Wrap Text
Year end results
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")
PRELIMINARY SUMMARISED AUDITED GROUP RESULTS
FOR THE YEAR ENDED 31 MARCH 2018
Commentary
The 2018 financial year has been extremely difficult. Although the group made a strong
recovery from the effects of the drought in the cane growing areas, the dramatic
decline in the cane price in South Africa as well as the continuation of the drought in
the Western Cape, severely impacted financial results.
Revenue from farming operations decreased by 8 % to R608 million (2017: R664 million)
on the prior corresponding year. Operating profit consequently decreased to R3 million
(2017: R125 million), with 76 % of the decrease coming from our cane segment. Cash
generated by operations decreased by 78% to R23 million (2017: R102 million).
Additional short-term cash facilities were utilised for ongoing projects, mainly in the
Mozambique macadamia and Renishaw property developments, in line with our
long term plans. Our total borrowings increased by R171 million for the year ended
31 March 2018, giving rise to an increased net interest cost of R15 million (2017:
R3.5 million net interest received).
The group recorded a headline loss of 50.6 cents per share (2017: Headline earnings
424.1 cents per share).
Operations Sugar
Sugar cane production dropped by 6 % to 556 000 tons in the aftermath of the drought,
while the SA RV price dropped by 15% compared to the prior year to R4187 per ton.
Revenue from cane decreased by 13% to R300 million (R 2017 R343 million).
The current low sugar prices also resulted in a significant reduction in the fair value of our
standing crop at 31 March 2018, despite the additional area planted during the year,
further impacting profits. Sugar cane operating profit decreased by 68% to R44 million
(2017: R137 million) as a result of these factors.
The adverse sugar price resulted from low international sugar prices, exacerbated by a
strong rand and a delayed import tariff adjustment.
We are hopeful that the low sugar price in South Africa will be rectified as an application
submitted by the South African Sugar Association, for a revision of the import tariff, has
reportedly been well received by Government.
Deciduous
As the year-end falls in the middle of the deciduous harvest, the 2018 (financial year)
results for deciduous fruit take into account the final results for the 2017 season as well
as expectations for the 2018 season. In both seasons, crop quality and to a lesser extent
yields were affected by drought. Deciduous production declined by 7% and the price
by 6 %, the latter largely due to the impact of the dry conditions on fruit quality.
Selling prices have not increased appreciably in nominal Rand terms in the past 5 years,
putting pressure on deciduous profits. The loss from this division increased to R20.4 million
from R10.4 million in the prior year.
Macadamia Nuts
The past year marked the beginning of production at Murrimo Macadamia, with 52 tons
dry nut in shell (DNIS) harvested in April/May 2017 and 200 tons DNIS harvested in 2018.
This project, which generated an operating profit of R5.5 million (2017: R2.3 million) is
running 40% ahead of the original yield estimates from our feasibility study, with
production set to grow exponentially over the next 5 years.
Banana Segment
The banana division continued to deliver good results, although operating profit
decreased by 27% to R28 million (2017: R38 million) following an exceptional 2017 prior-
year, marked by strong banana prices as a result of the drought. Production was up 8 %
on the prior year to 17 496 tons but prices declined by 16% to R6 760 per ton.
Banana prices have stabilised somewhat in 2018, but look set to remain at elevated
levels for the next year, while the drought persists in Southern Mozambique.
Renishaw property development
The Renishaw Hills mature lifestyle village of 512 units, set to be built over the next 8 years,
recorded revenue of R50 million in this financial year, with an operating loss of R 1 million,
which is as a result of initial sales being competitively priced in order to create traction
for the development. Later phases have been sold-out at higher prices.
The Renishaw Hills development consumed group working capital of R 100 million over
the past year in line with our plans. Additional working capital of R 14 million will be
required in the next year.
Prospects
Performance over the next 12 months will largely depend on the expected recovery of
the South African RV sugar price. As noted we are hopeful that the tariff will be
amended in the short term.
Long-term prospects in the deciduous sector are critically dependent on the water
supply situation in the Western Cape. Good early rains have been experienced this
season, giving some hope of relief from the devastating drought.
