Wrap Text
ILLOVO SUGAR LIMITED
PROFIT AND DIVIDEND ANNOUNCEMENT
FOR THE PERIOD ENDED 31 MARCH 2000
REVIEW
RECORD SUGAR, FURFURAL, DIACETYL AND LACTULOSE PRODUCTION WAS ACHIEVED DURING
THE PAST SEASON AND NEW DOWNSTREAM PRODUCTS, ACETOIN AND 2,3-PENTANEDIONE WERE
ADDED TO THE COMPANY'S FLAVOURANTS RANGE. HOWEVER, THE GROUP HAD A
DISAPPOINTING SIX-MONTH PERIOD AS A RESULT OF THE CONTINUED LOW LEVEL OF WORLD
PRICES FOR SUGAR AND DOWNSTREAM PRODUCTS. THE GROUP ACHIEVED TURNOVER OF
R1.971 BILLION AND HEADLINE EARNINGS OF R101.7 MILLION FOR THE SIX-MONTH PERIOD
ENDED 31 MARCH 2000. HEADLINE EARNINGS PER SHARE WERE 30.8 CENTS.
FOLLOWING THE UNBUNDLING OF C G SMITH LIMITED IN FEBRUARY 2000 THE GROUP'S
FINANCIAL YEAR HAS BEEN CHANGED TO COINCIDE WITH THE SUGAR SEASONS OF ITS
AFRICAN-BASED OPERATIONS, ALLOWING FOR GREATER SYNERGY BETWEEN OPERATIONAL AND
FINANCIAL PLANNING. PRO FORMA FIGURES FOR THE 12-MONTH PERIOD ENDED 31 MARCH
2000 AS COMPARED TO THE CORRESPONDING PERIOD ENDED 31 MARCH 1999 REFLECT
HEADLINE EARNINGS INCREASING BY 14% TO R286.6 MILLION. THE LOWER INCREASE IN
HEADLINE EARNINGS PER SHARE OF 4.0% TO 90.1 CENTS IS AS A RESULT OF THE HIGHER
AVERAGE NUMBER OF SHARES IN ISSUE FOLLOWING THE PURCHASE OF MONITOR SUGAR.
TURNOVER OF R3.9 BILLION WAS MARGINALLY ABOVE THAT ACHIEVED DURING THE PREVIOUS
12 MONTHS WITH OPERATING PROFIT DECREASING BY 15% LARGELY AS A RESULT OF LOWER
WORLD SUGAR AND DOWNSTREAM PRODUCT PRICES. HOWEVER, LOWER INTEREST RATES
RESULTED IN FINANCING COSTS DECREASING BY 15% TO R157.9 MILLION AND TAXATION
DROPPED SIGNIFICANTLY FROM R188.1 MILLION IN 1999 TO R99.4 MILLION AS A RESULT
OF A LOWER TAX RATE IN A NUMBER OF COUNTRIES IN WHICH THE GROUP OPERATES AND
ALLOWANCES ON CAPACITY EXPANSIONS. ATTRIBUTABLE PROFIT OF R427.3 MILLION
INCLUDES ABNORMAL ITEMS OF R142.3 MILLION ARISING FROM THE DISPOSAL OF
NON-STRATEGIC PROPERTIES AND THE COMPANY'S 50% SHARE IN ALLIANCE PEROXIDE.
THE CONTRIBUTION TO GROUP OPERATING PROFITS DURING THE 12 MONTHS FROM SUGAR
MANUFACTURE WAS 48.1%, CANE GROWING 35.7% AND DOWNSTREAM AND OTHER OPERATIONS
16.2%, WHILST THE CONTRIBUTION BY COUNTRY WAS SOUTH AFRICA 31.4%, MALAWI 26.7%,
SWAZILAND 19.2%, MAURITIUS 13.6% AND THE UNITED STATES 9.1% (NINE MONTHS OF
OPERATIONS ATTRIBUTABLE TO ILLOVO).
