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Voluntary Business Update At AGM
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” or “the Group”)
VOLUNTARY BUSINESS UPDATE AT AGM
Immediately following the annual general meeting (“AGM”) of the Company that will
be conducted entirely by electronic communication today, 11 February 2021 at
12:30 p.m., a voluntary business update will be provided to shareholders by the CEO,
Sean Walsh. A presentation relating to the voluntary business update is available on
the Company’s website at https://www.kaapagri.co.za/financial_results/voluntary-
business-update-presentation-for-the-3-months-ended-31-december-2020/.
The business update and presentation are focused on the Group’s performance during
the first three months of the 2021 financial year (“Q1”). While the Company does not
report on a quarterly basis, it wishes to provide shareholders with an update on its Q1
performance, given the continued uncertainty in the market surrounding the impact of
the COVID-19 pandemic on retail and other sectors.
The salient points of the presentation are outlined below:
1. The Group has traded well during Q1, with statutory revenue increasing by 16.9%
and gross profit increasing by 19.6%, compared to the first three months of the
prior year (“LY”). Total group fuel litre growth of 11.8% was achieved, despite the
December 2020 impact of the COVID-19 pandemic.
2. Retail-related revenue grew by 14.5% and agri-related revenue grew by 3.5%,
compared to LY, whilst Forge maintained its growth momentum.
3. Total retail fuel litre growth of 8.8% was achieved, however, like-for-like (“LFL”)
retail fuel volumes decreased by 8.1% from LY. Retail fuel gross profit per litre
increased by 12.1%. LFL retail fuel expenses reduced by 13.2% compared to LY.
Convenience store and quick service restaurant (“QSR”) gross profit increased by
23.0%. Fuel litre growth is expected to continue.
4. Within the grain services division, the recent wheat harvest intake was the largest
in 10 years. Given the volume and timing of wheat sales in Q1, the expectation is
that profit before tax within the grain services division will be higher in the first six
months of the financial year compared to the second six months of the financial
year.
5. Earnings for Q1 grew by 36.2% from R83.5m LY to R113.7m. Headline earnings
for Q1 increased by 38.2% from R82.2m LY to R113.6m. Recurring headline
earnings (“RHE”) for Q1 grew by 35.4% from R84.0m to R113.7m. This growth
was driven by strong operational performance across all divisions, as well as the
earlier timing of, and increase in, grain trading income. Kaap Agri has historically
considered RHE to be the most appropriate benchmark by which to measure its
performance, with RHE being adjusted from headline earnings to exclude non-
recurring expenses (predominantly, costs associated with acquisitions of new
businesses and the revaluation of put options), in line with the approach adopted
in the Company’s annual financial statements for the financial year ended 30
September 2020.
6. The business delivered strong cash flow from operations. Capital investment was
less than R10m and the debtors position is healthy, with debtors not within terms
decreasing as a percentage of total debtors during Q1. The focus on working
capital and enhanced return on invested capital remains.
7. The overall agriculture outlook is positive, however, wine grape farmers may
experience cashflow pressure. The growth in certain retail categories is expected
to continue, however, the COVID-19 impact on QSR performance may linger.
Retail fuel sales are expected to perform positively, especially given the impact of
COVID-19 in the second six months of the prior year.
8. The full year-on-year impact of COVID-19 is expected to be prominent in the
second half of the financial year. Whilst the overall outlook for the year is
encouraging, given the nature and timing of certain income and expenditure items
during Q1, shareholders are cautioned that the Q1 RHE performance is not
expected to repeat to the same degree going forward and full year RHE
expectations should be tempered.
Shareholders are referred to the above presentation, available on Kaap Agri’s website,
for further details regarding the Group’s Q1 performance.
The information above and in the presentation has not been audited or reviewed or
otherwise reported on by the Company´s external auditors.
Paarl
11 February 2021
Sponsor
PSG Capital
Date: 11-02-2021 11:00:00
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