Macadamias are set to make an increasing contribution over the next 12- 24 months, as
the orchards mature. We expect the bananas to continue to perform well as produce
in the local market remains in short supply.
We are pleased to report that the long-running land claim case at Renishaw has been
resolved in our favour, offering opportunities to unlock value from sales of developable land.
Capital Expenditure and financing Activities
Despite the difficult prevailing conditions, the group has continued to invest in the future.
During the year R172 million was invested (2017: R189 million), mainly in the development
of our macadamia and property projects, in line with our long term plans.
This level of investment necessitated that we arrange additional short term facilities of R
50 million at year end, and a further R60 million 3 year term facility subsequent to year
end. With these development projects nearing completion additional capital and
project expenditure as well as working capital will be limited to R 69 million for the 2019
financial year.
CASH DIVIDEND DECLARATION
Given the subdued performance of the group over the past year, the board
of directors, ("the board") has, resolved not to declare a final dividend for year
ended 31 March 2018.
BASIS OF PREPARATION
The preliminary summarised consolidated financial statements are
prepared in accordance with the requirements of the JSE Listings
Requirements ("Listings Requirements") for preliminary reports, and the
requirements of the Companies Act of South Africa applicable to summarised
financial statements. The Listings Requirements require preliminary 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 annual financial
statements, from which the summarised 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 2017 consolidated annual financial statements.
The results have been prepared by N Naidoo CA(SA), assisted by Melani De Castro
CA(SA) under the supervision of GL Veale CA(SA), the group financial director.
The financial information has been prepared on the historical cost basis except for the
valuation of biological assets, investment property, certain financial instruments and
share- based payments, which are at fair value.
AUDITED RESULTS
These preliminary summarised consolidated financial statements for the year ended
31 March 2018 have been audited by Deloitte & Touche who expressed an
unmodified opinion thereon. The auditor has expressed an unmodified opinion on
the consolidated annual financial statements from which these preliminary
summarised consolidated financial statements were derived.
A copy of the auditor's report on the preliminary summarised 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.
CHANGES TO THE BOARD OF DIRECTORS
Malcolm Rutherford was appointed as audit committee chairman on the 24 August 2017. Rodger Stewart was
appointed as risk committee chairman on the 24 August 2017.
Tasneem Abdool- Samad was appointed to the board as a non- executive director on 6 June 2017 and
Anthony Hewitt retired from the board on the 28 July 2017.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given to shareholders as recorded in the company's securities register on
Thursday, 14 June 2018 that the 105th annual general meeting of shareholders of Crookes
Brothers Limited ("Crookes Brothers" or "the company"), in respect of the financial year ended
31 March 2018 will be held at the Community Centre, Renishaw Hills, Scottburgh, 4181
on Friday, 27 July 2018. The proceedings will commence with a tour of the Renishaw
Hills Development at 10h00 thereafter the annual general meeting will be held at 11h00
("the annual general meeting"). The annual report be will published on or about 29 June 2018.
