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Interim results and Dividend Declaration foe the six month ended 30 September 2016
CROOKES BROTHERS LIMITED
(Incorporated in the Republic of South Africa)
Registration No. 1913/000290/06
Share code : CKS ISIN No: ZAE000001434
("Crookes Brothers" or "the company" or "the group")
Interim results and Dividend Declaration foe the six month ended 30 september 2016
COMMENTARY
The board cautions against using interim results to project full year earnings, due to the effect of seasonality of crop revenues
on profitability.
Earnings
Profit after tax has increased by 165% to R70,0 million compared to R26,4 million in the corresponding prior period. Headline
earnings for the first half of the financial year have been favourably impacted by a number of factors, which have resulted in
an increase of 54% to R39,2 million, compared to R25,5 million in the corresponding prior period. Profitability for the full year is
expected to be higher than the prior year, but below that indicated by an extrapolation of the interim results.
On 1 April 2016 the company terminated a lease which had four years' remaining on a significant portion of the Komatipoort
operation in exchange for a 49% participation in a community joint venture with a 20 year lease over the farm. Profit attributable
to non-controlling interests increased by R30 million as a result.
The group's participation represents a positive contribution to the land transformation process. In the first year significant
payments have been made in respect of lease fees and dividends to the community benefiting more than 500 families.
Change in accounting policy
Prior year earnings are adjusted to account for the effects of the adoption of IAS 16 whereby bearer biological assets are no
longer fair valued, and are classified as Property Plant and Equipment at cost and depreciated over their useful life. The effects
of this restatement are presented in note 6 of the interim financial statements.
Operations
Deciduous fruit
Operating profit for the six month period ended 30 September 2016 is R25,6 million lower than the corresponding prior period,
mainly as a result of a decline in deciduous fruit prices since the beginning of the financial year. This resulted in a write-down
against stock valuation at then forecast prices as at 31 March 2016, the effects of which are reversed in the current year and
are reflected in the interim results.
Sugar cane
Sugar cane operating profit has increased by R84,5 million against the corresponding prior period, driven by higher prices
across all regions. Cane production volumes decreased by 19% due to persistent drought conditions affecting the whole of
Southern Africa.
South African cane operations in aggregate realised an improvement in operating profit of R56 million, mainly due to a 30%
increase in the SA RV price. Operating profit from the Swaziland operation is R25 million higher than the corresponding prior
period as a result of a 30% increase in the Swaziland sucrose price. Zambia operations have realised an improvement of
R4 million as a result of a 21% increase in the ERC price.
Bananas
Banana production has improved by 6% on 2015 supported by a 48% increase in banana prices, as the market has been
undersupplied as a result of the drought conditions. This resulted in a R16,6 million increase in operating profit against the
corresponding prior period.
Macadamias
The macadamia orchards under development in northern Mozambique continue to make good progress, with the first small
crop expected in March 2017.
Worldwide demand for macadamia nuts remains strong and continues to outstrip supply, keeping macadamia prices high.
It is expected that this operation will become a major contributor to the group's operating profit in years to come, with positive
cash flows from the project being achieved from around 2021.
Prospects
In addition to the macadamia project in northern Mozambique, two other major projects are currently under implementation
following receipt of the required regulatory approvals.
The greenfield development of a 300 hectare banana farm in southern Mozambique, in partnership with our shareholder,
SilverStreet, was initiated following receipt of environmental authority approval. The first 40 hectares of bananas will be planted
in February 2017.
The first phase of the Renishaw property development, comprising a 550 unit mature lifestyle estate, commenced in April 2016.
This six year project is on budget with all 28 units in phase one pre-sold to date and continuing strong demand. Initial revenue
from first unit sales will reflect in the group's financial statements in the year ending March 2018.
The prospects of the group are encouraging, with these new projects under implementation, the macadamia project coming
into production and the deciduous orchards approaching maturity. The group continues to seek expansion opportunities in
the agricultural sector in Southern Africa to expand and diversify its portfolio of assets. The group has responded well to the
drought conditions through a combination of better prices, quality farms and good agricultural practices.
Interim cash dividend declaration
The board continues to maintain a conservative dividend policy, given the group's ongoing growth and investment strategy.
