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ILLOVO SUGAR LIMITED
INTERIM REPORT FOR THE 6 MONTHS ENDED 31 MARCH 1998
* HEADLINE EARNINGS +88%
* RECORD SUGAR PRODUCTION
REVIEW
ILLOVO SUGAR ACHIEVED SATISFACTORY RESULTS FOR THE HALF YEAR WITH HEADLINE
EARNINGS OF R124,9 MILLION REFLECTING AN IMPROVEMENT OF 88% OVER THE SAME
PERIOD IN THE PREVIOUS YEAR. THE HIGHER NUMBER OF SHARES IN ISSUE RESULTED IN
HEADLINE EARNINGS PER SHARE INCREASING BY 3%.
GROUP SUGAR PRODUCTION FOR THE 1997/98 SEASON WAS 1 532 289 TONS. IN SOUTH
AFRICA PRODUCTION INCREASED BY 87 024 TONS TO A COMPANY RECORD OF 1 082 160
TONS. IN MALAWI, SWAZILAND AND MAURITIUS PRODUCTION TOTALLED 450 129 TONS.
FOLLOWING THE ACQUISITION OF LONRHO SUGAR, THE PAST YEAR HAS SEEN A MAJOR
CHANGE IN THE MIX OF CONTRIBUTION TO PROFITS BY THE VARIOUS OPERATIONS. FOR
THE SIX MONTHS UNDER REVIEW SUGAR OPERATIONS OUTSIDE SOUTH AFRICA CONTRIBUTED
IN EXCESS OF 50% OF TOTAL OPERATING PROFIT WHEREAS IN THE SAME PERIOD LAST YEAR
THEY WERE NOT YET PART OF THE GROUP. ALTHOUGH THE CONTRIBUTION FROM SOUTH
AFRICAN SUGAR OPERATIONS INCREASED, THE RELATIVE SHARE REDUCED TO 30% DUE TO
THE ENLARGED SIZE OF THE GROUP. THE PROFITS FROM DOWNSTREAM OPERATIONS
INCREASED BY 22%.
CASH GENERATION FROM OPERATIONS FOR THE PERIOD OF R582 MILLION (1997:R417)
MILLION WAS STRONG.
TO ACCOMMODATE AN INCREASE IN CROP FORECASTS, THE GROUP'S FACTORY EXPANSION
PROGRAMMES WERE ACCELERATED. THIS HAS, IN THE SHORT TERM, IMPACTED ADVERSELY
ON BORROWINGS. PROJECTS AT UBOMBO IN SWAZILAND, SUCOMA IN MALAWI AND THE
UMFOLOZI, ESTON AND NOODSBERG MILLS IN SOUTH AFRICA WERE LARGELY COMPLETED IN
TIME FOR THE NEW SEASON. THESE EXPANSIONS TOGETHER WITH OTHER MARGINAL PLANT
ENHANCEMENTS WILL ENABLE THE COMPANY TO PRODUCE AN ADDITIONAL 200 000 TONS OF
SUGAR IN A SEASON. THE FULL PROFIT AND CASH FLOW BENEFITS WILL BE REALISED IN
FUTURE YEARS.
DIVIDEND
AN INTERIM DIVIDEND OF 15,0 CENTS PER SHARE (1997 : 14,5 CENTS PER SHARE) HAS
BEEN DECLARED.
PROSPECTS
IN THE FINANCIAL YEAR TO 30 SEPTEMBER 1998 THE COMPANY WILL BRING TO ACCOUNT
THE FIRST HALF OF THE 1998/99 SEASON WITH AN ESTIMATED RECORD PRODUCTION OF
1,75 MILLION TONS OF SUGAR. THIS INCREASED PRODUCTION IS AS A RESULT OF
INCREASED AREA UNDER CANE, IMPROVED METHODS OF IRRIGATION AND GOOD GROWING
CONDITIONS DURING THE SUMMER MONTHS. THE WORLD SUGAR PRICE HAS FALLEN IN
RECENT MONTHS FOLLOWING THE ASIAN ECONOMIC CRISIS AND THE BENEFITS OF THE
IMPROVED PRODUCTION WILL BE REDUCED IN RESPECT OF THE SOUTH AFRICAN PRODUCTION
EXPORTED INTO THE WORLD MARKET.
CONSEQUENTLY IT IS EXPECTED THAT THE RATE OF GROWTH IN HEADLINE EARNINGS PER
SHARE FOR THE FULL YEAR WILL BE SIMILAR TO THAT ACHIEVED IN THE FIRST SIX
MONTHS.
