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ILLOVO SUGAR LIMITED
INTERIM REPORT FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2000
REVIEW
HEADLINE EARNINGS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2000 OF R103.9 MILLION
WERE 22% LOWER THAN FOR THE SAME PERIOD IN THE PREVIOUS YEAR. THE HIGHER
AVERAGE NUMBER OF SHARES IN ISSUE, FOLLOWING THE ACQUISITION OF MONITOR SUGAR,
RESULTED IN HEADLINE EARNINGS PER SHARE DECLINING BY 27% TO 31.5 CENTS WHICH IS
SLIGHTLY HIGHER THAN THAT ACHIEVED IN THE SIX MONTHS TO MARCH 2000. TURNOVER
INCREASED SUBSTANTIALLY, DUE MAINLY TO THE INCLUSION OF MONITOR SUGAR AS PART
OF THE GROUP FOR THE WHOLE PERIOD UNDER REVIEW. THIS INCLUSION, HOWEVER, DID
NOT BENEFIT OPERATING PROFITS DUE TO ABNORMAL COST INCREASES AT THIS OPERATION.
GROUP OPERATING PROFITS SHOW A REDUCTION OF 2% WHICH WITH INCREASED FINANCING
COSTS RESULTS IN PROFIT BEFORE ABNORMAL ITEMS DECLINING BY 11%.
AS THE SUGAR SEASON RUNS FROM 1 APRIL TO 31 MARCH, THE EARNINGS FROM CANE
GROWING AND SUGAR PRODUCTION INCORPORATED IN THE RESULTS COMPRISE ONE HALF OF
THE LATEST ESTIMATE OF EARNINGS FOR THE SUGAR SEASON ENDING 31 MARCH 2001.
GROUP SUGAR PRODUCTION IS FORECAST TO BE 1 970 000 TONS WHICH IS 150 000 TONS
HIGHER THAN THE PREVIOUS SEASON AS A RESULT OF IMPROVED OUTPUT IN EVERY COUNTRY
OF OPERATION WITH THE EXCEPTION OF MOZAMBIQUE, WHERE THE FACTORY AT MARAGRA IS
CURRENTLY MOTHBALLED FOLLOWING THE FLOODING OF GROWERS' CANELAND EARLIER THIS
YEAR. COMPANY CANE PRODUCTION IS FORECAST TO BE 4,790 MILLION TONS WHICH IS
500 000 TONS HIGHER THAN LAST SEASON. THE IMPROVED CANE AND SUGAR OUTPUT IS
MAINLY AS A RESULT OF BETTER WEATHER CONDITIONS, IMPROVED AGRICULTURAL
PERFORMANCE AND BETTER FACTORY RECOVERIES, AS WELL AS INCREASED PRODUCTION BY
MONITOR SUGAR LARGELY AS A RESULT OF THE NEW DESUGARISATION PLANT.
GOOD PRODUCTION PERFORMANCE IN LINE WITH THE PREVIOUS SEASON IS FORECAST FOR
THE FURFURAL AND DIACETYL DOWNSTREAM PLANTS. SIGNIFICANTLY INCREASED SALES OF
ELECTRICITY INTO THE NATIONAL GRID HAVE BEEN ACHIEVED IN MAURITIUS. THE ETHYL
ALCOHOL AND LACTULOSE RESULTS HAVE BEEN BELOW EXPECTATIONS.
THE IMPROVED WORLD PRICE AND WEAKER RAND HAVE IMPACTED FAVOURABLY ON SUGAR
PRODUCTION RESULTS FROM SOUTH AFRICA. THIS, HOWEVER, HAS BEEN OFFSET BY
DECREASED SUGAR REVENUE IN MAURITIUS AS A RESULT OF THE WEAK EURO, INCREASED
EXPOSURE TO THE WORLD SUGAR PRICE IN SWAZILAND, DEPRESSED DOMESTIC SUGAR PRICES
AND SIGNIFICANTLY HIGHER FUEL PRICES IN THE UNITED STATES, AND CONTINUING LOW
WORLD PRICES FOR DOWNSTREAM PRODUCTS.
