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KAAP AGRI LIMITED - Voluntary Trading Update for the Six Months Ended 31 March 2019

15 April 2019 - 12:15 PM
Voluntary Trading Update for the Six Months Ended 31 March 2019

(Incorporated in the Republic of South Africa)
(Registration number 2011/113185/06)
ISIN: ZAE000244711
Share code: KAL
(Kaap Agri or the Company)


Despite the lingering pressures from the recent drought and the general subdued performance of the
retail sector, Kaap Agri increased revenue for the six-month period ended 31 March 2019, by 28.7% to
approximately R4.390 billion, up from R3.411 billion in the previous comparable financial period, with
like-for-like comparable store sales growth of 10.7 %. The growth in the value of business transacted
was driven by a 21.9% increase in the number of transactions. Product inflation, excluding the impact
of fuel inflation, is estimated at -0.5%. Gross profit has not grown in relation to revenue growth due to
sales mix changes, fuel price increases and margin pressure.

Agricultural conditions in the Western Cape have improved, but the sluggish recovery has led to slower
than expected growth in the Country Region Agrimarks and Pakmarks. The subdued retail sector had
the largest influence on the Urban Region Agrimarks. Whilst drought conditions have persisted in the
Northern Cape, Inland operations have benefitted from market share gains. Wesgraan has performed
well off the back of a more favourable wheat position, however the full impact of the recovery is weighted
to the second half of the financial year. Mechanisation experienced a favourable uptick in the period
under review. Revenue from the newly acquired Forge business is included from 1 October 2018.

Excluding the impact of Forge, non-agri retail sales have performed well, growing at 3.9% on the
previous comparable period and with the exception of water storage categories coming off a large base
last year as well as constrained cement sales, non-agri retail sales have delivered growth of 13.4%.
Fuel retail expansion continues, taking into account the improvement of timing in respect of regulatory
processes, with the outlook in this space being positive and existing and acquired sites performing well.

Group fuel volumes increased by 9.2%, of which The Fuel Company (TFC) owned and managed sites
have grown fuel volumes by 9.5%, with additional TFC site acquisitions at various stages of conclusion.
Growth in fuel site convenience and quick service restaurant retail operations has exceeded fuel volume

Although both agri and non-agri retail sales have shown signs of improvement, the outlook for the
remainder of the year remains dependant on normalised weather patterns and improved consumer
confidence. The recovery in Wesgraan, store upgrades and expansions, as well as the revenue from
new TFC sites will contribute more significantly during the next 6 months. The business remains
committed to its medium-term strategic plans and continues to explore Agri, Retail and Manufacturing
expansion opportunities.

The above financial information is the responsibility of the directors and has not been reviewed or
reported on by the Companys external auditors.

15 April 2019


PSG Capital

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