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30 September 2001
Interim Report for the six months ended 30 September 2001
Company Registration No. 1906/000622/06
Review
The group achieved good results for the half year with
headline earnings of R146,1 million reflecting a 41%
improvement over the same period in the previous year.
Headline earnings per share of 44,2 cents represents a 40%
increase.
As the sugar season runs from 1 April to 31 March,
operational profits incorporated in the results comprise one
half of the latest estimate for the year ending 31 March
2002.
Group operating profits increased by 12% as a result of good
performances in South Africa and Zambia partly offset by
disappointing contributions from Malawi and Swaziland. Net
financing costs and the effective tax rate are similar to
last year.
Net borrowings have reduced by R321 million to R1 762
million, mainly as a result of strong cash flows from
operations and the disposal of the Mauritian business which
was partly offset by the acquisition of 89,1% of Zambia Sugar
Plc.
Group sugar production for the year is forecast to be 2 035
000 tons which is 115 000 tons higher than the previous
season. Company cane production is forecast to be 4 930 000
tons which is 350 000 tons higher than last season. The
acquisition of Zambia Sugar has boosted production forecasts
but growing conditions in South Africa, Swaziland and Malawi
have been below normal, which has resulted in cane and sugar
production estimates being less than previously anticipated
levels. In general the sugar factories have performed well
with improved recoveries being achieved. As usual the beet
slicing campaign at Monitor in the United States commenced in
September.
Downstream production performance at the furfural, diacetyl
and ethyl alcohol plants has been good although reduced cane
supplies have resulted in the estimated furfural output for
the season declining by around 7,5%.
Although the world sugar price has declined recently, the
earlier hedging of sugar sales has resulted in better export
sugar prices being achieved compared to the previous year.
In addition, downstream product prices are much improved.
These improved prices together with the weaker rand have
impacted favourably on earnings, particularly in South
Africa. The majority of sugar sales and currency for the
financial year has been priced forward.
For the period under review the contributions to group
operating profits comprised 64% from sugar manufacture, 21%
from cane growing and 15% from downstream and other
operations. It is pleasing that the profit from downstream
and other operations has improved, despite the loss of
contribution following the disposal of the Mauritian hotels.
Good progress has been made towards the commercialisation of
furfural as an agricultural chemical following the approval
and registration of the product by the South African
Department of Agriculture in respect of groundnut
applications. The registration programme for extending the
use of the product to other crops and other countries is in
process.
Dividend
An interim dividend of 20,0 cents per share (2000 : 15,0
cents) has been declared.
Prospects
The attainment of higher world sugar and downstream prices
compared to last year, together with the weaker rand and
improved sugar prices in the United States, are expected to
more than offset the lower than anticipated production
levels. Consequently, the company still expects to achieve
headline earnings growth of approximately 40% for the full
year, provided there are no material changes in exchange
rates or market conditions and the production estimate at
Monitor in the United States is achieved.
On behalf of the Board
R A Williams D G MacLeod Durban
Chairman Managing Director 14 November 2001
GROUP INCOME STATEMENTS
Unaudited Audited
Six months ended Year ended
30 September 31 March
2001 2000 Change 2001
Notes Rm Rm % Rm
Revenue 2 746.9 2 454.5 12 4 735.1
Profit before
financing costs
and taxation 321.3 286.4 12 580.5
Net financing costs 1 92.3 86.7 184.1
Profit before abnormal
Items 229.0 199.7 15 396.4
Abnormal items 2 30.5 9.7 27.9
Profit before taxation 259.5 209.4 24 424.3
Taxation 53.7 45.1 96.0
Profit after taxation 205.9 164.3 25 328.3
Attributable to outside
shareholders in
subsidiary companies 29.3 49.8 81.8
Net profit attributable
to shareholders
in Illovo Sugar Limited 176.6 114.5 54 246.5
Determination of headline
earnings :
Net profit attributable to
Shareholders 176.6 114.5 54 246.5
Adjusted for :
Profit on disposal of
property, plant and
equipment 5.3 10.6 23.6
Profit on disposal of
subsidiary companies 25.2 - -
Headline earnings 146.1 103.9 41 222.9
Number of shares in
issue (millions) 330.8 330.0 330.2
Weighted average number
of shares on which
net profit and headline
earnings per share
are based (millions) 330.4 330.0 330.0
Net profit per share (cents) 53.5 34.7 54 74.7
Headline earnings per
share (cents) 44.2 31.5 40 67.5
Dividend per share (cents) 20.0 15.0 33 34.0
BUSINESS SEGMENTAL ANALYSIS
Unaudited Audited
Six months ended Year ended
30 September 31 March
2001 2000 2001
Rm % Rm % Rm
Revenue
Sugar production 2,141.0 78 1,838.2 75 3 481.0
