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Interim results and dividend declaration for the six months ended 30 September 2017
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
for the six months ended 30 September 2017
Commentary
The period under review has been challenging in the wake of the drought and under the prevailing tough economic
conditions. Profit after tax decreased by 70,5% to R26,4 million (2016: R89,4 million) driven mainly by a decrease in sugar cane
revenue and a write down in the cane biological asset value, both factors resulting from the aftermath of drought conditions
in the sugar producing areas. Commensurately, operating cash flows decreased by 33% to R115,9 million (2016: R173,5 million).
Good progress was made in bringing our development projects to fruition, in particular the macadamia project in Mozambique
and the property development at Renishaw. This is reflected in capital expenditure of R87 million and a similar value of working
capital, utilised in the construction of housing stock by Renishaw Property Developments, both of which were funded from
existing cash and debt facilities. As indicated in our integrated report we intend raising short and medium-term debt of
approximately R200 million to bring these other projects into production over the next two years.
The board cautions against using interim results to project full year earnings, due to the effect of seasonality of crop revenues
and the impact of biological asset valuations on earnings particularly in the deciduous and macadamia segments at
half year.
Operations
Sugar cane
Revenue decreased by 9,6% to R240,5 million (2016: R265,9 million) driven by a decrease in sugar prices in South Africa and
Zambia and a production decrease attributable to a decline in area under crop of 646 hectares caused by the drought.
These factors also resulted in a biological asset write down of R43,8 million (2016: R10,1 million) for the six-month period ended
30 September 2017. Consequently, sugar cane operating profit decreased by 49,5% to R67,8 million (2016: R134,3 million).
Deciduous fruit
Despite the precarious water supply position in the Western Cape, water resources at the group's deciduous farms in the
Elgin-Grabouw-Villiersdorp area, supplied mainly from farm dams and boreholes, are adequate to meet the 2017/2018
summer requirements. While prices in the year to date have followed the depressed trend of the previous year, firmer prices
are expected for our 2018 deciduous crop, which will be harvested in January through to May.
The deciduous operating loss of R18,3 million (2016: loss R24,8 million) includes operating costs incurred in the preparation
of our 2018 deciduous crop which are not accounted for in the biological asset valuation at half year. These costs will be
recovered from revenue from the 2018 crop.
Bananas
Banana operating profit decreased by 42,8% to R15,1 million (2016: R26,4 million) due mainly to a lag in production for the
six months to September 2017 when compared to the prior corresponding period, again, driven by the drought and early
season storm damage. Production is expected to catch up over the balance of the season and the annual production should
compare favourably to that of last year. Banana prices remain firm in South Africa and Mozambique following the effects of
the drought.
Macadamias
We are expecting our first significant macadamia crop in March 2018. This will be accounted for in the biological asset
valuation at 31 March 2018.
Revenue and operating profit for the period ending September 2017 arises from our first small crop of 52 tons dry-nut-in-shell,
which was harvested in the first three months of this financial year.
Property
In the six months ending 30 September 2017, Renishaw Property Developments closed contracts for 58 units in the lifestyle
village currently under development. Of these, only 11 units were transferred by 30 September 2017, which is reflected in
revenue of R16,5 million. Since then, 16 units have been transferred and we expect a further eight units to be transferred before
year-end.
Prospects
Although profitability for the six months ended 30 September 2017 is down on that of the prior period, it is in line with our
expectations, particularly given the impact of the drought on our sugar cane operations. We expect results for the full year
to reflect a recovery from the current position, with a firming of the deciduous markets and the macadamia and property
projects contributing for the first time. An expected recovery to normal rainfall in the Northern region also bodes well for the
following financial year.
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 declared a gross cash dividend of 35,0 cents (2016: 50,0 cents) per share for the six-month period ended
30 September 2017, payable to shareholders recorded in the register of the company at the close of business on the record
date, Friday, 5 January 2018.
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 20% resulting in a net dividend of 28,0 cents per share to those shareholders who are not
exempt from the dividend withholding tax;
- the company's income 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, 8 January 2018 to shareholders recorded in the register of the company at close
of business on the record date Friday, 5 January 2018.
