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Preliminary audited year end results and notice of AGM
CROOKES BROTHERS LIMITED
(Incorporated in the Republic of South Africa)
Registration No. 1913/000290/06
Share code: CKS ISIN: ZAE000001434
("Crookes Brothers" or "the company" or "the group")
PRELIMINARY SUMMARISED AUDITED GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2019 AND NOTICE OF ANNUAL GENERAL MEETING
Commentary
The year was marked by record crops in our sugar, banana and macadamia segments
and, in a year of turmoil for the sugar industry, the results underscore the success of the
group's diversification strategy.
During the year the board took a decision to sell certain assets considered non-core to
its objective of creating long term value for shareholders. The sale of the Renishaw Hills
infrastructure and work in progress supports this strategy. Details of the proposed
disposal are reflected under discontinued operations in the group's statement of profit
or loss and other comprehensive income.
Revenue from continuing operations increased by 21% to R576,1 million (2018: R477,2 million)
and operating profit from continuing operations increased to R73,9 million (2018: R4,1 million).
Cash generated from operations increased significantly by 419% to R117.9 million
(2018: R22.7 million).
Headline earnings increased to 145.0 cents per share. (2018: headline loss of 50.6 cents per share).
Sugar cane
Revenue from cane operations increased by 7% to R321,9 million (2018: R300,1 million)
and operating profit increased by 59% to R70,3 million (2018: R44,3 million).
The growth is attributable to a 26% increase in production to 703 000 tons (2018: 556 000 tons),
reflecting a strong recovery from the drought.
Improved yields and volumes were diluted by a sharp decline in the SA RV (Recoverable
Value) price of 15% compared to the prior corresponding period, with similar price
decreases experienced in Swaziland and Zambia.
The implementation of the health promotion levy(sugar tax) in South Africa, which has
resulted in a substantial decline in the local consumption of sugar, in combination with
cheaper sugar imports and a weak world sugar price, has contributed to the decline in
sugar prices in Southern Africa.
Although we expect an improvement in sugar prices over the next few years, a return
to previous price levels is considered unlikely in the short term without a major structural
change in the South African sugar industry.
Deciduous
Revenue increased by 46% to R100,2 million (2018: R68.5 million) and operating profit
increased to R10,1 million (2018: operating loss R20,4 million).
The improvement in performance is due to an increase in average deciduous prices
achieved by the company. These price increases were attributable in equal parts to rand
weakness and to improved quality, with a greater % of our 2019 crop achieving export
standard quality than in previous years.
Notwithstanding the improved quality, deciduous volumes were disappointing in the
aftermath of the drought, with production declining marginally to 29 000 tons
(2018: 29 541 tons).
With a large proportion of our deciduous area comprising young orchards, we anticipate
that yields and quality will continue to improve as these orchards continue to mature.
Macadamia Nuts
Revenue increased by 268 % to R8,1 million (2018: R2,2 million).
Operating profit increased by 231% to R18,2 million (2018: R5.5 million), driven by a
combination of increased yields as well an increase in price. In US dollar terms, the
average sales price improved by 39% as a result of improved quality and crack-out. (It
should be noted that profit exceeds revenue due to the significant impact of the year
end crop valuation resulting from the substantial growth in production from year to
year).
This year we developed new macadamia markets, selling directly to Hong Kong, as well
as to South African processors. This had a positive impact on prices and cash flow.
We expect rapid growth to continue in the macadamia division as our young orchards
mature. The yields achieved in the past 2 years have been exceptional when
compared with industry standards and our original expectations. We anticipate that our
production of dry- nut- in-shell will increase from 450 tons to around 800 tons DNIS in the
next season.
Bananas
Following a record crop of 24 000 tons (2018: 17 496 tons), revenue grew by 32% to
R117.1 million (2018: R88.5 million) and operating profit grew by 32% to R36.8 million
(2018: R27.8 million).
Bananas constitute an integral element of our diversification strategy and with the
cessation of the drought in the Lowveld region, we have re-commenced our planting at
the QBV project in Mozambique.
Capital expenditure and financing activities
In line with our long term plans, during the year R84 million was invested in capital
expenditure (2018: R172 million). Planned capital spend for 2020 is R66 million.
