Wrap Text
Interim Results for the six months ended 30 September 2016
Tongaat Hulett Limited
Registration No: 1892/000610/06
JSE share code: TON
ISIN: ZAE000096541
Interim Results for the six months ended 30 September 2016
- Revenue of R8,503 billion (2015: R7,609 billion) +11,7%
- Operating profit of R1,350 billion (2015: R1,276 billion) +5,8%
- Headline earnings of R631 million (2015: R607 million) +4,0%
- Operating cash flow (after working capital) of R1,061 billion
(2015: R266 million)
- Interim dividend of 100 cents per share (2015: 170 cents per share)
COMMENTARY
The results for the half-year ended 30 September 2016 show an
improvement in sugar revenue and operating profit under difficult
conditions. The starch operations delivered a strong performance.
Sales concluded in land conversion and developments in these six
months were lower than in recent periods. Operating cash flow,
after working capital movements, has advanced substantially.
The starch and glucose operation again increased operating profit,
to R306 million (2015: R281 million). The business benefitted from
a better sales mix, including replacing imports into the
coffee/creamer sector following the commissioning of the R135 million
project at the Germiston starch facilities. Overall volumes remained
flat as a result of muted domestic consumer demand. Higher maize
costs during the period were partially offset by higher co-product
revenues and ongoing cost control.
Land conversion and development activities recorded operating profit
of R269 million (2015: R576 million). The major contributors were
Sibaya (high-end residential and retirement – 7 developable hectares
sold), the industrial area of Cornubia (6 hectares), high intensity
mixed use areas of Umhlanga Ridgeside (1 hectare) and Umhlanga Ridge
Town Centre (1 hectare), integrated affordable residential at Bridge
City (2 hectares) and further high end residential at Izinga
(1 hectare) and Kindlewood (1 hectare), totaling 19 developable
hectares sold, compared to 65 hectares sold in the same period last
year. Revenue, costs and profit recorded per developable hectare
vary and are reflective of the degree of enhancement through urban
planning, land use integration and density, location and the intensity
of infrastructure investment and are in line with the value ranges
communicated previously.
The various sugar operations generated operating profit of
R825 million (2015: R477 million). This is reflective of improved
local market prices, more effective import protection dynamics in
the countries where Tongaat Hulett produces sugar and higher
international prices, including for exports into regional African
markets and the EU. Overall volumes are still being impacted by
lower cane yields due to the severe drought in KwaZulu-Natal and poor
growing conditions with low rainfall and restricted irrigation levels
in Mozambique and Zimbabwe as a result of low dam levels. The nature
of sugar milling and cane growing is such that there is a high
proportion of fixed costs. The drive to reduce costs continues
across all operations. Sugar production started later in the current
season than last year and is expected to reflect higher production
levels in the second half of the year compared to the second half of
last year.
The South African sugar operations, including agriculture, milling,
refining and various downstream activities produced operating profit
of R306 million (2015: R123 million). Sugar production is starting
to recover and Tongaat Hulett has increased its share of the total
industry production (some 23% this year compared to 19,5% last year)
and local market sales. The local market has seen more effective
import protection and better pricing dynamics. Voermol animal
feeds has contributed well with higher sales volumes (the previous
period had a shortage of raw materials) and increased margins.
The Mozambique sugar operating profit improved to R219 million
(2015: R94 million). Domestic market sales for the whole industry
increased by 27% as a result of better protection against imports
and improved sugar availability in more remote areas. Local market
price increases and higher export prices have positively impacted
revenue and cane valuations. The Metical weakened substantially
against the Rand and the US dollar, benefitting the operations with
sizeable Metical based costs and revenue that is linked to the
US dollar. A later start to the season and thus lower sugar
production in the first half of the year, given the high proportion
of fixed costs, had a negative impact, which was partially offset
by the higher value of standing cane still to be harvested.
The Zimbabwe sugar operating profit was R251 million
(2015: R232 million). Production and sales volumes in the first
half of the year were relatively consistent with the prior year,
notwithstanding a later start to the current season and a higher
proportion of production expected in the second half of the current
year. The first half of the current year has also seen a higher
level of outgrower cane payments compared to the first half of
last year. In addition, the division of proceeds in favour of the
growers is out of line with the region, not taking cognizance of
the full capital employed in the milling operations and is
not sustainable.
