business review
BUSINESS REVIEW
Review
Agricultural conditions for the first six months of the 2017 financial
year were challenging and the full impact of the drought cycle is
being felt by the company.
Senwes’ results were negatively impacted by the drought but despite
this, good results which outperformed the cycle were still achieved.
A profit after tax of R91 million was delivered compared to the
profit after tax of R103 million for the corresponding period of the
previous year.
Normalised headline earnings decreased by 3,5 cents per share,
6,1% lower than the comparative period’s 57,4 cents per share,
while operating profit declined by 8,7%.
The group maintained its momentum in respect of its upgrading
programme and further capital expenditure in the mechanisation,
retail and grain businesses of R57,5 million was incurred for the first
six months of the financial year.
Despite lower economic activities, the balance sheet still increased,
particularly due to an abnormal increase in commodity prices (grain
stock), repayment by clients (debtors) at a later stage due to the late
and smaller crop, as well as the fact that the capital programme (fixed
assets) had been maintained. Debtors and stock are evaluated on a
continuous basis and the necessary impairments have been taken.
The growth in assets contributed to an increase in interest-bearing
short-term loans.
Positive cash flow of R56 million was generated from operating
activities after the payment of final dividends of R35 million for the
2016 financial year, as well as interest paid of R101 million.
The own capital ratio of 39% is still within the capital maintenance
guidelines, while the interest cover of 2,6 times exceeds the target
of 2,5, despite the lower results and an increase in financing costs.
Operational review
MARKET ACCESS
Lower volumes had a direct impact on the income streams of the
silo industry with the lowest grain intake and stock levels since the
1991/92 marketing year. Despite the smaller crop and fiercer com
senwes interim results 31 october 2016
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