Wrap Text
ILLOVO SUGAR LIMITED
PROFIT AND DIVIDEND ANNOUNCEMENT
* RECORD PRODUCTION
* TURNOVER + 38%
* OPERATING PROFIT + 68%
* HEADLINE EARNINGS + 49%
* HEADLINE EARNINGS PER SHARE UNCHANGED
REVIEW
THE GROUP HAS HAD AN EXCITING AND SUCCESSFUL YEAR. THE INTEGRATION OF LONRHO
SUGAR CORPORATION HAS TRANSFORMED THE NATURE AND QUALITY OF ILLOVO FROM A
NATIONAL TO A MORE BROADLY BASED INTERNATIONAL SUGAR GROUP. OPERATIONALLY THE
GROUP HAD A GOOD YEAR INCREASING TURNOVER AND OPERATING PROFIT BY 38% AND 68%
RESPECTIVELY. THE OPERATING MARGIN IMPROVED TO 18,3% FROM 15%. PROFIT AFTER
TAX INCREASED BY 65% TO R453,2 MILLION OF WHICH R137,9 MILLION WAS ATTRIBUTABLE
TO OUTSIDE SHAREHOLDERS IN SUBSIDIARIES. HEADLINE EARNINGS ROSE BY 49% TO
R292,2 MILLION. HOWEVER, AS A RESULT OF THE HIGHER AVERAGE NUMBER OF SHARES IN
ISSUE, FOLLOWING THE ACQUISITION OF LONRHO SUGAR CORPORATION, HEADLINE EARNINGS
PER SHARE REMAIN AT THE SAME LEVEL AS LAST YEAR. THE CONTRIBUTION TO GROUP
OPERATING PROFITS BY SUGAR MANUFACTURE WAS 54%, CANE GROWING 29% AND DOWNSTREAM
AND OTHER OPERATIONS 17%, WHILST THE PROPORTIONATE CONTRIBUTIONS BY COUNTRY OF
OPERATION WERE SOUTH AFRICA 47%, MALAWI 27%, SWAZILAND 14% AND MAURITIUS 12%.
AS THE SUGAR SEASON RUNS FROM 1 APRIL TO 31 MARCH, THE EARNINGS FROM CANE
GROWING AND SUGAR MANUFACTURE INCORPORATED IN THESE RESULTS ARE DERIVED FROM
THE SECOND HALF OF THE 1997/98 SEASON AND THE FIRST HALF OF THE 1998/99 SEASON.
GROUP CANE AND SUGAR PRODUCTION ESTIMATES FOR THE CURRENT 1998/99 SEASON
REFLECT A SIGNIFICANT INCREASE OVER LAST SEASON'S RECORD ACHIEVEMENTS. CANE
PRODUCTION OF 4,6 MILLION TONS IS 580 000 TONS ABOVE LAST YEAR AS A RESULT OF
AN INCREASED AREA UNDER CANE IN SWAZILAND AND MALAWI, PARTICULARLY GOOD GROWING
CONDITIONS IN SOUTH AFRICA AND THE ACQUISITION OF NEW ESTATES IN TANZANIA.