The salient dates of the declaration and payment of these dividends are as follows:
Last day to trade cum-dividend Tuesday, 2 January 2018
Shares commence trading ex-dividend Wednesday, 3 January 2018
Record date Friday, 5 January 2018
Payment date Monday, 8 January 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 3 January 2018 and Friday, 5 January 2018,
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 2017
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 Proprietary Limited
PO Box 61051, Marshalltown, 2107
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Directors
JR Barton* (Chairman), GS Clarke (Managing), GL Veale (Financial), T Abdool-Samad*, RGF Chance*, TJ Crookes*
TK Denton*(#), P Mnganga*, MT Rutherford*, RE Stewart*, G Vaughan-Smith*(#)
*Non-executive director (#)British
Company secretary
Highway Corporate Services Proprietary Limited
Condensed consolidated statement of profit or loss
Unaudited
Unaudited Restated Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2017 2016* 2017
Note R'000 R'000 R'000
Revenue 412 267 452 036 663 951
Operating profit before biological assets 101 648 157 262 102 156
Change in fair value of biological assets (57 803) (34 278) 22 998
Operating profit after biological assets 43 845 122 984 125 154
Share of profit of joint venture and associate companies - - 2 105
Dividend income - - 97
Net finance (cost)/income 1 (7 232) 1 140 3 505
Profit before tax 36 613 124 124 130 861
Income tax expense (10 252) (34 663) (34 655)
Profit for the period 26 361 89 461 96 206
Profit attributable to:
Owners of the company 7 209 58 195 64 826
Non-controlling interests 19 152 31 266 31 380
26 361 89 461 96 206
Earnings per share
Basic (cents) 47,2 381,2 424,7
Diluted (cents) 47,1 380,2 424,6
Headline earnings per share
Basic (cents) 47,2 380,9 424,1
Diluted (cents) 47,1 379,9 424,0
Dividend per share
Interim (cents) 35,0 50,0 50,0
Final (cents) - - 115,0
* Prior period restated to account for change in functional currency per note 3.
Condensed consolidated statement of other comprehensive income
Unaudited
Unaudited Restated Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2017 2016* 2017
R'000 R'000 R'000
Net profit for the period 26 361 89 461 96 206
Other comprehensive income 445 1 942 1 756
Items that may not be reclassified subsequently to profit or loss, net of tax:
Remeasurement of defined benefit surplus - - (211)
Remeasurement of post-employment medical aid obligation - - 462
Items that may be reclassified subsequently to profit or loss, net of tax:
Net fair value loss on available-for-sale financial assets - - (46)
Exchange differences on translating foreign operations 445 1 942 1 551
Total comprehensive income for the period 26 806 91 403 97 962
Total comprehensive income for the period attributable to:
Owners of the company 7 654 60 137 66 582
Non-controlling interests 19 152 31 266 31 380
26 806 91 403 97 962
* Prior period restated to account for change in functional currency per note 3.
Condensed consolidated statement of financial position
Unaudited
Unaudited Restated Audited
30 September 30 September 31 March
2017 2016* 2017(#)
R'000 R'000 R'000
ASSETS
Non-current assets 1 006 212 846 678 944 326
Property, plant and equipment 937 599 790 517 874 815
Other financial assets 2 738 710 1 019
Investment in joint venture and associates 56 361 53 030 55 410
Unsecured loans 3 402 - -
Deferred tax assets 6 112 2 421 13 082
Current assets 520 615 542 318 523 495
Inventories 137 863 53 733 151 191
Biological assets 155 762 161 402 213 272
Trade and other receivables 166 815 188 768 84 512
Current tax assets 2 673 2 580 6 900
Retirement benefit surplus 10 212 9 708 10 212
Unsecured loans 5 232 540 540
Cash and bank balances 42 058 125 587 56 868
Total assets 1 526 827 1 388 996 1 467 821
EQUITY AND LIABILITIES
Capital and reserves 1 076 230 1 077 966 1 066 978
Share capital and premium 226 271 226 271 226 271
Investment revaluation reserve 951 997 951
Foreign currency translation reserve (23 319) (23 373) (23 764)
Share-based payment reserve 2 414 1 434 2 414
Retained earnings 816 618 837 456 836 706
Equity attributable to owners of the company 1 022 935 1 042 785 1 042 578
Non-controlling interests 53 295 35 181 24 400
Non-current liabilities 220 662 208 322 218 918
Deferred tax liabilities 132 568 130 106 148 326
Long-term borrowings: interest-bearing 49 590 47 141 33 169
Long-term liability: interest-free 38 504 31 075 37 423
Current liabilities 229 935 102 708 181 925
Trade payables, other payables and provisions 46 890 33 672 67 992
Short-term borrowings: interest-bearing 30 519 32 095 65 341
Outside shareholders' loan 604 617 597
Current tax liabilities 25 899 27 321 14 074
Dividend withholding tax - 63 -
Post-employment medical aid obligation 9 023 8 940 9 023
Bank overdraft 117 000 - 24 898
Total equity and liabilities 1 526 827 1 388 996 1 467 821
Net asset value per share 7 051 7 062 6 990
Number of shares
In issue 15 264 317 15 264 317 15 264 317
Weighted average (basic) 15 264 317 15 264 317 15 264 317
Weighted average (diluted) 15 295 846 15 304 690 15 268 767
* Prior period restated to account for change in functional currency per note 3.
(#) Reclassified demand deposit facilities to bank overdraft.