The board has consequently declared a gross cash dividend of 50,0 cents (2016: 35,0 cents) per share for the six month period
ended 30 September 2016, payable to shareholders recorded in the register of the company at the close of business on the
record date, Friday, 6 January 2017.
In respect of the gross interim cash dividend, the following further information is provided:
- The dividend has been declared from income reserves;
- The dividend withholding tax rate is 15% resulting in a net dividend of 42,5 cents per share to those shareholders who are
not exempt from the dividend withholding tax;
- The company's tax reference number is 9696/001/71/9; and
- The issued number of shares as at declaration date is 15 264 317.
The interim dividend will be paid on Monday, 9 January 2017 to shareholders recorded in the register of the company at close
of business on the record date Friday, 6 January 2017.
The salient dates of the declaration and payment of these dividends are as follows:
Last day to trade cum-dividend Tuesday, 3 January 2017
Shares commence trading ex-dividend Wednesday, 4 January 2017
Record date Friday, 6 January 2017
Payment date Monday, 9 January 2017
Share certificates may not be dematerialised or re-materialised between Wednesday, 4 January 2017 and Friday, 6 January 2017,
both days inclusive.
Any reference to the group's future financial performance included in this announcement has not been reviewed nor reported
on by the company's auditors.
For and on behalf of the board
JR Barton GS Clarke
Chairman Managing Director
Durban
29 November 2016
Registered office and postal address
170 Flanders Drive, Mount Edgecombe, KwaZulu-Natal
PO Box 611, Mount Edgecombe, KwaZulu-Natal, 4300
Website
www.cbl.co.za
Transfer secretaries
Computershare Investor Services (Pty) Ltd
PO Box 61051, Marshalltown, 2107
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Directors:
JR Barton* (Chairman), GS Clarke (Managing), GL Veale (Financial), RGF Chance*, TJ Crookes*, TK Denton*(#), JAF Hewat*,
P Mnganga*, MT Rutherford*, RE Stewart*, G Vaughan-Smith*(#)
*Non-executive director (#)British
Company secretary:
Highway Corporate Services (Pty) Limited
CONDENSED CONSOLIDATED STATEMENT OF
PROFIT OR LOSS
Unaudited Unaudited Unaudited
Six months to Six months to 12 months to
30 September 30 September 31 March
2016 2015* 2016*
Notes R'000 R'000 R'000
Revenue 451 699 353 162 542 712
Operating profit 103 342 43 456 72 212
Share of profit of associate companies – – 3 549
Dividend income – – 109
Net finance income/(cost) 1 1 295 (4 693) (4 179)
Profit before taxation 104 637 38 763 71 691
Taxation (34 636) (12 301) (21 638)
Profit for the period 70 001 26 462 50 053
Profit attributable to:
Owners of the company 39 287 25 462 48 893
Non-controlling interests 30 714 1 000 1 160
70 001 26 462 50 053
Earnings per share
Basic (cents) 257,4 202,5 366,9
Diluted (cents) 256,7 198,7 365,5
Headline earnings per share
Basic (cents) 257,0 203,1 366,0
Diluted (cents) 256,4 199,3 364,6
Dividend per share
Interim (cents) 50,0 35,0 35,0
Final (cents) – – 115,0
* Prior periods restated to account for change in accounting policy per note 6.
CONDENSED CONSOLIDATED STATEMENT OF
OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Unaudited
Six months to Six months to 12 months to
30 September 30 September 31 March
2016 2015* 2016*
R'000 R'000 R'000
Net profit for the period 70 001 26 462 50 053
Other comprehensive loss (58 143) (8 661) (26 254)
Items that may not be reclassified subsequently to profit or loss, net of tax:
Remeasurement of defined benefit surplus – – (115)
Remeasurement of post-employment medical aid obligation – – 1 773
Items that may be reclassified subsequently to profit or loss, net of tax:
Net fair value gain on available-for-sale financial assets – – 128
Exchange differences on translating foreign operations (refer to note 5) (58 143) (8 661) (28 040)
Total comprehensive income for the period 11 858 17 801 23 799
Total comprehensive income for the period attributable to:
Owners of the company (18 856) 16 801 22 639
Non-controlling interests 30 714 1 000 1 160
11 858 17 801 23 799
* Prior periods restated to account for change in accounting policy per note 6.
