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Preliminary report for the year ended 31 March 2014
ILLOVO SUGAR LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1906/000622/06)
Share code: ILV ISIN: ZAE000083846
("Illovo" or "the company")
PRELIMINARY REPORT FOR THE YEAR ENDED 31 MARCH 2014
Salient features
- Group revenue up 20% to R13.2 billion
- Operating profit flat at R1.887 billion, impacted by low-priced imported sugar and an unfavourable fair value adjustment
- Headline earnings per share up 4.3% to 194 cents
- Sugar production up 4.8% to 1.83 million tons
- Record production from current installed capacity
- Record ethanol production and increases in furfural production as well as electricity co-generation
- New warehouse in South Africa and distillery in Tanzania operational
- Tough market conditions expected for the foreseeable future
Quote:
The business delivered an acceptable financial and operational performance last year considering the difficult
trading conditions in all of our markets. Sugar and downstream production and revenues were both up and we will
continue to seek ways to diversify our earnings even further. Our operating profit was impacted by low-priced
imported sugar but the recent introduction of import tariffs in South Africa and Government commitment to regulate
imports in Tanzania are expected to curb the negative impact of these imports in the future. Sugar is a cyclical
commodity and we are currently at the bottom end of the cycle. We expect this cycle to turn in the short to
medium term and thus benefit from the huge growth in Africa, where Illovo Sugar is uniquely positioned.
Enquiries:
Illovo Sugar Limited 031 508 4300
Gavin Dalgleish, Managing Director
Mohammed Abdool-Samad, Financial Director
Chris Fitz-Gerald, Group Communications Manager
Instinctif 011 447 3030
Nicholas Williams 082 600 2192
OVERVIEW
The benefit of the group's geographic spread and the ongoing operating efficiency improvement
initiatives were evident during the 2013/14 season with year-on-year increases in sugar, electricity
co-generation, furfural and ethanol production. Increased throughput and improved performance in
the South African mills and a full season of operation at the expanded capacity in Swaziland resulted
in a 4.8% increase in sugar production over that of the previous season to 1.83 million tons, which is
a production record from the current installed capacity. Adverse growing conditions in some areas
reduced the cane crop by our own agricultural operations to 6.1 million tons (2013: 6.5 million tons)
whilst total cane from independent farmers increased to 9.4 million tons (2013: 8.4 million tons), driven
mainly by the full recovery from the recent years' drought conditions in South Africa.
Sugar sales volumes increased by 8.2% compared to the previous year. Better domestic market
pricing was offset by softer export market revenue. Improved downstream furfural and ethanol sales
underpinned growth in downstream revenues. Total group revenue increased by 20% to R13.2 billion.
This pleasing increase was achieved in the face of declining world sugar market prices, the early
effects of the 2017 abolition of European Union ("EU") production quotas and unprecedented levels
of sugar imports into South Africa and Tanzania.
Despite the increased sugar and downstream production and market sales, group operating profit
remained flat year-on-year at R1.887 billion. The operating margin reduced from 17.2% to 14.3% due to
competition from low-priced imported sugar which affected earnings in the group's export markets
and certain of its domestic markets. Additionally, the significant adverse year-on-year growing cane
fair value adjustments and higher than inflation production cost increases also impacted margins. Net
financing costs increased by R41 million with the benefits of strong cash generation and good working
capital management offset by the full-year effect of funding the warehouse in South Africa and the
completion of the distillery in Tanzania. Interest cover declined compared to the previous year from
6.4 times to 5.6 times. The effective tax rate for the group improved marginally from 31.7% to 31.3%,
mainly due to the positive deferred tax effect of increased profits in Swaziland. Headline earnings per
share for the year improved by 4.3% to 194.0 cents whilst the return on group net assets declined from
19.6% to 16.1%.
The contributions to operating profit were sugar production 70% (2013: 55%), cane growing 21%
(2013: 40%), downstream and power co-generation 9% (2013: 5%). Contributions by country were
Malawi 39% (2013: 48%), Zambia 30% (2013: 25%), South Africa 14% (2013: 8%), Swaziland 14% (2013:
8%), Mozambique 2% (2013: 6%) and Tanzania 1% (2013: 5%).
