - 3 4
- impairment of goodwill (22) - - - - -
- depreciation and amortisation (13) (9) (22) (19) (15) (17)
Operating profit/(loss) 46 88 195 220 108 140
Other items of profit and loss 1 7 - 1 (5) (1)
Fair value adjustment to disposal group assets - - - - - -
Share of profit/(loss) on joint ventures 1 - - - (5) 1
Share of profit on associates - 7 - 1 - (2)
Profit/(loss) before finance costs 47 95 195 221 103 139
Net finance costs (16) (26) (7) (27) (12) (81)
Profit/(loss) before income tax 31 69 188 194 91 58
Income tax expense
Profit after income tax
Assets 1 681 2 039 1 139 1 094 1 171 1 274
Non-current assets 384 225 481 419 275 246
Other current assets 759 1 345 222 208 52 158
Trade and other receivables 451 427 429 462 734 790
Cash and cash equivalents and cash collateral deposits 87 42 7 5 110 80
Liabilities 568 708 678 424 543 402
Non-current liabilities 7 4 13 6 19 15
Other current liabilities 555 679 665 418 318 251
Borrowings to finance trade receivables - - - - 140 135
Short-term borrowings and bank overdrafts 6 25 - - 66 1
Capital expenditure 56 75 58 47 6 19
Geographical analysis
South Africa
Gross segment revenue 1 609 1 392 530 492 331 368
Profit before taxation 52 63 192 194 83 58
Total assets 1 101 1 265 970 1 094 865 1 274
Total liabilities 371 581 674 424 477 402
Non-South Africa
Gross segment revenue 655 882 260 - 35 -
Profit before taxation (21) 6 (4) - 8 -
Total assets 580 774 169 - 306 -
Total liabilities 197 127 4 - 66 -
* Prior year information has been restated - refer to note 16.
Business segment Results (continued)
Foods
Animal Protein Oil, Milling and Protein
2013 2012* 2013 2012*
Rm Rm Rm Rm
Gross segment revenue 4 010 3 571 1 361 1 087
- Sales of goods and services 4 010 3 571 1 361 1 087
- Interest - - - -
Operating profit/(loss) (before items listed below) 77 184 92 59
Other amounts included in operating profit/(loss) (149) (72) (20) (12)
- other operating income - - - -
- impairment of goodwill (71) - - -
- depreciation and amortisation (78) (72) (20) (12)
Operating profit/(loss) (72) 112 72 47
Other items of profit and loss 2 (3) - -
Fair value adjustment to disposal group assets - - - -
Share of profit/(loss) on joint ventures 2 (3) - -
Share of profit on associates - - - -
Profit/(loss) before finance costs (70) 109 72 47
Net finance costs (71) (70) (30) (25)
Profit/(loss) before income tax (141) 39 42 22
Income tax expense
Profit after income tax
Assets 2 038 1 978 805 697
Non-current assets 1 160 1 173 544 430
Other current assets 365 299 97 94
Trade and other receivables 498 504 164 172
Cash and cash equivalents and cash collateral deposits 15 2 - 1
Liabilities 1 311 1 292 411 349
Non-current liabilities 496 509 197 37
Other current liabilities 531 575 147 147
Borrowings to finance trade receivables - - - -
Short-term borrowings and bank overdrafts 284 208 67 165
Capital expenditure 120 125 126 100
Geographical analysis
South Africa
Gross segment revenue 3 940 3 571 1 361 1 087
Profit before taxation (145) 39 42 22
Total assets 1 982 1 978 805 697
Total liabilities 1 283 1 292 411 349
Non-South Africa
Gross segment revenue 70 - - -
Profit before taxation 4 - - -
Total assets 56 - - -
Total liabilities 28 - - -
* Prior year information has been restated - refer to note 16.
