PROLONGED drought conditions could not shrivel the margins of Kaap Agri, the perennially profitable unlisted retail group focused mainly on farming areas.Results for the half-year to end March showed Kaap Agri’s gross margin fattening to 15.75% (from 14.6% previously) and the operating margin widening to an enviable 6.7% (from 5.7% previously).Kaap Agri retails through its Agrimark stores, but has diversified into liquor and convenience stores as well as DIY outlets and fuel sales in recent years. The company has also expanded from the Western Cape to the rest of SA and Namibia.Earnings came in 18% higher at 185c/share and cash profit from operations was 24% better at R213m.Though it seems Kaap Agri is on track to beat 2015’s full year earnings of 259c/share, directors stuck to a highly conservative dividend policy. The interim payout was lifted just 10% to 26.5c/share, covered almost seven times by earnings, despite light gearing with interest cover from operations at eight times.T...
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