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KAAP AGRI LIMITED - Summarised Consolidated Financial Statements For The Year Ended 30 September 2020 And Dividend Declaration

Release Date: 26/11/2020 07:05
Code(s): KAL     PDF:  
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Summarised Consolidated Financial Statements For The Year Ended 30 September 2020 And Dividend Declaration

KAAP AGRI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2011/113185/06)
Share code: KAL
ISIN: ZAE000244711
(“Kaap Agri” or “the Company”)



SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
30 SEPTEMBER 2020 AND DIVIDEND DECLARATION



1.   INTRODUCTION

     Despite Covid-19 (“Covid”), Kaap Agri increased revenue by 1,5% to R8,6 billion,
     up from R8,5 billion in the previous financial year, with like-for-like comparable
     growth declining by 0,6%. Covid is conservatively estimated to have had a 6,6%
     negative impact on Revenue growth. The 1,5% growth in revenue was achieved
     despite a 2,9% decrease in the number of transactions. Excluding a 5,9%
     reduction in the number of transactions in the retail fuel & convenience
     environment, the remaining business grew transactions by 2,3%. Product
     deflation is estimated at 3,9%, but excluding the large deflationary impact of fuel
     in the revenue basket, product inflation was 1,1%. Gross profit increased by 4,7%
     and at a rate higher than revenue growth due to the impact of a changed sales
     mix and an improvement in agri trading margins.

     The operating conditions under which the Group traded for the year consisted of
     two distinctly different periods due to Covid, which had a minimal influence on the
     first half of the financial year, but impacted Group results in the second half of the
     financial year.

     The first six months of the financial year experienced a slow start to agri and retail
     trade due to a combination of sluggish retail spend and a constrained consumer
     environment, underpinned by suppressed GDP growth as well as adverse weather
     conditions and increased competitor activity. Encouragingly, both agri and retail
     performance improved during the second quarter.

     The second six months of the financial year included the impact of Covid, which
     was felt across all the Group’s business units. Agri sales growth outperformed
     retail sales growth, largely due to Covid-related trading restrictions which impacted
     retail sales to a larger degree than agri sales. Retail fuel and convenience sales
     were hardest hit by Covid restrictions due to the lockdown-related reduction in
     travel and road transport, the inability to sell tobacco and related products and the
     closure of quick service restaurants. Whilst agri input trade was the least impacted
     by Covid of all income channels, farm infrastructure projects were either halted or
     delayed during initial lockdown levels, resulting in a slowdown in products required
     from our manufacturing division
     Grain Services delivered pleasing results despite a wheat harvest which was more
     than 30% down year on year, supported by the timing of non-recurring surplus
     wheat sales and grading gains.
     Retail fuel expansion continued through selective acquisitions. The Fuel
     Company (“TFC”) grew annual fuel volumes, inclusive of managed sites awaiting
     regulatory approval, by 3,7%. During the first half of the year, a decision was
     taken to slow down further TFC footprint expansion across the business and to
     focus on delivering returns on previously invested capital. The onset of Covid has
     reinforced this decision. However, the business will continue investigating value
     enhancing opportunities albeit with a more conservative approach.
     EBITDA grew by 6,8%, due largely to the impact of the adoption of IFRS 16.
     Excluding the impact of IFRS 16, EBITDA grew by 1,0%.
     Headline earnings decreased by 2,2% while recurring headline earnings (“RHE”)
     grew by 4,4%. Once-off items, predominantly adjustments for the interest and re-
     measurement of liabilities relating to put options exercisable by non-controlling
     subsidiary shareholders, as well as costs associated with new business
     development, are excluded from headline earnings to calculate recurring headline
     earnings. Excluding the adoption of IFRS 16 as well as the negative impact of
     Covid, both of which are non-comparable with the prior year, RHE would have
     grown by 15,4% year on year.

     The past year has been exceptionally challenging for the Company. Through our
     various cost saving and cash management interventions we have been able to
     save livelihoods, protect the company, avoid the Covid iceberg and stabilise the
     business. The business environment in which we operate continues to be
     constrained and it remains to be seen what the long-term effects of Covid will be
     on general consumer behaviour. Kaap Agri will be focussing on driving returns on
     the capital already invested in the retail fuel & convenience segment, but remains
     open to executing value-enhancing transactions. Our diversification strategy has
     reduced our overall group risk position and we believe we are well positioned to
     capitalise on any improvement in trading conditions. We remain committed to all
     our stakeholders and to our strategy of growth, underpinned by an improvement
     in value creation.