Condensed consolidated statement of cash flows
Unaudited
Unaudited Restated Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2017 2016* 2017(#)
R'000 R'000 R'000
Operating activities
Operating profit for the period 43 845 122 984 125 154
Other comprehensive income - - 348
Depreciation 21 856 22 580 48 557
Change in fair value of biological assets 57 803 34 278 (22 998)
Other non-cash items (7 647) (6 305) 2 262
Operating cash flows before movements in working capital 115 857 173 537 153 323
Net outflow from changes in working capital (87 749) (103 256) (51 505)
Interest received 634 4 304 8 958
Interest paid (7 866) (3 164) (5 453)
Income taxes paid (3 038) (6 769) (15 962)
Net cash generated by operating activities 17 838 64 652 89 361
Investing activities
Proceeds on disposal of property, plant and equipment 3 463 7 027 1 743
Investment in joint venture and associate companies (951) (29 418) (31 798)
Investment in property, plant and equipment (87 824) (33 577) (158 999)
Other net investing activities (1 719) - (212)
Net cash flows before dividends and financing activities (69 193) 8 684 (99 905)
Dividends paid (17 554) (17 554) (36 081)
Net (decrease)/increase in borrowings (20 165) 8 714 42 213
Net decrease in cash and cash equivalents (106 912) (156) (93 773)
Cash and cash equivalents at beginning of the period 31 970 125 743 125 743
Cash and cash equivalents at end of the period (74 942) 125 587 31 970
* Prior period restated to account for change in functional currency per note 3.
(#) Reclassified demand deposit facilities to bank overdraft.
Condensed consolidated statement of changes in equity
Unaudited
Unaudited Restated Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2017 2016* 2017
R'000 R'000 R'000
Balance at beginning of period 1 066 978 1 004 117 1 004 117
Share-based payment expense - - 980
Total comprehensive income for the period 26 806 91 403 97 962
Dividends declared and paid (17 554) (17 554) (36 081)
Total equity 1 076 230 1 077 966 1 066 978
* Prior period restated to account for change in functional currency per note 3.
Condensed consolidated segmental analysis
Unaudited
Unaudited Restated Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2017 2016* 2017
R'000 R'000 R'000
Revenue
Sugar cane 240 462 265 909 342 844
Deciduous fruit 92 462 99 720 170 219
Bananas 53 533 74 590 126 493
Macadamias 2 514 - -
Property 16 518 - -
Other operations 6 778 11 817 24 395
412 267 452 036 663 951
Operating profit
Sugar cane 67 806 134 336 136 979
Deciduous fruit (18 306) (24 861) (10 386)
Bananas 15 085 26 402 38 076
Macadamias^ 2 679 6 373 2 317
Property (646) - (1 530)
Other operations (2 037) 87 9 261
Group overheads (20 736) (19 353) (49 563)
43 845 122 984 125 154
* Prior period restated to account for change in functional currency per note 3.
^ Operating profit from the macadamia operation in the current period arises mainly from the sale of macadamia nuts, whereas
operating profit from the corresponding prior period is mainly due to foreign exchange gains from the translation of foreign
operations.
Condensed consolidated notes
Unaudited
Unaudited Restated Audited
Six months to Six months to 12 months to
30 September 30 September 31 March
2017 2016* 2017
R'000 R'000 R'000
1. Net finance (cost)/income
Interest paid (7 866) (3 164) (5 453)
Interest received 634 4 304 8 958
(7 232) 1 140 3 505
2. Headline earnings
Profit for the period attributable to owners of the company 7 209 58 195 64 826
Adjusted for:
Gain on disposal of property, plant and equipment - (73) (128)
Tax effect of the adjustments - 21 36
Headline earnings 7 209 58 143 64 734
* Prior period restated to account for change in functional currency per note 3.
3. Change in functional currency
Mozambique operations
With effect from 1 April 2016, due to changes in trading arrangements that meet the requirements of IAS 21:36, the
functional currency of the group's Mozambique operations changed from Meticais (MZN) to Rands (ZAR). In accordance
with IAS 21:37, the group has applied the new functional currency prospectively from 1 April 2016, with the prior interim
period ended 30 September 2016 restated accordingly.
The effect of the change in functional currency on the measurement of account balances and transactions disclosed in
the consolidated financial statements is as follows:
- Non-monetary assets - translated at the actual ZAR/MZN spot exchange rate at the date of acquisition or disposal.
- Monetary assets - translated at the closing ZAR/MZN spot exchange rate as at 30 September 2017. In the case of ZAR
denominated cash and bank balances, measured at the actual ZAR amount in the bank account as at 30 September 2017.
- Liabilities - translated at the closing ZAR/MZN spot exchange rate as at 30 September 2017. In the case of ZAR creditor
and loan accounts with related or unrelated parties, measured at the actual ZAR amount owing as at 30 September 2017.
- Equity (including share capital) - translated at the historical exchange rate at the date of issue of the equity instruments.
- Opening retained earnings - recorded at the actual ZAR value of closing retained earnings, as at the end of the
previous financial year.
- Current year profit or loss - translated at the average ZAR/MZN exchange rate for each month, in which the transaction
was recorded, or the actual ZAR/MZN spot exchange rate where practiceable.
- The foreign currency translation reserve as reported in the prior year, is retained in the current year and in future
financial periods.
4. Basis of preparation and accounting policies
The condensed consolidated unaudited results for the half-year ended 30 September 2017 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 2017 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 2017.
The adoption of these standards had no recognition and measurement impact on the financial results of the current
reporting period.
29 November 2017
Sponsor
SASFIN CAPITAL (a member of the SASFIN Group)
www.cbl.co.za
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