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KAAP AGRI LIMITED - Condensed Consolidated Interim Financial Statements for the Six Months Ended 31 March 2019

Release Date: 10/05/2019 07:05
Code(s): KAL     PDF:  
 
Wrap Text
Condensed Consolidated Interim Financial Statements for the Six Months Ended 31 March 2019

Kaap Agri Limited
Incorporated in the Republic of South Africa
Registration number: 2011/113185/06 
Income tax number: 9312717177
Share code: KAL
ISIN code: ZAE000244711

Condensed consolidated interim financial statements for the six months ended 31 March 2019

Salient features

Revenue up 28,7% to R4 389 785
Recurring headline earnings per share up 3,2% to 230,34 cents
Headline earnings per share up 1,4% to 224,17 cents
Interim dividend per share up 4,7% to 33,50 cents

COMMENTARY

The Group specialises in trading in agricultural, fuel and related retail markets in Southern Africa. With its strategic footprint, infrastructure,
facilities and client network, it follows a differentiated market approach. In support of the core retail business, the Group also offers financial, 
grain handling and agency services. Kaap Agri has over 200 operating points located in all nine South African provinces, as well as in Namibia.

Operating environment

During the period under review, Kaap Agri's performance has been affected by the slower-than-anticipated recovery of agricultural conditions in the 
Western Cape and the continued drought conditions in the Northern Cape. The addition of the Forge business in KwaZulu-Natal, as well as market share 
gains in the Inland region, have positively impacted the trade division. Although consumer pressure remains, the Group's range expansion and 
improvement has generated strong retail growth in non-agri categories. Lower disposable income has also influenced the retail fuel sector. Wesgraan 
has performed well off the back of a more favourable wheat position.

Financial results

Kaap Agri increased revenue by 28,7% to R4,4 billion, up from R3,4 billion in the previous comparable financial period, with like-for-like comparable
sales growth of 10,7%. The growth in the value of business transacted was driven by a 21,9% increase in the number of transactions. Product inflation,
excluding the impact of fuel inflation, is estimated at -0,5%.

While the sales growth of the Trade division has been encouraging, the largest impact on revenue came from The Fuel Company ("TFC"), specifically in 
newly acquired and non-like-for-like sites. Group fuel volumes increased by 9,2%, of which TFC owned and managed sites have grown fuel volumes by 9,5%.
Growth in fuel site convenience and quick service restaurant retail operations has exceeded fuel volume growth. Revenue from the newly acquired Forge
business is included from 1 October 2018. Mechanisation sales exceeded expectation during the period and Wesgraan has shown a good recovery from the 
previous period. The business continues to explore agri, retail and manufacturing expansion opportunities.

Gross profit increased by 15,6% but has not grown in relation to revenue growth. The Group's gross profit margin reduced to 15,5% from 17,3%, impacted 
by increased turnover of low-margin agri products, fuel price increases and general retail margin pressure. Return on revenue has decreased to 3,8% 
from 4,6% in the previous interim period.

In support of increased revenue and market share gains, expenditure grew 20,5%, a direct result of new acquisitions and the annualisation of non-
like-for-like stores. Also impacting expenditure growth were certain non-recurring costs associated with acquisitions of new businesses and other 
restructuring costs. Cost control remains a core focus area to alleviate the impact of suppressed margins. However, the business continues to invest 
in human capital and its supply chain, as well as various growth acceleration initiatives in line with our strategic medium-term plan.

Interest received grew by 3,1% due to increased credit sales and a higher average debtors book. Interest paid increased by 16,5% due to higher average
borrowings during the interim period in support of acquisitions and growth. Gearing remains at acceptable levels with sufficient headroom available to
increase borrowings to fund future growth to the extent required.

Headline earnings grew by 3,5% and headline earnings per share grew by 1,4%, while recurring headline earnings grew by 5,2% and recurring headline 
earnings per share increased by 3,2%. Once-off items are excluded from headline earnings to calculate recurring headline earnings.

EBITDA has grown by 6,6% and ahead of recurring headline earnings growth due to the impact of growth-related interest paid and depreciation.

Operating results

Revenue from the Trade division, which includes the Agrimark retail branches, Pakmark packaging material distribution centres, Forge, Mechanisation 
services and spare parts increased by 24,1% with operating profit before tax increasing by 0,7%. Excluding the impact of the recently acquired Forge 
business, non-agri retail sales have performed well, growing at 3,9% on the previous comparable period and with the exception of water storage 
categories coming off a large base last year as well as constrained cement sales, non-agri retail sales have delivered growth of 13,4%.

Significant growth was realised in TFC with revenue growing by 45,0% and operating profit before tax increasing by 24,7%. Sites previously operated 
under management agreement reflected only a management fee income earned, but subsequent to the required trading licences being issued, these sites 
are consolidated as owned sites, hence the disproportionate growth in revenue and operating profit. Growth in fuel site convenience and quick service
restaurant retail operations has exceeded fuel volume growth. Continued strong growth in this division is expected.

Wesgraan, which includes grain handling and storage of grain and related products, seed processing and potato seed marketing, grew revenue by 26,6%
off improved wheat harvests in the Western Cape, resulting in a 16,8% increase in operating profit before tax. Certain transport costs incurred during
the first six months will be recovered through sales in the second half of the financial year. The full impact of the Wesgraan recovery is weighted to
the second half of the current financial year.