Tongaat Hulett's net debt at 30 September was R5,5 billion,
compared to R5,3 billion last year. Finance costs of
R408 million (2015: R314 million) were commensurate with the
borrowing levels in the period and the higher interest rates.
Operating cash flow (after working capital movements) was
R1,061 billion which is a R795 million improvement on the first half
of last year. The half year reflects an absorption of cash in
working capital, as is the norm, due to higher sugar stock and
debtor levels in the middle of the sugar season. The Developments
operation generated a stronger operating cash flow, including
significant proceeds being received and development expenditure
related payments being made, with substantial receipts expected in
the second half of the year, following the previous periods when a
number of large transactions were concluded having lead times before
transfer. Capital expenditure is below last year and the sugar cane
root planting costs have been curtailed substantially in the drought
conditions. Overall, the current half year has seen a total net cash
outflow of R277 million, compared to a total net cash outflow of
R1,349 billion in the same period last year.
Taking all of the aforementioned into account, headline earnings for
the half year amounted to R631 million (2015: R607 million). The
intention going forward is to place more emphasis on the final
dividend as distinct from the interim dividend given the agricultural
nature of Tongaat Hulett’s activities. Against this background, an
interim dividend of 100 cents per share has been declared
(2015: 170 cents per share).
LOOKING AHEAD
Tongaat Hulett will continue to enhance its strategic positioning,
focusing on multiple strategic thrusts, all with a positive impact
on earnings and cash flow, through the various cycles that the
business experiences, to extract higher returns from the existing
asset base.
Multiple Strong Sugar Market Positions with a Domestic Market Focus
Prices for sugar in the international market have increased by some
50% over the past six months with the upcoming second year of a
global supply deficit and continuing steady increases in global
demand levels. Prices have now begun to stabilise and forecasts
for the next 18 months are for prices to remain at current levels.
In the medium term, there are emerging concerns of the ability of
global supply to match global demand at prevailing price levels.
Global sugar consumption is predicted to continue to grow at a rate
of some 1,5% per annum, with most of this growth coming from low per
capita consumption developing countries.
The domestic markets in countries where Tongaat Hulett produces
sugar remain its primary focus. They have significant protection
from imports, with Government support, given the high rural
job impact of these industries. In Zimbabwe and Mozambique, sugar
refining matters are being addressed, which should lead to the
replacement of imported industrial white sugar. Growth is expected
in consumption per capita, off a low base, particularly in
Mozambique and partly in Zimbabwe, supported by distribution,
industrialisation and marketing initiatives. In South Africa,
with its current low sugar production level, Tongaat Hulett is
having to source other producers’ raw sugar for refining, to
supply its local market white sugar position and plans to replace
this with its own production in future. Tongaat Hulett has the
leading sugar brands in South Africa, Zimbabwe, Botswana and Namibia.
The proposed sugar sweetened beverage tax in South Africa and its
socio impact is being assessed and debated. Depending on the
eventual outcome, it could reduce local demand and the impact would
inter alia depend on the level of the prevailing world sugar price.
Tongaat Hulett has key market positions and experience in both the
region (southern and eastern Africa) and the EU for the sale of its
additional sugar. It is developing and expanding its positions in
regional deficit markets as well as broadening its footprint in
key value-add markets in the EU where it enjoys preferential access.
Growing Sugar Production from the Current Low Point
Recent weather and growing conditions are masking the substantial
progress that is being made with intensive agricultural improvement
programs, increased hectares under cane, irrigation efficiency and power
reliability. The estimated impact is some 500 000 tons of annual sugar
production. The imminent completion in Zimbabwe of the Tokwe-Mukorsi
dam and, in Mozambique (Xinavane), the raising of the Corumana dam
wall and the construction of the new Moamba dam on the Incomati river
will diversify the water catchment area and provide increased
stability in future water supply.
Reducing the Cost of Sugar Production
The sustained decrease in costs achieved over the previous three
years (equivalent to some R1,4 billion in real terms) provides a
good base for the next steps in the concerted cost reduction process
in the sugar operations, particularly focused on bought-in goods,
services, transport, marketing, salaries and wages. There is scope
for considerable further reduction, with man-hour reductions focusing
on flexible components and natural attrition. The paradigms around
costs that have traditionally been viewed as fixed are being
challenged, to mitigate against future potential volume volatility.