2013/14 REVIEW
Growing conditions were variable in the year under review. In South Africa, full recovery from the
drought and the increased area under cane resulted in an additional 756 000 tons of cane being
milled, a 15% increase on the prior year. In Zambia, the effects of reduced irrigation as a result of the
prior-season turbo alternator failure and unusually heavy rains in January 2013 combined to reduce
the size of the crop. Similar conditions in Mozambique also negatively impacted late season cane
yields in that country. The latter half of the season was unseasonably wet in Tanzania, resulting in cane
being carried over into the next season. In Malawi and Swaziland, an additional 1 837 hectares of land
under cane harvested by our growers increased cane supply.
Group sugar production of 1.83 million tons increased by 84 000 tons compared to the previous
season, largely driven by a 17% increase in South Africa, amounting to 103 000 tons. In Mozambique,
sugar production was in line with the previous year with a vastly improved factory performance being
offset by the late season decline in cane supply. Tanzania recorded a disappointing year of operations
resulting in the carry-over of both own and outgrower cane of over 220 000 tons to the 2014/15
season. Swaziland exceeded the 250 000 tons sugar production milestone for the first time, but in
Zambia and Malawi the sugar output was slightly below the previous year.
The commercial environment was challenging with sugar imports impacting negatively on domestic
sales and on the group's export markets due to the continued world sugar surplus. Approximately
58% of the group's sales volume continues to be sold into the domestic markets where we produce
sugar. In 2013/14, these sales amounted to 1.06 million tons, sold via a range of pre-packed and
bulk industrial and direct consumption sugars in brown and refined sugar offerings. Sugar sold for
direct consumption in Malawi and Zambia is fortified with Vitamin A. In Zambia, current favourable
economic fundamentals are translating into increased consumer spending power, which continues
to drive growth in that market. Low cost imports negatively impacted market conditions in Tanzania
and South Africa. Notwithstanding the unprecedented levels of imported sugar, Illovo's strong South
African industrial customer base offered some protection. In Malawi, difficult economic conditions and
a depreciating local currency precipitated a number of price adjustments during the year to match
inflation and although local demand remained soft, the market was fully supplied. The successful
import tariff increase application in South Africa and the Government of Tanzania's commitment to
improve market management, augers well for the year ahead.
Meaningful storage and logistics benefits, as well as a significant change in food grade handling standards,
have been achieved in South Africa with the successful completion of the new 170 000 ton capacity
distribution centre outside Pietermaritzburg, on time and within budget. Similar opportunities are
being sought across the group as part of the ongoing reduction of supply chain cost.
Malawi and Zambia continue to supply sugar into large deficit markets in east and central Africa
where these two countries enjoy a geographical advantage over other potential suppliers. However,
the effect of abundant low-cost world sugar has begun to suppress pricing in these markets.
Preferential exports into the EU and the United States continued during the past year. EU prices fell
sharply during the second half of the year as major European sugar producers attempted to establish
market positions prior to the 2017 abolition of production quotas.
Group exposure to the world bulk raw sugar market is limited to South Africa from whence sugar
is sold via the single desk export marketing function of the South African Sugar Association
("SASA"). As a primary consequence of increased imports into South Africa, the volume of SASA
exports more than tripled relative to the previous year. Illovo's share of exports rose to 209 000 tons
(2012/13: 60 000 tons) priced at US18.1 cents/lb relative to a current world price trading range of
around US17.5 cents/lb.
The good cane supply and the smooth operation of the Sezela mill in South Africa combined to
increase furfural production from the downstream plant by 2 100 tons relative to the previous season.
Pricing for furfural products continue to be dampened by weak Chinese demand but reflected an
improvement in the second half of the year, also benefiting from the weaker Rand. New production
records were again set at the Merebank and Glendale ethanol distilleries. Pricing held up in local and
export markets.
Construction of the group's new potable alcohol distillery in Tanzania was completed and the plant was
commissioned during August 2013. The first batch of extra neutral alcohol produced from the plant
was approved and product quality has remained robust. Daily and weekly production records well in
excess of the installed capacity have been set. Throughput constraints due to energy interruptions
from the integrated sugar mill have limited the contribution to earnings in the current year but the
alcohol revenue will provide diversity to the 2014/15 earnings.
Co-generation of electricity remains a priority across the group, the objective being to ensure
reliable cost efficient energy supply to our operations and where attractive, to export electricity
into the national grid. The large commercial co-generation plant recently commissioned in Swaziland
is operating well and commercial exports to the national grid in Swaziland continue to exceed
contractual commitments. Limited supply into the national grid has also been achieved in Zambia
and Mozambique.