Subsequent to year end the group raised a further R80 million in general banking facilities
to cover peak borrowing requirements. It is anticipated that the planned sale of non-core
assets will further bolster our liquidity position.
Prospects
Although industry estimates reflect a welcome improvement in sugar prices in the year
ahead, these are still well below previous levels, with a meaningful recovery unlikely in
the short term. The plight of the sugar industry emphasizes the importance of the group's
diversification strategy. We expect increasing contributions from our macadamia and
deciduous divisions in the short term as these orchards mature, restoring profitability to
more acceptable levels.
The audited results of the group for the year ended 31 March 2019 together with those of the previous year are
set out below:
Audited year Audited year
end end
SUMMARISED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 31 March 31 March
(R000's) Notes 2019 2018*
Continuing operations
Revenue 576 106 477 183
Operating profit before biological assets 25 847 1 487
Change in fair value of biological assets 3 48 086 2 600
Operating profit after biological assets 73 933 4 087
Share of profit of joint venture and associate companies 1 209 3 641
Investment income 1 801 1 666
Finance costs (20 051) (14 050)
Profit/(loss) before tax 56 892 (4 656)
Income tax expense (14 447) 4 466
Profit/(loss) for the year from continuing operations 42 445 (190)
Discontinued operations
Loss for the year from discontinued operations 1 (1 760) (3 047)
Profit/(loss) for the year 40 685 (3 237)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of post-employment medical aid obligation 261 (514)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (2 496) (5 238)
Other comprehensive loss for the year, net of income tax (2 235) (5 752)
Total comprehensive income/(loss) for the year 38 450 (8 989)
Profit/(loss) for the year from continuing operations attributable to:
Owners of the company 26 964 (4 798)
Non-controlling interests 15 481 4 608
42 445 (190)
Loss for the year from discontinued operations attributable to:
Owners of the company (1 380) (2 789)
Non-controlling interests (380) (258)
(1 760) (3 047)
Total comprehensive income/(loss) for the year from continuing operations attributable to:
Owners of the company 24 729 (10 550)
Non-controlling interests 15 481 4 608
40 210 (5 942)
Total comprehensive loss for the year from discontinued operations attributable to:
Owners of the company (1 380) (2 789)
Non-controlling interests (380) (258)
(1 760) (3 047)
Earnings/(loss) per share
From continuing and discontinued operations
Basic (cents) 167.6 (49.7)
Diluted (cents) 167.6 (49.7)
Earnings/(loss) per share
From continuing operations (cents) 176.6 (31.4)
Basic (cents) 176.6 (31.4)
Diluted
* Prior year restated for revenue standard change and re-presented to account for discontinued operations.
Audited year Audited year
end end
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 31 March 31 March
(R000's) 2019 2018
Shareholders' equity at beginning of year 1 032 156 1 066 978
Movements in:
Share-based payment reserve 1 139 1 059
Other comprehensive loss (2 496) (5 238)
Non-controlling interests - 6 899
Changes in retained earnings 28 821 (37 542)
Net profit/(loss) attributable to owners of the company 25 584 (7 587)
Net profit attributable to non-controlling interests 15 101 4 350
Remeasurement of post-employment obligations 261 (514)
Dividends paid - ordinary shareholders - (22 896)
Dividends paid - community partners (12 125) (10 895)
Shareholders' equity at end of year 1 059 620 1 032 156
Audited year Audited year
end end
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 March 31 March
(R000's) Notes 2019 2018*
ASSETS
Non-current assets 1 076 056 1 052 815
Property, plant and equipment 960 879 967 756
Investment property 30 336 11 432
Deferred tax assets 14 406 6 044
Other financial assets 4 056 3 269
Investments in joint venture and associates 61 393 60 816
Unsecured loans 4 986 3 498
Current assets 605 876 515 615
Biological assets 3 260 806 213 443
Inventories 30 541 128 494
Trade and other receivables 136 414 124 419
Current tax assets 7 362 8 398
Other financial assets 110 102
Retirement benefit surplus 1 693 10 212
Unsecured loans 2 792 3 673
Cash and bank balances 56 683 26 874
496 401 515 615
Assets classified as held for sale 2 109 475 -
Total assets 1 681 932 1 568 430
EQUITY AND LIABILITIES
Capital and reserves 1 059 620 1 032 156
Share capital and premium 226 271 226 271
Investment revaluation reserve 951 951
Foreign currency translation reserve (31 498) (29 002)
Share-based payment reserve 4 612 3 473
Retained earnings 831 316 805 471
Equity attributable to owners of the company 1 031 652 1 007 164
Non-controlling interests 27 968 24 992
Non-current liabilities 267 674 207 202
Deferred tax liabilities 129 596 126 986
Borrowings - interest bearing 70 765 24 104
Other financial liabilities 19 692 8 797
Obligations to restore leased farmland 44 045 44 674
Post-employment medical aid obligation 3 576 2 641
Current liabilities 354 638 329 072
Trade and other payables 76 614 45 597
Provisions 16 154 9 603
Current tax liabilities 2 775 337
Post-employment medical aid obligation - 7 693
Borrowings - interest bearing 251 500 241 792
Bank overdraft 7 595 24 050
Total equity and liabilities 1 681 932 1 568 430
* Prior year restated for revenue standard change.