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
Unaudited Unaudited Unaudited
30 September 30 September 31 March
2016 2015* 2016*
Notes R'000 R'000 R'000
ASSETS
Non-current assets 760 916 824 545 801 209
Property, plant and equipment 731 988 794 947 769 941
Unlisted investments 710 627 710
Investment in associates 23 612 19 336 23 612
Retirement benefit surplus – 9 095 –
Unsecured loans: long-term – 540 –
Deferred taxation asset 2 421 – 6 946
Goodwill 7 2 185 – –
Current assets 575 791 297 312 495 433
Inventories 51 863 28 917 105 058
Biological assets 159 018 127 906 196 065
Trade and other receivables 184 993 123 050 53 963
Taxation 2 587 786 4 356
Retirement benefit surplus 9 708 – 9 708
Unsecured loans: short-term 540 – 540
Other financial assets – 6 221 –
Cash and cash equivalents 167 082 10 432 125 743
Total assets 1 336 707 1 121 857 1 296 642
EQUITY AND LIABILITIES
Capital and reserves 1 025 249 790 714 1 004 117
Share capital and premium 226 271 13 009 226 271
Investment revaluation reserve 997 869 997
Foreign currency translation reserve 5 (83 458) (5 936) (25 315)
Share-based payment reserve 1 434 1 036 1 434
Retained earnings 818 548 776 128 796 815
Equity attributable to owners of the company 963 792 785 106 1 000 202
Non-controlling interests 61 457 5 608 3 915
Non-current liabilities 206 378 215 826 209 485
Deferred taxation 130 080 118 050 132 559
Long-term borrowings: interest-bearing 45 223 47 492 42 967
Long-term liability: interest-free 31 075 39 714 33 959
Post-employment medical aid obligation – 10 570 –
Current liabilities 105 080 115 317 83 040
Trade, other payables and provisions 34 167 26 223 46 441
Short-term borrowings: interest-bearing 33 973 85 845 24 629
Outside shareholders' loan 616 624 660
Taxation 27 321 2 590 2 307
Dividend withholding taxation 63 35 63
Post-employment medical aid obligation 8 940 – 8 940
Total equity and liabilities 1 336 707 1 121 857 1 296 642
Net asset value per share 6 717 6 287 6 578
Number of shares
In issue 15 264 317 12 576 817 15 264 317
Weighted average (basic) 15 264 317 12 576 817 13 325 792
Weighted average (diluted) 15 304 690 12 812 817 13 376 735
* Prior periods restated to account for change in accounting policy per note 6.
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
Unaudited Unaudited Unaudited
Six months to Six months to 12 months to
30 September 30 September 31 March
2016 2015* 2016*
R'000 R'000 R'000
Operating profit for the period 103 342 43 456 72 212
Other comprehensive income – – 2 302
Depreciation 22 490 23 690 51 326
Change in fair value of biological assets 34 143 33 171 (24 327)
Other non-cash items 5 059 2 194 13 388
Operating cash flows before movements in working capital 165 034 102 511 114 901
Net outflow from changes in working capital (83 943) (40 856) (30 778)
Interest received 4 304 178 3 847
Interest paid (3 009) (4 871) (8 026)
Income taxes paid (6 772) (1 500) (8 358)
Purchase of annuities for post-employment medical aid benefits – – (366)
Net cash flows from operating activities 75 614 55 462 71 220
Net investing activities
Proceeds on disposal of investments – 100 100
Proceeds on disposal of property, plant and equipment 7 027 1 078 665
Net cash gained from acquisition of subsidiary 18 237 – –
Investment in expansion of area under crop 2 019 (14 827) (45 530)
Capital expenditure and other investing activities (52 677) (22 630) (27 915)
Net cash flows before dividends and financing activities 50 220 19 183 (1 460)
Dividends paid (17 554) (10 690) (16 945)
Proceeds from issue of equity instruments of the company – – 215 000
Payment for share issue costs – – (1 738)
Net increase/(decrease) in borrowings 8 673 (11 134) (82 187)
Net increase/(decrease) in cash and cash equivalents 41 339 (2 641) 112 670
Cash and cash equivalents at beginning of the period 125 743 13 073 13 073
Cash and cash equivalents at end of the period 167 082 10 432 125 743
* Prior periods restated to account for change in accounting policy per note 6.