PROSPECTS
The 2014/15 season will reflect the increased focus on cost efficiency and asset utilisation in the face of
declining regional prices and EU proceeds in respect of exports from Zambia, Malawi, Swaziland and
Mozambique. Generally, factories in the group have made a good start to the season and are expected
to build on the solid base of the previous season. Good weather conditions and expanding outgrower
area under cane in Zambia bode well for a good crop in that country. Drier weather in South Africa
during the growing months has impacted negatively on cane growth which will result in a decline in
sugar production, whilst the benefits of cane expansion in Swaziland are expected to improve sugar
output. Overall, a small increase in sugar production for the group is anticipated for 2014/15.
The declining world sugar market fundamentals, evident during the second half of the year,
are expected to prevail in the short to medium term. The world raw sugar price remains under negative
pressure, with a fourth year of global surplus production, together with a weakening Brazilian Real,
which is incentivising South American exports. In Brazil, the possible impact of an El Niño weather
event, the potential for an increased shift from sugar to ethanol production later this year and the
least number of mills in operation in six seasons has reduced estimates for sugar production in the
year ahead and this is reflected in futures contracts trading between US17.5 to US19.5 cents/lb.
The positioning of the major EU sugar producers prior to the 2017 removal of production quotas is
expected to continue depressing pricing in that market.
Local market prices are expected to increase generally in line with inflation with the effects of the
increased dollar-based reference price on imports into South Africa and the Government of Tanzania's
commitment to curb imports benefiting market conditions in those countries. The abundance of
world priced sugar and opportunistic trading activity will sustain the generally soft regional African
market prices.
Currency exchange rates across the group are generally expected to further depreciate against the
US Dollar and Euro, the major currency denominations of group exports. This could provide some
relief to lower prices through the conversion of export proceeds into reporting currency.
Increased momentum of the group's continuous improvement programme will continue to drive cost-
base margin improvement initiatives across the business as above inflation salary and wage increases
and lower export prices further squeeze margins. Finance costs are expected to reduce as strong
group cash flow is applied to the reduction of debt and the group's effective tax rate should normalise
at around 30%.
Capital expenditure in the coming year will again be modest and focused on supporting performance
improvement and normal plant and machinery replacements. No major new capital expansion projects
are planned for the year, although project opportunities are gaining momentum with a potential
ethanol and refined sugar expansion in Zambia being evaluated. Plans to expand furfural production
are progressing well. The group continues to evaluate opportunities for further footprint expansion in
Africa, but careful assessment of the risks will remain crucial to any new opportunity being progressed.
We anticipate that market conditions will generally be tough in the year ahead, but we are confident
that our endeavours will better position us to drive future growth, with a strong balance sheet and
operating cash flow.
Capital reduction distribution by way of a reduction of contributed tax capital in lieu of dividend
Notice is hereby given that a final capital reduction distribution, by way of a reduction of contributed
tax capital of 60.0 cents per share has been declared, in lieu of a dividend, on the ordinary shares of
the company in respect of the year ended 31 March 2014. This distribution, together with the interim
capital reduction distribution of 37.0 cents per share which was declared on 13 November 2013, makes
a total distribution in respect of the year ended 31 March 2014 of 97.0 cents per share. The directors
have determined that this capital reduction distribution will be paid out of qualifying contributed tax
capital, as contemplated in the definition of "contributed tax capital" in section 1 of the Income Tax Act,
1962. As the distribution will be regarded as a return of capital and may have potential capital gains
tax consequences, Illovo shareholders are advised to consult their tax advisors regarding the impact
of the distribution.
In accordance with the settlement procedures of STRATE, the company has determined the following
salient dates for the payment of the capital distribution:
Last day to trade cum the capital distribution Friday 27 June 2014
Shares commence trading ex the capital distribution Monday 30 June 2014
Record date Friday 4 July 2014
Payment of final capital distribution Monday 7 July 2014
Share certificates may not be dematerialised/rematerialised between Monday 30 June 2014 and
Friday 4 July 2014, both days inclusive.
Relative to this capital reduction distribution, the directors have confirmed that the company will
satisfy the solvency and liquidity test immediately after completing such distribution.