Audited year Audited year
end end
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS 31 March 31 March
(R000's) Notes 2019 2018*
Operating profit for the year from continuing operations 73 933 4 087
Operating profit/(loss) for the year from discontinued operations 1 4 569 (1 027)
Depreciation 59 989 49 290
Change in fair value of biological assets 3 (48 086) (2 600)
Other non-cash items 5 692 (4 405)
96 097 45 345
Net working capital changes 21 851 (22 621)
Cash generated from operations 117 948 22 724
Cash flows from operating activities 79 746 (9 450)
Cash generated from operations 117 948 22 724
Interest received 1 076 1 591
Interest paid (22 726) (16 594)
Income taxes paid (16 552) (17 171)
Cash flows from investing activities (83 624) (172 391)
Proceeds on disposal of property, plant and equipment 1 538 6 402
Investment in property, plant and equipment: (78 920) (155 217)
Investment in investment property (5 770) (11 449)
Investment in joint venture and associate companies 216 (2 525)
Other net investing activities (688) (9 602)
Cash flows from financing activities 50 142 137 680
Proceeds from loans and borrowings** 55 000 29 210
Repayment of loans and borrowings** (23 087) (21 597)
Increase in general banking facilities 19 097 154 985
Net increase in other financial liabilities 11 257 8 873
Dividends paid - ordinary shareholders - (22 896)
Dividends paid - community partners (12 125) (10 895)
Net increase/(decrease) in cash and cash equivalents 46 264 (44 161)
Cash and cash equivalents at beginning of the year 2 824 46 985
Cash and cash equivalents at end of the year 49 088 2 824
* Prior year restated for revenue standard change and re-presented to account for discontinued operations.
** Re-presented for improved disclosure.
Audited year Audited year
end end
SUMMARISED CONSOLIDATED SEGMENTAL ANALYSIS - continuing operations 31 March 31 March
(R000's) 2019 2018*
Revenue from external customers
Sugar cane 321 855 300 080
Deciduous fruit 100 226 68 513
Bananas 117 052 88 464
Macadamias 8 070 2 166
Property^ 1 981 -
Other operations 26 922 17 960
576 106 477 183
Operating profit before biological assets
Sugar cane 50 391 48 993
Deciduous fruit 140 (19 197)
Bananas 39 779 26 240
Macadamias (2 931) (1 398)
Property^ 2 865 (498)
Other operations (3 118) (3 667)
Profit on disposal of property, plant and equipment and unlisted shares 399 361
Corporate expenses (61 678) (49 347)
25 847 1 487
Change in fair value of biological assets
Sugar cane 19 920 (4 684)
Deciduous fruit 9 979 (1 227)
Bananas (2 976) 1 584
Macadamias 21 163 6 927
48 086 2 600
Operating profit after biological assets
Sugar cane 70 311 44 309
Deciduous fruit 10 119 (20 424)
Bananas 36 803 27 824
Macadamias 18 232 5 529
Property^ 2 865 (498)
Other operations (3 118) (3 667)
Profit on disposal of property, plant and equipment and unlisted shares 399 361
Corporate expenses (61 678) (49 347)
73 933 4 087
* Prior year restated for revenue standard change and represented to account for discontinued operations.
