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ILLOVO SUGAR LIMITED
INTERIM REPORT FOR THE 6 MONTHS ENDED 31 MARCH 1999
HEADLINE EARNINGS PER SHARE +21%
RECORD PRODUCTION
REVIEW
THE GROUP ACHIEVED GOOD RESULTS FOR THE HALF YEAR WITH HEADLINE EARNINGS OF
R151,4 MILLION AND HEADLINE EARNINGS PER SHARE OF 52.0 CENTS BOTH REFLECTING
AN IMPROVEMENT OF 21% OVER THE SAME PERIOD IN THE PREVIOUS YEAR.
THE RESULTS INCORPORATE THE SECOND HALF OF THE 1998/99 SUGAR SEASON WITH
RECORD SUGAR AND CANE PRODUCTION BEING ACHIEVED AS A RESULT OF GOOD GROWING
CONDITIONS IN SOUTH AFRICA, INCREASED AREAS UNDER CANE IN MALAWI AND SWAZILAND
AND THE ACQUISITION OF NEW ESTATES IN TANZANIA. GROUP PRODUCTION FOR THE
1998/99 SEASON AMOUNTED TO 1 783 000 TONS SUGAR AND 4 567 000 TONS CANE. IN
SOUTH AFRICA SUGAR PRODUCTION INCREASED BY 180 000 TONS TO A COMPANY RECORD OF
1 262 000 TONS. PRODUCTION IN MALAWI, SWAZILAND, MAURITIUS AND TANZANIA
TOTALLED 521 000 TONS SUGAR WITH SWAZILAND'S PRODUCTION OF 184 000 TONS BEING
THE HIGHEST IT HAS ACHIEVED. RECORD SEASONAL OUTPUTS OF THE DOWNSTREAM
PRODUCTS FURFURAL AND DIACETYL WERE ALSO ACHIEVED.
FOR THE SIX MONTHS UNDER REVIEW THE CONTRIBUTION TO GROUP OPERATING PROFITS BY
SUGAR MANUFACTURE WAS 53%, CANE GROWING 31% AND DOWNSTREAM AND OTHER OPERATIONS
16%. THE OPERATING MARGIN OF 20% SHOWS A GOOD IMPROVEMENT OVER THAT FOR THE
CORRESPONDING PERIOD LAST YEAR.
CASH GENERATION FROM OPERATIONS AMOUNTING TO R589 MILLION (1998 - R582 MILLION)
WAS STRONG. THE AVERAGE NET GEARING OF 46,3% ALSO REFLECTS AN IMPROVEMENT OVER
THAT OF THE SAME PERIOD IN THE PREVIOUS YEAR.
THE EXPANSION PROJECTS AT UBOMBO IN SWAZILAND, NCHALO AND DWANGWA IN MALAWI AND
PONGOLA IN SOUTH AFRICA WERE COMPLETED IN TIME FOR THE NEW SEASON.
THE ACQUISITION OF MONITOR SUGAR IN THE UNITED STATES HAS BEEN APPROVED BY THE
COMPANY'S SHAREHOLDERS AND WILL BE EFFECTIVE ON 1 JULY 1999.
YEAR 2000
THE PROGRAMME FOR ACHIEVING YEAR 2000 COMPLIANCE WHICH WAS FULLY DISCLOSED IN
THE COMPANY'S 1998 ANNUAL REPORT, IS PROCEEDING ON SCHEDULE WITH ALL CRITICAL
SYSTEMS AND APPLICATIONS SUBSTANTIALLY COMPLETE.
DIVIDEND
AN INTERIM DIVIDEND OF 18.0 CENTS PER SHARE (1998 : 15.0 CENTS) HAS BEEN
DECLARED.