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Unaudited Unaudited Unaudited
Six months to Six months to 12 months to
30 September 30 September 31 March
2016 2015* 2016*
R'000 R'000 R'000
Balance at beginning of period 1 004 117 783 603 783 603
Share-based payment reserve movement – – 398
Total comprehensive income for the period 11 858 17 801 23 799
Dividends declared and paid (17 554) (10 690) (16 945)
Share issue – – 215 000
Share issue costs – – (1 738)
Additional non-controlling interests arising on the acquisition of subsidiary
(refer to note 7) 26 828 – –
Total equity 1 025 249 790 714 1 004 117
* Prior periods restated to account for change in accounting policy per note 6.
CONDENSED CONSOLIDATED
SEGMENTAL ANALYSIS
Unaudited Unaudited Unaudited
Six months to Six months to 12 months to
30 September 30 September 31 March
2016 2015* 2016*
R'000 R'000 R'000
Revenue
Sugar cane 265 909 222 740 283 321
Deciduous fruit 99 720 69 424 134 012
Bananas 74 590 49 035 104 962
Other operations 11 480 11 963 20 417
451 699 353 162 542 712
Operating profit*
Sugar cane^ 134 336 49 872 49 108
Deciduous fruit (24 861) 832 46 719
Bananas^ 26 582 9 934 23 718
Macadamias^ (11 837) (11 258) (13 782)
Other operations/sundry income (595) 6 164 6 291
Group^ (20 283) (12 088) (39 842)
103 342 43 456 72 212
The effects of foreign exchange losses included in operating segments
above, are as follows:
Sugar cane 691 (3 085) (1 820)
Bananas 297 – –
Macadamias (12 697) (4 692) (8 119)
(11 709) (7 777) (9 939)
* Prior periods restated to account for change in accounting policy per note 6.
^ Operating lease rentals and unrealised foreign exchange losses have been reclassified and allocated to relevant crop segments in current
and prior periods.
CONDENSED CONSOLIDATED NOTES
Unaudited Unaudited Unaudited
Six months to Six months to 12 months to
30 September 30 September 31 March
2016 2015* 2016*
R'000 R'000 R'000
1.NET FINANCE INCOME/(COST)
Interest paid (3 009) (4 871) (8 026)
Interest received 4 304 178 3 847
1 295 (4 693) (4 179)
2.CAPITAL EXPENDITURE
Capital expenditure
– Incurred 36 639 25 955 46 305
Capital commitments
– Contracted 14 442 5 940 9 880
– Authorised but not contracted 152 677 7 914 221 351
167 119 13 854 231 231
3.HEADLINE EARNINGS
Profit for the period attributable to owners of the company 39 287 25 462 48 893
Adjusted for:
(Profit)/loss on disposal of plant and equipment (73) 53 (399)
Tax effect of the adjustments 21 23 280
Headline earnings 39 235 25 538 48 774
4.EXCHANGE RATES
Rand/US Dollar closing 13,87 13,90 14,85
Rand/US Dollar average 14,56 12,55 13,79
Rand/Metical closing 0,18 0,33 0,29
Rand/Metical average 0,23 0,33 0,33
Rand/Kwacha closing 1,40 1,24 1,33
Rand/Kwacha average 1,44 1,58 1,40
* Prior periods restated to account for change in accounting policy per note 6.
5.FOREIGN CURRENCY TRANSLATION RESERVE
Exchange differences relating to the translation of foreign operations
from their functional currency to the group's presentation currency are
recognised through other comprehensive income and accumulated
in the foreign currency translation reserve.
The movement in the foreign currency translation reserve, arising
mainly from the devaluation of the Meticais over the past six months,
is as follows:
Balance at beginning of period (25 315) 2 725 2 725
Exchange differences recognised in other comprehensive income (58 143) (8 661) (28 040)
Balance at end of period (83 458) (5 936) (25 315)
* Prior periods restated to account for change in accounting policy per note 6.