Business segment Results(continued)
Other
Corporate Agri Sizwe and Izitsalo SPVs Inter-group eliminations
2013 2012* 2013 2012* 2013 2012*
Rm Rm Rm Rm Rm Rm
Gross segment revenue - - - - (218) (227)
- Sales of goods and services - - - - (218) (227)
- Interest - - - - - -
Operating profit/(loss) (before items listed below) (54) (29) - - - -
Other amounts included in operating profit/(loss) (10) (17) - - - -
- other operating income 10 10 - - - -
- impairment of goodwill - - - - - -
- depreciation and amortisation (20) (27) - - - -
Operating profit/(loss) (64) (46) - - - -
Other items of profit and loss - - - - - -
Fair value adjustment to disposal group assets - - - - - -
Share of profit/(loss) on joint ventures - - - - - -
Share of profit on associates - - - - - -
Profit/(loss) before finance costs (64) (46) - - - -
Net finance costs 1 1 (75) (80) - -
Profit/(loss) before income tax (63) (45) (75) (80) - -
Income tax expense
Profit after income tax
Assets 711 448 - (38) (149) (308)
Non-current assets 245 256 - 8 - -
Other current assets 17 56 - - (149) (308)
Trade and other receivables 27 35 - (46) - -
Cash and cash equivalents and cash collateral deposits 422 101 - - - -
Liabilities 1 629 1 898 - 557 (164) (200)
Non-current liabilities 1 563 1 559 - - - -
Other current liabilities 66 74 - 557 (164) (200)
Borrowings to finance trade receivables - - - - - -
Short-term borrowings and bank overdrafts - 265 - - - -
Capital expenditure 4 7 - - - -
Geographical analysis
South Africa
Gross segment revenue - - - - (218) (227)
Profit before taxation (63) (45) (75) (80) - -
Total assets 711 448 - (38) (149) (308)
Total liabilities 1 629 1 898 - 557 (164) (200)
Non-South Africa
Gross segment revenue - - - - - -
Profit before taxation - - - - - -
Total assets - - - - - -
Total liabilities - - - - - -
* Prior year information has been restated - refer to note 16.
Business segment Results (continued)
Total Total
Continuing operations Discontinued operations All operations
2013 2012* 2013 2012* 2013 2012*
Rm Rm Rm Rm Rm Rm
Gross segment revenue 8 573 7 565 1 743 1 809 10 316 9 374
- Sales of goods and services 8 477 7 415 1 743 1 809 10 220 9 224
- Interest 96 150 - - 96 150
Operating profit/(loss) (before items listed below) 533 703 108 34 641 737
Other amounts included in operating profit/(loss) (248) (142) (3) (7) (251) (149)
- other operating income 13 14 - - 13 14
- impairment of goodwill (93) - - - (93) -
- depreciation and amortisation (168) (156) (3) (7) (171) (163)
Operating profit/(loss) 285 561 105 27 390 588
Other items of profit and loss (2) 4 (9) - (11) 4
Fair value adjustment to disposal group assets - - (9) - (9) -
Share of profit/(loss) on joint ventures (2) (2) - - (2) (2)
Share of profit on associates - 6 - - - 6
Profit/(loss) before finance costs 283 565 96 27 379 592
Net finance costs (210) (308) (15) (11) (225) (319)
Profit/(loss) before income tax 73 257 81 16 154 273
Income tax expense (46) (75) (9) (2) (55) (77)
Profit after income tax 27 182 72 14 99 196
Assets 7 396 7 184 7 396 7 184
Non-current assets 3 089 2 757 3 089 2 757
Other current assets 1 363 1 852 1 363 1 852
Trade and other receivables 2 303 2 344 2 303 2 344
Cash and cash equivalents and cash collateral deposits 641 231 641 231
Liabilities 4 976 5 430 4 976 5 430
Non-current liabilities 2 295 2 130 2 295 2 130
Other current liabilities 2 117 2 501 2 117 2 501
Borrowings to finance trade receivables 140 135 140 135
Short-term borrowings and bank overdrafts 424 664 424 664
Capital expenditure 370 373 370 373
Geographical analysis
South Africa
Gross segment revenue 7 553 6 683 1 743 1 809 9 296 8 492
Profit before taxation 86 251 81 16 167 267
Total assets 6 285 6 410 - - 6 285 6 410
Total liabilities 4 681 5 303 - - 4 681 5 303
Non-South Africa
Gross segment revenue 1 020 882 - - 1 020 882
Profit before taxation (13) 6 - - (13) 6
Total assets 1 111 774 - - 1 111 774
Total liabilities 295 127 - - 295 127
* Prior year information has been restated - refer to note 16.
Group statement of comprehensive income
Year ended 30 June 2013 2012
Rm Rm
Restated*
Profit for the year 99 196
Other comprehensive income:
Items that may be reclassified to profit and loss subsequently
Exchange differences on translating foreign operations 25 36
Share of comprehensive income from joint ventures (2) 4
Cash flow hedges 6 (4)
Other comprehensive income for the year, net of tax 29 36
Total comprehensive income for the year 128 232
Total comprehensive income attributable to:
Equityholders of the Company 127 231
Non-controlling interest
- BEE partner (2) -
- Other non-controlling interest 3 1
128 232
* Prior year information has been restated - refer to note 16.