^ The property segment includes development, infrastructure costs and future land sales not affiliated with the
Renishaw Hills residential development, which has been represented as a discontinued operation.
Audited year Audited year
end end
NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS 31 March 31 March
(R000's) 2019 2018
1. Discontinued operations - Renishaw Hills
Revenue 89 587 49 538
Cost of sales (81 596) (49 692)
Gross profit/(loss) 7 991 (154)
Other gains and losses 471 1 929
Operating and administration expenses (3 893) (2 802)
Operating profit/(loss) 4 569 (1 027)
Finance costs (6 696) (2 650)
Loss before tax (2 127) (3 677)
Tax 367 630
Loss for the year from discontinued operations (1 760) (3 047)
2. Assets classified as held for sale
Inventory - Renishaw Hills 86 064 -
Property, plant and equipment - Aircraft 23 411 -
109 475 -
3. Biological assets
3.1 Growing crops at fair value
Sugar cane 189 083 169 886
Deciduous fruit 28 796 18 817
Bananas 14 837 17 813
Macadamias 28 090 6 927
Fair value at end of year 260 806 213 443
Analysis of fair values of growing crops:
Fair value at beginning of year 213 443 213 272
Gains/(losses) arising from changes attributable to volume and price:
Sugar cane
- Gain arising from physical growth/yield 6 164 19 367
- Gain arising from area under crop to be harvested 2 305 16 989
- Gain/(loss) arising from price changes 11 451 (41 040)
Deciduous fruit
- (Loss)/gain arising from physical growth/yield (397) 2 274
- Gain/(loss) arising from area under crop to be harvested 3 973 (227)
- Gain/(loss) arising from price changes 6 403 (3 274)
Bananas
- Gain arising from physical growth/yield 1 756 923
- Gain arising from area under crop to be harvested 1 341 203
- (Loss)/gain arising from price changes (6 073) 458
Macadamias
- Gain arising from physical growth/yield 16 101 6 927
- Gain arising from area under crop to be harvested 3 477 -
- Gain arising from price changes 1 585 -
Fair value changes attributable to births, deaths and ageing of livestock - (5)
Transfer of livestock to inventory - (916)
Effect of foreign currency exchange differences (723) (1 508)
Fair value at end of year 260 806 213 443
3.2 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) 3 954 3 901
- Swaziland (ha) 2 439 2 443
- Zambia (ha) 428 410
Total area (ha) 6 821 6 754
Estimated yields
- South Africa (tons/ha) 104.3 101.5
- Swaziland (tons/ha) 111.5 108.3
- Zambia (tons/ha) 133.9 120.9
Weighted average 108.7 105.1
Average maturity of cane at 31 March
- South Africa (%) 64 64
- Swaziland (%) 64 64
- Zambia (%) 64 64
Estimated RV price - South Africa (Rands) 4 119 3 991
Estimated sucrose price - Swaziland (Rands) 3 358 2 946
Estimated ERC price - Zambia (Rands) 3 943 4 044
Deciduous fruit
Expected area to harvest after 31 March (ha) 254 202
Estimated yields* (tons/ha) 47.4 56.9
Average maturity of crop at 31 March (%) 83.9 81.9
Estimated net price per kg - apples and pears (Rands) 4.43 3.47
Estimated packout
- Class 1 (%) 39.5 31.8
- Class 2 (%) 19.2 18.5
- Class 3 (%) 12.9 11.9
- Juice (%) 28.4 37.7
Bananas
Expected area to harvest after 31 March (ha) 446 415
Estimated yields (tons/ha) 60.7 55.3
Average maturity of crop at 31 March (%) 50.0 50.0
Estimated net price per carton (Rands) 81.98 103.53
Macadamias
Expected area to harvest after 31 March (ha) 462 382
Estimated yields* (tons/ha) 0.97 0.41
Average maturity of crop at 31 March (%) 95 76
Estimated net price per ton (Rands) 72 111 53 741
* Actual yield data used in 2019.