Revenue from Irrigation manufacturing decreased by 5,3% due to the lingering drought related impact on capital investments and upgrades. Operating 
profit reduced by 27,9%. The sales outlook is, however, improving with increased turnover experienced in the latter part of this period expected to 
continue. Investments have been made into this segment to improve manufacturing efficiencies and new product range opportunities are being investigated.

The Corporate division cost, which includes the cost of support services, as well as other costs not allocated to specific segments, increased by 10,9%
for the six-month period.

Treasury income, which represents net internal interest received less external interest paid, remained constant year-on-year.

Financial position

Despite the challenging trading environment, investment activities continued, which included R67,9 million on the expansion and upgrade of properties,
plant and equipment, as well as an additional R91,0 million in acquisitions since the end of the previous financial year.

Working capital has been well-controlled. Debtors have grown in line with credit sales and out-of-term debtors have reduced by 27,6% year-on-year.
Management views the debtors book as being healthy and adequately provided for. Stock has grown at a rate slower than turnover and is turning quicker
as the contribution of retail sales and fuel sales increases. Creditor payment terms have remained relatively constant during the period.

Return on net assets has reduced to 5,2% (2018: 5,8%) due to the full value of increased assets being included with only partial period or delayed
returns. 

Net interest-bearing borrowings increased by 20,0% to R1,4 billion year-on-year off the back of investments into expansions, upgrades and acquisitions,
as well as working capital. The Group's debt to equity ratio increased to 70,9% from 65,2% last year with interest cover of 5,9 times (2018: 5,5 times).
This is in line with previous indications that, despite the adverse trading conditions, we will continue with our investments in new TFC sites, as well
as into other agri, retail and manufacturing opportunities. This will result in Kaap Agri's debt to equity position increasing accordingly.

The Group continues to generate strong cash flows from operations and significant investment has been made back into the business to support future 
growth.

Dividend

A gross interim dividend of 33,50 cents per share (2018: 32,00 cents) has been approved and declared by the Board from income reserves, which 
represents a 4,7% increase on the previous interim period. The interim dividend amount, net of South African dividend tax of 20%, is 26,80 cents per
share for those shareholders that are not exempt from dividend tax. As at the declaration date, the Company had 74 170 277 shares in issue.

The salient dates for this dividend distribution are:

Declaration date                                                                                                                Friday, 10 May 2019
Last day to trade cum dividend                                                                                                 Tuesday, 4 June 2019
Trading ex dividend commences                                                                                                Wednesday, 5 June 2019
Record date to qualify for dividend                                                                                             Friday, 7 June 2019
Payment date                                                                                                                   Monday, 10 June 2019

Share certificates may not be dematerialised or rematerialised between Wednesday, 5 June 2019 and Friday, 7 June 2019, both days inclusive.

Outlook

The second half of the year will remain challenging and improved performance will be dependent on normalised weather patterns and increased consumer
confidence. We are committed to growing our market share in the areas where we operate and to enhance our customer offerings. Our core strategic 
themes of growth, optimisation, leveraging culture and diversity and digital transformation are aligned to create sustainable value for all our 
stakeholders. The recovery in Wesgraan, store upgrades and expansions, as well as the revenue from new TFC sites will contribute more significantly 
during the next six months.

Our footprint expansion continues, as will our investment in our people and in selective revenue and cash generating expansion and acquisition 
opportunities aligned with our strategic plans. We remain committed to achieving our strategic medium-term growth targets.

Events after the reporting date

There have been no events that may have a material effect on the Group that occurred after the end of the reporting period and up to the date of 
approval of the interim financial results by the Board.

On behalf of the Board

GM Steyn                                   S Walsh
Chairman                                   Chief Executive Officer
10 May 2019


STATEMENT OF FINANCIAL POSITION
                                                                                                    Restated 
                                                                               Unaudited           Unaudited         Audited
                                                                                31 March            31 March    30 September
                                                                                    2019                2018            2018
                                                                        Notes      R'000               R'000           R'000

ASSETS
Non-current assets
Property, plant and equipment                                               5  1 185 909           1 016 833       1 097 159
Intangible assets                                                           6    276 684              98 951         168 165
Investment in joint venture                                                 7     10 238              14 243          11 941
Loans                                                                             49 913              20 218          26 397
Deferred taxation                                                                    788                 726           1 234
                                                                               1 523 532           1 150 971       1 304 896
Current assets
Inventory                                                                        880 158             781 204         911 151
Trade and other receivables                                                 8  1 745 613           1 582 067       1 664 483
Derivative financial instruments                                                       -               2 401           6 487
Short-term portion of loans                                                        3 127               2 679               -
Cash and cash equivalents                                                         43 046              27 070          40 214
                                                                               2 671 944           2 395 421       2 622 335

Total assets                                                                   4 195 476           3 546 392       3 927 231

EQUITY AND LIABILITIES
Capital and reserves                                                           1 902 570           1 681 929       1 742 746
Non-current liabilities
Deferred taxation                                                                 56 902              23 848          41 905
Finance lease liabilities                                                         29 705              20 445          17 402
Employee benefit obligations                                                      16 073              15 405          16 367
                                                                                 102 680              59 698          75 674
Current liabilities
Trade and other payables                                                    9    737 440             602 528       1 095 812
Derivative financial instruments                                                   2 618               2 401               -
Short-term portion of finance lease liabilities                                   11 668               9 648           8 542
Short-term portion of Employee benefit obligations                                 1 996               5 045           1 914
Short-term borrowings                                                          1 427 579           1 180 770       1 000 907
Income tax                                                                         8 925               4 373           1 636
                                                                               2 190 226           1 804 765       2 108 811

Total liabilities                                                              2 292 906           1 864 463       2 184 485

Total equity and liabilities                                                   4 195 476           3 546 392       3 927 231
                                                                                   
Total shareholders' equity to Total assets employed* (%)                            46,3                47,3            45,3
Net interest-bearing debt to Total assets employed* (%)                             32,8                30,8            23,8
Net asset value per share (rand)                                                   27,09               23,87           24,84
Shares issued (number - '000)                                                     70 237              70 462          70 162
Total number of ordinary shares in issue**                                        74 170              74 170          74 170
Treasury shares                                                                   (3 933)             (3 708)         (4 008)

*  Ratios calculated on average balances.
** There was no change in the issued share capital between 31 March 2019 and the dividend declaration date, being 
   74 170 277 shares.


