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ILLOVO SUGAR LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 02/00622/06)
ILLOVO SUGAR LIMITED
PROFIT AND DIVIDEND ANNOUNCEMENT FOR THE YEAR ENDED 30 SEPTEMBER 1999
- HEADLINE EARNINGS +24%
- HEADLINE EARNINGS PER SHARE +20%
- DIVIDEND + 20%
- ACQUISITION OF MONITOR SUGAR
REVIEW
THE GROUP HAS HAD ANOTHER SUCCESSFUL YEAR WITH HEADLINE EARNINGS INCREASING BY
24% TO R296,1 MILLION. WITH THE ACQUISITION OF MONITOR SUGAR IN THE UNITED
STATES AND THE COMPLETION OF THE REHABILITATION OF THE MARAGRA MILL IN
MOZAMBIQUE, FURTHER PROGRESS HAS BEEN MADE TOWARDS ILLOVO BECOMING A BROADLY
BASED INTERNATIONAL SUGAR COMPANY. OPERATIONALLY THE GROUP PERFORMED WELL WITH
TURNOVER AND OPERATING PROFIT INCREASING BY 4% AND 9% RESPECTIVELY, AND THE
OPERATING MARGIN IMPROVING FROM 18,3% TO 19,2%. THE EFFECTIVE RATE OF TAXATION
DECLINED FROM 35% TO 25% AS A RESULT OF A LOWER TAX RATE IN A NUMBER OF
COUNTRIES IN WHICH THE GROUP OPERATES AND ALLOWANCES ON CAPACITY EXPANSIONS.
PROFIT AFTER TAXATION OF R546,6 MILLION INCLUDES ABNORMAL INCOME OF R132,5
MILLION ARISING FROM THE DISPOSAL OF NON-STRATEGIC PROPERTIES. THE INCREASE IN
HEADLINE EARNINGS PER SHARE OF 20% WAS AFFECTED BY THE HIGHER AVERAGE NUMBER OF
SHARES IN ISSUE FOLLOWING THE ACQUISITION OF MONITOR SUGAR.
THE GROUP HAS CHANGED ITS ACCOUNTING POLICY FOR DEFERRED TAXATION FROM THE
PARTIAL TO THE COMPREHENSIVE BASIS WITH EFFECT FROM 1 OCTOBER 1998 AND WHERE
APPLICABLE PRIOR YEAR FIGURES HAVE BEEN RESTATED ON THE NEW BASIS.
AS THE SUGAR SEASON IN AFRICA RUNS FROM 1 APRIL TO 31 MARCH, THE EARNINGS FROM
CANE GROWING AND SUGAR PRODUCTION INCORPORATED IN THE RESULTS ARE DERIVED FROM
THE SECOND HALF OF THE 1998/99 SEASON AND THE FIRST HALF OF THE 1999/2000
SEASON. IN THE UNITED STATES THE SUGAR SEASON COINCIDES WITH THE GROUP'S
FINANCIAL YEAR.
THE CONTRIBUTION TO GROUP OPERATING PROFITS FROM SUGAR MANUFACTURE WAS 45%,
CANE GROWING 39% AND DOWNSTREAM AND OTHER OPERATIONS 16%, WHILST THE
CONTRIBUTION BY COUNTRY WAS SOUTH AFRICA 38%, MALAWI 28%, SWAZILAND 19%,
MAURITIUS 14% AND UNITED STATES 1% (THREE MONTHS OF OPERATIONS ATTRIBUTABLE TO
ILLOVO).
THE BORROWINGS ASSUMED ON THE ACQUISITION OF MONITOR SUGAR, TOGETHER WITH THE
EXPANSION OF CAPACITY THROUGHOUT THE GROUP AND INCREASED SEASONAL WORKING
CAPITAL REQUIREMENTS, RESULTED IN BORROWINGS INCREASING TO R1,480 BILLION. THIS
HIGHER LEVEL OF AVERAGE NET BORROWINGS INCREASED ANNUAL FINANCING COSTS BY 14%
TO R174,4 MILLION. HOWEVER, STRONG CASH GENERATION OF R871 MILLION FOR THE YEAR
WAS ONCE AGAIN A POSITIVE FEATURE OF THE GROUP'S RESULTS.
