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ILLOVO SUGAR LIMITED - FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2001

Release Date: 22/05/2001 07:05
Code(s): ILV
Wrap Text
Illovo Sugar Limited
(Registration number 1906/000622/06)

Profit and Dividend announcement for the year ended 31 March 2001 REVIEW
Record sugar and furfural production was achieved during the past
year. Further progress was made in enhancing the company's
position as a leading global low cost sugar producer through its
acquisition of Zambia Sugar and the disposal of its Mauritian
sugar interest with effect from April 2001. This acquisition is
a strategic fit for the group as Zambia Sugar is one of the
world's lowest cost producers with excellent agricultural
conditions, access to secure water supplies, and good factory
operations. The sale of the group's shareholding in Mon Tresor
and Mon Desert Limited involved the disposal of a relatively high
cost sugar producer, with limited expansion potential, which was
heavily reliant on sales at preferential prices into Europe and
the United States. In addition the company was dependant for a
significant part of its earnings on its hotel operations which
were non-core to Illovo. The sale proceeds have been used to
reduce the group's borrowings and finance the acquisition of Zambia Sugar.
In the financial year ended 31 March 2001, the group achieved
turnover of R4.7 billion, operating profit of R580.5 million and
headline earnings of R222.9 million. Compared to the pro forma
results for the 12 month period to 31 March 2000, turnover
increased by 23% with operating profit and headline earnings
declining by 6% and 20% respectively. Earnings per share of
67.5 cents were 23% less than those achieved in the previous
12 months. The reduced earnings were the result of disappointing
production in Malawi and Swaziland caused by adverse weather
conditions in the latter part of the season, significantly
depressed sugar prices and high energy costs in the United
States, the impact of the weaker Euro on preferential market
sales especially in Mauritius, and increased finance costs. The
effective tax rate (excluding abnormal items) was 24.2%, which
was 4.3% higher than that applicable in the previous year. This
rate is expected to be sustainable in future years. Attributable
profit of R246.5 million includes profit on the sale of assets of
R23.6 million. Net group borrowings of R1 483 million were
R45 million above those at the end of the previous financial
year, whilst financing costs increased by R26.2 million.
Borrowings are anticipated to reduce materially in the year ahead.
The contribution to operating profits by sugar manufacture was
59%, cane growing 23% and downstream and other operations 18%,
whilst contributions by country, excluding Tanzania and
Mozambique which are presently treated as investments, were South
Africa 39%, Malawi 31%, Swaziland 19%, Mauritius 8% and the United States 3%.
The group's productive base continued to expand with record sugar
production of 1.921 million tons being achieved in the
2000/01 season. The increase over last year was attributable to
good growing conditions and improved factory performance in South
Africa, increased production in the United States and Tanzania,
and a return to near normal operating conditions in Mauritius
following the previous year's drought. Group cane production of
4.610 million tons was marginally above the previous record of
4.558 million tons set in 1998/99, with good increases in
production over last season being achieved in South Africa, Malawi, Mauritius and Tanzania.
The downstream plant at Sezela performed particularly well,
achieving record production of 21 674 tons of furfural as well as
good outputs of furfuryl alcohol and diacetyl. Ethyl alcohol
production at the Merebank plant made substantial progress in
both product quality and quantity with the operation set to
realise the full benefit of its recent expansion during the
forthcoming year. During the last quarter of the financial year
global prices for downstream products improved significantly
from their recent lows. The contribution from this sector of the business increased by 32% year on year.
At Monitor Sugar, the final phase of the molasses desugarisation
project was completed with the commissioning of the molasses
chemical softening plant. The benefit of the additional sugar
which can be obtained through this process will be realised in future years.
Following the flood in February 2000, which caused extensive
damage to the newly planted cane fields, excellent progress has
been made with the rehabilitation of the growers' agricultural
estates at Maragra in Mozambique. As a result, the sugar
factory, which was mothballed last year, will be recommissioned
for a short milling season commencing in August 2001 during which
approximately 100 000 tons of cane will be crushed and about 12 000 tons of sugar produced.
Last year saw an encouraging improvement in world prices for both
sugar and downstream products. Sugar production problems in the
2000/01 season, primarily as a result of adverse weather
conditions, have occurred in Asia, Australia, Cuba and most
notably Brazil. Accordingly world sugar production is expected
to be two million tons below the current world consumption
estimate. This has had the effect of lifting the world price
from the depressed levels experienced in recent years. Although
the present price has declined from the highs achieved in
December 2000 the current price is still well above the levels of a year ago.
The group supplies sugar and downstream products to a
considerable range of domestic, regional and export markets.
Sales to domestic markets contributed 62% to total revenue while
