CROOKES BROTHERS LIMITED - Provisional summary audited group results and dividend declaration

Release Date: 02/06/2015 16:30
Code(s): CKS
 
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Provisional summary audited group results and dividend declaration

CROOKES BROTHERS LIMITED   
Registration number. 1913/000290/06
Share code: CKS     ISIN No: ZAE000001434

PROVISIONAL SUMMARY AUDITED GROUP RESULTS
FOR THE YEAR ENDED 31 MARCH 2015 AND FINAL DIVIDEND DECLARATION

The audited results of the group for the year ended 31 March 2015 together with those of the previous year are
set out below:
                                                                      
SUMMARY CONSOLIDATED                                                           Year ended   Year ended   
STATEMENT OF COMPREHENSIVE INCOME                                                31 March     31 March   
(R000's)                                                                             2015         2014   
                                                                                  audited      audited   
Continuing operations:                                                                                   
Revenue                                                                           526,087      439,019   
Operating profit                                                                   61,109       90,765   
Share of profit of associate companies                                                655        1,121   
Investment income                                                                   3,211        4,504   
Finance costs                                                                     (7,316)      (4,538)   
Capital items                                                                         251        7,430   
Profit before taxation                                                             57,910       99,282   
Taxation                                                                         (14,774)     (19,692)   
Profit for the year  from continuing operations                                    43,136       79,590   
Discontinued operations:                                                                                 
Operating profit for the year from discontinued operations                              -        8,793   
Capital profit for the year from discontinued operations                                -      114,314   
Profit for the year  from discontinued operations                                       -      123,107   
Profit for the year                                                                43,136      202,697   
Other comprehensive (loss)/income                                                                        
Remeasurement of post-employment obligations                                        1,086        5,977   
Realised net fair value gain on available-for-sale financial assets                 (204)      (7,430)   
Investment revaluation                                                                 15        2,052   
Exchange differences on translating foreign operations                            (2,121)        (257)   
Other comprehensive (loss)/income for the year, net of tax                        (1,224)          342   
Total comprehensive income for the year                                            41,912      203,039   
Profit for the year attributable to:                                                                     
Shareholders of the company                                                        40,697      201,146   
Non-controlling interests                                                           2,439        1,551   
                                                                                   43,136      202,697   
Total comprehensive income attributable to:                                                              
Shareholders of the company                                                        39,473      201,488   
Non-controlling interests                                                           2,439        1,551   
                                                                                   41,912      203,039   
Earnings per share (cents)                                                                               
From continuing and discontinued operations                                                              
Basic                                                                               323.9      1,609.0   
Diluted                                                                             317.9      1,580.4   
From continuing operations                                                                               
Basic                                                                               323.9        633.1   
Diluted                                                                             317.9        621.9   

                                                                               Year ended   Year ended   
RECONCILIATION OF HEADLINE EARNINGS                                              31 March     31 March   
(R000's)                                                                             2015         2014   
                                                                                  audited      audited   
Profit for the year attributable to shareholders of the company                    40,697      201,146   
Adjusted for:                                                                                            
Capital loss/(profit) on disposal of land, buildings, plant and equipment           1,165    (126,398)   
Profit on disposal of shares                                                        (251)      (7,430)   
Loss on disposal of subsidiary                                                          -        2,815   
Tax effect of the adjustments                                                        (80)       14,470   
Headline earnings                                                                  41,531       84,603   
Headline earnings per share (cents)                                                                      
Headline earnings per share                                                         330.6        676.8   
Headline earnings per share (diluted)                                               324.5        664.7   

                                                                               Year ended   Year ended   
DIVIDEND DECLARATION                                                             31 March     31 March   
                                                                                     2015         2014   
                                                                                  audited      audited   
Dividends per share (cents)                                                                              
Ordinary dividends declared per share - interim                                      65.0         80.0   
Ordinary dividends declared per share - final                                        85.0        120.0   
                                                                                    150.0        200.0   
                                                                               