RECORD CANE AND SUGAR PRODUCTION WAS ACHIEVED IN THE 1998/99 SEASON. THIS
RESULTED FROM EXCEPTIONALLY GOOD GROWING CONDITIONS IN SOUTH AFRICA, INCREASED
AREAS UNDER CANE IN MALAWI AND SWAZILAND, AND THE INCLUSION OF PRODUCTION FROM
NEWLY ACQUIRED CANE ESTATES IN TANZANIA. GROUP CANE PRODUCTION ESTIMATES FOR
THE L999/2000 SEASON HAVE DECREASED BY SOME 3% TO 4,4 MILLION TONS AS A RESULT
OF DRIER CONDITIONS AND THE SALE OF A NUMBER OF MEDIUM SCALE FARMS TO BLACK
GROWERS IN SOUTH AFRICA, AS WELL AS THE IMPACT OF THE SEVERE DROUGHT IN
MAURITIUS. DESPITE THESE ADVERSE FACTORS SUGAR PRODUCTION IN THE 1999/2000
SEASON WILL BE SIMILAR TO LAST SEASON'S 1,8 MILLION TONS AND HAS BEEN
FAVOURABLY INFLUENCED BY INCREASED PRODUCTION IN SWAZILAND AND TANZANIA, THE
COMMENCEMENT OF MILLING OPERATIONS IN MOZAMBIQUE AND THE ACQUISITION OF MONITOR
SUGAR.
THE SOUTH AFRICAN DOWNSTREAM OPERATIONS AT SEZELA AND THE GLENDALE DISTILLERY
PERFORMED WELL AND RECORD LEVELS OF FURFURAL, DIACETYL AND ETHYL ALCOHOL WERE
ACHIEVED.
THE GROUP'S SUGAR IS SOLD INTO DOMESTIC MARKETS, PREMIUM PRICED EXPORT MARKETS
AND THE WORLD TREE MARKET. EXPORTS HAVE INCREASED AND NOW AMOUNT TO 42% OF THE
GROUP'S TOTAL TURNOVER. A MAJOR INHERENT STRENGTH OF THE GROUP IS THAT
APPROXIMATELY 70% OF SUGAR PRODUCTION BY VOLUME AND 80% BY VALUE IS SOLD INTO
STABLE DOMESTIC OR PREMIUM PRICED EXPORT MARKETS. THE WORLD RAW SUGAR PRICE
DECLINED TO A 13 YEAR LOW OF US$104 PER TON DURING THE CURRENT SEASON BUT HAD
PARTIALLY RECOVERED TO US$145 PER TON BY YEAR END. AS A MAJOR EXPORTER TO THE
WORLD MARKET, THE REDUCED PRICE IMPACTED NEGATIVELY ON SUGAR REVENUE EARNED BY
THE SOUTH AFRICAN SUGAR OPERATIONS.
DURING THE PAST YEAR R215 MILLION WAS INVESTED IN MAJOR EXPANSION PROJECTS AT
UBOMBO IN SWAZILAND, NCHALO AND DWANGWA IN MALAWI, PONGOLA IN SOUTH AFRICA, AND
THE MOLASSES DESUGARISATION PLANT AT MONITOR SUGAR IN THE UNITED STATES.
PROSPECTS
INCREASED PRODUCTION LEVELS ARE FORECAST FOR NEXT SEASON IN MALAWI, SWAZILAND,
MOZAMBIQUE, TANZANIA AND THE UNITED STATES WHILST MAURITIUS IS LIKELY TO RETURN
TO NORMAL LEVELS OF PRODUCTION FOLLOWING THIS YEAR'S DROUGHT. IN SOUTH AFRICA
GOOD WEATHER CONDITIONS DURING THE SUMMER MONTHS ARE NECESSARY IF SUGAR
PRODUCTION IS TO REACH THIS YEAR'S LEVELS. OVERALL GROUP SUGAR PRODUCTION IS
EXPECTED TO EXCEED 2 MILLION TONS NEXT SEASON. PROVIDED THESE PRODUCTION
FORECASTS ARE ACHIEVED AND THERE IS A CONTINUED STABILISATION IN THE WORLD
SUGAR PRICE, REAL GROWTH IN HEADLINE EARNINGS PER SHARE IS EXPECTED IN 2000.
DIVIDEND
THE FINAL DIVIDEND HAS BEEN INCREASED TO 30,0 CENTS PER SHARE -1998 : 25,0
CENTS- WHICH GIVES A TOTAL DISTRIBUTION OF 48,0 CENTS PER SHARE -1998 : 40,0
CENTS- FOR THE FULL YEAR.