Group cash flow statement
Year ended 30 June 2013 2012
Rm Rm
Restated*
Operating activities
Cash generated by operations before changes in working capital and tax paid 369 444
Changes in working capital 503 (1 531)
Taxation paid (70) (60)
Net cash generated from/(utilised in) operating activities 802 (1 147)
Net cash utilised in investing activities (321) (611)
Net cash generated from financing activities 161 1 950
Net increase in cash and cash equivalents 642 192
Cash and cash equivalents at beginning of the year (501) (693)
Cash and cash equivalents at end of the year 141 (501)
Cash collateral deposits 77 76
Cash and cash equivalents and cash collateral deposits 218 (425)
- Included in cash and cash equivalents and cash collateral deposits 217 (433)
- Included in assets from disposed groups classified as held-for-sale 1 8
* Prior year information has been restated - refer to note 16.
Declaration of final 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 3,30 cents per share (2,805 cents per share net of dividend
withholding tax, where applicable) for the year ended 30 June 2013. 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. The issued ordinary share capital of AFGRI is 375 503 580 ordinary shares. In accordance
with settlement procedures of STRATE, the following dates will apply to the
final dividend:
Last day to trade cum the dividend Friday, 15 November 2013
Trading ex dividend commences Monday, 18 November 2013
Record date Friday, 22 November 2013
Dividend payment date Monday, 25 November 2013
There will be no dematerialisation or rematerialisation of AFGRI shares between Monday, 18 November 2013 and Friday,
22 November 2013, both dates inclusive.
By order of the Board
M Shikwinya
Group Company Secretary
Centurion
Group Statement of changes in equity
Fair Other
value In- Total non-
and centive share- con-
Share other Retained Treasury trust holders' BEE trolling Total
Rm capital reserves earnings Shares shares equity partners interests equity
Balance 30 June 2011 - (64) 1 858 (90) (133) 1 571 - 4 1 575
Profit for the year - - 195 - - 195 - 1 196
Other comprehensive income - 36 - - - 36 - - 36
for the year
Payment to non-controlling interests - - - - - - - (1) (1)
Share-based payments - 7 - - - 7 - - 7
Dividends paid - - (73) - - (73) - - (73)
Disposal of incentive shares - - - - 16 16 - - 16
Executive Share Award Scheme shares - - - - (6) (6) - - (6)
Treasury shares issued to Executive Share Awards Scheme - - - 4 - 4 - - 4
BEE partners share to non-distributable reserve - (2) 2 - - - - - -
Balance 30 June 2012 - (23) 1 982 (86) (123) 1 750 - 4 1 754
Profit for the year - - 98 - - 98 (2) 3 99
Other comprehensive income - 29 - - - 29 - - 29
for the year
Share-based payments - 7 - - - 7 - - 7
Dividends paid - - (88) - - (88) - - (88)
Disposal of incentive shares - - - - 3 3 - - 3
Forfeiture of awards under scheme shares - - - - (2) (2) - - (2)
BEE partners share to non-distributable reserve - (35) 35 - - - - - -
Transaction with non-controlling interests - BEE partners - - (56) - - (56) 330 - 274
Deconsolidation of BEE SPVs - 165 280 - - 445 - - 445
Payment of non-controlling interests - - - - - - (94) - (94)
Transaction with other non-controlling interests - - (4) - - (4) - (6) (10)
Recognition of non-controlling interest in business combination - - - - - - - 3 3
Balance 30 June 2013 - 143 2 247 (86) (122) 2 182 234 4 2 420
Notes to the summarised consolidated annual financial statements
1. Basis of preparation and accounting policies
These audited summarised consolidated financial results 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, except for the change in
accounting policies as disclosed in note 16.1 and the early adoption of IAS 1 - Presentation of Financial Statements (effective 1 January 2013). The
preparation of the summarised consolidated annual financial statements has been supervised by the Group Financial Director, GJ Geel CA(SA).
Property, plant Other intangible assets
and equipment and goodwill
Year Year Year Year
ended ended ended ended
30 June 30 June 30 June 30 June
(Rmillions) 2013 2012* 2013 2012*
2. Property, plant and equipment, other intangible assets and goodwill
Carrying value beginning of the year 2 001 1 697 350 387
Additions 367 368 3 5
Borrowing costs capitalised 10 5 - -
Disposals at carrying value (12) (18) (13) -
Foreign currency differences 11 10 1 3
Depreciation/amortisation (132) (121) (38) (42)
Purchase of subsidiaries/business 3 154 19 83
Net sale of subsidiary/business (including assets held-for-sale) (3) (94) - (78)
Impairment (4) - (139) (8)
Carrying value end of the year 2 241 2 001 183 350
* Prior year information has been restated - refer to note 16.
