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Summarised Consolidated Financial Statements For The Year Ended 30 September 2020 And Dividend Declaration
KAAP AGRI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2011/113185/06)
Share code: KAL
ISIN: ZAE000244711
(“Kaap Agri” or “the Company”)
SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
30 SEPTEMBER 2020 AND DIVIDEND DECLARATION
1. INTRODUCTION
Despite Covid-19 (“Covid”), Kaap Agri increased revenue by 1,5% to R8,6 billion,
up from R8,5 billion in the previous financial year, with like-for-like comparable
growth declining by 0,6%. Covid is conservatively estimated to have had a 6,6%
negative impact on Revenue growth. The 1,5% growth in revenue was achieved
despite a 2,9% decrease in the number of transactions. Excluding a 5,9%
reduction in the number of transactions in the retail fuel & convenience
environment, the remaining business grew transactions by 2,3%. Product
deflation is estimated at 3,9%, but excluding the large deflationary impact of fuel
in the revenue basket, product inflation was 1,1%. Gross profit increased by 4,7%
and at a rate higher than revenue growth due to the impact of a changed sales
mix and an improvement in agri trading margins.
The operating conditions under which the Group traded for the year consisted of
two distinctly different periods due to Covid, which had a minimal influence on the
first half of the financial year, but impacted Group results in the second half of the
financial year.
The first six months of the financial year experienced a slow start to agri and retail
trade due to a combination of sluggish retail spend and a constrained consumer
environment, underpinned by suppressed GDP growth as well as adverse weather
conditions and increased competitor activity. Encouragingly, both agri and retail
performance improved during the second quarter.
The second six months of the financial year included the impact of Covid, which
was felt across all the Group’s business units. Agri sales growth outperformed
retail sales growth, largely due to Covid-related trading restrictions which impacted
retail sales to a larger degree than agri sales. Retail fuel and convenience sales
were hardest hit by Covid restrictions due to the lockdown-related reduction in
travel and road transport, the inability to sell tobacco and related products and the
closure of quick service restaurants. Whilst agri input trade was the least impacted
by Covid of all income channels, farm infrastructure projects were either halted or
delayed during initial lockdown levels, resulting in a slowdown in products required
from our manufacturing division
Grain Services delivered pleasing results despite a wheat harvest which was more
than 30% down year on year, supported by the timing of non-recurring surplus
wheat sales and grading gains.
Retail fuel expansion continued through selective acquisitions. The Fuel
Company (“TFC”) grew annual fuel volumes, inclusive of managed sites awaiting
regulatory approval, by 3,7%. During the first half of the year, a decision was
taken to slow down further TFC footprint expansion across the business and to
focus on delivering returns on previously invested capital. The onset of Covid has
reinforced this decision. However, the business will continue investigating value
enhancing opportunities albeit with a more conservative approach.
EBITDA grew by 6,8%, due largely to the impact of the adoption of IFRS 16.
Excluding the impact of IFRS 16, EBITDA grew by 1,0%.
Headline earnings decreased by 2,2% while recurring headline earnings (“RHE”)
grew by 4,4%. Once-off items, predominantly adjustments for the interest and re-
measurement of liabilities relating to put options exercisable by non-controlling
subsidiary shareholders, as well as costs associated with new business
development, are excluded from headline earnings to calculate recurring headline
earnings. Excluding the adoption of IFRS 16 as well as the negative impact of
Covid, both of which are non-comparable with the prior year, RHE would have
grown by 15,4% year on year.
The past year has been exceptionally challenging for the Company. Through our
various cost saving and cash management interventions we have been able to
save livelihoods, protect the company, avoid the Covid iceberg and stabilise the
business. The business environment in which we operate continues to be
constrained and it remains to be seen what the long-term effects of Covid will be
on general consumer behaviour. Kaap Agri will be focussing on driving returns on
the capital already invested in the retail fuel & convenience segment, but remains
open to executing value-enhancing transactions. Our diversification strategy has
reduced our overall group risk position and we believe we are well positioned to
capitalise on any improvement in trading conditions. We remain committed to all
our stakeholders and to our strategy of growth, underpinned by an improvement
in value creation.