PROSPECTS
IN THE FINANCIAL YEAR TO 30 SEPTEMBER 1999 THE GROUP WILL BRING TO ACCOUNT THE
FIRST HALF OF THE 1999/2000 SEASON WITH AN EARLY PRODUCTION ESTIMATE FOR THE
FULL SEASON OF 1 741 000 TONS SUGAR. IN SWAZILAND, MALAWI AND TANZANIA
INCREASED AREAS UNDER CANE, IMPROVED METHODS OF IRRIGATION AND GOOD GROWING
CONDITIONS DURING THE SUMMER MONTHS WILL RESULT IN AN INCREASE IN BOTH SUGAR
AND CANE PRODUCTION. WEATHER CONDITIONS IN SOUTH AFRICA AND MAURITIUS HAVE BEEN
DRIER THAN NORMAL AND THIS IS EXPECTED TO REDUCE PRODUCTION IN THESE COUNTRIES.
HOWEVER, THE NATIONAL CROP INSURANCE SCHEME IN MAURITIUS WILL AMELIORATE THE
FINANCIAL CONSEQUENCES OF THE LOWER PRODUCTION IN THAT COUNTRY. THE NEWLY
REHABILITATED SUGAR MILL AT MARAGRA IN MOZAMBIQUE WILL COME INTO OPERATION
EARLY IN JUNE.
NOTWITHSTANDING THAT THE WORLD SUGAR PRICE HAS FALLEN TO A FIFTEEN YEAR LOW,
THE NEGATIVE IMPACT WILL BE CONFINED TO THE SOUTH AFRICAN SUGAR OPERATIONS
WHERE APPROXIMATELY 50% OF PRODUCTION IS EXPORTED AT THE WORLD PRICE. THE
SUGAR OPERATIONS ELSEWHERE IN THE GROUP ARE UNAFFECTED SINCE THEIR ENTIRE
EXPORT PRODUCTION IS SOLD INTO FAVOURABLY PRICED PREFERENTIAL MARKETS IN EUROPE
AND THE UNITED STATES.
EARNINGS FOR THE FULL YEAR WILL CONTINUE TO SHOW GOOD GROWTH, ALTHOUGH THE RATE
OF INCREASE IS LIKELY TO BE LOWER THAN THAT ACHIEVED IN THE FIRST SIX MONTHS.
ON BEHALF OF THE BOARD
R A WILLIAMS CHAIRMAN MT. EDGECOMBE
D G MACLEOD MANAGING DIRECTOR 11 MAY 1999
------------------------------------------------------------------------
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
1999 1998 CHANGE 1998
NOTES R000 R000 % R000
TURNOVER 1 910 028 1 726 721 11 3 650 267
--------- --------- ---------
OPERATING PROFIT 382 133 302 910 26 666 416
NET FINANCING COSTS 1 94 272 63 115 - 133 290
--------- --------- - ---------
PROFIT BEFORE TAXATION
AND ABNORMAL ITEMS 287 861 239 795 20 533 126
ABNORMAL ITEMS 2 5 346 7 675 - 23 399
--------- --------- ---------
PROFIT BEFORE TAXATION 293 207 247 470 - 556 525
TAXATION 42 920 43 344 - 103 369
--------- --------- - ---------
PROFIT AFTER TAXATION 250 287 204 126 23 453 156
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS IN SUBSIDIARY
COMPANIES 92 291 71 315 - 137 937
--------- --------- ---------
NET PROFIT ATTRIBUTABLE TO
SHAREHOLDERS IN ILLOVO SUGAR
LIMITED 157 996 132 811 19 315 219
--------- --------- ---------
DETERMINATION OF HEADLINE
EARNINGS:
NET PROFIT FOR THE PERIOD PER
INCOME STATEMENT 157 996 132 811 19 315 219
ADJUSTED FOR:
NET PROFIT ON SALE OF FIXED
ASSETS (6 552) (7 882) - (22 975)
--------- --------- ---------
HEADLINE EARNINGS FOR THE
PERIOD 151 444 124 929 21 292 244
--------- --------- ---------
NUMBER OF SHARES IN