OVERALL SUGAR PRODUCTION IN THE CURRENT SEASON IS FORECAST TO INCREASE BY 270
000 TONS TO 1,8 MILLION TONS. SOUTH AFRICAN SUGAR PRODUCTION OF 1,27 MILLION
TONS IS 188 000 TONS HIGHER THAN LAST YEAR'S RECORD. ESTIMATES OF SUGAR
PRODUCTION FOR THE 1998/99 SEASON IN MALAWI, SWAZILAND AND MAURITIUS AMOUNT TO
490 000 TONS WHICH IS 10% ABOVE LAST YEAR. IN ADDITION, THE NEWLY ACQUIRED
MILLS IN TANZANIA ARE EXPECTED TO PRODUCE 40 000 TONS OF SUGAR THIS SEASON. IN
ORDER TO CRUSH THE INCREASED CANE SUPPLIES, FACTORY CAPACITY EXPANSIONS WERE
UNDERTAKEN IN SOUTH AFRICA, SWAZILAND AND MALAWI. EXPORTS HAVE INCREASED AND
NOW CONSTITUTE 40% OF THE GROUP'S TOTAL TURNOVER. ILLOVO HAS AN INHERENT
STRATEGIC STRENGTH IN THAT 71% OF PRODUCTION BY VOLUME AND 81% BY VALUE IS SOLD
INTO EITHER DOMESTIC OR PREMIUM PRICED MARKETS. THE DECLINE IN THE WORLD
MARKET PRICE FOR SUGAR ONLY AFFECTS THE GROUP'S SOUTH AFRICAN SUGAR EXPORT
REVENUE. THE FURFURAL PLANT AT SEZELA HAS OPERATED EXTREMELY WELL THROUGHOUT
THE YEAR AND BOTH THE FURFURAL AND DIACETYL OPERATIONS WILL ACHIEVE RECORD
OUTPUT FOLLOWING THEIR EXPANSIONS LAST YEAR. AT MEREBANK THE DISTILLERY
EXPANSION HAS NOW ACHIEVED DESIGN CAPACITY AFTER INITIAL OPERATIONAL
DIFFICULTIES HAD CONSTRAINED PRODUCTION LEVELS. THE LACTULOSE, DEXTRAN AND
GLENDALE DISTILLERY OPERATIONS HAVE ALL ACHIEVED RECORD PRODUCTIONS. THE POWER
CO-GENERATION PLANT TO SUPPLY ENERGY EXPORTS TO THE NATIONAL GRID IN MAURITIUS
WAS SUCCESSFULLY COMMISSIONED IN JULY. INCREASED STOCKS AND A TAPERING OF
DEMAND IN LINE WITH THE REDUCTION IN WORLD ECONOMIC ACTIVITY SAW WORLD
FURFURAL, FURFURYL ALCOHOL AND POTABLE ALCOHOL PRICES DECLINE. HOWEVER THE
IMPACT ON PROFITS WAS AMELIORATED BY THE LOWER VALUE OF THE RAND. OVERALL THE
CONTRIBUTION IN RAND TERMS FROM DOWNSTREAM PRODUCTS WAS 26% ABOVE THE PREVIOUS
YEAR. FINANCING COSTS INCREASED TO R133,2 MILLION AS A RESULT OF THE HIGHER
LEVEL OF AVERAGE NET BORROWINGS DURING THE YEAR AND THE SIGNIFICANT INCREASE IN
SOUTH AFRICAN INTEREST RATES DURING THE LAST SIX MONTHS. THE PAST YEAR SAW
SOME R212 MILLION INVESTED IN FUTURE OPERATIONS WHILST TOTAL NET BORROWINGS
WERE REDUCED BY R53 MILLION, REFLECTING THE STRONG CASH GENERATING CAPABILITY
OF THE GROUP. THE EFFECTIVE RATE OF TAX DECLINED TO JUST BELOW 20% FROM LAST
YEAR'S 30%. ABNORMAL INCOME OF R23,4 MILLION COMPRISED THE SURPLUS ARISING
FROM THE DISPOSAL OF NON-STRATEGIC LAND.
PROSPECTS
DURING THIS COMING YEAR R185 MILLION WILL BE SPENT ON FURTHER FACTORY AND FIELD
CAPACITY EXPANSIONS IN MALAWI, SWAZILAND AND AT PONGOLA IN SOUTH AFRICA. GIVEN
NORMAL WEATHER CONDITIONS NEXT SEASON'S SUGAR PRODUCTION IS EXPECTED TO
INCREASE TO 1,87 MILLION TONS AND CANE PRODUCTION TO 4,8 MILLION TONS. THIS
TOGETHER WITH A STABILISING OF THE WORLD SUGAR PRICE, SHOULD ENSURE GOOD GROWTH
IN HEADLINE EARNINGS PER SHARE IN 1999.
DIVIDEND
A FINAL DIVIDEND OF 25,0 CENTS PER SHARE (1997 : 25,5 CENTS) GIVES AN UNCHANGED
TOTAL DISTRIBUTION OF 40,0 CENTS PER SHARE FOR THE FULL YEAR.
