On behalf of the board, I am extremely pleased to report that the group has experienced an excellent year which ended on 31 March 2008. The record net profit of R41,9m after tax is 51% higher than last year, but it does include a net surplus of R3,9m from the sale of two farming units – one in Nkwalini and the other in the Napier area. Operating profit of R61,3m (2007: R43,6m) was achieved from a record turnover of R246,9m (2007: R211,7m). These results are inclusive of adjustments made in respect of the valuation of biological assets.

The higher revenues are attributable to greater volumes of all products from the continuing farming operations (except bananas), as well as the incorporation for the first time of the results of the deciduous fruit farm acquired in 2007 in the Western Cape. In addition, prices realised during the year exceeded those of last year for all products except citrus. The net effect of the price increases was somewhat tempered by rising input costs, particularly for chemicals, fertiliser and fuel, as well as the increased cost of borrowings.

Whilst power interruptions have been disruptive, plans to provide back-up generation in support of packhouse facilities are well advanced and the related capital expenditure is not a material factor.

Prospects

Sugar cane production is expected to rise by 20% mainly due to the tonnage to be harvested from the replanted land in Mpumalanga during 2006. However, this benefit will be partly offset by a lower RV price as estimated by the SA Sugar Association. World sugar prices, currently below 10 US cents/lb, are considerably reduced from the highs of the 2006 calendar year.
Improved volumes in the other major divisions, bananas, citrus and deciduous fruit, are also expected. As is to be expected in the agricultural industry, the outlook for earnings is subject to fluctuations in the Rand exchange rate, price levels for agricultural produce and unpredictable weather conditions. Additionally, input cost increases at rates higher than inflation, for items such as fuel, transport and fertiliser are affecting the agricultural sector.
Agriculture in Southern Africa is undergoing major changes particularly in respect of land redistribution and empowerment. While fully supporting the State in its efforts, Crookes Brothers Limited aims to use its expertise and resources to participate in the opportunities arising from these processes. The increasing international demand for bio-fuels could offer further opportunities for growth.