THE GROUP'S SUGAR IS SOLD INTO DOMESTIC MARKETS, PREMIUM PRICED EXPORT MARKETS
AND THE WORLD FREE MARKET. A MAJOR INHERENT STRENGTH OF THE GROUP IS THAT
APPROXIMATELY 70% OF SUGAR PRODUCTION BY VOLUME AND 85% BY VALUE IS SOLD INTO
DOMESTIC OR PREMIUM PRICED EXPORT MARKETS, AND NOT INTO THE WORLD FREE MARKET.
THE GROUP'S RANGE OF PRODUCTS IS SOLD INTO 77 COUNTRIES WORLDWIDE WITH EXPORTS
CONTRIBUTING 35% OF TOTAL TURNOVER. INCORPORATING REVENUE EARNED BY THE GROUP'S
OPERATIONS IN THE UNITED STATES INCREASES THE PROPORTION OF TURNOVER RECEIVED
IN DOLLAR-BASED CURRENCIES TO 45%.
THE WORLD SUGAR MARKET HAS BEEN CHARACTERISED BY FALLING PRICES FOR THE PAST
2,5YEARS WITH THE RAW SUGAR PRICE DECLINING TO A 13 YEAR LOW DURING THE PAST
SEASON. FEW COUNTRIES WORLDWIDE ARE ABLE TO PRODUCE SUGAR AT THIS LEVEL OF
WORLD PRICE AND ALMOST WITHOUT EXCEPTION ALL PRODUCING COUNTRIES PROTECT THEIR
DOMESTIC SUGAR MARKET THROUGH TARIFFS IN ONE FORM OR ANOTHER. AS A MAJOR
EXPORTER TO THE WORLD MARKET, THE REDUCED PRICE IMPACTED NEGATIVELY ON SUGAR
REVENUE EARNED BY THE SOUTH AFRICAN SUGAR OPERATIONS. SWAZILAND WAS AFFECTED
TO A MUCH LESSER EXTENT. THERE ARE SIGNS THAT THE IMBALANCE BETWEEN SUPPLY AND
DEMAND IS BEGINNING TO CORRECT AS A RESULT OF WEATHER RELATED PHENOMENA AND
UNATTRACTIVE EXPORT RETURNS. THE FUTURES MARKET TENDS TO ANTICIPATE THESE
EVENTS AND IN RECENT WEEKS THE WORLD SUGAR FUTURES PRICE HAS ADVANCED ON LAST
YEAR'S LOWS.
DURING THE PAST YEAR CAPITAL EXPENDITURE AMOUNTING TO R311 MILLION WAS MADE,
INCLUDING R189 MILLION IN RESPECT OF 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.
THE BORROWINGS ASSUMED ON THE ACQUISITION OF MONITOR SUGAR, TOGETHER WITH THE
EXPANSION OF CAPACITY THROUGHOUT THE GROUP AND INCREASED WORKING CAPITAL
REQUIREMENTS RESULTED IN BORROWINGS INCREASING TO R1.468 BILLION. HOWEVER,
STRONG OPERATING CASH GENERATION OF R792.6 MILLION FOR THE YEAR WAS AGAIN A
POSITIVE FEATURE OF THE RESULTS.
THE MARAGRA MILL IN MOZAMBIQUE WAS RECOMMISSIONED DURING THE PAST SEASON.
HOWEVER, THE AGRICULTURAL ESTATE, WHICH IS FARMED BY INDEPENDENT GROWERS, WAS
FLOODED DURING FEBRUARY THIS YEAR. THE STATUS OF THE AREAS UNDER CANE IS STILL
UNCERTAIN AND RE-ESTABLISHMENT OF THE FIELDS MAY BE NECESSARY ONCE THE FLOOD
WATERS HAVE COMPLETELY SUBSIDED AND THE AGRICULTURAL INFRASTRUCTURE HAS BEEN
RESTORED. THE FACTORY WAS NOT DAMAGED BUT THE PLANT WILL BE MOTHBALLED UNTIL
CANE SUPPLIES ARE RESTORED. THE FLOODING WILL NOT IMPACT ON GROUP RESULTS FOR
2001.
