Wrap Text
Interim results for the six months ended 30 September 2018
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
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018
Commentary
As in prior years, the board cautions against using interim earnings to project full year earnings, due to the impact of seasonality,
particularly in the deciduous and macadamia segments.
At the interim stage, cash generated by operations is believed to be a more reliable indicator of group performance as it
eliminates the vagaries of price estimates of the prior year crop. Cash generated by operations for the six month period ended
30 September 2018 increased by 86% to R52 million (2017: R28 million).
Operations
Sugar cane
Operating profit from sugar cane increased by 16% to R78 million due to excellent yields and quality following extensive
replanting after the drought although results are undermined by current estimated RV prices which are still 16% below
the 2017 price estimates and 22% below those of 2016. The group has expanded its area under crop to 6 755 hectares
(2017: 6 192 hectares).
Deciduous fruit
The Western Cape has experienced debilitating drought conditions and results in the deciduous operations reflect the resultant
poor yields and quality of the crop. The unmatched results in the interim period reflect the tail-end of revenues from the 2018
crop and the cost of establishing the 2019 crop.
Bananas
Following two years of outstanding results, revenue and operating profit has declined due to weaker prices following increased
production in Mozambique and South Africa.
Macadamias
Revenue is significantly higher than that of the previous year as new orchards come into production. Growth continues to
exceed expectations.
Property
Revenue is up 113% as the sale of units in Renishaw Hills gains momentum. Operating margins have improved as early sales
were done at attractive prices to encourage early entrants to the development.
Prospects
We expect results for the full year to reflect a recovery with record sugar cane yields following our replant programme, new
young macadamia and deciduous orchards coming into production early in 2019 and recovery in sugar prices.
Interim dividend declaration
The board continues to maintain a conservative dividend policy during this recovery period and has taken the decision not to
declare an interim dividend for the six month period ended 30 September 2018.
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
28 November 2018
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 member of the Sasfin Group
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
Unaudited Restated Restated
Six months to Six months to 12 months to
30 September 30 September 31 March
2018 2017* 2018*
Note R'000 R'000 R'000
Revenue 373 000 346 602 577 371
Operating profit before biological assets 83 229 101 648 460
Change in fair value of biological assets (43 009) (57 803) 2 600
Operating profit after biological assets 40 220 43 845 3 060
Share of profit of joint venture and associate companies - - 3 641
Investment income 791 634 1 666
Finance costs 1 (13 601) (7 866) (16 700)
Profit/(loss) before tax 27 410 36 613 (8 333)
Income tax expense (6 939) (10 252) 5 096
Profit/(loss) for the period 20 471 26 361 (3 237)
Attributable to:
Owners of the company 9 963 7 209 (7 587)
Non-controlling interests 10 508 19 152 4 350
20 471 26 361 (3 237)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of post-employment medical aid obligation - - (514)
- - (514)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (3 937) 445 (5 238)
Other comprehensive (loss)/income, net of income tax (3 937) 445 (5 752)
Total comprehensive income/(loss) for the period 16 534 26 806 (8 989)
Attributable to:
Owners of the company 6 026 7 654 (13 339)
Non-controlling interests 10 508 19 152 4 350
16 534 26 806 (8 989)
Earnings/(loss) per share
Basic (cents) 65,3 47,2 (49,7)
Diluted (cents) 65,3 47,1 (49,7)
Headline earnings/(loss) per share
Basic (cents) 52,9 47,2 (50,6)
Diluted (cents) 52,9 47,1 (50,6)
Dividend per share
Interim (cents) - 35,0 35,0
Final (cents) - - -
* Restated for change in accounting policy per note 5.