Year Year
ended ended
30 June 30 June
(Rmillions) 2013 2012*
3. Finance costs and interest Income
Finance costs
Interest paid on bank borrowings used to finance trade receivables (13) (129)
Other interest paid to financial institutions (218) (146)
Other interest paid to financial institutions as a result of the consolidation of the BEE SPVs (75) (80)
Finance cost - Continuing operations (306) (355)
Less: Interest included under cost of sales 63 19
Less: Borrowing costs capitalised on qualifying assets 10 5
Finance cost - Continuing operations (per income statement) (233) (331)
Finance cost - Discontinued operations (17) (13)
Finance cost - Total (250) (344)
Interest income
Interest received from financial institutions 5 3
Interest received from independent 3rd parties 18 20
Interest income - Continuing operations (per income statement) 23 23
Interest income - Discontinued operations 2 2
Interest income - Total 25 25
* Prior year information has been restated - refer to note 16.
Year Year
ended ended
30 June 30 June
(Cents) 2013 2012
4. Reconciliation of headline earnings per share
Earnings 29,0 58,3
Impairment of assets 12,6 2,5
Impairment of goodwill 20,3 0,0
Profit on the sale of business (22,9) 0,0
Profit on disposal of assets (1,0) (4,2)
Headline earnings 38,0 56,6
Diluted headline earnings 35,7 52,9
5. Business segment results
The pre-tax segment results are presented before the allocation of any profits to non-controlling interests. Operating profits after
finance costs are shown after a charge for internal interest based on each business units net assets throughout the year. With the
exception of the acquisition of the business in Nigeria (included under the Animal Protein division) and the sale of the Groups foreign
investments into the new Mauritius-based holding structure, no other significant changes to the Groups 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 trade receivables of up to 15%
(2012: additional cash trade receivables of up to 10%). The Group carries the risk of loss on these trade receivables. The total
value of additional debtors encumbered for these facilities is R25 million (2012: R13 million).
7. Agency agreements
The Group manages agri and corporate debtors on behalf of third party financial institutions to the amount of R7,7 billion (2012:
R4,2 billion). Administration and management fees are paid by these third parties to the Group for services rendered in accordance
with the service level agreements.
Under the service level agreement with the Land Bank the Group is only liable for bad debts on a second loss basis.
On all other service level agreements, the Group is not liable for any bad debts (2012: 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 R7,2 billion (2012: R5,3 billion).
8. 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 and fish feed 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 which includes
contingent consideration of R10 million. The contingent consideration is payable in USD including interest, calculated at the ruling
deposit rate, on 31 October 2015 should certain retention targets be met by the previous owner. The amount was deposited into an external
bank account in USD and is held in escrow on behalf of the previous owner pending compliance with retention targets. The initial accounting
for this business combination in terms of IFRS3 is complete and fair values were determined as follows:
Year Year
ended ended
30 June 30 June
(Rmillions) 2013 2012
Property, plant and equipment 3 -
Intangible assets 10 -
Inventory 4 -
Trade receivables 8 -
Cash and cash equivalents 1 -
Other current assets 1 -
Trade payables (9) -
Deferred tax (1) -
Non-controlling interest (3) -
Assets acquired and liabilities assumed 14 -
Less: Purchase consideration
Cash consideration (13) -
Contingent consideration (10) -
Goodwill (9) -
Since 1 November 2012 this business unit generated revenue of R70,2 million and a net profit before tax and non-controlling interest share of
profits of R5,5 million (before the allocation of internal interest) which were included in the current year results.
9. 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. Subsequent to year-end Newco changed its name to Hinterland Proprietary Limited (Hinterland).
As a result of this transaction, this group of assets (disposal group) was disclosed as a disposal group held for sale as at 30 June 2012
and subsequently sold on 1 June 2013. Despite the fact that the Group retains a 50% shareholding in the joint venture, it also met the
definition of a discontinued operation, being a separate major line of business disposed in a single transaction, resulting in separate
disclosure on the face of the income statement in both the current and prior years. Profit after taxation from discontinued operations
increased by R67 million to R81 million (2012: R14 million). This increase is mainly attributable to the R110,2 million profit recorded on
the merger.