ON BEHALF OF THE BOARD
R A WILLIAMS CHAIRMAN DURBAN
D G MACLEOD MANAGING DIRECTOR 15 MAY 1998
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1998
THIS REPORT HAS BEEN PREPARED IN COMPLIANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRACTICE.
GROUP INCOME STATEMENT
UNAUDITED AUDITED
SIX MONTHS ENDED YEAR ENDED
31 MARCH 30 SEPT
1998 1997 CHANGE 1997
NOTES R000 R000 % R000
TURNOVER 1 1 726 721 974 314 77 2 653 645
OPERATING PROFIT 302 910 102 620 195 397 678
NET FINANCING COSTS 63 115 12 116 421 46 711
PROFIT BEFORE TAXATION
AND ABNORMAL ITEMS 239 795 90 504 165 350 967
ABNORMAL ITEMS 2 7 675 1 745 28 911
PROFIT BEFORE TAXATION 247 470 92 249 168 379 878
TAXATION 43 344 23 531 105 257
PROFIT AFTER TAXATION 204 126 68 718 274 621
ATTRIBUTABLE TO OUTSIDE SHARE-
HOLDERS IN SUBSIDIARY
COMPANIES 71 315 - 52 729
NET PROFIT ATTRIBUTABLE TO
SHAREHOLDERS IN ILLOVO SUGAR
LIMITED 132 811 68 718 93 221 892
NUMBER OF SHARES IN ISSUE
(000) 290 930 159 933 290 155
WEIGHTED AVERAGE NUMBER OF
SHARES ON WHICH NET PROFIT
AND HEADLINE EARNINGS PER
SHARE ARE BASED (000) 290 738 159 804 195 852
NET PROFIT PER SHARE (CENTS) 45.7 43.0 113.3
HEADLINE EARNINGS PER SHARE 43.0 41.7 3 100.4
(CENTS)
DIVIDEND PER SHARE (CENTS) 15,0 14,5 3 40.0
DETERMINATION OF HEADLINE
EARNINGS:
NET PROFIT FOR THE PERIOD PER
INCOME STATEMENT 132 811 68 718 93 221 892
ADJUSTMENT FOR:
PROFIT ON SALE OF FIXED
ASSETS (7 882) (2 139) (25 231)
HEADLINE EARNINGS FOR THE
PERIOD 124 929 66 579 88 196 661
GROUP BALANCE SHEET UNAUDITED UNAUDITED AUDITED
31 MARCH 31 MARCH 30 SEPT
1998 1997 1997
R000 R000 R000
CAPITAL EMPLOYED
SHARE CAPITAL AND PREMIUM 15 426 120 010 13 282
NON-DISTRIBUTABLE RESERVES
AND RETAINED SURPLUS 720 898 670 491 621 701
INTEREST OF SHAREHOLDERS IN
ILLOVO SUGAR LIMITED 736 324 790 501 634 983
INTEREST OF OUTSIDE
SHAREHOLDERS IN SUBSIDIARIES 503 389 - 504 052
INTEREST OF ALL SHAREHOLDERS 1 239 713 790 501 1 139 035
DEFERRED TAXATION 103 539 67 645 103 539
LONG-TERM BORROWINGS 96 180 71 978 64 391
1 439 432 930 124 1 306 965
EMPLOYMENT OF CAPITAL
FIXED ASSETS 1 583 676 792 473 1 490 046
INVESTMENTS AND LOANS 54 903 43 840 58 037
CURRENT ASSETS 899 219 745 888 1 379 941
INVENTORIES 452 732 78 241 845 365
DEBTORS 345 219 191 645 415 963
CASH RESOURCES 101 268 476 002 118 613
TOTAL ASSETS 2 537 798 1 582 201 2 928 024
CURRENT LIABILITIES 1 098 366 652 077 1 621 059
SHORT-TERM BORROWINGS 541 876 335 919 930 081
CREDITORS, PROVISIONS AND
SHAREHOLDERS FOR DIVIDEND 556 490 316 158 690 978
NET CURRENT (LIABILITIES)/
ASSETS (199 147) 93 811 (241 118)
1 439 432 930 124 1 306 965
OTHER SALIENT FEATURES
INTEREST COVER (TIMES) 4.2 8.7 7.4
NET ASSET VALUE PER SHARE
(CENTS) 253.3 492,8 324.2
AVERAGE NET GEARING (%) 49.9 18,7 33.2
DEPRECIATION 47 215 33 861 90 954
CAPITAL EXPENDITURE 136 130 54 209 136 013
-EXPANSION 90 571 23 833 52,907
-REPLACEMENT 45 559 30 376 83,106
CAPITAL COMMITMENTS 147 426 161 365 282 747
-CONTRACTED 49 532 21 334 27 709