Audited year Audited year
end end
RECONCILIATION OF HEADLINE EARNINGS 31 March 31 March
(R000's) 2019 2018
Profit/(loss) for the year attributable to owners of the company 25 584 (7 587)
Adjusted for:
Gain on disposal of property, plant and equipment (369) (361)
(Gain)/loss on disposal of available-for-sale financial assets (30) 4
Impairment of goodwill and investment premium 393 150
(Gain)/loss arising on changes in fair value of investment property (4 787) 17
Tax effect of the adjustments 1 342 54
Headline earnings/(loss) 22 133 (7 723)
Headline earnings/(loss) per share (cents) 145.0 (50.6)
Headline earnings/(loss) per share (diluted) (cents) 145.0 (50.6)
Audited year Audited year
end end
OTHER GROUP SALIENT FEATURES 31 March 31 March
(R000's) 2019 2018
Depreciation 59 989 49 290
Inventories written down to net realisable value - relating to a write off of grain stock. 2 500 -
Budgeted capital expenditure
Contracted and anticipated:
- replacement 95 150
- expansion, improvement and development 1 812 18 832
Authorised by the directors but not yet contracted:
- replacement 9 791 5 310
- expansion, improvement and development 27 611 34 398
- bearer asset replants 20 831 15 921
60 140 74 611
Net asset value per share (cents) 6 942 6 762
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
DIVIDEND DECLARATION 31 March 31 March
2019 2018
Dividends per share
Ordinary dividends declared per share - interim (cents) 0.0 35.0
Ordinary dividends declared per share - final (cents) 0.0 0.0
0.0 35.0
CASH DIVIDEND DECLARATION
The board of directors, ("the board") has, resolved not to declare a final dividend for
year ended 31 March 2019.
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 2018
consolidated annual financial statements except for the adoption of IFRS 15
Revenue and IFRS 9 Financial Instruments.
Certain segmental revenue is now recognised net of selling and processing costs
incurred by external customers for which the group historically has recognised as a
separate expense. Specifically with regard to the deciduous segment, revenue is now
recognised upon delivery which has been assessed as the point at which control has
passed to the external customer.
The adoption of IFRS 15 resulted in a reduction in the prior year revenue number of R131 million
offset by an equal reduction in costs with no impact on operating profit.
There has been no impact as a result of the adoption of IFRS 9.
The results have been prepared under the supervision of GL Veale CA (SA), 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 2019 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
John Barton retired from the board on 1 March 2019. Roger Stewart retired from the
Board on 18 March 2019. Tasneem Abdool- Samad resigned from the board on 25 April 2019.
Larry Wilson Riddle was appointed to the board on 25 April 2019.
NOTICE OF ANNUAL GENERAL MEETING ("AGM")
Notice is hereby given to shareholders as recorded in the company's securities register
on Thursday, 21 June 2019 that the 106th annual general meeting of shareholders of
Crookes Brothers Limited ("Crookes Brothers" or "the company"), in respect of the
financial year ended 31 March 2019 will be held at the Mount Edgecombe Country Club
on Friday, 26 July 2019. Registration will commence at 09h00 thereafter the annual
general meeting will be held at 10h00.
The annual report and the Notice of the AGM will be published on or about 27th June
2019. For and on behalf of the board:
Malcolm Rutherford Guy Clarke
Chairman Managing Director
Durban
Registered office and postal address
170 Flanders Drive, Mount Edgecombe, KwaZulu-Natal, 4300
PO Box 611, Mount Edgecombe, KwaZulu-Natal, 4300
Transfer secretaries
Computershare Investor Services (Pty) Ltd
PO Box 61051, Marshalltown, 2107
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Directors
MT Rutherford* (Chairman), GS Clarke (Managing), RGF Chance*, TJ Crookes*,
TK Denton*#, P Mnganga*, LW Riddle*.
G Vaughan-Smith*#, GL Veale (Financial)
* Non-executive director #British
Company secretary
Ziyanda Ngwenya
Website
www.cbl.co.za
Date: 12/06/2019 05:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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