2.   SALIENT FEATURES

     Revenue increased by 1,5% to R8,6 billion, from R8,5 billion in the prior corresponding
     period.

     EBITDA increased by 6,8% to R587,5 million.

     Earnings per share decreased by 0,9% to 391,49 cents per share, from 394,98 cents per
     share in the prior corresponding period.
     Headline earnings per share decreased by 2,3% to 388,54 cents per share, from 397,85
     cents per share in the prior corresponding period.

     Recurring headline earnings per share increased by 4,6% to 392,52 cents per share, from
     375,19 cents per share in the prior corresponding period.

     No interim dividend was declared during the year. The final gross dividend decreased by
     44,4% to 50,00 cents per share, from 90,00 cents per share in the prior corresponding
     period.

3.   DIVIDEND DECLARATION

     At half year, the Board took the decision to forego the payment of an interim dividend due
     to the uncertainty surrounding Covid and the view that cash preservation and liquidity
     were paramount. This has proven to be the correct decision and together with a number
     of cost saving and cash flow initiatives, has contributed significantly to the Group’s
     ongoing balance sheet strength. Salary sacrifices were made across the Group, including
     by executive and non-executive directors, and the personal sacrifice of all our staff
     members has contributed significantly to the Group’s robustness in dealing with the
     challenges of Covid. The full year results have highlighted exceptional working capital
     management, strong cash generation and resilient earnings growth. Footfall has returned
     and revenue has partially recovered, although not to pre-Covid levels. We remain
     confident regarding the performance of the business going forward. Whilst recognising
     salary sacrifices made and considering the performance of the business excluding these
     sacrifices, the Board has approved and declared a gross final dividend of 50.00 cents per
     share (2019: 90.00 cents per share) from income reserves, for the period ended
     30 September 2020. The final dividend amount, net of South African dividends tax of 20%
     is 40.00 cents per share for those shareholders who are not exempt from dividend tax or
     are not entitled to a reduced rate in terms of the applicable double-tax agreement. Given
     that no interim dividend was declared, the total dividend for the year of 50.00 cents per
     share (2019: 123,50 cents) represents a dividend cover of 7,4 times (2019: 2,9 times).
     The salient dates for the distribution are:

     Declaration date                                       Thursday, 26 November 2020
     Last day to trade cum dividend                            Tuesday, 9 February 2021
     Trading ex dividend commences                          Wednesday, 10 February 2021
     Record date to qualify for dividend                        Friday, 12 February 2021
     Date of payment                                          Monday, 15 February 2021

     The number of ordinary shares in issue at declaration date is 74 170 277 and the
     income tax number of Kaap Agri is 9312717177.

     Share certificates may not be dematerialised or rematerialised between
     Wednesday, 10 February 2021 and Friday, 12 February 2021, both days inclusive.


4.   SHORT-FORM ANNOUNCEMENT

     This short-form announcement is the responsibility of the directors of the Company. It
     contains only a summary of the information in the full announcement (“Full
     Announcement”) and does not contain full or complete details. The Full Announcement
     can be found at:

     https://senspdf.jse.co.za/documents/2020/JSE/ISSE/KALE/KALSept20.pdf
     Copies of the Full Announcement are also available for viewing on the Company’s website
     at     https://www.kaapagri.co.za/wp-content/uploads/20/11/2020-Condensed-Financial-
     Statements.pdf or may be requested in person, at the Company’s registered office or the
     office of the sponsor, at no charge, during office hours.

     Any investment decisions by investors and/or shareholders should be based on
     consideration of the Full Announcement, as a whole.

     This short-form announcement has been extracted from the summarised consolidated
     annual financial results, which, in turn, have been extracted from the full set of
     consolidated annual financial statements (“AFS”). The AFS have been audited by the
     Company’s auditors, PricewaterhouseCoopers Inc. who expressed an unmodified audit
     opinion thereon. The full auditor’s report includes details of key audit matters. This
     auditor’s report is available, along with the AFS, on the Company’s website at
     www.kaapagri.co.za.



26 November 2020

Sponsor

PSG Capital

Date: 26-11-2020 07:05:00
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