-APPROVED BUT NOT CONTRACTED 97 894 140 031 255 038
LEASE COMMITMENTS
-LAND AND BUILDINGS 19 463 43 573 55 307
CONTINGENT LIABILITIES
INCLUDING DEFERRED TAXATION 179 241 26 093 180 708
GROUP CASH FLOW STATEMENT
UNAUDITED AUDITED
SIX MONTHS ENDED YEAR ENDED
31 MARCH 31 SEPT
1998 1997 1997
R000 R000 R000
CASH OPERATING PROFIT 361,270 142,398 493,834
WORKING CAPITAL CHANGES 346,541 330,971 (105,943)
NET FINANCING COSTS (63,115) (12,116) (46,711)
TAXATION PAID (62,420) (44,266) (79,023)
CASH AVAILABLE FROM
OPERATIONS 582,276 416,987 262,157
DIVIDENDS PAID (78,523) (32,811) (121,399)
NET CASH INFLOW FROM OPERATING
ACTIVITIES 503,753 384,176 140,758
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (159,658) (54,452) (608,977)
NET CASH INFLOW/(OUTFLOW) BEFORE
FINANCING ACTIVITIES 344,095 329,724 (468,219)
NET CASH (OUTFLOW)/INFLOW FROM
FINANCING ACTIVITIES (356,416) 140,833 588,087
NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS (12,321) 470,557 119,868
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 118,613 5,445 5,445
FOREIGN CURRENCY TRANSLATION
DIFFERENCES (5,024) - (6,700)
CASH AND CASH FLOW EQUIVALENTS
AT END OF PERIOD 101,268 476,002 118,613
NOTES
UNAUDITED AUDITED
SIX MONTHS ENDED YEAR ENDED
31 MARCH 30 SEPT
1998 1997 1997
R000 R000 R000
1. NET FINANCING COSTS
INTEREST PAID 75,107 17,910 65,947
INTEREST RECEIVED (11,731) (5,794) 17,795)
DIVIDEND INCOME (261) - (1,441)
63,115 12,116 46,711
2. ABNORMAL ITEMS
PROFIT ON DISPOSAL OF LAND
AND BUILDINGS 7,675 1,745 28,911
ABNORMAL PROFIT BEFORE TAXATION 7,675 1,745 28,911
TAXATION - - -
MINORITY SHARE OF ABNORMAL ITEMS
AFTER TAX (1,164) - -
ABNORMAL PROFIT ATTRIBUTABLE TO
SHAREHOLDERS IN ILLOVO SUGAR
LIMITED 6,511 1,745 28,911
DECLARATION OF DIVIDEND NO. 13
NOTICE IS HEREBY GIVEN THAT AN INTERIM DIVIDEND OF 15,0 CENTS PER SHARE HAS
BEEN DECLARED, PAYABLE TO SHAREHOLDERS REGISTERED IN THE BOOKS OF THE COMPANY
AT THE CLOSE OF BUSINESS ON FRIDAY 12 JUNE 1998.
THE TRANSFER BOOKS AND REGISTER OF ORDINARY SHAREHOLDERS WILL BE CLOSED FROM 13
JUNE TO 21 JUNE 1998, BOTH DAYS INCLUSIVE, FOR THE PURPOSE OF DETERMINING THOSE
SHAREHOLDERS TO WHOM THE DIVIDEND WILL BE PAID.
PAYMENT OF DIVIDENDS BY WAY OF ELECTRONIC TRANSFER WILL BE MADE ON 10 JULY
1998. DIVIDEND WARRANTS WILL BE POSTED TO SHAREHOLDERS ON OR ABOUT 8 JULY 1998
FOR PAYMENT ON 10 JULY 1998.
BY ORDER OF THE BOARD
GD KNOX SECRETARY 15 MAY 1998
DIRECTORS:
R A WILLIAMS (CHAIRMAN), D G MACLEOD (MANAGING DIRECTOR), W M A BUCHANAN, G J
CLARK (AUSTRALIAN), B P CONNELLAN, D E COOPER, J M GOSNELL, R D HAMILTON, R L
HETZLER (USA), G D KNOX (BRITISH), D KONAR, G LEUNG SHING (MAURITIAN), D D B
MKHWANAZI, R A NORTON, A B RAVNV, J T RUSSELL, B M STUART, G TAYLOR
REGISTERED OFFICE:
10TH FLOOR, EAGLE BUILDING, 359 WEST STREET, DURBAN, 4000
POSTAL ADDRESS:
P.O. BOX 194, DURBAN, 4000
TRANSFER SECRETARIES:
RAND REGISTRARS LIMITED, BLOCK "C", 100 NORTHERN PARKWAY, ORMONDE, 2091
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