On behalf of the board
D G MacLeod G B Dalgleish Mount Edgecombe
Chairman Managing director 26 May 2014
CORPORATE INFORMATION
DIRECTORS
D G MacLeod (Chairman)*,
G B Dalgleish (Managing Director),
M H Abdool-Samad, M I Carr#*,
M J Hankinson*, J P Hulley, D Konar*,
P A Lister#*, P M Madi*, C W N Molope*,
A R Mpungwe (Tanzanian)*, T S Munday*,
G M Rhodes#*, L W Riddle
# British *Non-executive
Registered office:
Illovo Sugar Park,
1 Montgomery Drive, Mount Edgecombe,
KwaZulu-Natal, South Africa
Postal address:
PO Box 194, Durban, 4000
Telephone:+27 31 508 4300
Telefax: +27 31 508 4535
Website: www.illovosugar.com
Transfer Secretaries:
Link Market Services South Africa Proprietary Limited
Rennie House,
13th Floor, 19 Ameshoff Street,
Braamfontein, 2001
P O Box 4844, Johannesburg, 2000
Auditors:
Deloitte & Touche
Sponsor:
J.P. Morgan Equities South Africa Proprietary Limited.
SUMMARY CONSOLIDATED INCOME STATEMENT
Year ended 31 March
Change 2014 2013*
Note % Rm Rm
Revenue 20 13 190.1 10 980.7
Operating profit – 1 886.9 1 887.0
Dividend income 5.1 2.3
Net financing costs 3 336.4 295.4
Profit before taxation and non-trading items 1 555.6 1 593.9
Share of profit from associates and joint ventures 25.2 5.7
Material items 4 24.5 4.6
Profit before taxation 1 605.3 1 604.2
Taxation 486.8 505.7
Profit for the year 1 118.5 1 098.5
Attributable to:
Shareholders of Illovo Sugar Limited 7 916.3 859.9
Non-controlling interest 202.2 238.6
1 118.5 1 098.5
Other comprehensive income
Items that will not be reclassified subsequently
to profit or loss:
Actuarial gains/(losses) on post-retirement obligations 2.6 (17.3)
Tax effect of actuarial (gains)/losses on
post-retirement obligations (3.0) 1.9
Items that may be reclassified subsequently
to profit or loss:
Foreign currency translation differences 209.7 (231.2)
Adjustments in respect of cash flow hedges (51.4) 0.8
Tax effect of cash flow hedges 3.2 1.3
Hedge of net investment in foreign subsidiaries (231.3) (64.8)
Tax effect of hedge of net investment in foreign
subsidiaries 1.2 14.5
Total comprehensive income for the year 1 049.5 803.7
Attributable to:
Shareholders of Illovo Sugar Limited 821.8 638.3
Non-controlling interest 227.7 165.4
1 049.5 803.7
Headline earnings per share (cents) 5 4.3 194.0 186.0
Diluted headline earnings per share (cents) 194.0 185.9
Basic earnings per share (cents) 199.0 186.9
Diluted basic earnings per share (cents) 198.9 186.8
Distribution per share
(interim – paid; final – declared) (cents) 6 2 97.0 95.0
* Amounts restated, refer to note 10.
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Year ended 31 March
2014 2013* 2012*
Note Rm Rm Rm
ASSETS
Non-current assets 8 895.0 7 995.1 6 952.9
Property, plant and equipment 6 783.3 6 209.5 5 312.5
Cane roots 1 531.0 1 260.0 1 216.3
Intangible assets 288.0 266.1 218.1
Investments and loans 248.6 202.1 174.3
Deferred taxation asset 44.1 57.4 31.7
Current assets 4 924.8 4 546.6 4 449.2
Inventories and factory overhaul 1 337.5 1 218.3 848.8
Growing cane 1 662.5 1 520.4 1 346.7
Trade and other receivables 1 309.2 1 337.5 858.0
Derivative financial instruments 18.5 16.9 14.0
Cash and cash equivalents 597.1 453.5 1 381.7
Total assets 13 819.8 12 541.7 11 402.1
EQUITY AND LIABILITIES
Total equity 7 468.6 6 974.7 6 465.3
Equity holders' interest 6 340.3 5 968.5 5 562.6
Non-controlling interest 1 128.3 1 006.2 902.7
Non-current liabilities 3 320.8 2 410.6 2 741.2
Long-term borrowings 1 824.8 1 164.0 1 545.4
Deferred taxation liability 1 189.9 930.1 853.5
Other liabilities 306.1 316.5 342.3
Current liabilities 3 030.4 3 156.4 2 195.6
Short-term borrowings 858.2 1 162.4 568.4
Trade and other payables 2 110.7 1 983.7 1 620.8
Derivative financial instruments 61.5 10.3 6.4
Total equity and liabilities 13 819.8 12 541.7 11 402.1
OTHER SALIENT FEATURES
Operating margin (%) 14.3 17.2 14.8
Interest cover (times) 5.6 6.4 5.5
Effective tax rate (%) 31.3 31.7 30.3
Net debt:equity ratio 8 27.9 26.9 11.3
Net asset value per share (cents) 1 621.4 1 514.8 1 405.5
Net borrowings 2 085.9 1 872.9 732.1
Depreciation 309.0 258.0 238.5
Capital expenditure 722.0 970.7 443.4
- Expansion capital 366.2 640.8 193.8
- Replacement capital 342.6 291.0 237.0
708.8 931.8 430.8
- Expansion of area under cane 7.9 28.4 0.2
- Product registration costs 5.3 10.5 12.4
Capital commitments 1 042.2 1 013.6 1 125.9
- Contracted 255.1 152.7 168.1
- Approved but not contracted 787.1 860.9 957.8
Lease commitments 220.7 201.7 284.7
Contingent liabilities 116.5 119.9 175.0
* Amounts restated, refer to note 10.