INCOME STATEMENT
                                                                                                    Restated 
                                                                               Unaudited           Unaudited         Audited
                                                                                31 March            31 March    30 September
                                                                       Notes        2019                2018            2018
                                                                                   R'000               R'000           R'000

Revenue                                                                   10   4 389 785           3 410 763       6 548 793
Cost of sales                                                                 (3 707 950)         (2 820 830)     (5 446 480)
Gross profit                                                                     681 835             589 933       1 102 313
Operating expenses                                                              (465 628)           (386 421)       (787 094)
Operating profit before interest received                                        216 207             203 512         315 219
Interest received                                                                 60 894              59 077         115 840
Operating profit                                                                 277 101             262 589         431 059
Finance costs                                                                    (52 248)            (44 843)        (82 739)
Share in profit/(loss) of joint venture                                           (1 703)             (1 114)         (3 416)
Profit before tax                                                                223 150             216 632         344 904
Income tax                                                                       (61 958)            (60 420)        (95 947)
Profit for the period attributable to equity holders of the holding company
                                                                                 161 192             156 212         248 957
Attributable to equity holders of the holding company                            157 495             156 212         246 247
Non-controlling interest                                                           3 697                   -           2 710
Earnings per share - basic (cents)                                                224,23              221,70          349,80
Earnings per share - diluted (cents)                                              222,98              219,80          346,90
Dividend per share (cents)                                                         33,50               32,00          116,70


HEADLINE EARNINGS RECONCILIATION
                                                                                                    Restated 
                                                                               Unaudited           Unaudited         Audited
                                                                                31 March            31 March    30 September
                                                                                    2019                2018            2018
                                                                                   R'000               R'000           R'000

Profit for the period                                                            161 192             156 212         248 957
Attributable to equity holders of the holding company                            157 495             156 212         246 247
Non-controlling interest                                                           3 697                   -           2 710
Net profit on disposal of assets                                                     (44)               (489)           (578)
Gross                                                                                (61)               (679)           (803)
Tax effect                                                                            17                 190             225

Headline earnings                                                                161 148             155 723         248 379
Attributable to equity holders of the holding company                            157 451             155 723         245 669
Non-controlling interest                                                           3 697                   -           2 710
Headline earnings per share - basic (cents)                                       224,17              221,00          348,98
Headline earnings per share - diluted (cents)                                     222,91              219,12          346,09
Weighted average number of shares (number - '000)                                 70 237              70 462          70 396
Weighted average number of diluted shares (number - '000)                         70 633              71 069          70 984


STATEMENT OF COMPREHENSIVE INCOME
                                                                                                    Restated 
                                                                               Unaudited           Unaudited         Audited
                                                                                31 March            31 March    30 September
                                                                                    2019                2018            2018
                                                                        Notes      R'000               R'000           R'000

Profit for the period                                                            161 192             156 212         248 957
Other comprehensive income:
Cash flow hedges (can be classified to profit and loss)                                -                   -            (394)
Gross                                                                                  -                   -            (547)
Tax                                                                                    -                   -             153

Total comprehensive income for the period                                        161 192             156 212         248 563
Attributable to equity holders of the holding company                            157 495             156 212         245 853
Non-controlling interest                                                           3 697                   -           2 710


STATEMENT OF CHANGES IN EQUITY
                                                                                                    Restated 
                                                                               Unaudited           Unaudited         Audited
                                                                                31 March            31 March    30 September
                                                                                    2019                2018            2018
                                                                                   R'000               R'000           R'000

Share capital                                                                    447 101             456 643         443 921
Gross shares issued                                                              480 347             480 347         480 347
Treasury shares                                                                  (33 246)            (23 704)        (36 426)
Other reserves                                                                     8 063               5 830           9 172
Opening balance                                                                    9 172               3 893           3 893
Share-based payments                                                              (1 109)              1 937           5 673
Other comprehensive income                                                             -                   -            (394)
Retained profit                                                                1 389 764           1 219 456       1 286 943
Opening balance                                                                1 286 943           1 121 445       1 121 445
Effect of adopting IFRS 9 - Financial Instruments                         2.1       (815)                  -               -
Gain on partial disposal of subsidiary                                             5 631                   -               -
Profit for the period                                                            157 495             156 212         246 247
Dividends paid                                                                   (59 490)            (58 201)        (80 749)
Non-controlling interest                                                          57 642                   -           2 710
Opening balance                                                                    2 710                   -               -
Non-controlling interest on acquisition of subsidiary                             12 014                   -               -
Non-controlling interest on partial disposal of subsidiary                        41 480                   -               -
Profit for the period                                                              3 697                   -           2 710
Dividends paid                                                                    (2 259)                  -               -

Capital and reserves                                                           1 902 570           1 681 929       1 742 746