PROSPECTS
GOOD GROWING CONDITIONS, WITH ABOVE AVERAGE SUMMER RAINFALL IN THE
NON-IRRIGATED AREAS, HAVE BOOSTED CANE PRODUCTION FORECASTS. THIS COMBINED
WITH FOCUSED MAINTENANCE PROGRAMMES, IMPROVEMENTS IN SUGAR RECOVERIES AND
CAPACITY EXPANSIONS IN MALAWI AND THE UNITED STATES IS EXPECTED TO INCREASE
SUGAR PRODUCTION BY AROUND 150 000 TONS TO ALMOST 2 MILLION TONS. DOWNSTREAM
PRODUCTION IS EXPECTED TO BE SIMILAR TO THE RECORD LEVELS THAT WERE ACHIEVED
DURING THE PAST SEASON.
AS STATED EARLIER THE WORLD SUGAR FUTURES PRICE HAS IMPROVED FROM ITS PREVIOUS
VERY LOW LEVELS. HOWEVER A FURTHER IMPROVEMENT IN BOTH WORLD SUGAR AND
DOWNSTREAM PRODUCT PRICES IN RAND TERMS IS NECESSARY IF GROWTH IN HEADLINE
EARNINGS IS TO BE ACHIEVED IN 2001.
DIVIDEND
A DIVIDEND OF 18 CENTS PER SHARE HAS BEEN DECLARED. THIS IS THE SAME AS WAS
DECLARED THIS TIME LAST YEAR.
ON BEHALF OF THE BOARD
R A WILLIAMS D G MACLEOD DURBAN
CHAIRMAN MANAGING DIRECTOR 17 MAY 2000
INCOME STATEMENTS
AUDITED FOR THE SIX MONTHS ENDED 31 MARCH 2000
SIX MONTHS
ENDED YEAR ENDED
31 MARCH 30 SEPTEMBER
2000 1999
RM RM
REVENUE 1,971.2 3,799.2
PROFIT FROM OPERATIONS 286.0 728.7
NET FINANCING COST 88.7 174.4
PROFIT BEFORE ABNORMAL ITEMS 197.3 554.3
ABNORMAL ITEMS 15.2 132.5
PROFIT AFTER ABNORMAL ITEMS 212.5 686.8
TAXATION 51.6 140.2
PROFIT AFTER TAXATION 160.9 546.6
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS IN SUBSIDIARIES 45.3 117.1
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
IN ILLOVO SUGAR LIMITED 115.6 429.5
DETERMINATION OF HEADLINE EARNINGS:
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS 115.6 429.5
ADJUSTED FOR:
PROFIT ON SALE OF INVESTMENT 5.1 -
PROFIT ON SALE OF FIXED ASSETS 8.8 133.4
HEADLINE EARNINGS 101.7 296.1
FINANCIAL RATIOS AND STATISTICS
HEADLINE EARNINGS PER SHARE (CENTS) 30.8 98.4
DIVIDEND PER SHARE (CENTS) 18.0 48.0
NET PROFIT PER SHARE (CENTS) 36.3 142.7
GEARING (%) 89.4 99.1
NO. OF SHARES IN ISSUE (M) 330.0 329.7
WEIGHTED AVERAGE NO. OF SHARES IN ISSUE (M) 329.8 301.0
INCOME STATEMENTS
UNAUDITED PRO FORMA FOR THE YEAR ENDED 31 MARCH 2000
YEAR ENDED
31 MARCH CHANGE
2000 1999 %
RM RM
REVENUE 3,860.4 3,833.6 1
PROFIT FROM OPERATIONS 632.5 745.6 (15)
NET FINANCING COST 157.9 185.9
PROFIT BEFORE ABNORMAL ITEMS 474.6 559.7 (15)
ABNORMAL ITEMS 142.3 21.4
PROFIT AFTER ABNORMAL ITEMS 616.9 581.1 6
TAXATION 99.4 188.1