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 March
2014 2013*
Rm Rm
Cash flows from operating and investing activities
Cash operating profit 1 922.4 1 551.9
Working capital requirements 105.2 (516.5)
Cash generated from operations 2 027.6 1 035.4
Replacement capital expenditure (342.6) (291.0)
Financing costs, taxation and distributions (1 186.8) (944.6)
Net investment in future operations (379.4) (679.7)
Acquisition of business 15.6 –
Proceeds on disposal of shareholding in joint ventures 9.5 –
Other movements (8.4) 51.0
Net cash inflows/(outflows) before financing activities 135.5 (828.9)
Borrowings raised/(repaid) 51.6 (30.1)
Other financing activities 1.3 3.1
Net increase/(decrease) in cash and cash equivalents 188.4 (855.9)
Cash and cash equivalents at the beginning of the year 453.5 1 381.6
Exchange rate translation (44.8) (72.2)
Cash and cash equivalents at the end of the year 597.1 453.5
* Amounts restated, refer to note 10.
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 March
2014 2013*
Rm Rm
Share capital and share premium
Balance at beginning of the year 2 055.4 2 489.8
Issue of share capital 1.3 3.1
Transfer to distribution reserve (446.8) (437.5)
Balance at end of the year 1 609.9 2 055.4
Share-based payments reserve
Balance at beginning and end of the year 13.1 13.1
Non-distributable reserves
Balance at beginning of the year 42.3 155.8
Transfer of realised profit on disposal of property
to retained earnings – (82.0)
Release of non-controlling shareholders' transactions – (31.2)
Transfer of foreign currency translation reserve 64.9 211.7
Total comprehensive income:
– Foreign currency translation 165.0 (167.4)
– Cash flow hedges (36.5) (0.3)
– Hedge of net investment in foreign subsidiaries (229.9) (44.3)
Balance at end of the year 5.8 42.3
Retained earnings
Balance at beginning of the year 3 576.8 2 706.1
Transfer of realised profit on disposal of property from
non-distributable reserves – 82.0
Release of non-controlling shareholders' transactions – 31.2
Transfer of foreign currency translation reserve (64.9) (211.7)
Gain on redemption of preference shares – 118.9
Total comprehensive income:
– Profit for the year 916.3 859.9
– Actuarial gains/(losses) on post-retirement obligations 6.9 (9.6)
Balance at end of the year 4 435.1 3 576.8
Distribution reserve
Balance at beginning of the year 280.9 197.8
Transfer from share premium 446.8 437.5
Distributions paid (451.3) (354.4)
Balance at end of the year 276.4 280.9
Equity holders' interest 6 340.3 5 968.5
Non-controlling interest
Balance at beginning of the year 1 006.2 902.7
Distributions paid (105.6) (103.6)
Change in shareholding – 41.7
Total comprehensive income:
– Foreign currency translation 44.7 (63.8)
– Hedge of net investment in foreign subsidiary (0.2) (6.0)
– Cash flow hedges (11.7) 2.4
– Actuarial losses on post-retirement obligations (7.3) (5.8)
– Profit for the year 202.2 238.6
Balance at end of the year 1 128.3 1 006.2
Total equity 7 468.6 6 974.7
* Amounts restated, refer to note 10.