STATEMENT OF CASH FLOWS
                                                                                                    Restated 
                                                                               Unaudited           Unaudited         Audited
                                                                                31 March            31 March    30 September
                                                                                    2019                2018            2018
                                                                                   R'000               R'000           R'000

Cash flow from operating activities                                             (106 916)            (81 045)        237 025
Net cash profit from operating activities                                        306 381             246 706         451 431
Working capital changes                                                         (372 818)           (276 310)       (127 150)
Income tax paid                                                                  (40 479)            (51 441)        (87 256)
Cash flow from investment activities                                            (184 868)           (235 510)       (283 503)
Purchase of property, plant and equipment                                        (67 946)            (85 092)       (130 615)
Proceeds on disposal of property, plant and equipment                                702               2 421           2 736
Prepayments made during the year                                                 (41 150)           (167 400)        (52 900)
Decrease/(increase) in loans                                                     (26 643)             14 561          11 776
Acquisition of operations                                                        (49 831)                  -        (114 500)
Cash flow from financing activities                                              294 616             308 537          51 604
Increase/(decrease) in short-term loans                                          412 070             415 878         236 015
Decrease in finance lease liabilities                                             (3 457)             (4 297)         (8 201)
Interest paid                                                                    (52 248)            (44 843)        (82 739)
Treasury shares acquired                                                               -                   -         (12 722)
Dividends paid                                                                   (61 749)            (58 201)        (80 749)

Net increase/(decrease) in cash and cash equivalents                               2 832              (8 018)          5 126
Cash and cash equivalents at the beginning of the period                          40 214              35 088          35 088

Cash and cash equivalents at the end of the period                                43 046              27 070          40 214


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The unaudited condensed consolidated interim financial statements have been prepared and presented 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, the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the Listings 
Requirements of the JSE Limited, the information as required by IAS 34 - Interim Financial Reporting and the requirements of the South African 
Companies Act, 71 of 2008. The consolidated interim financial information has been prepared using accounting policies that comply with IFRS, which 
are consistent with those applied in the consolidated financial statements for the year ended 30 September 2018, except for instances listed in note 2.

The condensed consolidated interim financial statements for the six months ended 31 March 2019  were  prepared by GC Victor CA(SA), the Group's
Financial Manager under supervision of GW Sim CA(SA), the Group's Financial Director.

The condensed consolidated interim financial statements have not been audited or reviewed by  the  Company's auditors.

International Financial Reporting Standards and amendments effective for the first time
- Amendments to IFRS 2 - Share-based Payments (effective from 1 January 2018)
  This amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting for modifications that change an award from 
  cash-settled to equity-settled.
- IFRS 9 - Financial Instruments - Financial Assets (effective from 1 January 2018)
  This standard replaces the guidance in IAS 39. It includes requirements on the classification and measurement of financial assets and liabilities;
  it also includes an expected credit loss model that replaces the current incurred loss impairment model.
- Amendment to IFRS 9 - Financial Instruments (effective from 1 January 2018)
  The IASB has amended IFRS 9 to align hedge accounting more closely with an entity's risk management. The revised standard also establishes a more
  principles-based approach to hedge accounting and addresses inconsistencies and weaknesses in the current model in IAS 39.
- IFRS 15 - Revenue from Contracts with Customers (effective from 1 January 2018)
  The IASB has amended IFRS 15 to clarify the guidance, but there were no major changes to the standard itself. The amendments comprise clarifications
  of the guidance on identifying performance obligations, accounting for licences of intellectual property and the principal versus agent assessment 
  (gross versus net revenue presentation). New and amended illustrative examples have been added for each of these areas of guidance. The IASB has also
  included additional practical expedients related to transition to the new revenue standard.

International Financial Reporting Standards, interpretations and amendments issued but not yet effective
The following standards, amendments and interpretations are not yet effective and have not been early  adopted by the Group (the effective dates stated
below refer to financial reporting periods beginning on or after the stated dates):

New standards
- IFRS 16 - Leases (effective from 1 January 2019)
  This standard replaces the current guidance in IAS 17 and is a far reaching change in accounting by lessees in particular. Under IAS 17, lessees were
  required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to
  recognise a lease liability reflecting future lease payments and a "right-of-use asset" for virtually all lease contracts. The IASB has included an 
  optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees. For lessors,
  the accounting stays almost the same. However, as the IASB has updated the guidance on the definition of a lease (as well as the guidance on the 
  combination and separation of contracts), lessors will also be affected by the new standard.

Amendments
- Amendment to IAS 1 - Presentation of Financial Statements and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors on the definition
  of material (effective from 1 January 2020)
  These amendments to IAS 1 and IAS 8 and consequential amendments to other IFRS: use a consistent definition of materiality through IFRS and the 
  Conceptual Framework for Financial Reporting; clarify the explanation of the definition of material; and incorporate some of the guidance in IAS 1 
  about immaterial information.
- Amendments to IAS 19 - Employee Benefits on plan amendment, curtailment or settlement (effective from  1 January 2019)
  These amendments require an entity to use updated assumptions to determine current service cost and net interest for the remainder of the period after
  a plan amendment, curtailment or settlement; and recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any 
  reduction in a surplus (recognised or unrecognised).
- Amendment to IFRS 3 - Business Combinations (effective from 1 January 2020)
  This amendment revises the definition of a business. According to feedback received by the IASB, application of the current guidance is commonly 
  thought to be too complex, and it results in too many transactions qualifying as business combinations. More acquisitions are likely to be accounted 
  for as asset acquisitions.
- Amendments to IAS 28 - Investments in Associates and Joint Ventures - Long-term Interests in Associates and Joint Ventures (effective from 
  1 January 2019)
  The amendments clarified that companies account for long-term interests in an associate or joint venture, to which the equity method is not applied, 
  using IFRS 9.
  