exports to 83 countries contributed 38%. 64% of sugar production
by volume and 83% by value was sold into stable domestic or premium priced export markets.
During the year R304 million was spent on capital projects,
including R52 million in respect of major expansion projects at Monitor Sugar in the United States and in Malawi. Prospects
Normal growing conditions together with the acquisition of Zambia
Sugar have boosted cane production forecasts for the 2001/02
season by 800 000 tons to approximately 5.4 million tons. This
combined with focused maintenance programmes, factory
debottlenecking projects and improvements in sugar recoveries is
expected to increase sugar production by around 250 000 tons to
almost 2.2 million tons. In respect of downstream production,
furfural is expected to be marginally down due to a shorter
crushing season at Sezela, whilst diacetyl, acetoin, syrup and
ethyl alcohol are all expected to reflect increased levels of output.
Improved world sugar and downstream product prices and the weaker
Rand, together with the increased levels of production, are
expected to result in good growth in headline earnings being achieved in 2002. DIVIDEND
A final dividend of 19.0 cents per share has been declared which
gives a total distribution of 34.0 cents per share for the full year. On behalf of the Board R A Williams D G MacLeod Durban Chairman Managing Director 21 May 2001 CHANGE OF FINANCIAL YEAR
In the previous financial period, the group changed the end of
its financial year from 30 September to 31 March, to coincide the
financial year with the sugar seasons of its African-based operations.
Consequently, the previous audited reporting period covered by
this profit and dividend announcement is of six months duration
only. This needs to be taken into account when making
comparisons with the current financial year. To provide a better
understanding, pro forma figures for the year ended 31 March
2000, as compared with those of the current financial year, are also provided. DECLARATION OF DIVIDEND NO. 19
Notice is hereby given that a dividend of 19.0 cents per share
has been declared, payable to shareholders registered in the
books of the company at the close of business on Friday, 15 June
2001. This dividend, together with the dividend of 15.0 cents
per share which was declared on 8 November 2000, makes a total
distribution in respect of the financial year ended 31 March 2001 of 34.0 cents.
The transfer books and register of ordinary shareholders will be
closed from 16 June to 24 June 2001, 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, 13 July 2001. Dividend warrants will be posted to
shareholders on or about Tuesday, 10 July 2001 for payment on Friday, 13 July 2001. By order of the Board G D Knox Secretary 21 May 2001 Directors :
R A Williams (Chairman), D G MacLeod (Managing Director),
W M A Buchanan, G J Clark (Australian), D E Cooper,
B P Connellan, R D Hamilton, N M Hawley, R L Hetzler (USA),
G D Knox (British), D Konar, D D B Mkhwanazi, A R Mpungwe
(Tanzanian), R A Norton, A B Ravn , J T Russell, B M Stuart Registered office :
Illovo Sugar Park, 1 Montgomery Drive, Mount Edgecombe, 4300 Postal address : P O Box 194, Durban, 4000 Transfer Secretaries :
Mercantile Registrars Limited, 11 Diagonal Street, Johannesburg, 2001
This report has been prepared in compliance with South African statements of General Accepted Accounting Practice.
In the year under review the group changed its accounting policies for the provision of post retirement benefits, leave pay and dividends payable and where applicable prior year figures have been restated. GROUP INCOME STATEMENT
Year ended Six months
ended
31 March 31 March
2001 2000 Change 2000
Rm Rm % Rm Pro forma
Audited Unaudited Audited
Restated Restated
Revenue 4,735.1 3,842.3 23 1,953.2
Profit from 580.5 618.5 (6) 278.9 operations
Net financing 184.1 157.9 88.8 costs
Profit before 396.4 460.6 (14) 190.1 abnormal items
Abnormal items 27.9 142.3 15.2
Profit after 424.3 602.9 205.3 abnormal items
Taxation 96.0 94.6 49.0
Profit after 328.3 508.3 156.3 taxation
Attributable to 81.8 90.3 45.3 outside shareholders in subsidiaries Net profit attributable to shareholders
in Illovo Sugar 246.5 418.0 111.0 Limited
Headline 222.9 277.3 (20) 97.1 earnings Determination of headline earnings :
Net profit 246.5 418.0 111.0 attributable to shareholders Adjusted for :
Profit on sale 23.6 135.6 8.8 of property, plant and equipment
Profit on sale - 5.1 5.1 of investment
Headline 222.9 277.3 (20) 97.1 earnings FINANCIAL RATIOS AND STATISTICS
Headline 67.5 87.2 (23) 29.4 earnings per share (cents)
Dividend per 34.0 48.0 18.0 share (cents)
Gearing (%) 85.7 92.4 92.4
No. of shares 330.2 330.0 330.0 in issue (millions)
Weighted 330.0 318.0 329.8 average no. of shares in issue (millions) ABRIDGED GROUP BALANCE SHEET 31 March 2001 2000 Rm Rm Audited Audited Restated ASSETS Non-current assets 2,907.0 2 817.4 Current assets 1,996.4 1 767.0 4,903.4 4 584.4 EQUITY AND LIABILITIES Capital and reserves 1,333.6 1 184.7 Interest of outside 397.3 371.5 shareholders in subsidiary companies Deferred taxation 456.1 463.6 Net borrowings 1,482.9 1 437.7 Current liabilities 1,233.5 1 126.9 4,903.4 4 584.4 ABRIDGED GROUP CASH FLOW STATEMENT Year 6 months ended ended 31 March 31 March 2001 2000 Rm Rm Audited Audited Restated Cash flows from operating and investing activities Cash operating profit 860.6 405.8 Working capital requirements (203.0) 126.9 Replacement capital (251.2) (155.7) Interest, tax and dividend (360.6) (241.9) Investment in future operations (69.4) (112.7) Other movements 44.7 18.1 Net cash inflow before 21.1 40.5 financing activities

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