NOTES TO THE SUMMARY FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
These summary consolidated financial statements have been prepared under the
supervision of Mr M H Abdool-Samad CA(SA), the group financial director.
The summary financial statements are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for summary reports and the requirements
of the Companies Act of South Africa applicable to summary financial statements. The
Listings Requirements for the summary financial statements require them to be prepared
in accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards ("IFRS"), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards Council, and also, as a
minimum, to contain the information required by IAS 34 Interim Financial Reporting.
The accounting policies applied in the preparation of the consolidated financial
statements from which the summary consolidated financial statements were derived
are in terms of International Financial Reporting Standards and are consistent with the
accounting policies applied in the preparation of the previous consolidated annual financial
statements, with the exception of the adoption of IFRS 11 Joint Arrangements, IFRS 13 Fair
Value Measurement, the amendments relating to IAS 19 (revised) Employee Benefits and
IAS 1 Presentation of Financial Statements. The adoption of the revised IFRS 10 Consolidated
Financial Statements and IFRS 12 Disclosure of Interest in Other Entities has had no impact
on the consolidated financial statements.
The annual financial statements from which these summary consolidated financial
statements were derived are electronically available on the group's website
www.illovosugar.com.
2. IMPACT OF THE APPLICATION OF NEW AND REVISED STANDARDS
IFRS 11 Joint Arrangements
IFRS 11 requires equity accounting for joint ventures and eliminates the proportionate
consolidation option of accounting. Previously, the group proportionately consolidated all
joint ventures which entailed that it included its share of the assets, liabilities, income and
expenses of jointly controlled entities on a line-by-line basis in its financial statements.
Under the equity method, the investments in joint ventures are initially recognised at cost
and the carrying amounts are increased or decreased to recognise the group's share of
profit or loss and movements in other comprehensive income of joint ventures after the
date of acquisition. The group's share of the profit or loss of joint ventures is recognised as
a single line item in profit or loss under the equity method.
The change from proportionate consolidation to equity accounting resulted in a change in
individual asset, liability, income, expense and cash flow items with no material impact on
equity or profit attributable to equity holders.
IAS 19 (revised) Employee Benefits
IAS 19 (revised) impacted the measurements of the various components representing
movements in the defined benefit pension obligation and associated disclosures. As the
group has always recognised actuarial gains and losses immediately outside profit and loss,
the group's total obligation was unchanged.
The impact of the application of IFRS 11 and IAS 19 (revised) on the group's financial results,
financial position and cash flows is disclosed in note 10.
Year ended 31 March
2014 2013*
Rm Rm
3. NET FINANCING COSTS
Interest paid 353.5 322.0
Less: capitalised (20.8) (21.7)
332.7 300.3
Interest received (8.3) (17.6)
Foreign exchange losses 12.0 12.7
336.4 295.4
4. MATERIAL ITEMS
Profit on disposal of property 1.3 1.5
Profit on disposal of previously impaired assets 0.1 3.1
Gain on bargain purchase 2.2 –
Proceeds received from insurance claim 19.1 –
Disposal and deregistration of businesses 1.8 –
Material profit before taxation 24.5 4.6
Taxation (1.4) –
Non-controlling interest (0.4) (0.6)
Material profit attributable to shareholders of
Illovo Sugar Limited 22.7 4.0
5. DETERMINATION OF HEADLINE EARNINGS
Profit attributable to shareholders 916.3 859.9
Adjusted for:
– Profit on disposal of property (1.3) (1.5)
– Profit on disposal of previously impaired assets (0.1) (3.1)
– Disposal and deregistration of businesses (1.8) –
– Gain on bargain purchase (2.2) –
– Proceeds received from insurance claim (19.1) –
Total tax effect of adjustments 1.4 –
Total non-controlling interest effect of adjustments 0.4 0.6
Headline earnings 893.6 855.9
Number of shares in issue (millions) 460.6 460.4
Weighted average number of shares on which
headline earnings per share are based (millions) 460.5 460.2
Headline earnings per share (cents) 194.0 186.0
* Amounts restated, refer to note 10.
6. DISTRIBUTION PER SHARE
The distribution per share of 97.0 cents (2013: 95.0 cents) includes an interim capital
distribution of 37.0 cents declared out of share premium and a final capital distribution of
60.0 cents declared out of share premium.
