But the group, one of South Africa’s largest agribusinesses, says that it has already regained some financial ground in the new business year.
The Northern Cape-based GWK Group released its annual report for 2016/2017 at its AGM in Kimberley on 9 November.
Managing director Llewellyn Brooks told the meeting that during the year under review, the group’s new wheat mill, pasta and biscuit plants, involving an investment of R400 million, had begun operation.
“Although we budgeted for a start-up loss in the new venture, it was compounded by import tariffs on grain, the volatility of grain prices, and lower-than-expected milling volumes,” he said.
Brooks said that the GWK’s maize mill in Christiana had been affected by volatile maize prices. He added in the annual report that performance by the biscuit plant had been worse than expected, the phosphates business had faced challenges, and there had been pressure on the sheep value chain.
“The net effect is that GWK closed off the year in the red […]” he said.
The group posted a loss before allocation to shareholders of R196,4 million for 2016/2017 after having realised a profit before allocation to shareholders of about R148,2 million in the previous year.
The profit after shareholder allocation (rebates) in 2015/2016 had been slightly more than R32,4 million, compared with a loss of about R167 million in 2016/2017. No dividends (rebates) were paid in the year under review.
On the upside, Brooks highlighted strong equity, to the value of nearly R900 million, and sound cash flow management. He also pointed out that the group had experienced good financial traction in the first quarter of the new business year.
He said that solid planning and new structures implemented earlier in the year were already delivering positive results and this had to be built on.
Chairman of the board Frank Lawrence said that the group had faced setbacks while embarking on a new journey during the previous financial year. They had also made mistakes.
“We’re accountable for the consequences of the decisions we took, good or bad, and we have to accept responsibility for a few wrong decisions we took,” he stated in the annual report.
Lawrence added that the team had come through under difficult circumstances and shown what they were made of.
The wheat mill was making a positive contribution, the SIDI business venture had gone from making a loss to showing profit, and there had been a turnaround in the sheep business.
He said that at GWK Farm Foods, which had incurred serious losses, new management appointments and strategies were yielding positive results and the operation was geared for the year ahead.
“The next financial year will not be without challenges but we’re prepared to face it with the positivity for which we have become known,” he said.