ISSUE (000) 291 284 290 930 291 205
WEIGHTED AVERAGE NUMBER OF
SHARES ON WHICH NET PROFIT
AND HEADLINE EARNINGS PER
SHARE ARE BASED (000) 291 246 290 738 - 290 941
NET PROFIT PER SHARE (CENTS) 54.2 45.7 19 108.3
HEADLINE EARNINGS PER SHARE
(CENTS) 52.0 43.0 21 100.4
DIVIDEND PER SHARE (CENTS) 18.0 15.0 20 40.0
------------------------------------------------------------------------
GROUP BALANCE SHEET UNAUDITED UNAUDITED AUDITED
31 MARCH 31 MARCH 30 SEPT
1999 1998 1998
R000 R000 R000
CAPITAL EMPLOYED
SHARE CAPITAL AND PREMIUM 17 437 15 426 17 223
NON-DISTRIBUTABLE RESERVES
AND RETAINED SURPLUS 887 705 720 898 785 217
--------- --------- ---------
INTEREST OF SHAREHOLDERS IN
ILLOVO SUGAR LIMITED 905 142 736 324 802 440
INTEREST OF OUTSIDE SHARE-
HOLDERS IN SUBSIDIARIES 653 832 503 389 560 314
--------- --------- ---------
INTEREST OF ALL SHARE-
HOLDERS 1 558 974 1 239 713 1 362 754
DEFERRED TAXATION 60 196 103 539 62 024
LONG-TERM BORROWINGS 65 234 96 180 86 858
--------- --------- ---------
1 684 404 1 439 432 1 511 636
--------- --------- ---------
EMPLOYMENT OF CAPITAL
FIXED ASSETS 1 699 972 1 583 676 1 614 939
INVESTMENTS AND LOANS 120 957 54 903 89 618
CURRENT ASSETS 1 000 693 899 219 1 688 637
- INVENTORIES 634 451 452 732 1 143 113
- DEBTORS 358 314 345 219 480 456
------------------------------------------------------------------------
- CASH RESOURCES 7 928 101 268 65 068
--------- --------- ---------
TOTAL ASSETS 2 821 622 2 537 798 3 393 194
-------------------------------------------
CURRENT LIABILITIES 1 137 218 1 098 366 1 881 558
- SHORT-TERM BORROWINGS 468 954 541 876 799 380
- CREDITORS, PROVISIONS AND
SHAREHOLDERS FOR DIVIDEND 668 264 556 490 1 082 178
--------- --------- ---------
NET CURRENT LIABILITIES (134 697) (199 147) (192 921)
1 684 404 1 439 432 1 511 636
------------------------------------------------------------------------
OTHER SALIENT FEATURES
OPERATING MARGIN (%) 20.0 17.5 18.3
NET WORTH PER SHARE (CENTS) 310.8 253.3 275.6
AVERAGE NET GEARING (%) 46.3 49.9 48.5
DEPRECIATION 53 230 47 215 111 288
-------------------------------------------
CAPITAL EXPENDITURE 162 659 136 130 212 180
- EXPANSION 116 769 90 571 167 298
- REPLACEMENT 45 890 45 559 44 882
CAPITAL COMMITMENTS 161 131 147 426 293 809
- CONTRACTED 72 277 49 532 63 318
- APPROVED BUT NOT 88 854 97 894 230 491
CONTRACTED
-------------------------------------------------
LEASE COMMITMENTS
- LAND AND BUILDINGS 127 131 19 463 35 174
CONTINGENT LIABILITIES
INCLUDING DEFERRED TAXATION 228 234 179 241 178 128
GROUP CASH FLOW STATEMENT
UNAUDITED AUDITED
SIX MONTHS ENDED YEAR ENDED
31 MARCH 30 SEPT
1999 1998 1998
R000 R000 R000
CASH OPERATING PROFIT 437 260 361 270 788 247
WORKING CAPITAL CHANGES 329 064 346 541 5 211