7. FINANCIAL INSTRUMENTS
The fair values of financial instruments are determined using inputs that are observable,
either directly, (i.e. as prices) or indirectly (i.e. derived from prices), other than quoted prices
in an active market and therefore fall into the level 2 fair value category. The fair values of
non-financial assets are determined using inputs that are unobservable, using the best
information available in the circumstances for using the assets and therefore fall into the
level 3 fair value category.
8. NET DEBT:EQUITY RATIO
The net debt:equity ratio is calculated as interest-bearing liabilities, net of cash and cash
equivalents, divided by total equity.
9. SEGMENTAL ANALYSIS
Year ended 31 March
2014 2013*
BUSINESS SEGMENTS Rm % Rm %
Revenue
Sugar production 9 355.7 71 7 610.8 70
Cane growing 2 856.2 22 2 565.5 23
Downstream and co-generation 978.2 7 804.4 7
13 190.1 10 980.7
Operating profit
Sugar production 1 320.3 70 1 035.0 55
Cane growing 388.8 21 760.5 40
Downstream and co-generation 177.8 9 91.5 5
1 886.9 1 887.0
GEOGRAPHICAL SEGMENTS
Revenue
Malawi 2 341.5 18 1 829.8 17
Zambia 3 265.9 25 2 519.8 23
South Africa 4 504.1 34 4 081.3 37
Swaziland 1 601.1 12 1 314.9 12
Mozambique 552.8 4 536.4 5
Tanzania 924.7 7 698.5 6
13 190.1 10 980.7
Operating profit
Malawi 762.0 39 899.3 48
Zambia 558.1 30 478.8 25
South Africa 265.8 14 150.3 8
Swaziland 257.5 14 155.8 8
Mozambique 32.5 2 109.1 6
Tanzania 11.0 1 93.7 5
1 886.9 1 887.0
Total assets
Malawi 2 052.8 15 1 560.1 14
Zambia 3 793.4 29 3 777.5 31
South Africa 2 658.7 20 2 422.7 20
Swaziland 2 046.0 16 2 068.5 17
Mozambique 918.9 7 809.1 7
Tanzania 1 690.3 13 1 376.0 11
13 160.1 12 013.9
Note: Total assets excludes cash and cash equivalents, financial instruments and deferred tax.
* Amounts restated, refer to note 10.
10. IMPACT OF THE APPLICATION OF NEW AND REVISED STANDARDS
Year ended 31 March 2013
Effect of
Previously restate-
reported ment Restated
INCOME STATEMENT Rm Rm Rm
Revenue 11 128.9 (148.2) 10 980.7
Operating profit 1 901.0 (14.0) 1 887.0
Dividend income 2.3 – 2.3
Net financing costs 279.6 15.8 295.4
Profit before taxation and non-trading items 1 623.7 (29.8) 1 593.9
Share of profit from associates and joint ventures 0.7 5.0 5.7
Material items 4.6 – 4.6
Profit before taxation 1 629.0 (24.8) 1 604.2
Taxation 513.9 (8.2) 505.7
Profit for the year 1 115.1 (16.6) 1 098.5
Attributable to:
Shareholders of Illovo Sugar Limited 876.5 (16.6) 859.9
Non-controlling interest 238.6 – 238.6
1 115.1 (16.6) 1 098.5
Other comprehensive income
Items that will not be reclassified
subsequently to profit or loss:
Actuarial losses on post-retirement obligations,
net of tax (32.0) 16.6 (15.4)
Items that may be reclassified
subsequently to profit or loss:
Foreign currency translation differences (231.2) – (231.2)
Adjustments in respect of cash flow hedges,
net of tax 2.1 – 2.1
Hedge of net investment in foreign subsidiaries (50.3) – (50.3)
Total comprehensive income for the year 803.7 – 803.7
Attributable to:
Shareholders of Illovo Sugar Limited 638.3 – 638.3
Non-controlling interest 165.4 – 165.4
803.7 – 803.7
Earnings per share (cents)
Basic earnings per share 190.5 (3.6) 186.9
Headline earnings per share 189.6 (3.6) 186.0
Year ended 31 March 2013 Year ended 31 March 2012
Pre- Effect of Pre- Effect of
viously restate- Re- viously restate- Re-
STATEMENT OF reported ment stated reported ment stated
FINANCIAL POSITION Rm Rm Rm Rm Rm Rm
ASSETS
Non-current assets 7 938.5 56.6 7 995.1 6 900.4 52.5 6 952.9
Property, plant and
equipment 6 223.4 (13.9) 6 209.5 5 328.0 (15.5) 5 312.5
Cane roots 1 260.0 – 1 260.0 1 216.3 – 1 216.3