For and on behalf of the board
John Barton Guy Clarke
Chairman Managing Director
Durban
12 June 2018
Registered office and postal address
170 Flanders Drive, Mount Edgecombe, KwaZulu-Natal, 4300
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 Group
A member of Sasfin Bank Limited
Directors
JR Barton* (Chairman), GS Clarke (Managing), RGF Chance*, TJ Crookes*,
TK Denton*#, T Abdool –Samad *, P Mnganga*, MT Rutherford*, RE Stewart*,
G Vaughan-Smith*#, GL Veale (Financial)
* Non-executive director #British
Company secretary
Highway Corporate Services (Pty) Limited
PRELIMINARY SUMMARISED AUDITED GROUP RESULTS
FOR THE YEAR ENDED 31 MARCH 2018 AND FINAL DIVIDEND DECLARATION
The audited results of the group for the year ended 31 March 2018 together with those of the previous year are
set out below:
Audited year- Audited year-
end end
SUMMARISED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME 31 March 31 March
(R000's) 2018 2017*
Revenue 657 223 663 951
Operating profit before biological assets 460 102 156
Change in fair value of biological assets 2 600 22 998
Operating profit after biological assets 3 060 125 154
Share of profit of joint venture and associate companies 3 641 2 105
Investment income 1 666 9 055
Finance costs (16 700) (5 453)
(Loss)/profit before tax (8 333) 130 861
Income tax expense 5 096 (34 655)
(Loss)/profit for the year (3 237) 96 206
Other comprehensive (loss)/income, net of income tax
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit surplus - (211)
Remeasurement of post-employment medical aid obligation (514) 462
Items that may be reclassified subsequently to profit or loss:
Net fair value loss on available-for-sale financial assets - (46)
Exchange differences on translating foreign operations (5 238) 1 551
Other comprehensive (loss)/income for the year, net of income tax (5 752) 1 756
Total comprehensive (loss)/income for the year (8 989) 97 962
(Loss)/profit for the year attributable to:
Owners of the company (7 587) 64 826
Non-controlling interests 4 350 31 380
(3 237) 96 206
Total comprehensive (loss)/income for the year attributable to:
Owners of the company (13 339) 66 582
Non-controlling interests 4 350 31 380
(8 989) 97 962
(Loss)/earnings per share (cents)
Basic (49.7) 424.7
Diluted (49.7) 424.6
* Prior year restated to split operating profit into operating profit before and after biological asset valuation.
Audited year- Audited year-
end end
RECONCILIATION OF HEADLINE EARNINGS 31 March 31 March
(R000's) 2018 2017
(Loss)/profit for the year attributable to owners of the company (7 587) 64 826
Adjusted for:
Gain on disposal of property, plant and equipment (361) (128)
Loss on disposal of available-for-sale financial assets - held at cost 4 -
Impairment of investment premium 150 -
Loss arising on changes in fair value of investment property 17 -
Tax effect of the adjustments 54 36
Headline (loss)/earnings (7 723) 64 734
Headline (loss)/earnings per share (cents)
Headline (loss)/earnings per share (50.6) 424.1
Headline (loss)/earnings per share (diluted) (50.6) 424.0
Audited year- Audited year-
end end
DIVIDEND DECLARATION 31 March 31 March
2018 2017
Dividends per share (cents)
Ordinary dividends declared per share - interim 35.0 50.0
Ordinary dividends declared per share - final 0.0 115.0
35.0 165.0
Audited year- Audited year-
end end
SUMMARISED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY 31 March 31 March
(R000's) 2018 2017
Shareholders' equity at beginning of year 1 066 978 1 004 117
Movements in:
Share-based payment reserve 1 059 980
Other comprehensive (loss)/income for the year (5 238) 1 294
Non-controlling interests 6 899 -
Changes in retained earnings (37 542) 60 587
Net (loss)/profit attributable to owners of the company (7 587) 64 826
Net profit attributable to non-controlling interests 4 350 31 380
Remeasurement of post-employment obligations (514) 462
Dividends paid - ordinary shareholders (22 896) (25 186)
Dividends paid - community partners (10 895) (10 895)
Shareholders' equity at end of year 1 032 156 1 066 978
Audited year- Audited year-
end end
SUMMARISED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION 31 March 31 March
(R000's) 2018 2017*
ASSETS
Non-current assets 1 052 815 931 244
Property, plant and equipment 967 756 874 815
Investment property 11 432 -
Deferred tax assets 6 044 -
Other financial assets 3 269 1 019
Investments in joint venture and associates 60 816 55 410
Unsecured loans 3 498 -
Current assets 515 615 523 495
Inventories 159 021 151 191
Biological assets 213 443 213 272
Trade and other receivables 93 892 84 512
Current tax assets 8 398 6 900
Other financial assets 102 -
Retirement benefit surplus 10 212 10 212
Unsecured loans 3 673 540
Cash and bank balances 26 874 56 868
Total assets 1 568 430 1 454 739
EQUITY AND LIABILITIES
Capital and reserves 1 032 156 1 066 978
Share capital and premium 226 271 226 271
Investment revaluation reserve 951 951
Foreign currency translation reserve (29 002) (23 764)
Share-based payment reserve 3 473 2 414
Retained earnings 805 471 836 706
Equity attributable to owners of the company 1 007 164 1 042 578
Non-controlling interests 24 992 24 400
Non-current liabilities 207 202 205 836
Deferred tax liabilities 126 986 135 244
Borrowings - interest bearing 24 104 33 169
Other financial liabilities 8 797 -
Obligation to restore leased farmland 44 674 37 423
Post-employment medical aid obligation 2 641 -
Current liabilities 329 072 181 925
Trade and other payables 45 597 51 182
Provisions 9 603 16 810
Current tax liabilities 337 14 074
Post-employment medical aid obligation 7 693 9 023
Borrowings - interest bearing 241 792 80 356
Outside shareholders' loan - 597
Bank overdraft 24 050 9 883
Total equity and liabilities 1 568 430 1 454 739
* Prior year restated to reclassify deferred tax asset to net deferred tax liability.