PROFIT AFTER TAXATION 517.5 393.0 32
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS IN SUBSIDIARIES 90.2 119.0
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
IN ILLOVO SUGAR LIMITED 427.3 274.0 56
DETERMINATION OF HEADLINE EARNINGS:
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS 427.3 274.0 56
ADJUSTED FOR:
PROFIT ON SALE OF INVESTMENT 5.1 -
PROFIT ON SALE OF FIXED ASSETS 135.6 21.6
HEADLINE EARNINGS 286.6 252.4 14
FINANCIAL RATIOS AND STATISTICS
HEADLINE EARNINGS PER SHARE (CENTS) 90.1 86.7 4
DIVIDEND PER SHARE (CENTS) N/A N/A
NET PROFIT PER SHARE (CENTS) 134.4 94.1
GEARING (%) 89.4 60.1
NO. OF SHARES IN ISSUE (M) 330.0 291.3
WEIGHTED AVERAGE NO. OF SHARES IN ISSUE (M) 318.0 291.2
ABRIDGED BALANCE SHEET
31 MARCH 30 SEPTEMBER 31 MARCH
2000 1999 1999
RM RM RM
(AUDITED) (AUDITED) (UNAUDITED)
ASSETS
NON-CURRENT ASSETS 2 754.4 2 518.1 1 821.0
CURRENT ASSETS 1 850.3 2 087.6 992.7
4 604.7 4 605.7 2 813.7
EQUITY AND LIABILITIES
EQUITY INCLUDING MINORITY FUNDING 1 643.3 1 493.4 1 126.1
DEFERRED TAXATION 524.8 424.3 343.1
NET BORROWINGS 1 468.4 1 479.9 676.3
CURRENT LIABILITIES 968.2 1 208.1 668.2
4 604.7 4 605.7 2 813.7
ABRIDGED CASH FLOW STATEMENT
6 MONTHS
YEAR ENDED ENDED YEAR ENDED
31 MARCH 31 MARCH 30 SEPTEMBER
2000 2000 1999
RM RM RM
(UNAUDITED) (AUDITED) (AUDITED)
CASH FLOWS FROM OPERATING AND
INVESTING ACTIVITIES
CASH OPERATING PROFIT 792.6 385.9 870.7
WORKING CAPITAL REQUIREMENTS (529.0) 78.2 (358.5)
REPLACEMENT CAPITAL (121.9) (74.3) (92.7)
INTEREST, TAX AND DIVIDEND (461.0) (244.1) (469.6)
INVESTMENT IN FUTURE OPERATIONS (702.6) (135.5) (491.3)
NET CASH (OUTFLOW)/INFLOW BEFORE
FINANCING ACTIVITIES (1 021.9) 10.2 (541.4)
DECLARATION OF DIVIDEND NO. 17
NOTICE IS HEREBY GIVEN THAT A 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 THURSDAY, 15 JUNE 2000.
THE TRANSFER BOOKS AND REGISTER OF ORDINARY SHAREHOLDERS WILL BE CLOSED FROM 16
JUNE TO 25 JUNE 2000, 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, 14
JULY 2000. DIVIDEND WARRANTS WILL BE POSTED TO SHAREHOLDERS ON OR ABOUT
TUESDAY, 11 JULY 2000 FOR PAYMENT ON FRIDAY, 14 JULY 2000.
BY ORDER OF THE BOARD
G D KNOX
SECRETARY
17 MAY 2000
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 O BOX 194, DURBAN, 4000
TRANSFER SECRETARIES :
MERCANTILE REGISTRARS LIMITED, 11 DIAGONAL STREET, JOHANNESBURG, 2001
Sharenet Sites 