SUMMARY CONSOLIDATED                                                           Year ended   Year ended   
STATEMENT OF CHANGES IN EQUITY                                                   31 March     31 March   
                                                                                     2015         2014   
(R000's)                                                                          audited      audited   
Shareholders' equity at beginning of year                                         763,778      584,549   
Movements in:                                                                                            
Share capital and premium - exercise of share options and scrip dividend              900        8,901   
Share-based payment reserve                                                           244           72   
Other comprehensive loss for the year                                             (2,310)      (5,635)   
Changes in retained earnings                                                       20,991      175,891   
Net profit attributable to owners of the company                                   40,697      201,146   
Remeasurement of post-employment obligations                                        1,086        5,977   
Net profit attributable to non-controlling interests                                2,439        1,551   
Change in non-controlling shareholding                                                  -      (2,930)   
Dividends paid                                                                   (23,231)     (29,853)   
Shareholders' equity at end of year                                               783,603      763,778   
                                              
SUMMARY CONSOLIDATED                                                           Year ended   Year ended   
STATEMENT OF FINANCIAL POSITION                                                  31 March     31 March   
                                                                                     2015         2014   
(R000's)                                                                          audited      audited   
ASSETS                                                                                                   
Non-current assets                                                                798,048      680,148   
Property, plant and equipment                                                     514,116      460,961   
Bearer biological assets                                                          254,234      192,883   
Unlisted investments                                                                  727          979   
Investment in associates                                                           19,336       18,681   
Retirement benefit surplus                                                          9,095        5,990   
Unsecured loan – long term                                                            540          654   
Current assets                                                                    313,937      345,722   
Inventories                                                                        60,655       52,808   
Biological assets – crops and livestock                                           184,864      190,762   
Trade and other receivables                                                        45,659       58,669   
Taxation                                                                            9,686            -   
Cash and cash equivalents                                                          13,073       28,847   
Other financial assets                                                                  -       14,636   
Total assets                                                                    1,111,985    1,025,870   
EQUITY AND LIABILITIES                                                                                   
Capital and reserves                                                              783,603      763,778   
Share capital and premium                                                          13,009       12,109   
Retained earnings                                                                 761,356      742,804   
Investment revaluation reserve                                                        869        1,058   
Foreign currency translation reserve                                                2,725        4,846   
Share-based payment reserve                                                         1,036          792   
Equity attributable to owners of the company                                      778,995      761,609   
Non-controlling interests                                                           4,608        2,169   
Non-current liabilities                                                           213,500      178,535   
Deferred taxation                                                                 118,320      107,199   
Long-term borrowings – interest-bearing                                            39,162       19,955   
Long-term liability – interest-free                                                45,082       41,763   
Post-employment obligations                                                        10,936        9,618   
Current liabilities                                                               114,882       83,557   
Trade and other payables and provisions                                            23,229       49,379   
Short-term borrowings – interest-bearing                                           91,653       34,178   
Total equity and liabilities                                                    1,111,985    1,025,870   
Net asset value per share (cents)                                                   6,231        6,087   
                                                                              
SUMMARY CONSOLIDATED                                                           Year ended   Year ended   
STATEMENT OF CASH FLOWS                                                          31 March     31 March   
                                                                                     2015        2014*   
(R000's)                                                                          audited      audited   
Operating profit for the year – continuing operations                              61,109       90,765   
– discontinued operations                                                               -       16,063   
Adjustment for non-cash items                                                      13,204     (37,595)   
                                                                                   74,313       69,233   
Net working capital changes                                                      (12,205)     (49,782)   
Cash generated from operations                                                     62,108       19,451   
Cash flows from operating activities                                               36,703        2,558   
Cash generated from operations                                                     62,108       19,451   
Interest received*                                                                  3,045        4,426   
Finance costs                                                                     (7,316)      (4,538)   
Taxation paid                                                                    (21,134)     (16,781)   
Cash flows from investing activities                                            (106,896)     (33,459)   
Proceeds on disposal of property, plant, equipment and biological assets            1,178      148,240   
Proceeds on disposal of investments                                                15,038       42,533   
Occupational interest received*                                                         -        3,720   
Acquisition of land rights, property, plant, equipment and biological assets     (88,081)    (214,572)   
Expansion of area under crop                                                     (38,569)      (2,034)   
Other investing activities                                                          3,538     (11,346)   
Cash flows from financing activities                                               54,419       23,128   
Dividends paid                                                                   (23,231)     (20,953)   
Net increase in borrowings                                                         77,650       44,081   
Net decrease in cash and cash equivalents                                        (15,774)      (7,773)   
Cash and cash equivalents at beginning of year                                     28,847       36,620   
Cash and cash equivalents at end of year                                           13,073       28,847   
Cash flow from operating activities - per share (cents)                             292.1         20.5   