2. SALIENT FEATURES
Revenue increased by 1,5% to R8,6 billion, from R8,5 billion in the prior corresponding
period.
EBITDA increased by 6,8% to R587,5 million.
Earnings per share decreased by 0,9% to 391,49 cents per share, from 394,98 cents per
share in the prior corresponding period.
Headline earnings per share decreased by 2,3% to 388,54 cents per share, from 397,85
cents per share in the prior corresponding period.
Recurring headline earnings per share increased by 4,6% to 392,52 cents per share, from
375,19 cents per share in the prior corresponding period.
No interim dividend was declared during the year. The final gross dividend decreased by
44,4% to 50,00 cents per share, from 90,00 cents per share in the prior corresponding
period.
3. DIVIDEND DECLARATION
At half year, the Board took the decision to forego the payment of an interim dividend due
to the uncertainty surrounding Covid and the view that cash preservation and liquidity
were paramount. This has proven to be the correct decision and together with a number
of cost saving and cash flow initiatives, has contributed significantly to the Group’s
ongoing balance sheet strength. Salary sacrifices were made across the Group, including
by executive and non-executive directors, and the personal sacrifice of all our staff
members has contributed significantly to the Group’s robustness in dealing with the
challenges of Covid. The full year results have highlighted exceptional working capital
management, strong cash generation and resilient earnings growth. Footfall has returned
and revenue has partially recovered, although not to pre-Covid levels. We remain
confident regarding the performance of the business going forward. Whilst recognising
salary sacrifices made and considering the performance of the business excluding these
sacrifices, the Board has approved and declared a gross final dividend of 50.00 cents per
share (2019: 90.00 cents per share) from income reserves, for the period ended
30 September 2020. The final dividend amount, net of South African dividends tax of 20%
is 40.00 cents per share for those shareholders who are not exempt from dividend tax or
are not entitled to a reduced rate in terms of the applicable double-tax agreement. Given
that no interim dividend was declared, the total dividend for the year of 50.00 cents per
share (2019: 123,50 cents) represents a dividend cover of 7,4 times (2019: 2,9 times).
The salient dates for the distribution are:
Declaration date Thursday, 26 November 2020
Last day to trade cum dividend Tuesday, 9 February 2021
Trading ex dividend commences Wednesday, 10 February 2021
Record date to qualify for dividend Friday, 12 February 2021
Date of payment Monday, 15 February 2021
The number of ordinary shares in issue at declaration date is 74 170 277 and the
income tax number of Kaap Agri is 9312717177.
Share certificates may not be dematerialised or rematerialised between
Wednesday, 10 February 2021 and Friday, 12 February 2021, both days inclusive.
4. SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the directors of the Company. It
contains only a summary of the information in the full announcement (“Full
Announcement”) and does not contain full or complete details. The Full Announcement
can be found at:
https://senspdf.jse.co.za/documents/2020/JSE/ISSE/KALE/KALSept20.pdf
Copies of the Full Announcement are also available for viewing on the Company’s website
at https://www.kaapagri.co.za/wp-content/uploads/20/11/2020-Condensed-Financial-
Statements.pdf or may be requested in person, at the Company’s registered office or the
office of the sponsor, at no charge, during office hours.
Any investment decisions by investors and/or shareholders should be based on
consideration of the Full Announcement, as a whole.
This short-form announcement has been extracted from the summarised consolidated
annual financial results, which, in turn, have been extracted from the full set of
consolidated annual financial statements (“AFS”). The AFS have been audited by the
Company’s auditors, PricewaterhouseCoopers Inc. who expressed an unmodified audit
opinion thereon. The full auditor’s report includes details of key audit matters. This
auditor’s report is available, along with the AFS, on the Company’s website at
www.kaapagri.co.za.
26 November 2020
Sponsor
PSG Capital
Date: 26-11-2020 07:05:00
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