  Management considered all new accounting standards, interpretations and amendments to IFRS that were issued prior to 31 March 2019 but not yet 
  effective on that date. The most significant of these standards is IFRS 16, which will be effective for the Group's 2020 financial year.

  The new standard for leases, IFRS 16, requires a lessee to recognise a right-of-use asset and corresponding lease liability on the balance sheet 
  for almost all lease contracts. Currently operating lease expenses are charged to the income statement on a straight line basis over the term of 
  the lease. The Group leases various properties, machinery, equipment and vehicles under operating lease agreements. A more detailed assessment of 
  the impact is under way as the Group will evaluate the effect of IFRS 16 on its consolidated financial statements.

2. ACCOUNTING POLICIES
The accounting policies applied in the preparation of the condensed consolidated interim financial statements are in terms of IFRS and are consistent
with those accounting policies applied in the preparation of the previous Group annual financial statements except the instances listed below.

2.1 Effect of adopting IFRS 9 - Financial Instruments
IFRS 9 replaces IAS 39: Financial Instruments: Recognition and Measurement. It addresses the classification, measurement and derecognition of financial
assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

The adoption of IFRS 9 with effect from 1 October 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the
financial statements. The Group has elected not to restate its comparative information as permitted by IFRS 9. Accordingly, the impact of IFRS 9 has 
been applied retrospectively with an adjustment to opening retained earnings on 1 October 2018. Therefore comparative information in the prior period 
annual financial statements has not been amended for the impact of IFRS 9.

The total impact on the Group's retained earnings as at 1 October 2018 is as follows:

                                                                                                       Notes           R'000
Closing retained earnings on 30 September 2018 as previously reported                                              1 286 943               
Adjustments to retained earnings on initial application of IFRS 9                                      2.1.2            (815)  
Increase in impairment allowance for trade and other receivables 
Opening retained earnings on 1 October 2018                                                                        1 286 128

The application of IFRS 9 had no material impact on the reported earnings or financial position for the interim period under review.

2.1.1 Classification and measurement of financial instruments
IFRS 9 requires all financial assets to be classified and measured on the basis of the entity's business model for managing the financial assets and
the contractual cash flow characteristics of the financial assets.

Management has assessed which business models apply to the financial assets held by the Group at the date of initial application of IFRS 9 and has
classified its financial instruments into the appropriate IFRS 9 categories. It was determined that all of the Group's financial assets which were 
measured at amortised cost under IAS 39, satisfy the conditions for classification at amortised cost under IFRS 9. Hence there is no change to the
measurement of these assets.

There has been no change to the classification of the Group's financial liabilities and they continue to be classified and measured at amortised cost.

2.1.2 Impairment of financial assets under the expected credit loss model
IFRS 9 has introduced new expected credit loss (ECL) impairment requirements, as opposed to an incurred loss model applied in terms of IAS 39. The ECL
requirements apply to all financial assets measured at amortised cost and will result in the earlier recognition of credit provisions.

At a minimum, an impairment provision is required to be measured at an amount equal to the 12-month ECL for financial assets measured at amortised 
cost. A loss allowance for full lifetime ECLs is required for a financial asset if the credit risk of that financial instrument has increased 
significantly since initial recognition.

The impact of the change in impairment methodology on the Group's retained earnings and equity is disclosed in the table above.

For trade and other receivables, the Group has adopted the simplified approach which recognises lifetime ECLs regardless of stage classification. 
The Group has established a provision matrix that is based on risk factors per type of debtor, adjusted for forward-looking factors specific to such
trade and other receivables and the economic environment.

2.2 Effect of adopting IFRS 15 - Revenue from Contracts with Customers
IFRS 15 replaces IAS 18 - Revenue. It addresses the classification, measurement and disclosure of revenue from contracts with customers. It 
establishes a five-step model to account for revenue from contracts with customers, based on the principle that revenue is recognised either over 
time or at a point in time, as or when the Group satisfies performance obligations and transfers control of goods or services to its customers.

The Group's revenue consists mostly of sales of products delivered to customers at the point of sale and does not have multiple element arrangements
included in it. It is therefore assessed that the timing and measurement of the Group's revenue will not change as a result of the implementation of 
IFRS 15.

2.2.1 Agent versus principal assessment
IFRS 15 provides new guidance for the Group's assessment of whether it acts as principal or agent when recognising revenue from certain value-added
services. Management assessed these changes and has concluded that Kaap Agri is acting as an agent in this scenario and revenue will be accounted 
for on a net basis. The same conclusion was reached under the current revenue standard and thus there will be no change in treatment upon 
implementation of IFRS 15.

3. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's 
accounting policies of estimation uncertainty were the same as those that applied to the Group annual financial statements for the year ended 
30 September 2018. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets 
and liabilities within the next financial year are discussed below.

Provision for impairment of trade receivables
In estimating the provision for impairment of trade receivables, management makes certain estimates and judgements relating to the estimated 
recovery rate of debtors who are deemed to be impaired. This includes an assessment of current and expected future payment profiles and 
customer-specific risk factors such as economic circumstances, geographical location and the value of security held.