* Prior year restated to reclassify interest received as an operating activity and occupational interest received
 as an investing activity.
                                                                               Year ended   Year ended   
OTHER GROUP SALIENT FEATURES                                                     31 March     31 March   
                                                                                     2015         2014   
(R000's)                                                                          audited      audited   
Depreciation                                                                       30,502       24,953   
Capital expenditure and expansion of area under crop                              126,650      216,606   
Capital commitments                                                                                      
- Contracted                                                                       15,623       11,183   
- Authorised but not contracted                                                    26,457       89,644   
                                                                                   42,080      100,827   
Guarantees                                                                             86           86   
Number of shares in issue                                                      12,576,817   12,546,817   
Weighted average number of shares on which earnings per share (and headline                              
earnings per share) are based                                                  12,563,913   12,501,154  
                                                                               
SUMMARY CONSOLIDATED                                                           Year ended   Year ended   
SEGMENTAL ANALYSIS - Continuing operations                                       31 March     31 March   
                                                                                     2015        2014*   
(R000's)                                                                          audited      audited   
Revenue                                                                                                  
Sugar cane                                                                        281,281      270,811   
Deciduous fruit                                                                   141,851       90,605   
Bananas                                                                            84,930       66,408   
Other operations                                                                   18,025       11,195   
                                                                                  526,087      439,019   
Operating profit                                                                                         
Sugar cane                                                                         73,366       88,728   
Deciduous fruit                                                                    16,183       38,617   
Bananas                                                                            15,949        6,871   
Macadamias*                                                                       (5,183)        (587)   
Other operations/sundry income*                                                     7,630        7,711   
(Loss)/profit on disposal of plant and equipment                                  (1,165)          230   
Unallocated corporate expenses                                                   (45,671)     (50,805)   
                                                                                   61,109       90,765   
Assets                                                                                                   
Sugar cane                                                                        434,958      413,769   
Deciduous fruit                                                                   294,764      284,516   
Bananas                                                                            34,024       31,589   
Macadamias                                                                        142,291       78,822   
Other operations                                                                    9,010       35,910   
Investments and loans                                                              20,603       23,812   
Short-term financial assets                                                             -       14,635   
Unallocated corporate current assets                                              176,335      142,817   
                                                                                1,111,985    1,025,870   
Liabilities                                                                                              
Unallocated corporate liabilities                                                 328,382      262,092   

* Prior year restated to reclassify macadamias as a separate operating segment.

                                                                               Year ended   Year ended   
DISCONTINUED OPERATIONS                                                          31 March     31 March   
                                                                                     2015         2014   
(R000's)                                                                          audited      audited   
Revenue                                                                                 -       51,400   
Operating profit before taxation                                                        -       16,063   
Net finance income                                                                      -        3,720   
Profit on sale of land, buildings, plant and equipment                                  -      126,168   
Loss on sale of a subsidiary                                                            -      (2,815)   
Profit before taxation                                                                  -      143,136   
Income tax expense                                                                      -     (20,029)   
Profit for the year                                                                     -      123,107   

COMMENTS ON THE RESULTS

Group revenue from continuing operations increased from R439 million in 2014 to
R526 million, predominantly due to the inclusion of a full year's revenue from the
High Noon deciduous fruit farm acquired towards the end of the previous financial
year.

The previous period's profit benefited from the inclusion of R123.1 million relating to
discontinued operations, chiefly the capital profit on disposal of the fixed assets and
investments of Quarrie Farms sold in November 2013. Nevertheless, profit for the year
decreased by a further R36.5 million to R43.1 million.