FOR THE PERIOD UNDER REVIEW THE CONTRIBUTIONS TO GROUP OPERATING PROFITS
COMPRISED 56% FROM SUGAR MANUFACTURE, 29% FROM CANE GROWING, AND 15% FROM
DOWNSTREAM AND OTHER OPERATIONS.
DESPITE STRONG CASH FLOWS FROM OPERATIONS, BORROWINGS HAVE INCREASED AS A
RESULT OF EXPANSION CAPITAL EXPENDITURE AND INCREASED SEASONAL WORKING CAPITAL
IN SOUTH AFRICA. BORROWINGS AT THE FINANCIAL YEAR END ARE EXPECTED TO REFLECT
A YEAR ON YEAR REDUCTION.
IN MOZAMBIQUE CONSIDERABLE PROGRESS HAS BEEN MADE AT MARAGRA WITH
INFRASTRUCTURE REPAIRS INCLUDING THE COMPLETE RE-INSTATEMENT OF THE BERM WALL,
AND THE RE-PLANTING OF CANELANDS.
DIVIDEND
AN INTERIM DIVIDEND OF 15.0 CENTS PER SHARE HAS BEEN DECLARED.
PROSPECTS
THE LOW DOMESTIC SUGAR PRICES AND HIGH FUEL COSTS IN THE UNITED STATES, THE
IMPACT OF THE WEAK EURO ON EXPORT REVENUE IN MAURITIUS AND MALAWI, THE
DEVALUATION OF THE KWACHA IN MALAWI, TOGETHER WITH INCREASED FINANCE COSTS, ARE
EXPECTED TO REDUCE HEADLINE EARNINGS PER SHARE FOR THE FULL YEAR BY 30%
COMPARED TO THOSE ACHIEVED IN THE YEAR TO 31 MARCH 2000.
THE EXPANDED ASSET BASE, PRODUCTIVITY GAINS AND IMPROVEMENTS IN THE MARKET
PLACE, HOWEVER, ARE EXPECTED TO IMPACT FAVOURABLY ON EARNINGS IN THE NEXT
FINANCIAL YEAR.
ON BEHALF OF THE BOARD
R A WILLIAMS D G MACLEOD DURBAN
CHAIRMAN MANAGING DIRECTOR 8 NOVEMBER 2000
GROUP INCOME STATEMENT
UNAUDITED AUDITED
SIX MONTHS ENDED SIX MONTHS ENDED
30 SEPTEMBER 31 MARCH
2000 1999 CHANGE 2000
NOTES RM RM % RM
REVENUE 2 454.5 1 889.1 30 1 971.2
PROFIT FROM OPERATIONS 286.4 293.1 (2) 286.0
NET FINANCING COSTS 1 86.7 69.2 88.7
PROFIT BEFORE ABNORMAL ITEMS 199.7 223.9 (11) 197.3
ABNORMAL ITEMS 2 9.7 127.2 15.2
PROFIT AFTER ABNORMAL ITEMS 209.4 351.1 212.5
TAXATION 45.1 46.0 51.6
PROFIT AFTER TAXATION 164.3 305.1 160.9
ATTRIBUTABLE TO OUTSIDE S/HOLDERS
IN SUBSIDIARY COMPANIES 49.8 44.7 45.3
NET PROFIT ATTRIBUTABLE TO S/HOLDERS
IN ILLOVO SUGAR LIMITED 114.5 260.4 115.6
DETERMINATION OF HEADLINE
EARNINGS:
NET PROFIT ATTRIBUTABLE TO S/HOLDERS 114.5 260.4 115.6
ADJUSTED FOR:
PROFIT ON DISPOSAL OF PROPERTY, PLANT 10.6 126.8 8.8
AND EQUIPMENT
PROFIT ON DISPOSAL OF JOINT VENTURE - - 5.1
HEADLINE EARNINGS 103.9 133.6 (22) 101.7
NO OF SHARES IN ISSUE (000) 329 979.7 329 708.5 329 953.4
WEIGHTED AVERAGE NUMBER OF SHARES
ON WHICH NET PROFIT AND HEADLINE