6.AMENDMENTS TO IAS 16 AND IAS 41 – AGRICULTURE: BEARER PLANTS
The amendments to IAS 16 Property Plant and Equipment and IAS 41 Biological Assets require bearer assets to be accounted
for under property, plant and equipment in accordance with IAS 16 instead of IAS 41.
Previously under IAS 41, bearer assets were fair valued through profit and loss on an annual basis resulting in the group
enjoying a non-cash flow profit, as bearer fair values increased over time. Under the new standard, the bearer asset is
capitalised at cost, to property plant and equipment and depreciated over its useful life.
Agricultural produce growing on bearer plants continues to be accounted for at fair value in accordance with IAS 41.
In terms of the adoption of IAS 16, prior year comparatives must be restated by adjusting for the effects of prior year bearer
fair value adjustments. The prior period's adjustment on the group's income statement is as follows:
Unaudited Unaudited
Six months to 12 months to
30 September 31 March
2015 2016
R'000 R'000
Operating profit 4 112 (15 326)
Deferred tax (1 507) 3 616
Total attributable to: 2 605 (11 710)
Non-controlling interests 113 138
Owners of the company 2 718 (11 572)
In terms of the adoption of IAS 16, bearer biological assets are now reclassified as
property, plant and equipment.
The effect of the reclassification adjustment on the prior periods group balance sheet
is as follows:
Deemed cost of bearer biological assets reclassified as property, plant and equipment 284 891 309 652
Effect of change in accounting policy 4 112 (15 326)
Net book value of bearer biological assets reclassified as property, plant and equipment 289 003 294 326
7.ACQUISITION OF SILVERLANDS MOZAMBIQUE HOLDINGS LIMITED
As part of the group's investment into a 300 hectare banana project, on 7 September 2016, the group acquired a 49,5%
share in Silverlands Mozambique Holdings Limited ("SMHL"). SMHL is incorporated in Mauritius and is the parent company
of Quinta da Bela Vista Limitada ("QBV"), the wholly owned operating entity incorporated in Mozambique.
The remaining 50,5% ownership interest in SMHL is held by SilverStreet Private Equity Strategies ("SilverStreet"), a subsidiary
of the group's majority shareholder Silverlands (SA) Plantations S.A.R.L. a company incorporated in the United Kingdom.
Based on the contractual arrangements between the group and SilverStreet, the group has the power to direct the
relevant activities of SMHL, and thereby QBV. The directors therefore concluded that the group has control over SMHL and
QBV.
Fair value of SMHL net assets acquired R'000
As at 7 September 2016
Share capital 57 770
Pre-acquisition retained losses (3 090)
Pre-acquisition foreign currency translation reserve (1 506)
Fair value of identifiable net assets 53 174
Adjusted for non-controlling interests @ 50,5% (26 828)
Fair value of identifiable net assets attributable to owners of the company 26 346
Consideration paid (28 621)
Goodwill – at acquisition 2 275
Effect of foreign currency exchange differences1 (90)
Goodwill – at end of period 2 185
(1) In accordance with IAS 21, goodwill arising from the acquisition of SMHL, has been translated at period end at the spot exchange
rate, with the corresponding exchange difference accumulated in equity, reflected under foreign currency translation reserve.
8.BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated unaudited results for the half-year ended 30 September 2016 have been prepared in
accordance with the framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee,
Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the information as required
by International Accounting Standard 34 Interim Financial Reporting and the requirements of the Companies Act of South
Africa, as amended.
The report has been prepared using accounting policies that comply with IFRS which are consistent with those applied
in the financial statements for the year ended 31 March 2016 and were prepared by Mr N Naidoo CA(SA) under the
supervision of the Group Financial Director, Mr GL Veale CA(SA).
Crookes Brothers Limited has adopted all the new or revised accounting pronouncements as issued by the IASB which
were effective for Crookes Brothers Limited from 1 January 2016. The adoption of these standards and its recognition and
measurement impact on the financial results of the group, have been disclosed in note 6.
29 November 2016
Sponsor
SASFIN CAPITAL (a division of SASFIN Bank Limited)
www.cbl.co.za
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