Unit costs of sugar production will reduce further as these cost
reduction processes continue, benefitting from future volume
increases.
Growing Starch and Glucose
The starch and glucose operation is well positioned strategically
and is focused on growing its sales volume, with an enhanced product
mix, by reducing imports and on the back of customer growth. This
includes the replacement of imports in the coffee/creamer sector
and a number of similar actions underway in other sectors. Working
together with customers, further opportunities are being targeted
for growth through customer exports. Market development work to
increase the production of value added modified starches, inter
alia for the prepared foods sector, is underway following the
capital expenditure completed last year at the Meyerton plant.
This is all underpinned by improving the use of the available
capacity and the efficiency of operations.
Value Creation from Land Conversion and Development
Tongaat Hulett is focused on its portfolio of prime land,
comprising some 7 951 developable hectares, to create stakeholder
value through its conversion over time to the highest value and
best land use beyond its current use. At the same time Tongaat
Hulett is driving ongoing rural agricultural development in the
cane catchment area of its sugar mills in KwaZulu-Natal. Over the
past four years more than 20 000 hectares of new cane land, mainly
in communal areas, have been developed.
The value being created through the land conversion and development
activities continues to increase, with good progress in the important
value drivers. This includes sound relationships with key
stakeholders; growing demand in selected usage areas; increasing
the supply of land through planning processes and unlocking
infrastructure; selected bigger transactions that are de-linked
from short term market dynamics and growing the range of
transacting mechanisms to increase value created, with particular
emphasis on transformation opportunities. The recent achievements
that led to over 3 000 developable hectares being released from
agriculture through Act 70 of 1970 approvals are being consolidated
through ongoing planning. Currently some 3 399 developable hectares
are in various stages of EIA processes, with new impetus gained
through a joint process having been finalised with the eThekwini
Municipality defining how to enhance the resilience of the city
through the appropriate use of this land.
A detailed and enhanced update on the land conversion portfolio is
available on the www.tongaat.com website. It gives details of all
these activities, provides insights relating to each portion of land
making up the portfolio and includes an update of the possible
5-year sales outcomes, indicating a range of hectares for each
demand driver and the expected range of profit per hectare across
the various demand drivers.
Near Term Outlook
Tongaat Hulett should continue to benefit substantially from
improved local sugar market revenues (volumes and prices) with the
improved import protection measures and better export revenues.
Actions to reduce costs continue.
Total sugar production in 2016/17 is continuing to be
impacted by the effects of the drought in KwaZulu-Natal and
irrigation having been reduced as a mitigation measure against
poor rainfall and low dam levels in Zimbabwe, Mozambique and
Swaziland. The estimate for sugar production in total for 2016/17
is between 1 000 000 and 1 100 000 tons, compared to 1 023 000 tons
last year.
The weather forecast for the coming summer in the key
growing and catchment areas is for average to above average
rainfall. The recent encouraging rainfall in the coastal areas of
KwaZulu-Natal is positive for the 2017/18 crop.The 2017/18 crop
in Zimbabwe and Mozambique will be impacted to some extent by the
current reduced irrigation. Given ongoing average to above average
rainfall and a recovery of key dam levels, total sugar production
is expected to recover over 2 years, to between some 1 200 000
and 1 300 000 tons in 2017/18 and to between some 1 500 000 and
1 600 000 tons in 2018/19. Tongaat Hulett’s marginal cost of
additional sugar production is typically US$110 per ton from own
cane (45%) and US$340 per ton from third party cane (55%).
Realisations, ex-mill, based on current regional and EU market
dynamics are above US$420 per ton. Should the drought continue
over the next summer in the catchment areas of the key dams
in Zimbabwe and Mozambique then it could lead to a reduction in
sugar production in 2017/18, compared to 2016/17, of some
150 000 tons and 50 000 tons respectively.