EARNINGS PER SHARE /
ARE BASED (000) 329 971.0 307 805.0 329 849.2
NET PROFIT PER SHARE (CENTS) 34.7 84.6 35.0
HEADLINE EARNINGS PER SHARE (CENTS) 31.5 43.4 (27) 30.8
DIVIDEND PER SHARE (CENTS)
- INTERIM 15.0
- FINAL 30.0 18.0
ABRIDGED GROUP BALANCE SHEET
UNAUDITED AUDITED
30 SEPTEMBER 31 MARCH
2000 1999 2000
RM RM RM
ASSETS
NON-CURRENT ASSETS 2 954.1 2 518.1 2 768.7
PROPERTY, PLANT AND EQUIPMENT 2 635.4 2 339.7 2 514.7
INVESTMENTS 318.7 178.4 254.0
CURRENT ASSETS 2 671.1 2 087.6 1 834.6
TOTAL ASSETS 5 625.2 4 605.7 4 603.3
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 1 271.8 953.3 1 156.6
INTEREST OF OUTSIDE S/HOLDERS IN
SUBSIDIARIES 444.1 437.2 379.8
DEFERRED TAXATION 513.4 374.7 472.6
NET BORROWINGS 2 083.0 1 479.7 1 470.2
CURRENT LIABILITIES 1 312.9 1 360.8 1 124.1
TOTAL EQUITY AND LIABILITIES 5 625.2 4 605.7 4 603.3
OTHER SALIENT FEATURES
OPERATING MARGIN (%) 11.7 15.5 14.5
NET WORTH PER SHARE (CENTS) 385.4 289.1 350.5
GEARING (%) 121.4 106.4 95.7
DEPRECIATION 91.4 81.7 86.9
CAPITAL EXPENDITURE 145.8 145.0 154.5
- EXPANSION 75.5 98.2 74.3
- REPLACEMENT 70.3 46.8 80.2
CAPITAL COMMITMENTS 206.1 264.6 187.7
- CONTRACTED 40.0 44.9 60.0
- APPROVED BUT NOT CONTRACTED 166.1 219.7 127.7
LEASE COMMITMENTS 645.4 590.0 598.9
- LAND AND BUILDINGS 533.0 549.0 506.1
- OTHER 112.4 41.0 92.8
CONTINGENT LIABILITIES 233.9 6.9 202.3
GROUP CASH FLOW STATEMENT
UNAUDITED AUDITED
SIX MONTHS ENDED SIX MONTHS ENDED
30 SEPTEMBER 31 MARCH
2000 1999 2000
RM RM RM
CASH OPERATING PROFIT 385.0 380.5 376.2
WORKING CAPITAL REQUIREMENTS (596.7) (598.5) 78.1
NET FINANCING COSTS INCLUDING
CAPITALISED INTEREST (87.8) (76.0) (91.9)
TAXATION PAID (19.1) 2.0 (32.0)
CASH (UTILISED) /AVAILABLE FROM
OPERATIONS (318.6) (292.0) 330.4
DIVIDENDS PAID (79.2) (127.4) (117.6)
NET CASH (OUTFLOW)/INFLOW FROM
OPERATING ACTIVITIES (397.8) (419.4) 212.8
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (202.2) (193.2) (174.2)
NET CASH (OUTFLOW)/INFLOW BEFORE
FINANCING ACTIVITIES (600.0) (612.6) 38.6
NET CASH INFLOW FROM FINANCING
ACTIVITIES 385.1 675.3 128.2
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (214.9) 62.7 166.8
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE PERIOD 239.0 7.9 70.6
FOREIGN CURRENCY TRANSLATION ADJUSTMENT
ON OPENING BALANCE 2.4 - 1.6