4. FAIR VALUE ESTIMATION
Financial instruments measured at fair value are disclosed by level of the following fair value hierarchy:
- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2 - Inputs (other than quoted prices included within level 1) that are observable for the asset or liability, either directly (as prices)
  or indirectly (derived from prices)
- Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The only financial instruments that are carried at fair value are derivative financial instruments held for hedging. The fair value is based on quoted
market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price (Level 2).

Level 2 hedging derivatives comprise forward purchase and sale contracts and options. The effects of discounting are generally insignificant for 
Level 2 derivatives.

The fair value of the following financial instruments approximate their carrying amount at the reporting date:
- Trade and other receivables
- Trade and other payables
- Short-term borrowings
- Loans


                                                                                                    Restated                       
                                                                               Unaudited           Unaudited         Audited        
                                                                                31 March            31 March    30 September
                                                                                    2019                2018            2018
                                                                                   R'000               R'000           R'000
5.  PROPERTY, PLANT AND EQUIPMENT
Reconciliation of movements in carrying value:
Carrying value beginning of period                                             1 097 159             947 617         947 617
Additions                                                                         71 501              94 870         140 148
 Land and buildings                                                               11 185              16 624          31 275
 Grain Silo's                                                                      3 512                   -           4 122
 Machinery and equipment                                                           9 810               8 526          13 027
 Vehicles                                                                          9 920               9 078          10 397
 Office furniture and equipment                                                    5 232               6 122          11 198
 Leasehold properties                                                              4 884               4 281             433
 Assets under construction                                                        26 958              50 239          69 696
Additions through business combinations                                           46 740                   -          61 017
Disposals                                                                           (657)             (1 742)         (1 933)
Depreciation                                                                     (28 834)            (23 912)        (49 690)
Carrying value end of period                                                   1 185 909           1 016 833       1 097 159
Land and buildings                                                               863 090             685 071         807 595
Grain silos                                                                       25 972              15 986          21 636
Machinery and equipment                                                          100 263              87 760          95 877
Vehicles                                                                          45 744              32 270          28 915
Office furniture and equipment                                                    96 683              75 476          87 116
Leasehold properties                                                              22 244              17 600          22 568
Assets under construction                                                         31 913             102 670          33 452
Vehicles include the following amounts where the Group
is a lessee under a finance lease:
Cost                                                                              71 023              38 327          39 451
Accumulated depreciation                                                         (29 341)            (12 838)        (16 826)
Carrying value                                                                    41 682              25 489          22 625
   
6.  INTANGIBLE ASSETS
Reconciliation of movements in carrying value:
Carrying value beginning of period                                               168 165              99 482          99 482
Additions through business combinations                                          108 707                   -          69 744
Amortisation                                                                        (188)               (531)         (1 061)
Carrying value end of period                                                     276 684              98 951         168 165
Goodwill                                                                         276 402              97 950         167 695
Customer relations                                                                   282               1 001             470

7.  INVESTMENT IN JOINT VENTURE
Kaap Agri (Namibia) (Pty) Ltd
Carrying value beginning of period                                                11 941              15 357          15 357
Share in total comprehensive income/(loss)                                        (1 703)             (1 114)         (3 416)
Carrying value end of period                                                      10 238              14 243          11 941


8.  TRADE AND OTHER RECEIVABLES
Trade debtors                                                                  1 658 613           1 413 588       1 549 498
                                                                                 (40 764)            (44 859)        (39 909)
Provision for impairment
                                                                               1 617 849           1 368 729       1 509 589
VAT                                                                               14 714               9 191          45 932
Prepayments                                                                       41 150             167 400          52 900
Other debtors                                                                     71 900              36 747          56 062
                                                                               1 745 613           1 582 067       1 664 483

9.  TRADE AND OTHER PAYABLES
Trade creditors                                                                  696 093             550 478       1 000 982
Employee accruals                                                                 31 796              28 776          42 177
Other creditors                                                                    9 551              23 274          52 653
                                                                                 737 440             602 528       1 095 812

10.  REVENUE
Sale of goods and services                                                     4 337 465           3 362 369       6 448 084
- Trade                                                                        2 538 767           2 039 633       4 021 209
- The Fuel Company (TFC)                                                       1 221 149             842 105       1 802 049
- Wesgraan                                                                       491 125             387 647         438 071
- Irrigation manufacturing                                                        86 424              91 302         186 755
- Corporate                                                                            -               1 682               -
Margin on direct transactions                                                     52 320              48 394         100 709
- Trade                                                                           52 042              47 877          99 659
- Wesgraan                                                                           278                 517           1 050
Total                                                                          4 389 785           3 410 763       6 548 793

11. INFORMATION ABOUT OPERATING SEGMENTS
Management has determined the operating segments based on the reports reviewed by the Executive committee that are used to make strategic decisions. 
The Executive committee considers the business from a divisional perspective. The performance of the following divisions are separately considered:
Trade, The Fuel Company (TFC), Wesgraan as well as Irrigation manufacturing. The performance of the operating segments is assessed based on a 
measure of revenue and net profit before taxation.

Trade provides a complete range of production inputs, mechanisation equipment and services, and other goods to agricultural producers as well as 
the general public.

TFC provides a full retail fuel offering to a diverse range of customers, including convenience store and quick- service restaurant outlets.

Wesgraan provides a complete range of marketing options, as well as handling grain products between producer and buyer.

Irrigation manufacturing manufactures dripper pipe and other irrigation equipment and distributes franchise and other irrigation parts.