Intangible assets 266.1 – 266.1 218.1 – 218.1
Investments and loans 131.6 70.5 202.1 106.3 68.0 174.3
Deferred taxation asset 57.4 – 57.4 31.7 – 31.7
Current assets 4 635.3 (88.7) 4 546.6 4 510.5 (61.3) 4 449.2
Inventories and
factory overhaul 1 253.7 (35.4) 1 218.3 881.9 (33.1) 848.8
Growing cane 1 520.4 – 1 520.4 1 346.7 – 1 346.7
Trade and
other receivables 1 370.1 (32.6) 1 337.5 877.8 (19.8) 858.0
Derivative financial
instruments 16.9 – 16.9 14.0 – 14.0
Cash and cash equivalents 474.2 (20.7) 453.5 1 390.1 (8.4) 1 381.7
Total assets 12 573.8 (32.1) 12 541.7 11 410.9 (8.8) 11 402.1
EQUITY AND LIABILITIES
Total equity 6 974.7 – 6 974.7 6 465.3 – 6 465.3
Equity holders' interest 5 968.5 – 5 968.5 5 562.6 – 5 562.6
Non-controlling interest 1 006.2 – 1 006.2 902.7 – 902.7
Non-current liabilities 2 413.0 (2.4) 2 410.6 2 741.7 (0.5) 2 741.2
Long-term borrowings 1 166.4 (2.4) 1 164.0 1 545.4 – 1 545.4
Deferred taxation liability 930.1 – 930.1 854.0 (0.5) 853.5
Other liabilities 316.5 – 316.5 342.3 – 342.3
Current liabilities 3 186.1 (29.7) 3 156.4 2 203.9 (8.3) 2 195.6
Short-term borrowings 1 174.4 (12.0) 1 162.4 568.4 – 568.4
Trade and other payables 2 001.4 (17.7) 1 983.7 1 629.1 (8.3) 1 620.8
Derivative financial
instruments 10.3 – 10.3 6.4 – 6.4
Total equity and liabilities 12 573.8 (32.1) 12 541.7 11 410.9 (8.8) 11 402.1
Year ended 31 March 2013
Effect of
Previously restate-
reported ment Restated
STATEMENT OF CASH FLOWS Rm Rm Rm
Cash flows from operating and
investing activities
Cash operating profit 1 567.9 (16.0) 1 551.9
Working capital requirements (506.4) (10.1) (516.5)
Cash generated from operations 1 061.5 (26.1) 1 035.4
Replacement capital expenditure (291.4) 0.4 (291.0)
Financing costs, taxation and distributions (931.4) (13.2) (944.6)
Net investment in future operations (679.7) – (679.7)
Other movements 23.4 27.6 51.0
Net cash outflows before financing activities (817.6) (11.3) (828.9)
Borrowings repaid (30.1) – (30.1)
Other financing activities 3.1 – 3.1
Net decrease in cash and cash equivalents (844.6) (11.3) (855.9)
Cash and cash equivalents at the beginning
of the year 1 390.1 (8.5) 1 381.6
Exchange rate translation (71.3) (0.9) (72.2)
Cash and cash equivalents
at the end of the year 474.2 (20.7) 453.5
AUDIT OPINION
These summary consolidated financial statements for the year ended 31 March 2014 have
been audited by Deloitte & Touche, who expressed an unmodified opinion thereon. The
auditor also expressed an unmodified opinion on the annual financial statements from
which these summary consolidated financial statements were derived. A copy of the
auditor's report on the summary consolidated financial statements and of the auditor's
report on the annual consolidated financial statements are available for inspection at
the company's registered office, together with the financial statements identified in the
respective auditor's reports.
Deloitte & Touche have not audited future financial performance and expectations
expressed by management included in the commentary in the accompanying preliminary
report and accordingly do not express an opinion thereon. The auditor's report does
not necessarily report on all of the information contained in this preliminary report.
Shareholders are therefore advised that in order to obtain a full understanding of the
nature of the auditor's engagement, they should obtain a copy of the auditor's report
together with the accompanying financial information from the issuer's registered office.
Date: 26/05/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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