ON BEHALF OF THE BOARD
R A WILLIAMS CHAIRMAN DURBAN
D G MACLEOD MANAGING DIRECTOR 5 NOVEMBER 1998
DECLARATION OF DIVIDEND NO. 14
NOTICE IS HEREBY GIVEN THAT A FINAL DIVIDEND OF 25,0 CENTS PER SHARE HAS BEEN
DECLARED, PAYABLE TO SHAREHOLDERS REGISTERED IN THE BOOKS OF THE COMPANY AT THE
CLOSE OF BUSINESS ON FRIDAY 11 DECEMBER 1998. THIS DIVIDEND, TOGETHER WITH THE
DIVIDEND OF 15,0 CENTS PER SHARE WHICH WAS DECLARED ON 15 MAY 1998, MAKES A
TOTAL DISTRIBUTION IN RESPECT OF THE FINANCIAL YEAR ENDED 30 SEPTEMBER 1998 OF
40,0 CENTS PER SHARE. THE TRANSFER BOOKS AND REGISTER OF ORDINARY SHAREHOLDERS
WILL BE CLOSED FROM 12 DECEMBER TO 20 DECEMBER 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
FRIDAY 8 JANUARY 1999. DIVIDEND WARRANTS WILL BE POSTED TO SHAREHOLDERS ON OR
ABOUT 5 JANUARY 1999 FOR PAYMENT ON 8 JANUARY 1999.
BY ORDER OF THE BOARD
G D KNOX SECRETARY 5 NOVEMBER 1998
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1998
INCOME STATEMENT
YEAR ENDED
30 SEPTEMBER CHANGE
1998 1997 %
R000 R000
TURNOVER 3 650 267 2 653 645 38
OPERATING PROFIT BEFORE INTEREST 666 416 397 678 68
NET FINANCING COSTS 133 290 46 711 -
PROFIT BEFORE ABNORMAL ITEMS 533 126 350 967 52
ABNORMAL ITEMS 23 399 28 911 -
PROFIT AFTER ABNORMAL ITEMS 556 525 379 878 -
TAXATION 103 369 105 257 -
PROFIT AFTER TAXATION 453 156 274 621 65
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS IN SUBSIDIARIES 137 937 52 729 -
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
IN ILLOVO SUGAR LIMITED 315 219 221 892 42
RECONCILIATION OF HEADLINE EARNINGS
(AS PER AC 306):
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS 315 219 221 892 42
ADJUSTED FOR:
PROFIT ON SALE OF FIXED ASSETS 22 975 25 231 -
HEADLINE EARNINGS 292 244 196 661 49
FINANCIAL RATIOS AND STATISTICS
HEADLINE EARNINGS PER SHARE (CENTS) 100,4 100,4 -
DIVIDEND PER SHARE (CENTS) 40,0 40,4 -
NET PROFIT PER SHARE (CENTS) 108,3 113,3 -
NO. OF SHARES IN ISSUE (000) 291 205 290 155 -
WEIGHTED AVERAGE NO. OF SHARES
IN ISSUE (000) 290 941 195 852 -
ABRIDGED BALANCE SHEET
30 SEPTEMBER
1998 1997
R000 R000
CAPITAL EMPLOYED
INTEREST OF ORDINARY SHAREHOLDERS 802 440 634 983
INTEREST OF OUTSIDE SHAREHOLDERS 560 314 504 052
DEFERRED TAXATION 62 024 103 539
NET BORROWINGS 821 170 875 859
2 245 948 2 118 433
EMPLOYMENT OF CAPITAL
FIXED ASSETS 1 614 939 1 490 046
INVESTMENTS AND LOANS 89 618 58 037
NET CURRENT ASSETS 541 391 570 350
2 245 948 2 118 433
ABRIDGED CASH FLOW STATEMENT
YEAR ENDED
30 SEPTEMBER
1998 1997
R000 R000
CASH FLOWS FROM OPERATING AND INVESTING
ACTIVITIES
CASH OPERATING PROFIT 788 247 501 303
WORKING CAPITAL REQUIREMENTS 5 211 (105 943)
REPLACEMENT CAPITAL ( 44 882) (83 016)
INTEREST, TAX AND DIVIDEND (483 346) ( 207 716)
INVESTMENT IN FUTURE OPERATIONS (212 270) (572 847)
NET CASH INFLOW/(OUTFLOW) BEFORE
FINANCING ACTIVITIES 52 960 (468 219)
DIRECTORS :
R A WILLIAMS (CHAIRMAN) D G MACLEOD (MANAGING DIRECTOR) W M A BUCHANAN G J
CLARK (AUSTRALIAN) B P CONNELLAN D E COOPER R D HAMILTON N M HAWLEY 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, 4001
POSTAL ADDRESS :
P O BOX 194, DURBAN, 4000
TRANSFER SECRETARIES :
RAND REGISTRARS LIMITED, BLOCK "C", 100 NORTHERN PARKWAY, ORMONDE, 2091
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