Condensed consolidated statement of
financial position
Unaudited Unaudited
Unaudited Restated Restated
30 September 30 September 31 March
2018 2017* 2018*
Notes R'000 R'000 R'000
ASSETS
Non-current assets 1 064 251 1 006 212 1 052 815
Property, plant and equipment 967 627 937 599 967 756
Investment property 19 995 - 11 432
Deferred tax assets 8 972 6 112 6 044
Other financial assets 4 151 2 738 3 269
Investments in joint venture and associates 59 843 56 361 60 816
Unsecured loans 3 663 3 402 3 498
Current assets 564 663 520 615 515 615
Inventories 3 141 969 137 863 128 494
Biological assets 169 837 155 762 213 443
Trade and other receivables 4 171 744 166 815 124 419
Current tax assets 5 688 2 673 8 398
Other financial assets 107 - 102
Retirement benefit surplus 10 212 10 212 10 212
Unsecured loans 3 803 5 232 3 673
Cash and bank balances 61 303 42 058 26 874
Total assets 1 628 914 1 526 827 1 568 430
EQUITY AND LIABILITIES
Capital and reserves 1 048 690 1 076 230 1 032 156
Share capital and premium 226 271 226 271 226 271
Investment revaluation reserve 951 951 951
Foreign currency translation reserve (32 939) (23 319) (29 002)
Share-based payment reserve 3 473 2 414 3 473
Retained earnings 815 434 816 618 805 471
Equity attributable to owners of the company 1 013 190 1 022 935 1 007 164
Non-controlling interests 35 500 53 295 24 992
Non-current liabilities 253 070 220 662 207 202
Deferred tax liabilities 118 868 132 568 126 986
Borrowings - interest-bearing 73 020 49 590 24 104
Other financial liabilities 13 543 - 8 797
Obligation to restore leased farmland 44 998 38 504 44 674
Post-employment medical aid obligation 2 641 - 2 641
Current liabilities 327 154 229 935 329 072
Trade and other payables and provisions 62 382 46 890 55 200
Current tax liabilities 13 304 25 899 337
Post-employment medical aid obligation 7 693 9 023 7 693
Borrowings - interest-bearing 218 847 147 519 241 792
Outside shareholders' loan - 604 -
Bank overdraft 24 928 - 24 050
Total equity and liabilities 1 628 914 1 526 827 1 568 430
Net asset value per share 6 870 7 051 6 762
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) 15 264 317 15 295 846 15 320 090
* Restated for change in accounting policy per note 5.
Condensed consolidated statement of
cash flows
Unaudited Unaudited
Unaudited Restated Restated
Six months to Six months to 12 months to
30 September 30 September 31 March
2018 2017* 2018*
R'000 R'000 R'000
Operating activities
Operating profit for the period 40 220 43 845 3 060
Adjustment for non-cash items:
Depreciation 27 001 21 856 49 290
Change in fair value of biological assets 43 009 57 803 (2 600)
Other non-cash items (2 861) (7 647) (4 405)
Operating cash flows before movements in working capital 107 369 115 857 45 345
Net outflow from changes in working capital (55 109) (87 749) (22 621)
Cash generated from operations 52 260 28 108 22 724
Interest received 481 634 1 591
Interest paid (9 266) (7 866) (16 594)
Income taxes paid (1 725) (3 038) (17 171)
Net cash generated by/(used in) operating activities 41 750 17 838 (9 450)
Investing activities
Investment in other financial assets (955) - (2 356)
Increase in unsecured loans - - (7 171)
Proceeds on disposal of property, plant and equipment 398 3 463 6 402
Investment in property, plant and equipment (28 876) (87 824) (155 217)
Investment in investment property (4 704) - (11 449)
Investment in joint venture and associate companies 558 (951) (2 525)
Other net investing activities 113 (1 719) (75)
Net cash flows before dividends and financing activities 8 284 (69 193) (181 841)
Net increase in/(repayment of) term-loans 42 040 4 824 (2 732)
Net (repayment of)/increase in other loans and borrowings (16 773) (24 989) 10 345
Net increase in general banking facilities - 101 985 154 985
Net increase in other financial liabilities - - 8 873
Dividends paid - (17 554) (33 791)
Net increase/(decrease) in cash and cash equivalents 33 551 (4 927) (44 161)
Cash and cash equivalents at beginning of the period 2 824 46 985 46 985
Cash and cash equivalents at end of the period 36 375 42 058 2 824
* Restated for change in accounting policy per note 5.
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
2018 2017 2018
R'000 R'000 R'000
Balance at beginning of period 1 032 156 1 066 978 1 066 978
Share-based payment expense - - 1 059
Other comprehensive income/(loss) for the period 16 534 26 806 (8 989)
Dividends declared and paid - (17 554) (33 791)
Adjustments to non-controlling interests - - 6 899
Balance at end of period 1 048 690 1 076 230 1 032 156
Condensed consolidated
segmental analysis
Unaudited Unaudited
Unaudited Restated Restated
Six months to Six months to 12 months to
30 September 30 September 31 March
2018 2017* 2018*
R'000 R'000 R'000
Revenue
Sugar cane 232 963 240 462 300 080
Deciduous fruit 35 917 41 812 119 163
Bananas 48 775 38 991 88 464
Macadamias 8 007 2 041 2 166
Property development 35 241 16 518 49 538
Other operations 12 097 6 778 17 960
373 000 346 602 577 371
Operating profit before biological assets
Sugar cane 99 424 111 578 48 993
Deciduous fruit (8 294) 1 738 (19 197)
Bananas 9 475 9 072 26 240
Macadamias 3 041 2 679 (1 398)
Property development 2 906 (646) (974)
Other operations (265) (2 037) (3 667)
Disposal of plant and equipment and unlisted shares 220 - 361
Corporate expenses (23 278) (20 736) (49 898)
83 229 101 648 460
Change in fair value of biological assets
Sugar cane (21 010) (43 772) (4 684)
Deciduous fruit (18 817) (20 044) (1 227)
Bananas (1 528) 6 013 1 584
Macadamias (1 654) - 6 927
(43 009) (57 803) 2 600
Operating profit after biological assets
Sugar cane 78 414 67 806 44 309
Deciduous fruit (27 111) (18 306) (20 424)
Bananas 7 947 15 085 27 824
Macadamias 1 387 2 679 5 529
Property development 2 906 (646) (974)
Other operations (265) (2 037) (3 667)
Disposal of plant and equipment and unlisted shares 220 - 361
Corporate expenses (23 278) (20 736) (49 898)
40 220 43 845 3 060
* Restated for change in accounting policy per note 5.
