6
BUSINESS REVIEW
Positive cash flow from operating activities of R152,2 million was gene
rated from operating activities, after the payment of a final dividend of
R46,6 million for the 2018 financial year, as well as the payment of finance
costs of R99,1 million. The interest cover of 3,5 times is an improvement
on the previous year and comfortably within the funding caveat.
OPERATIONAL REVIEW
R155 MILLION • 2,0%
Market Access
The previous grain season ensured good momentum for the financial
year in that high carry-over grain inventory from the 2017/18 financial
year resulted in the current financial year starting off with a platform for
notable storage income. However, the harvest was six weeks late on
average, compared to initial expectations, and resulted in a permanent
difference in storage income relating to grain intake for the 2018/19
crop. Although the business segment outperformed the previous year’s
results by 2,0%, the results are behind initial expectations due to this fact.
The silo upgrading programme is in its fourth year and R44,2 million
was spent in this regard for the first six months. It is expected that the
programme will increase efficiencies by 87%.
The grain marketing division used the favourable market conditions and
performed 53,9% better than the previous year, while the seed division
reported a record profit for the six months under review.
R83 MILLION • 23,9%
Financial Services
35,2% of season accounts which were due on 31 August 2018, were
only settled after the due date due to the late season. These overdue
accounts amounted to 6,3% (2017: 4,8%) of the total book as at 31
October 2018. As a result, provision was made for additional impairments
in anticipation of normalisation by 30 April 2019. Additional capacity has
been established in new areas and products. These projects should be-
come profitable at a later stage.
R24 MILLION • 41,2%
Input Supply
Mechanisation sales are still under pressure, but as a result of increased
focus on the management of operating capital, stock impairments of
R5,9 million were reversed. In addition the retail business improved no-
tably and despite the low appetite and uncertainties for the new sea-
son, better margins were achieved in respect of most of the bulk input
supplies. Good progress has been made with the integration of the
wholesale business with the input supply channel.
senwes interim results 31 october 2018