Segment revenue and results

                                                               Segment revenue                         Segment results
                                                                  Restated                                  Restated
                                               Unaudited         Unaudited         Audited    Unaudited    Unaudited         Audited
                                                31 March          31 March    30 September     31 March     31 March    30 September
                                                    2019              2018            2018         2019         2018            2018
                                                   R'000             R'000           R'000        R'000        R'000           R'000
                                                                                                               

Trade                                          2 590 809         2 087 510       4 120 868      152 413      151 347         241 947
TFC                                            1 221 149           842 105       1 802 049       53 796       43 153          85 809
Wesgraan                                         491 403           388 164         439 121       28 885       24 736          23 611
Irrigation manufacturing                          86 424            91 302         186 755        9 315       12 925          25 952
Total for reportable segments                  4 389 785         3 409 081       6 548 793      244 409      232 161         377 319
Corporate                                              -             1 682               -      (52 374)     (47 228)        (94 237)
Treasury                                               -                 -               -       32 818       32 813          65 238
Share in profit/(loss) of joint venture                -                 -               -       (1 703)      (1 114)         (3 416)
Total external revenue                         4 389 785         3 410 763       6 548 793
Profit before tax                                                                               223 150      216 632         344 904
Income tax                                                                                      (61 958)     (60 420)        (95 947)
Profit after tax                                                                                161 192      156 212         248 957

Segment assets and liabilities
                                                              Segment revenue                         Segment results
                                                                  Restated                                  Restated
                                               Unaudited         Unaudited         Audited    Unaudited    Unaudited         Audited
                                                31 March          31 March    30 September     31 March     31 March    30 September
                                                    2019              2018            2018         2019         2018            2018
                                                   R'000             R'000           R'000        R'000        R'000           R'000 
                                          

Trade                                          1 401 769         1 260 066       1 430 303      607 625      530 927         888 404
TFC                                              679 124           554 059         546 449       86 475       33 803         121 215
Wesgraan                                         126 651            92 596          97 440       50 435       30 897          12 638
Irrigation manufacturing                          74 695            70 988          71 740       13 156       12 311          25 925
Total for reportable segments                  2 282 239         1 977 709       2 145 932      757 691      607 938       1 048 182
Corporate                                        284 362           184 985         258 535       50 734       51 907          93 491
Trade debtors                                  1 617 849         1 368 729       1 509 589            -            -               -
Investment in joint venture                       10 238            14 243          11 941            -            -               -
Short-term borrowings                                  -                 -               -    1 427 579    1 180 770       1 000 907
Deferred taxation                                    788               726           1 234       56 902       23 848          41 905
                                               4 195 476         3 546 392       3 927 231    2 292 906    1 864 463       2 184 485


12. BUSINESS COMBINATIONS
In line with the Group's growth strategy to acquire businesses in the fuel sector, certain retail fuel operations and accompanying retail fuel 
properties were acquired. Goodwill on acquisition was paid on these businesses as the price is competitive in the context of other retail fuel 
operations and the business combinations present synergies within the Group and have further earnings potential.

A purchase price allocation as required by IFRS 3 - Business Combinations was provisionally performed and no material intangible assets were 
identified, other than fuel site operating licences, which are recognised with the property that it relates to as one asset as these assets have 
similar useful lives. 

The Group also acquired a 60% shareholding in Partridge Building Supplies (Pty) Ltd in line with the Group's growth strategy and to expand its 
footprint and range of products.

A purchase price allocation was provisionally performed and possible other intangible assets might be raised as the valuations are still pending. 
Thus the purchase price allocation is deemed to be provisional and will be finalised in the financial statement for the year ending 30 September 2019.

The Group acquired the following assets through business combinations:
A 60% shareholding in Partridge Building Supplies (Pty) Ltd - October 2018 Sasol
Verbaard service station - October 2018
Sasol East Rand Mall service station - November 2018
Total Summit Road service station - December 2018
                                                                    Partridge
                                                                     Building      Sasol               Sasol           Total
                                                           Total     Supplies   Verbaard      East Rand Mall          Summit
                                                           R'000        R'000      R'000               R'000           R'000

Carrying value
Assets
Moveable assets                                           19 460       18 593        230                 123             514
Property                                                  40 900            -          -                   -          40 900
Trade and other receivables                               43 606       43 606          -                   -               -
Inventory                                                 39 751       37 735      1 217                 799               -
Liabilities
Trade and other payables                                 (54 017)     (54 017)         -                   -               -
Deferred taxation                                         (1 279)      (1 279)         -                   -               -
Bank overdraft                                           (14 602)     (14 602)         -                   -               -
                                                          73 819       30 036      1 447                 922          41 414
Fair value
Assets
Moveable assets                                           19 460       18 593        230                 123             514
Property                                                  27 281            -          -                   -          27 281
Trade and other receivables                               43 606       43 606          -                   -               -
Inventory                                                 40 340       37 735      1 217                 799             589
Liabilities
Trade and other payables                                 (54 017)     (54 017)         -                   -               -
Deferred taxation                                         (8 918)      (1 279)         -                   -          (7 639)
Bank overdraft                                           (14 602)     (14 602)         -                   -               -
Goodwill                                                 108 707       29 204     36 109              10 649          32 745
Equity
Non-controlling interest                                 (12 014)     (12 014)         -                   -               -
Purchase consideration                                   149 843       47 226     37 556              11 571          53 490
- paid in cash (current period)                           49 831       47 226      1 217                 799             589
- paid in cash (previous period)                          52 901            -          -                   -          52 901
- paid through issue of subsidiary shares                 47 111            -     36 339              10 772               -


The acquired businesses contributed as follows since acquisition to the Group's results:

                                                                    Partridge
                                                                     Building      Sasol               Sasol           Total
                                                           Total     Supplies   Verbaard      East Rand Mall          Summit
                                                           R'000        R'000      R'000               R'000           R'000

Revenue                                                  307 207      177 462     78 258              14 210          37 277
Net profit/(loss)                                          6 936        2 002      3 871                 (39)          1 102


13. RESTATEMENT OF COMPARATIVE AMOUNTS
Classification of leases

During the prior year, the Group reassessed the classification of leases relating to their vehicle fleet and identified that a number of leases 
previously classified as operating leases should be classified as finance leases.