Cane growing 375.8 14 384.8 16 754.7
Downstream and other 230.1 8 231.5 9 499.4
2 746.9 2 454.5 4 735.1
Profit before financing
costs and taxation
Sugar production 204.9 64 160.4 56 342.2
Cane growing 66.6 21 83.0 29 129.0
Downstream and other 49.8 15 43.0 15 109.3
321.3 286.4 580.5
Notes to the Group Income Statements
Unaudited Audited
Six months ended Year ended
30 September 31 March
2001 2000 2001
Rm Rm Rm
1. Net financing costs
Interest paid 118.9 122.8 261.3
Interest received (26.3) (36.2) (72.0)
Dividend income - (3.2) (8.5)
Preference dividend paid - 4.4 5.1
Interest incurred prior
to the commencement
of production and capitalised
as part of the
cost of property, plant
and equipment (0.3) (1.1) (1.8)
92.3 86.7 184.1
2. Abnormal items
Profit on disposal
of property 5.3 9.7 27.9
Profit on disposal of
subsidiary companies 25.2 - -
Abnormal profit before
Taxation 30.5 9.7 27.9
Taxation - - -
Minority share of abnormal
items after taxation - - (3.8)
Abnormal profit attributable
to shareholders
in Illovo Sugar Limited 30.5 9.7 24.1
ABRIDGED GROUP BALANCE SHEETS
Unaudited Audited
30 September 31 March
2001 2000 2001
Rm Rm Rm
ASSETS
Non-current assets 2 862.6 2 994.8 2 907.0
Property, plant and
Equipment 2 539.5 2,676.1 2 653.3
Investments 323.1 318.7 253.7
Current assets 2 844.0 2 630.4 1 996.4
Inventories 1 788.9 1,711.4 1 121.9
Accounts receivable 1 018.4 928.1 874.5
Total assets 5 706.6 5 625.2 4 903.4
EQUITY AND LIABILITIES
Capital and reserves 1 557.3 1 321.3 1 333.6
Ordinary share capital
and premium 249.4 247.0 247.8
Non-distributable reserves 549.3 471.4 417.9
Retained surplus 758.6 602.9 667.9
Interest of outside shareholders
in subsidiaries 300.6 444.1 397.3
Deferred taxation 524.8 513.4 456.1
Net borrowings 1 761.9 2,083.0 1 482.9
Current liabilities 1 562.0 1 263.4 1 233.5
Total equity and liabilities 5 706.6 5 625.2 4 903.4
Other salient features
Unaudited Audited
30 September 31 March
2001 2000 2001
Rm Rm Rm
Operating margin (%) 11.7 11.7 12.2
Gearing (%) 94.8 118.0 85.7
Depreciation 157.4 132.1 268.0
Capital expenditure 81.3 112.0 303.5
- expansion 28.5 41.7 52.3
- replacement 52.8 70.3 251.2
Capital commitments 135.7 206.1 186.0
- contracted 31.2 40.0 20.4
- approved but not contracted 104.5 166.1 165.6
Lease commitments 605.6 645.4 628.5
- land and buildings 534.7 533.0 530.9
- other 70.9 112.4 97.6
Contingent liabilities 349.4 233.9 262.8
- loans 324.0 224.9 252.7
- other 25.4 9.0 10.1
ABRIDGED GROUP CASH FLOW STATEMENTS
Unaudited Audited
Six months ended Year ended
30 September 31 March
2001 2000 2001
Rm Rm Rm
Cash flows from operating
and investing activities
Cash operating profit 479.6 425.8 860.6
Working capital requirements (516.0) (637.5) (203.0)
Replacement capital (52.8) (70.3) (251.2)
Interest, taxation and
dividend (189.6) (186.1) (360.6)
Proceeds on disposal of
Mauritius operations 390.4 - -
Investment in future
operations (221.3) (83.5) (69.4)
Other movements 9.5 (48.4) 44.7
Net cash (outflow)/inflow
before financing activities (100.2) (600.0) 21.1
STATEMENTS OF CHANGES IN EQUITY
Unaudited Audited
Six months ended Year ended
30 September 31 March
2001 2000 2001
Rm Rm Rm
Share capital and share premium
Balance at beginning of
the period 247.8 247.1 247.1
Movements during the period 1.6 (0.1) 0.7
Balance at end of the period 249.4 247.0 247.8
Non-distributable reserves
Balance at beginning of
the period 417.9 399.5 404.5
Movements during the period 131.4 60.0 13.4
Balance at end of the period 549.3 459.5 417.9
Retained surplus
Balance at beginning of
the period 667.9 569.4 533.1
Dividends paid (62.8) (59.4) (108.9)
Movements during the period 153.5 104.8 243.7
Balance at end of the period 758.6 614.8 667.9
Ordinary shareholders' equity 1 557.3 1 321.3 1 333.6
Illovo Sugar Limited
Company Registration no. 1906/000622/06
Share code ILV
ISIN no. ZAE000003547
DECLARATION OF DIVIDEND NO. 20
Notice is hereby given that an interim dividend of 20.0 cents
per share has been declared on the ordinary shares of the
company in respect of the six months ended 30 September 2001.
In compliance with the requirements of STRATE, the electronic
settlement and custody system used by the JSE Securities
Exchange South Africa, the company has determined the
following salient dates for the payment of the dividend :
Last day to trade cum-dividend Friday, 4 January 2002
Shares commence trading ex-dividend Monday, 7 January
2002
Record date Friday, 11 January
2002
Payment of dividend Monday, 14 January
2002
Share certificates may not be dematerialised / rematerialised
between Thursday, 27 December 2001 and Friday, 11 January
2002, both days inclusive.
By order of the Board
G D Knox Durban
Secretary 14 November 2001
Directors :
R A Williams (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, A R Mpungwe (Tanzanian), R A Norton, A B Ravno, J T
Russell, M J Shaw, B M Stuart
Registered office :
Illovo Sugar Park, 1 Montgomery Drive, Mount Edgecombe,
KwaZulu-Natal, South Africa
Postal address :
P O Box 194, Durban, 4000
Website : www.illovosugar.com
Transfer Secretaries :
Mercantile Registrars Limited, 11 Diagonal Street,
Johannesburg, 2001
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