ON BEHALF OF THE BOARD
R A WILLIAMS D G MACLEOD DURBAN
CHAIRMAN MANAGING DIRECTOR 9 NOVEMBER 1999
INCOME STATEMENT
YEAR ENDED
30 SEPTEMBER CHANGE
1999 1998
R000 R000
RESTATED
TURNOVER 3 799 155 3 650 267 4
OPERATING PROFIT BEFORE INTEREST 728 684 666 416 9
NET FINANCING COSTS 174 440 152 948
PROFIT BEFORE ABNORMAL ITEMS 554 244 513 468 8
ABNORMAL ITEMS 132 533 24 563
PROFIT AFTER ABNORMAL ITEMS 686 777 538 031 28
TAXATION 140 176 177 706
PROFIT AFTER TAXATION 546 601 360 325 52
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS IN SUBSIDIARIES 117 114 99 479
NET PROFIT ATTRIBUTABLE TO
SHAREHOLDERS IN ILLOVO SUGAR LIMITED 429 487 260 846 65
DETERMINATION OF HEADLINE EARNINGS:
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS 429 487 260 846 65
ADJUSTED FOR:
PROFIT ON SALE OF FIXED ASSETS 133 387 22 975
HEADLINE EARNINGS 296 100 237 871 24
FINANCIAL RATIOS AND STATISTICS
HEADLINE EARNINGS PER SHARE (CENTS) 98.4 81.8 20
DIVIDEND PER SHARE (CENTS) 48.0 40.0 20
NET PROFIT PER SHARE (CENTS) 142.7 89.7
AVERAGE GEARING (%) 46.1 48.5
NO. OF SHARES IN ISSUE (000) 329 709 291 205
WEIGHTED AVERAGE NO. OF SHARES
IN ISSUE (000) 300 951 290 941
ABRIDGED BALANCE SHEET
30 SEPTEMBER
1999 1998
R000 R000
RESTATED
CAPITAL EMPLOYED
INTEREST OF ORDINARY SHAREHOLDER 1 053 596 637 569
INTEREST OF OUTSIDE SHAREHOLDERS 439 856 359 145
DEFERRED TAXATION - LONG TERM 357 855 216 040
DEFERRED TAXATION - SHORT TERM 66 404 62 024
NET BORROWINGS 1 479 856 971 170
3 397 567 2 245 948
EMPLOYMENT OF CAPITAL
FIXED ASSETS 2 339 672 1 614 939
INVESTMENTS AND LOANS 151 576 89 618
NET CURRENT ASSETS 906 319 541 391
3 397 567 2 245 948
ABRIDGED CASH FLOW STATEMENT
YEAR ENDED
30 SEPTEMBER CHANGE
1999 1998
R000 R000
CASH FLOWS FROM OPERATING AND
INVESTING ACTIVITIES
CASH OPERATING PROFIT 870 759 788 247
WORKING CAPITAL REQUIREMENTS (358 529) 5 211
REPLACEMENT CAPITAL (92 735) (44 882)
INTEREST, TAX AND DIVIDEND (469 582) (483 346)
INVESTMENT IN FUTURE OPERATIONS (491 269) (212 270)
NET CASH (OUTFLOW)/INFLOW
BEFORE FINANCING ACTIVITIES (541 356) 52 960
DECLARATION OF DIVIDEND NO. 16
NOTICE IS HEREBY GIVEN THAT A FINAL DIVIDEND OF 30,0 CENTS PER SHARE HAS BEEN
DECLARED, PAYABLE TO SHAREHOLDERS REGISTERED IN THE BOOKS OF THE COMPANY AT THE
CLOSE OF BUSINESS ON FRIDAY 10 DECEMBER 1999. THIS DIVIDEND, TOGETHER WITH THE
DIVIDEND OF 18,0 CENTS PER SHARE WHICH WAS DECLARED ON 11 MAY 1999, MAKES A
TOTAL DISTRIBUTION IN RESPECT OF THE FINANCIAL YEAR ENDED 30 SEPTEMBER 1999 OF
48,0 CENTS PER SHARE.
THE TRANSFER BOOKS AND REGISTER OF ORDINARY SHAREHOLDERS WILL BE CLOSED FROM 11
DECEMBER TO 19 DECEMBER 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 7 JANUARY
2000. DIVIDEND WARRANTS WILL BE POSTED TO SHAREHOLDERS ON OR ABOUT 4 JANUARY
2000 FOR PAYMENT ON 7 JANUARY 2000.
BY ORDER OF THE BOARD
G D KNOX
SECRETARY
9 NOVEMBER 1999
DIRECTORS :
R A WILLIAMS (CHAIRMAN) D E COOPER (DEPUTY CHAIRMAN) D G MACLEOD (MANAGING
DIRECTOR) W M A BUCHANAN G J CLARK (AUSTRALIAN) B P CONNELLAN 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 RAVNO J T RUSSELL B M STUART
REGISTERED OFFICE
ILLOVO SUGAR PARK, 1 MONTGOMERY DRIVE, MT. EDGECOMBE, 4300
POSTAL ADDRESS :
P 0 BOX 194, DURBAN, 4000
TRANSFER SECRETARIES :
MERCANTILE REGISTRARS LIMITED, 11 DIAGONAL STREET, JOHANNESBURG, 2001
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