CASH AND CASH EQUIVALENTS AT END OF
THE PERIOD 26.5 70.6 239.0
STATEMENT OF CHANGES IN EQUITY
UNAUDITED AUDITED
SIX MONTHS ENDED SIX MONTHS ENDED
30 SEPTEMBER 31 MARCH
2000 1999 2000
RM RM RM
SHARE CAPITAL AND SHARE PREMIUM
BALANCE AT BEGINNING OF THE PERIOD 247.1 17.4 246.0
MOVEMENT DURING THE PERIOD (0.1) 228.6 1.1
BALANCE AT THE END OF THE PERIOD 247.0 246.0 247.1
NON-DISTRIBUTABLE RESERVES
BALANCE AT BEGINNING OF THE PERIOD 399.5 147.3 242.6
MOVEMENT DURING THE PERIOD 60.0 95.3 156.9
BALANCE AT END OF THE PERIOD 459.5 242.6 399.5
RETAINED SURPLUS
BALANCE AT BEGINNING OF THE PERIOD 510.0 430.2 464.7
DIVIDEND DECLARED (49.5) (98.9) (59.4)
MOVEMENT DURING THE PERIOD 104.8 133.4 104.7
BALANCE AT END OF THE PERIOD 565.3 464.7 510.0
ORDINARY SHAREHOLDERS' EQUITY 1 271.8 953.3 1 156.6
NOTES UNAUDITED AUDITED
SIX MONTHS ENDED SIX MONTHS ENDED
30 SEPTEMBER 31 MARCH
2000 1999 2000
RM RM RM
1. NET FINANCING COSTS
INTEREST PAID 122.8 77.9 124.5
INTEREST RECEIVED (36.2) (8.9) (39.4)
DIVIDEND INCOME (3.2) (2.6) (2.4)
PREFERENCE DIVIDEND PAID 4.4 9.6 6.8
87.8 76.0 89.5
INTEREST INCURRED PRIOR TO THE
COMMENCEMENT OF PRODUCTION AND
CAPITALISED AS PART OF THE COSTS
OF PROPERTY, PLANT AND EQUIPMENT (1.1) (6.8) (0.8)
86.7 69.2 88.7
2. ABNORMAL ITEMS
PROFIT ON DISPOSAL OF PROPERTY, PLANT
AND EQUIPMENT 9.7 127.2 8.0
PROFIT ON DISPOSAL OF JOINT VENTURE - - 7.2
ABNORMAL PROFIT BEFORE TAXATION 9.7 127.2 15.2
TAXATION - - (3.0)
MINORITY SHARE OF ABNORMAL ITEMS AFTER
TAXATION - (0.2) (1.3)
ABNORMAL PROFIT ATTRIBUTABLE TO
SHAREHOLDERS IN ILLOVO SUGAR LIMITED 9.7 127.0 10.9
DECLARATION OF DIVIDEND NO. 18
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, 8 DECEMBER 2000.
THE TRANSFER BOOKS AND REGISTER OF ORDINARY SHAREHOLDERS WILL BE CLOSED FROM 9
DECEMBER TO 17 DECEMBER 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, 12
JANUARY 2001. DIVIDEND WARRANTS WILL BE POSTED TO SHAREHOLDERS ON OR ABOUT
TUESDAY, 9 JANUARY 2001 FOR PAYMENT ON FRIDAY, 12 JANUARY 2001.
BY ORDER OF THE BOARD
G D KNOX
SECRETARY
8 NOVEMBER 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, KWAZULU-NATAL, 4300
POSTAL ADDRESS :
P O BOX 194, DURBAN, 4000
TRANSFER SECRETARIES :
MERCANTILE REGISTRARS LIMITED, 11 DIAGONAL STREET, JOHANNESBURG, 2001
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