Condensed consolidated notes
Unaudited Unaudited
Unaudited Restated Restated
Six months to Six months to 12 months to
30 September 30 September 31 March
2018 2017* 2018*
R'000 R'000 R'000
1. Finance costs
Interest paid - bank overdraft and borrowings 13 395 7 866 16 594
Interest paid - reversionary sale and transfer obligations 206 - 106
13 601 7 866 16 700
2. Headline earnings/(loss)
Profit/(loss) for the period attributable to owners of the company 9 963 7 209 (7 587)
Adjusted for:
Gain on disposal of property, plant and equipment (190) - (361)
(Gain)/loss on disposal of available-for-sale financial assets - held at cost (30) - 4
Impairment of investment premium - - 150
(Gain)/loss arising on changes in fair value of investment property (2 393) - 17
Tax effect of the adjustments 732 - 54
Headline earnings/(loss) 8 082 7 209 (7 723)
3. Inventories
Consumable stores and other 45 336 41 390 39 843
Property for development and sale 96 633 96 473 88 651
141 969 137 863 128 494
4. Trade and other receivables
Receivables - trade and other 164 646 157 708 108 869
Less: Allowances for doubtful debts (347) (271) (347)
Net trade receivables 164 299 157 437 108 522
Prepayments 7 445 9 378 15 897
171 744 166 815 124 419
* Restated for change in accounting policy per note 5.
5.Changes in IFRS 15 Revenue
IFRS 15 Revenue from contracts with customers
IFRS 15 the new revenue standard, came into effect on 1 January 2018. Under IFRS 15, revenue is now recognised when
control over goods passes to customers. The effect of the standard on the group is felt mainly in our deciduous sector
where Two a Day ("TAD"), a distributor and marketing agent for Crookes, is now treated as a customer and not as an
agent. Deliveries of deciduous fruit are now recognised as revenue upon TAD receiving the fruit into its care and control.
Under the old IAS 18 revenue standard, revenue was only recognised upon TAD selling the fruit, and unsold inventory held
by TAD was recognised by the group as inventory, measured at the estimated selling price less direct costs.
The financial effect of IFRS 15 on the group's results is summarised as follows:
- Revenue is measured and disclosed net of customer processing costs, whereas previously, was disclosed at gross
revenue, with processing costs accounted for separately.
- Stock sold to distributors are reclassified as a trade receivables, whereas previously, was disclosed as inventory measured
at selling price less direct costs.
- As there is no net impact on operating profit, tax, earnings and earnings per share remain unchanged.
- Prior period comparatives have been restated.
The following tables summarise the impact of IFRS 15 on the prior period comparatives
Unaudited Unaudited
Six months to 12 months to
30 September 31 March
2017 2018
Statement of profit or loss R'000 R'000
Revenue - reduced (65 665) (79 852)
Cost of sales - reduced 51 123 47 360
Distribution expenses - reduced 14 542 32 492
Net effect on operating profit - -
Unaudited Unaudited
Six months to 12 months to
30 September 31 March
2017 2018
Statement of financial position R'000 R'000
Inventories - reduced - (30 527)
Trade and other receivables - increased - 30 527
Net effect - -
Reconciliation to prior period audited results
Revenue as previously reported - audited 657 223
IFRS 15 change above - unaudited (79 852)
Revenue restated - unaudited 577 371
Inventories as previously reported - audited 159 021
IFRS 15 change above - unaudited (30 527)
Inventories restated - unaudited 128 494
Trade and other receivables as previously reported - audited 93 892
IFRS 15 change above - unaudited 30 527
Trade and other receivables restated - unaudited 124 419
6. Basis of preparation and accounting policies
The condensed consolidated unaudited results for the half-year ended 30 September 2018 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 2018 and were prepared 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 2018. The adoption of these standards and its recognition and
measurement impact on the financial results of the group, have been disclosed in note 5.
28 November 2018
Sponsor
Sasfin Capital (a member of the Sasfin Group)
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