The transaction was subject to the fulfilment of various suspensive conditions, in particular the unconditional approval of the South African
Competition Authorities, which was obtained during April 2013 resulting in the effective date of the transaction being 1 June 2013. Details
regarding this transaction were published in SENS on 31 July 2012, 4 December 2012, 12 April 2013 and 3 June 2013 respectively.
10. Disposal of Deposita Systems Proprietary Limited
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 sold 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 R117,1 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 transaction
was 1 January 2013, being the date which G4S took control over the day-to-day operations of the business.
11. 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 2014, the working capital available to AFGRI will be sufficient to meet its requirements for the
next 12 months.
12. 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 summarised consolidated annual financial statements.
13. Annual financial statements
A copy of the Groups annual financial statements for the year ended 30 June 2013 is available at the Groups registered office and can be obtained
from the company secretary, Ms M Shikwinya. The Groups Integrated Annual Report will be distributed to shareholders on or before 20 September 2013.
Year Year
ended ended
30 June 30 June
(Rmillions) 2013 2012
14. Capital commitments
Contracted for additions to property, plant and equipment and intangibles 136 44
Authorised but not yet contracted for additions to property, plant and equipment 196 91
332 135
15. Subsequent events
As previously disclosed, the Groups trade and other receivables included an amount of R45,2 million which was under dispute. The matter was
referred to legal arbitration and later to an independent audit firm for expert determination. On 2 September 2013 the Group was notified by the
independent audit firm of a determined settlement amount of R22,9 million. Although the determined settlement still needs to be accepted by
both parties, this event constitutes an adjusting event after the reporting period in terms of IAS 10 and as a result the Group recognised an
impairment on trade and other receivables of R22,3 million.
16. Change in accounting policy and reclassification of comparative figures
16.1 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. Comparatives have been restated accordingly and the impact are disclosed below.
The Group has adopted IAS 1 - Presentation of Financial Statements (effective 1 January 2013) and concluded that the presentation of a third
balance sheet is not material.
June
(Rmillions) 2012
Balance sheet
Decrease in property, plant and equipment (21)
Increase in investment in joint ventures 11
Increase in financial receivables 26
Decrease in deferred taxation (1)
Decrease in inventories (2)
Decrease in trade and other receivables (17)
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)
Decrease in cost of sales 43
Decrease in other operating expenses (before depreciation) 6
Decrease in depreciation 1
Increase in share of losses of joint ventures (2)
Increase in profit before taxation 1
Decrease in income tax expense (1)
Statement of comprehensive income
Decrease in exchange differences on translating foreign operations (4)
Increase in share of comprehensive income of joint ventures 4
Statement of changes in equity
Retained earnings -
Cash flow statement
Increase in cash utilised in operations 9
Decrease in purchase of property, plant and equipment 20
Increase in financial receivables granted (26)
Increase in acquisition of share in joint venture (11)
Decrease in net increase of cash and cash equivalents (8)
16.2 Reclassification of comparative figures
The finalisation of the Groups fee based business model within its Financial Services segment resulted in some selling and administration
expenses as well as some finance costs within the GroCapital and Unigro business units now being reported as part of cost of sales. It also
resulted in the reclassification of interest revenue between interest on trade receivables financed by banks and interest on trade receivables
with the same implications for interest paid to banks for trade receivables financing and interest paid to financial institutions.
Comparatives have been restated since the change in business model started on 1 December 2011 for Unigro and 29 June 2012 for GroCapital.
The impact was as follows:
June
(Rmillions) 2012
Income statement
Sale of goods and rendering of services 45
Interest on trade receivables financed by banks (45)
Cost of sales (41)
Selling and administration expenses 22
Finance costs 19
The prior year information in the corresponding notes has also been restated as well as the information in the segment report.
17. Audit opinion
These summarised consolidated financial results have been audited by our auditors, PricewaterhouseCoopers Inc., who have performed their audit in
accordance with the International Standards on Auditing. Their unqualified audit report is included. Forecast financial information included
in the commentary on results has not been reviewed or audited, in accordance with Section 8.40(a) of the JSE Listings Requirements.
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, LL von Zeuner, L Stephens
Executive
CP Venter (Chief Executive Officer), GJ Geel (Financial Director)
AFGRI Limited
12 Byls Bridge Boulevard
Highveld Ext 73 Centurion 0157
PO Box 11054 Centurion 0046
GPS 25°5146.13S 28°1224.74 E
e-mail: afgri@afgri.co.za
Tel: +27 11 063 2347
Fax: +27 87 942 7463
www.afgri.co.za
Date: 04/09/2013 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.