Audited year- Audited year-
end end
SUMMARISED CONSOLIDATED
STATEMENT OF CASH FLOWS 31 March 31 March
(R000's) 2018 2017
Operating profit for the year 3 060 125 154
Depreciation 49 290 48 557
Change in fair value of biological assets (2 600) (22 998)
Other non-cash items (4 405) 2 610
45 345 153 323
Net working capital changes (22 621) (51 505)
Cash generated from operations 22 724 101 818
Cash flows from operating activities (9 450) 89 361
Cash generated from operations 22 724 101 818
Interest received 1 591 8 958
Interest paid (16 594) (5 453)
Income taxes paid (17 171) (15 962)
Cash flows from investing activities (172 391) (189 266)
Proceeds on disposal of property, plant and equipment 6 402 1 743
Investment in property, plant and equipment:
replacement (9 668) (9 065)
expansion, improvement and development (80 411) (102 783)
bearer asset replants (65 138) (47 151)
Investment in investment property (11 449) -
Investment in joint venture and associate companies (2 525) (31 798)
Other net investing activities (9 602) (212)
Cash flows from financing activities 137 680 21 147
Dividends paid:
Ordinary shareholders (22 896) (25 186)
Community partners (10 895) (10 895)
Net increase in borrowings 7 613 42 213
Net increase in general banking facilities 154 985 15 015
Net increase in other financial liabilities 8 873 -
Net decrease in cash and cash equivalents (44 161) (78 758)
Cash and cash equivalents at beginning of the year 46 985 125 743
Cash and cash equivalents at end of the year 2 824 46 985
Audited year- Audited year-
end end
OTHER GROUP SALIENT FEATURES 31 March 31 March
(R000's) 2018 2017
Depreciation 49 290 48 557
Capital commitments
- Contracted and anticipated:
- replacement 150 1 231
- expansion, improvement and development 18 832 25 736
18 982 26 967
- Authorised but not contracted:
- replacement 5 310 11 538
- expansion, improvement and development 34 398 177 882
- bearer asset replants 15 921 36 825
55 629 226 245
Net asset value per share (cents) 6 762 6 990
Number of shares in issue 15 264 317 15 264 317
Weighted average number of shares on which earnings per share (and headline
earnings per share) are based 15 264 317 15 264 317
Audited year- Audited year-
end end
SUMMARISED CONSOLIDATED
SEGMENTAL ANALYSIS 31 March 31 March
(R000's) 2018 2017*
Revenue
Sugar cane 300 080 342 844
Deciduous fruit 166 061 170 219
Bananas 120 956 126 493
Macadamias 2 628 -
Property development 49 538 -
Other operations 17 960 24 395
657 223 663 951
Operating profit before biological assets
Sugar cane 48 993 112 906
Deciduous fruit (19 197) (5 083)
Bananas 26 240 33 842
Macadamias (1 398) 2 317
Property development (974) (1 530)
Other operations (3 667) 9 267
Profit on disposal of property, plant and equipment 361 128
Corporate expenses (49 898) (49 691)
460 102 156
Change in fair value of biological assets
Sugar cane (4 684) 24 073
Deciduous fruit (1 227) (5 303)
Bananas 1 584 4 234
Macadamias 6 927 -
Other operations - (6)
2 600 22 998
Operating profit after biological assets
Sugar cane 44 309 136 979
Deciduous fruit (20 424) (10 386)
Bananas 27 824 38 076
Macadamias 5 529 2 317
Property development (974) (1 530)
Other operations (3 667) 9 261
Profit on disposal of property, plant and equipment 361 128
Corporate expenses (49 898) (49 691)
3 060 125 154
* Prior year restated to split operating profit into operating profit before and after biological asset valuation.