NET FINANCING COSTS INCLUD-
ING CAPITALISED INTEREST (98 305) (63 115) (134 906)
TAXATION PAID (78 892) (62 420) (176 497)
--------- --------- ---------
CASH AVAILABLE FROM
OPERATIONS 589 127 582 276 482 055
DIVIDENDS PAID (79 985) (78 523) (175 439)
--------- --------- ---------
NET CASH INFLOW FROM
OPERATING ACTIVITIES 509 142 503 753 306 616
NET CASH OUTFLOW FROM
INVESTING ACTIVITIES (171 226) (159 658) (253 656)
--------- --------- ---------
NET CASH INFLOW BEFORE
FINANCING ACTIVITIES 337 916 344 094 52 960
NET CASH OUTFLOW FROM
FINANCING ACTIVITIES (396 836) (356 416) (98 302)
--------- --------- ---------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (58 920) (12 321) (45 342)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 65 068 118 613 118 613
FOREIGN CURRENCY
TRANSLATION DIFFERENCES 1 780 (5 024) (8 203)
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD 7 928 101 268 65 068
--------- --------- ---------
NOTES UNAUDITED AUDITED
SIX MONTHS ENDED YEAR ENDED
31 MARCH 30 SEPT
1999 1998 1998
R000 R000 R000
1. NET FINANCING COSTS
INTEREST PAID 127 645 75 107 160 858
INTEREST RECEIVED (28 759) (11 731) (24 019)
DIVIDEND INCOME (581) (261) (1 933)
--------- --------- ---------
98 305 63 115 134 906
INTEREST INCURRED PRIOR
TO THE COMMENCEMENT OF
PRODUCTION AND CAPITALISED
AS PART OF THE COST OF
FIXED ASSETS (4 033) - (1 616)
--------- --------- ---------
94 272 63 115 133 290
--------- --------- ---------
2. ABNORMAL ITEMS
PROFIT ON DISPOSAL OF
LAND 5 346 7 675 23 399
--------- --------- ---------
ABNORMAL PROFIT BEFORE
TAXATION 5 346 7 675 23 399
TAXATION - - -
MINORITY SHARE OF ABNORMAL
ITEMS AFTER TAX (887) (1 164) (1 164)
--------- --------- ---------
ABNORMAL PROFIT
ATTRIBUTABLE TO SHARE-
HOLDERS IN ILLOVO SUGAR
LIMITED 4 459 6 511 22 235
--------- --------- ---------
DECLARATION OF DIVIDEND NO. 15
NOTICE IS HEREBY GIVEN THAT AN INTERIM DIVIDEND OF 18.0 CENTS PER SHARE HAS
BEEN DECLARED, PAYABLE TO SHAREHOLDERS REGISTERED IN THE BOOKS OF THE COMPANY
AT THE CLOSE OF BUSINESS ON FRIDAY 11 JUNE 1999.
THE TRANSFER BOOKS AND REGISTER OF ORDINARY SHAREHOLDERS WILL BE CLOSED FROM 12
JUNE TO 20 JUNE 1999, 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 9 JULY 1999.
DIVIDEND WARRANTS WILL BE POSTED TO SHAREHOLDERS ON OR ABOUT 6 JULY 1999 FOR
PAYMENT ON 9 JULY 1999.
BY ORDER OF THE BOARD
G D KNOX
SECRETARY
11 MAY 1999
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 :
ILLOVO SUGAR PARK, 1 MONTGOMERY DRIVE, MT. EDGECOMBE, KWAZULU-NATAL, 4300
POSTAL ADDRESS :
P O BOX 194, DURBAN, 4000
TRANSFER SECRETARIES :
RAND REGISTRARS LIMITED, BLOCK "C", 100 NORTHERN PARKWAY, ORMONDE, 2091
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