Agra recovers from dry profit spell

Agra has weathered the drought and Covid-19 storm in its past financial year.

30 October 2020 | Business

Farming has faced a difficult and uncertain 2020. – Ryna van der Merwe, Chairperson: Agra

A N$56-million increase in revenue from contracts with customers helped to boost Agra Limited's operating profit for its past financial year by nearly 7% to about N$61.7 million.

“Comparing our growth in operating profit to that of many other Namibian companies, I can only be grateful for our performance,” the chief executive officer of Agra, Arnold Klein, said in the latest integrated annual report released yesterday.

The group reported a profit after tax of around N$26.8 million for the year ended 31 July 2020, up N$2.8 million or nearly 11.7% from its previous book-year. The performance marks a recovery in profit after tax, but is still significantly below the nearly N$49.2 million reported in the 2017 financial year.

Headline earnings per share (HEPS), a profitability gauge, came in at N$29.44 – an increase of 17% compared to the 2019 book-year.

Earnings per share (EPS) rose by 4.4% to N$24.79.

A total and final dividend of 5c per share was declared for 2020, up from 4c last year.



Segments

Agra's retail division, which includes Auas Wholesalers, Safari Den and Auas Vet Med, Ondangwa Service Station and A Rosenthal, made a net operating profit before head office expenses of N$108.9 million – up 25.9% from 2019.

The group is in the process of selling the entire business within Ondangwa Service Station (Pty) Ltd. According to the integrated annual report, the sale is expected to be “substantially completed” by next month. The group's auction division saw a year-on-year decrease of 17.4% in its net operating profit before head office expenses to about N$19.1 million. “The drought has had an enormous impact on the agricultural sector year-on-year and the knock-on effect caused by this on the broader Namibian economy is unmistakable,” Klein said.

The Swakara Pelt Centre recorded a net operating loss before head office expenses of N$686 000 for the year under review, compared to a net loss of N$137 00 for the previous year.





“The turnover for the pelts sold was N$8.7 million for the period, compared to N$25.7 million for 2018/19. This is mainly due to the negative impact of Covid-19 on the April 2020 pelt auction,” according to Klein.

Total revenue for Agra's property division decreased from N$22.9 million in the 2019 financial year to N$20 million.

A contributing factor was rental reductions for tenants severely impacted by Covid-19. Rental income for the year under review dropped by 11.3% to about N$20.2 million.

The property division's net operating profit before head office expenses fell by 36% to N$4.8 million.

Agra ProVision recorded a net operating loss before head office expenses of N$1.1 million, an improvement of 35.3% on the loss of N$1.7 million suffered in the 2019 book-year.

OTHER FIGURES

Bad debts written off spiked by 164% or more than N$5.4 million to about N$8.7 million.

Cash on hand of N$5.59 million was 3.4% lower on an annual basis.

The group's bank overdraft shrunk by nearly N$69 million or 43% year-on-year to about N$90 million.

Agra's total assets at the end of July 2020 amounted to nearly N$978.1 million, down from about N$1.03 billion in July 2019.

'GOOD AND BAD TIMES'

“Farming has faced a difficult and uncertain 2020,” Agra chairperson, Ryno van der Merwe, said in the integrated annual report.

“The effects of the longest drought in Namibian history will still be felt for the next two to three years and although many parts of the country have had some good rains, nearly half of the commercial farms have not,” he added.

Van der Merwe elaborated: “Under the circumstances, particularly when compared to the general Namibian businesses climate, Agra has performed very well during the financial year under review. We have seen a growth in our market share in various business areas which has led to a slight increase in turnover, whilst net profit has increased significantly as a direct result of more efficient operations.”

Agra, which trades over the counter at the Namibian Stock Exchange (NSX), this year celebrates four decades of doing business in the country.

Agra has seen good and bad times and has had to adapt to overcome to numerous challenges along the way, Klein said.

“Namibia, coming off of the worst drought in recorded history was faced with a global pandemic that is still currently gripping our nation, and with no indication that it will let up anytime in the foreseeable future.

“Therefore, Agra will again learn, adapt, overcome and continue to serve our clients and our country,” Klein said.

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