Audited year- Audited year-
end end
NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS 31 March 31 March
(R000's) 2018 2017
Biological assets
Growing crops at fair value
Sugar cane 169 886 176 078
Deciduous fruit 18 817 20 044
Bananas 17 813 16 229
Macadamias 6 927 -
Livestock - 921
Fair value at end of year 213 443 213 272
Analysis of fair values of growing crops:
Fair value at beginning of year 213 272 189 522
Gains/(losses) arising from changes attributable to volume and price:
Sugar cane
- Gain arising from physical growth (yield) 19 367 22 862
- Gain/(loss) arising from area under crop to be harvested 16 989 (11 332)
- (Loss)/gain arising from price changes (41 040) 12 543
Deciduous fruit
- Gain/(loss) arising from physical growth (yield) 2 274 (626)
- (Loss)/gain arising from area under crop to be harvested (227) 1 004
- Loss arising from price changes (3 274) (5 681)
Bananas
- Gain/(loss) arising from physical growth (yield) 923 (775)
- Gain/(loss) arising from area under crop to be harvested 203 (629)
- Gain arising from price changes 458 5 638
Macadamias
- Gain arising from area under crop to be harvested 6 927 -
Fair value changes attributable to births, deaths and ageing of livestock (5) (6)
Transfer of livestock to inventory (916) -
Effect of foreign currency exchange differences (1 508) 752
Fair value at end of year 213 443 213 272
Audited year- Audited year-
end end
NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS 31 March 31 March
(R000's) 2018 2017
Biological asset valuations
The following key assumptions have been used in determining the
fair value of biological assets:
Sugar cane
Expected area to harvest after 31 March
- South Africa (ha) 3 901 3 615
- Swaziland (ha) 2 443 2 195
- Zambia (ha) 410 382
Total area (ha) 6 754 6 192
Estimated yields
- South Africa (tons/ha) 101.5 84.8
- Swaziland (tons/ha) 108.3 108.0
- Zambia (tons/ha) 120.9 130.0
Weighted average 105.1 95.8
Average maturity of cane at 31 March
- South Africa (%) 64 64
- Swaziland (%) 64 64
- Zambia (%) 64 64
Estimated RV price - South Africa (Rands) 3 991 4 790
Estimated sucrose price - Swaziland (Rands) 2 946 3 880
Estimated ERC price - Zambia (Rands) 4 044 3 355
Deciduous fruit
Expected area to harvest after 31 March (ha) 202 178
Estimated yields (tons/ha) 56.9 57.0
Average maturity of crop at 31 March (%) 81.9 81.8
Estimated net price per kg - apples and pears (Rands) 3.47 3.97
Estimated packout
- Class 1 (%) 31.8 41.6
- Class 2 (%) 18.5 15.9
- Class 3 (%) 11.9 9.1
- Juice (%) 37.7 33.4
Bananas
Expected area to harvest after 31 March (ha) 415 411
Estimated yields (tons/ha) 55.3 52.6
Average maturity of crop at 31 March (%) 50.0 50.0
Estimated net price per carton (Rands) 139.73 134.64
Macadamias
Expected area to harvest after 31 March (ha) 382 -
Estimated yields (tons/ha) 0.4 -
Average maturity of crop at 31 March (%) 0.8 -
Estimated net price per ton (Rands) 53 741 -
Date: 12/06/2018 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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