THE PERFORMANCE
REPORT BY THE CHIEF
FINANCIAL OFFICER
SEGMENTAL RESULTS
MARKET ACCESS
The year started off with increased soft commodity carry over-stock
levels contributing R91,4 million to profit before tax, but the smaller
and late harvest had a negative impact of R101,4 million and R27,4
million, respectively on the year's results. Add to this a weaker carry in
MARKET ACCESS
CORNÉ KRUGER, SENWES CFO
600
vered a dividend yield of 5,5% on the opening market price.
Our financial performance and value creation are best portrayed
by the increase in distribution per share and the growth in net
asset value per share, which together produced a total return of
13,1% (2018: 13,2%).
EBITDA decreased by 4,2% after an average crop followed the previ-
ous year's record harvest. The operational cost margin is 8,5% (2018:
7,7%) and the increase is mainly due to the increase in maintenance
costs, electricity costs, as well as the increased cost of carrying the
grain on the soft commodity procurement book.
The board declared a final dividend of 30 cents per share which,
together with the interim dividend of 30 cents per share, deli
Difference
%
Market
Access
Group*
400
91
412
(101)
Input
Supply
Financial
Services
Corporate and
Consolidation
2019
R’m 2018
R’m 2019
R’m 2018
R’m 2019
R’m 2018
R’m 2019
R’m 2018
R’m 2019
R’m 2018
R’m
0
Results
2018
Increase in
carry-over
stock
104
4% 2 687 2 792 758 942 1 485 1 425 348 321 96 2% 1 463 1 434 758 811 259 171 348 321 98 131 Operating expenses 8% (797) (737) (396) (333) (182) (188) (47) (29) (172) (187) EBITDA (5%) 666 697 362 478 77 (17) 301 292 (74) (56) Depreciation 31% (55) (42) (30) (20) (7) (6) - - (18) (16) EBIT (7%) 611 655 332 458 70 (23) 301 292 (92) (72) -40
Finance costs (5%) (213) (223) (32) (46) (40) (36) (133) (132) (8) (9) -80
Profit before tax (8%) 398 432 300 412 30 (59) 168 160 (100) (81) Taxation (5%) (115) (121) Profit after tax (9%) 283 311 Non-controlling interest 76% Profit after tax and non-controlling
interest (9%) (2) Impairment of investments, loans
and PPE (100%) - 8
Restructuring cost (100%) - 13
700% 16 2
Other (67%) (2) (6)
Normalised headline earnings (10%) 295 327
EPS (cent) (9%) 169,1 185,3
HEPS (cent) (9%) 177,5 195,5
- 3,1 3,1
Interest cover (times)
*Group includes corporate segment.
MAIN DEVIATIONS
➊ The group’s gross profit is 2,0% higher mainly due to the input
Adjustments:
supply channel recovering to more profitable levels.
➋ The group’s operational expenses increased by 8,1%, mainly
due to the following reasons:
• Overtime and the cost of temporary employees, due to
the late and shortened intake period;
• Maintenance, due to a backlog from the previous season;
and
• Consultation fees, for various operational-related projects.
➌ The group’s EBIT decreased by 6,7%, due to lower gross profit
percentage and increased costs, as described above.
➍ The group’s finance costs are 4,5% lower, due to increased
focus on inventory management.
46
SENWES INTEGRATED REPORT 2019
(21)
(24)
Late season
impact on
storage
income
Increase
in seed
volumes
processed
Procurement
Book - less
carry in the
market
Trading
hedging
products
Trading less
commision and
less tonnages
Municipality
costs
300
(13)
Silo
infrastructure
maintenance
(6)
Other
Results
2019
in a decrease in stock levels of R249 million. In addition, mechani-
sation margins have improved (R60,9 million), operational profit from
the Staalmeester acquisition was generated (R7,1 million), as well as
increased fuel and retail results (R3,5 million).
INPUT SUPPLY
40
61 7 4
Increased
mechanisation
net profit
margins Newly
acquired
equipment
business Increase in
retail activity,
including fuel
sales
0
(1)
30
18
(59)
Results
2018
Reversal
of stock
provisions
Other
Results
2019
FINANCIAL SERVICES
Previous season credit was repaid at a rapid rate by producers and
new season credit was taken up at a later stage due to late plant-
ings, more aggressive deferred payment arrangements by suppliers
than in the past and a decline in property transactions due to political
uncertainty and the lower price environment. Despite the above, the
business unit performed better, due to focused margin management
and credit book management (R24,2 million). A new structure was es-
tablished for structured financing, which is expected to bring about the
desired return, but only later. Provisions of R11,9 million were created,
due to the expected smaller crop.
FINANCIAL SERVICES
(1)
Decrease in
harvest
The input channel reflected an improvement of R88,8 million over the
past year, which was largely characterised by the reversal of impair-
ments in respect of mechanisation stock (R18,4 million) due to last
year's high stock levels which were successfully managed to result
Gross profit
310
18
(38)
200
Turnover
281
9
(27)
INPUT SUPPLY
SIMPLIFIED DISTRIBUTABLE INCOME AND SEGMENT STATEMENTS
Legal and consulting fees
the market (R38m), increased electricity costs due to the late season's
drying of wet grain, the increased municipal costs of R24,2 million,
together with increased maintenance costs of R12,6 million and this
year's result is 27,2% lower than the previous year's record result.
250
200
150
24
160
(2)
100
2
(4)
(12)
168
50
0
Results
2018
Speculation
and fees
Higher interest
margins
Increased
credit
provisions
AgriRewards
SENWES INTEGRATED REPORT 2019
Other
Results
2019
47