Difficult pricing and operating conditions in Swaziland, weak deciduous prices and
ongoing start-up issues in Mozambique were offset to some extent by a very good
performance from the Mpumalanga sugar cane and banana operations. As a
result, operating profit from continuing operations decreased from R90.8 million in
2014 to R61.1 million in the period under review. Further details relating to these issues
are shown in the operational activities section below.

Headline earnings of R41.5 million were significantly lower than the previous year's
R84.6 million, the reduction in operating profit being compounded by an increase in
finance and other costs.

The operating cash inflow of R36.7 million was an improvement on that of the prior
period, and the company continued to invest in line with its expansion strategy. Net
cash expended on investing activities increased to R106.9 million (2014: R33.5 million)
resulting in a net increase in borrowings of R77.7 million after payment of dividends of
R23.2 million.

Corporate activities

Substantial projects currently being implemented include:

- The development of the 3 200 hectare property located near Gurue in northern
  Mozambique with 249 hectares of the planned 450 hectares of macadamia
  orchards having been planted to date;
- the refinement of an annual crop strategy to fully utilise available arable land in
  Mozambique;
- the continuous improvement programme to upgrade irrigation systems; and
- the rezoning of the Renishaw farm near Scottburgh for mixed use development,
  with the application for rezoning being processed by the Department of
  Agriculture.

Operational activities

Sugar cane – The farms in Mpumalanga benefitted from increased production and
an improved South African RV (relative sucrose value) price. However, the Swaziland
operation's earnings were severely impacted by a reduced sucrose price as a result
of the marked decline in sugar prices in the EU, as well as by increased costs
associated with the prolonged strike and expenditure incurred in combatting severe
pest infestations in the sugar cane. The reduced earnings from this operation was the
most significant contributor to the decline in group profitability.

Bananas - The recently completed large-scale replant of bananas continued to
have a positive effect on both production volumes and quality, with a substantial
impact on operating profit.

Deciduous – Prices in our major African markets were affected by demand
weakness as the oil price fell, and Russian sanctions resulted in an over-supply of fruit
in Europe. Revenue was consequently markedly lower than anticipated, and with
these lower prices, fruit stocks and biological assets did not achieve the levels at
which they were valued at the prior year-end.

Prospects

The agricultural environment in southern Africa, although not without its challenges,
continues to offer great potential arising from regional economic growth, global
food security concerns and renewable energy opportunities. With several profit-
enhancing projects under implementation and recent orchard developments
moving towards maturity, the group's prospects remain positive.

Capital planning

In order for the group to continue to pursue its approved strategy of expansion into
southern Africa and to drive its property development opportunities, the board has
resolved to embark on a capital raising exercise which is the subject of the
cautionary issued on 22 April 2015.

CASH DIVIDEND DECLARATION

The directors are mindful of the preference of certain shareholders to receive a cash
yield from their investment in the group. However, the cash component of earnings
remains low and a marked expansion investment programme continues.
Accordingly, the board has declared a reduced dividend. Shareholders are advised
that this trend is likely to continue in the medium term without a meaningful capital
injection to fund planned investment activities.

The board of directors ("the board") has resolved to declare a final gross cash
dividend of 85.0 cents per ordinary share ("the cash dividend") to ordinary
shareholders recorded in the register of the company at the close of business on
Friday, 10 July 2015.

In respect of the final gross 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 72.25
           cents per share to those shareholders who are not exempt from the
           dividend withholding tax;
         - Crookes Brothers Limited tax reference number is 9696/001/71/9; and
         - the issued number of shares as at declaration date is 12 576 817.

The cash dividend will be paid on Monday, 13 July 2015 to shareholders recorded in
the books of the company at close of business on the record date Friday, 10 July
2015.

The salient dates of the declaration and payment of these dividends are as follows:

         Last day to trade cum-dividend                    Friday      3 July 2015
         Shares commence trading ex-dividend               Monday      6 July 2015
         Record date                                       Friday      10 July 2015
         Payment date                                      Monday      13 July 2015

Share certificates may not be dematerialised or re-materialised between Monday, 6
July 2015 and Friday, 10 July 2015, both days inclusive.

The above dividend is in addition to the interim dividend of 65.0 cents per share,
which was declared on 3 December 2014 and brings the aggregate dividend in
respect of the year ended 31 March 2015 to 150.0 cents (2014: 200.0 cents) per
share.

