Introduction
The agricultural sector and maize in particular, has emerged from two of the most difficult seasons in recent memory. The current maize harvest is expected to come in at approximately 12,2 million tons, substantially higher than last year’s 7,2 million tons. Last year’s crop size was well below initial projections, due to drought in many parts of the maize growing area. The previous season was even more disastrous, as farmers opted to reduce plantings due to the low maize price prevailing at the time. Despite this difficult agricultural environment, AFGRI’s financial results for the 16-month reporting period reflect an 18,7% growth in headline earnings per share.

Undoubtedly, the highlight of the year is the return to normal weather and crop patterns and the increase of some 69% over the previous season’s maize crop, at substantially higher prices than recorded for 2006/7. This set the scene for a good financial period in all divisions with the notable exceptions of Daybreak, Seed and Farming, and a reduced profit contribution from Logistics Services due to the past two seasons’ low maize harvests. The results are discussed below.

Strategy
AFGRI's business strategy is to achieve real economic growth by maximising returns on shareholder capital, and to fix or exit those businesses that destroy value. AFGRI also seeks to capture a larger share of the agricultural value chain and, by so doing, reduce its exposure to the vagaries of individual commodities prices. Since embarking on a major restructuring of the group five years ago, value-destroying businesses that could not be fixed have been sold and new business opportunities with solid potential for value creation have been pursued both in South Africa and beyond. Today, AFGRI is a diverse agricultural services group offering the full spectrum of agricultural, logistics and financial services to its clients.

• Handling and Storage, with 65 silo complexes and four million tons of capacity countrywide
• Afgri Logistics, a supplier of logistic services, fleet management and owner-driver solutions

Turnover in this division was 17,2% higher at R272,8 million for the 16-month reporting period (12 months to February 2007: R232,7 million). Operating profit after interest and dividends fell 36,2% to R71,8 million (2007: R112,5 million).

Turnover increased 18,8% to R264,5 million for the reporting period, but operating profit after interest and dividends was down 28,0% to R80,2 million due to the smaller maize crop and lower carry-over stocks from the previous growing season. Market conditions improved dramatically from May 2008 when, as expected, AFGRI started to receive early deliveries from producers. Given the substantially higher acreage planted to maize during the most recent growing season and the high average yields on this crop, Handling and Storage is expecting to achieve at least 85% capacity utilisation at its silo complexes in the coming year. Two additional bunker facilities have been built and indications are that these facilities will achieve 100% utilisation over the coming season.

There are strong indications that winter wheat plantings have increased, due to better prices and improved soil moisture levels.

High commodity prices encourage farmers to maximise their plantings, though prices will have to remain high to compensate farmers for higher input costs as we head into the next summer planting season, starting in September 2008.

The business continues to benefit from the use of electronic silo certificates and a more innovative tariff structure, both of which have strengthened AFGRI’s competitive position in the market. After many years of testing an electronic grain stock measuring and management silo system, grain stock variances have all but been eliminated.

Handling and Storage expects to show a healthy improvement in financial performance over the coming year.

The outlook for the business in the coming year is positive. Given the current high volume levels, the demand for logistics services from producers is expected to increase.