The correction of the incorrect classification has been applied retrospectively. This has resulted in the restatement of the comparative 
consolidated interim financial statements for the period ended 31 March 2018, with the impact on the respective financial statement line items 
as follows:

                                                                                               31 March 2018
                                                                                Original                            Restated 
                                                                                 balance         Restatement         balance
                                                                                   R'000               R'000           R'000

Effect on Statement of financial position
Non-current assets
Property, plant and equipment                                                    991 344              25 489       1 016 833
Current assets
Trade and other receivables                                                    1 578 086               3 981       1 582 067
Non-current liabilities
Finance lease liabilities                                                              -             (20 445)        (20 445)
Deferred taxation                                                                (23 839)                 (9)        (23 848)
Current liabilities
Short-term portion finance lease liabilities                                           -              (9 648)         (9 648)
Capital and reserves
Retained profit                                                               (1 220 088)                632      (1 219 456)
Effect on Statement of comprehensive income
Operating expenses                                                              (388 078)              1 657        (386 421)
Finance costs                                                                    (43 216)             (1 627)        (44 843)
Profit before tax                                                                216 602                  30         216 632
Profit attributable to shareholders of the holding company                       216 602                  30         216 632
Effect on Statement of cash flows
Cash flow from operating activities
Net cash profit from operating activities                                        (85 601)              4 556         (81 045)
Working capital changes                                                         (276 280)                (30)       (276 310)
Cash flow from investment activities
Increase/(decrease) in finance lease liabilities                                       -              (4 297)         (4 297)
Interest paid                                                                    (43 216)             (1 627)        (44 843)
Basic earnings per share (cents)                                                  221,67                0,03          221,70
Diluted earnings per share (cents)                                                219,77                0,03          219,80
Basic headline earnings per share (cents)                                         220,97                0,03          221,00
Diluted headline earnings per share (cents)                                       219,09                0,03          219,12


14. RECURRING HEADLINE EARNINGS
Kaap Agri considers recurring headline earnings to be a key benchmark to measure performance and to allow for meaningful year-on-year comparison.

The pro forma adjustments below regarding recurring headline earnings are shown for illustrative purposes only and, because of their nature, may
not fairly present Kaap Agri's financial position, changes in equity, results of operations or cash flows. These adjustments relate to non-recurring 
expenses and consist predominantly of once-off costs associated with acquisitions of new businesses and other restructuring costs.

The pro forma financial effects are presented in accordance with the JSE Listings Requirements, the Guide on Pro Forma Financial Information issued
by SAICA and the measurement and recognition requirements of International Financial Reporting Standards. The accounting policies applied in 
quantifying pro forma adjustments are consistent with Kaap Agri's accounting policies at 31 March 2019. The pro forma financial information is the
responsibility of the directors and has not been reviewed or reported on by the company's external auditors.

                                                                                                    Restated 
                                                                               Unaudited           Unaudited         Audited
                                                                                31 March            31 March    30 September
                                                                                    2019                2018            2018
                                                                                   R'000               R'000           R'000

Headline earnings                                                                161 148             155 723         248 379
Attributable to equity holders of the holding company                            157 451             155 723         245 669
Non-controlling interest                                                           3 697                   -           2 710
Non-recurring expenses                                                             4 335               1 513           3 604
Recurring headline earnings                                                      165 483             157 236         251 983
Attributable to equity holders of the holding company                            161 786             157 236         249 273
Non-controlling interest                                                           3 697                   -           2 710

Recurring headline earnings per share (cents)                                     230,34              223,15          354,10


CORPORATE INFORMATION

Directors
GM Steyn (Chairman)*#
S Walsh (Chief Executive Officer) 
GW Sim (Financial Director)
BS du Toit*# D du Toit*# 
JH le Roux* EA Messina*#
WC Michaels*# CA Otto*#
HM Smit*#
JH van Niekerk*# 
I Chalumbira*

* Non-executive
# Independent

Transfer Secretaries
Computershare Investor Services (Pty) Ltd 
Registration number: 2004/003647/07
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196
PO Box 61051, Marshalltown, 2107
Fax number: 086 636 7200

Company Secretary
RH Kostens

Registered address
1 Westhoven Street, Paarl, Western Cape, 7646
Suite 110, Private Bag X3041, Paarl, Western Cape, 7620 
Telephone number: 021 860 3750
Fax number: 021 860 3314 
Website: www.kaapagri.co.za

Auditors
PricewaterhouseCoopers Inc.

Sponsor
PSG Capital (Pty) Ltd
Registration number: 2006/015817/07
1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600 
PO Box 7403, Stellenbosch, 7599
and
2nd Floor, 11 Alice Lane, Sandhurst, Sandton, 2196 
PO Box 987, Parklands, 2121

www.kaapagri.co.za

Date: 10/05/2019 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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