ACCOUNTING POLICIES

The provisional summary consolidated financial statements are prepared in
accordance with the requirements of the JSE Listings Requirements (“Listings
Requirements”) for provisional reports, and the requirements of the Companies Act
of South Africa applicable to summary financial statements. The Listings
Requirements require provisional reports to be 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 and Financial
Pronouncements as issued by the Financial Reporting Standards Council, and to
also, as a minimum, contain the information required by IAS 34, Interim Financial
Reporting. The accounting policies applied in the preparation of the consolidated
financial statements, from which the summary consolidated financial statements
were derived, are in terms of IFRS and are consistent with the accounting policies
applied in the preparation of the 31 March 2014 consolidated financial statements.

The group has adopted all the new or revised accounting pronouncements as
issued by the IASB. The adoption of these standards had no recognition and
measurement impact on the financial results.

The results have been prepared by Mr N Naidoo CA (SA) under the supervision of Mr
PJ Barker, BA, ACMA, CGMA, the group financial director.

The financial information has been prepared on the historical cost basis except for
the valuation of biological assets, certain financial instruments and share-based
payments, which are at fair value. The principal accounting policies are consistent
with those of the previous financial year.

FAIR VALUE DISCLOSURE

The JSE requires that all the disclosure mandated by IFRS13 ‘Fair Value
Measurement' be included in the annual financial statements as well as in the
provisional summary group results announcement. Please refer to Annexure A on the
company's website at the following link:
www.cbl.co.za/financials/ar2015/downloads/IFRS13.pdf for the full disclosure.

AUDITED RESULTS

These provisional summary consolidated financial statements for the year ended 31
March 2015 have been audited by Deloitte and Touche who expressed an
unmodified opinion thereon. The auditor has expressed an unmodified opinion on
the consolidated annual financial statements from which these provisional summary
consolidated financial statements were derived.

A copy of the auditor's report on the provisional summary consolidated financial
statements and of the auditor's report on the consolidated annual financial
statements are available for inspection at the company's registered office, together
with the financial statements identified in the respective auditor's reports.

The auditor's report does not necessarily report on all the information contained in
the financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor's engagement they should obtain a copy
of the auditor's report together with the accompanying financial information from
the company's registered office.

EVENTS AFTER THE REPORTING PERIOD

There have been no major changes in the affairs or financial position of the group or
its subsidiary companies since the end of the period under review.

CHANGES TO THE BOARD OF DIRECTORS

During the year under review, the following changes to the board took place:
- Mr XGS Sithole was appointed as a non-executive director on 30 May 2014;
- Mr GP Wayne retired as non-executive director and chairman on 1 August 2014;
  and
- Mr P Bhengu retired as a non-executive director on 25 February 2015.

Subsequent to the year under review, Mr CJH Chance resigned as a non-executive
director on 29 May 2015.

NOTICE OF THE ANNUAL GENERAL MEETING AND POSTING OF ANNUAL REPORT

Notice is hereby given that the annual general meeting of the company will be held
at 11:00 on Friday 31 July 2015, at the Durban Country Club, to transact the business
as stated in the annual general meeting notice forming part of the annual financial
statements.

The annual report will be posted to shareholders on or about 30 June 2015.

For and on behalf of the Board:

John Barton                                  Guy Clarke
(Chairman)                                   (Managing Director)

Renishaw                                     29 May 2015

Registered office and postal address         Transfer secretaries
Renishaw, KwaZulu-Natal                      Computershare Investor Services (Proprietary) Limited.
PO Renishaw, KwaZulu-Natal, 4181             PO Box 61051, Marshalltown, 2107

Sponsor                                      Website
Sasfin Capital                               www.cbl.co.za
A division of Sasfin Bank Limited

Directors:
JR Barton * (Chairman), GS Clarke (Managing), PJ Barker (Financial), JAF Hewat*,
P Mnganga*, MT Rutherford*, RE Stewart*, G Vaughan-Smith*#, XGS Sithole*, TK Denton*#
(alternate).

* Non-executive director    #British

Secretary:
Highway Corporate Services (Pty) Limited

2 June 2015
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