Starch and glucose volume growth for the remainder of the year is
expected to remain subdued with lower consumer spending. Further
replacement of imported volumes is expected, particularly in the
last quarter of the year. The drought conditions have resulted
in South Africa having to import maize for the current maize
season with maize prices trading at import parity levels and
expected to remain at these levels for the remainder of the
year. Lower co-product prices in the second half of the year
are expected to result in margins that are below those achieved
in the first half. Looking to the next maize season, improved
planting intentions and the outlook for better rainfall should
see maize prices moving towards export parity levels.
Negotiations have commenced on some 227 developable hectares,
reflecting an increase in the number of substantial transaction
opportunities, in various demand categories, following
encouraging advancements in the land conversion and development
activities, boding well for near term future sales. There is
strong interest in the remaining 38 prime hectares at Ridgeside.
The opening up of the Sibaya node has created new interest and
opportunities. Construction works related to the early sales
have now commenced and the relevance of this as a completely
new development node is becoming increasingly obvious to new
purchasers. Substantial interest is being experienced at
Ntshongweni, west of Durban and, as infrastructure solutions
are developed for further land in this area, this is likely
to convert into a growing momentum in this new node. The new
infrastructure currently going into the uMhlanga Ridge Town
Centre western expansion into Cornubia New Town is likely to
open up further short term sales potential in this area.
Various interfaces with the public sector continue to be
constructive and productive.
Overall, Tongaat Hulett’s profit for the full 2016/17 year will
continue to be influenced by a number of substantial and varying
dynamics, both positive and negative, and the full impact is
difficult to predict at this stage. The proportion of earnings in
the second half of the current year is likely to be significantly
higher than that of last year. Cash flow is expected to advance
substantially, including a release of the working capital absorbed
in the 2015/16 year.
Tongaat Hulett strives to be a proactive and resilient
organisation working in collaboration with all its stakeholders
through different business and agricultural cycles in a
constructive, mutual value-adding and developmental manner.
It has operations in six countries in SADC, significant
sugar cane and maize processing facilities, a unique land
conversion platform, a sizeable animal feeds thrust and
possibilities to grow ethanol and electricity generation.
For and on behalf of the Board
Bahle Sibisi Peter Staude
Chairman Chief Executive Officer
Amanzimnyama
Tongaat, KwaZulu-Natal
10 November 2016
DIVIDEND DECLARATION
Notice is hereby given that the Board has declared an interim gross
cash dividend (number 178) of 100 cents per share for the half-year
ended 30 September 2016 to shareholders recorded in the register
at the close of business on Friday 27 January 2017.
The salient dates of the declaration and payment of this interim
dividend are as follows:
Last date to trade ordinary shares
“CUM” dividend Tuesday 24 January 2017
Ordinary shares trade “EX” dividend Wednesday 25 January 2017
Record date Friday 27 January 2017
Payment date Thursday 2 February 2017
Share certificates may not be dematerialised or re-materialised,
nor may transfers between registers take place between Wednesday
25 January 2017 and Friday 27 January 2017, both days inclusive.
The dividend is declared in the currency of the Republic of South
Africa. Dividends paid by the United Kingdom transfer secretaries
will be paid in British currency at the rate of exchange ruling at
the close of business on Friday 20 January 2017.
The dividend has been declared from income reserves. A net dividend
of 85 cents per share will apply to shareholders liable for the
local 15% dividend withholding tax and 100 cents per share to
shareholders exempt from paying the dividend tax.
The issued ordinary share capital as at 10 November 2016 is
135 112 506 shares. The company’s income tax reference number is
9306/101/20/6.
For and on behalf of the Board
M A C Mahlari
Company Secretary
Amanzimnyama
Tongaat, KwaZulu-Natal
10 November 2016
INCOME STATEMENT
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months to
30 Sept 30 Sept 2015 31 March 2016
2016 (restated- (restated-
Rmillion note 10) note 10)
Revenue 8 503 7 609 16 676
Operating profit 1 350 1 276 1 669
Net financing costs (note 1) (408) (314) (680)
Profit before tax 942 962 989
Tax (note 2) (255) (288) (326)
Net profit for the period 687 674 663
Profit attributable to:
Shareholders of Tongaat
Hulett 639 635 716
Minority (non-controlling)
interest 48 39 (53)
687 674 663
Earnings per share (cents)
Basic 553,7 551,8 620,1
Diluted 553,7 551,8 620,1
Headline earnings attributable
to Tongaat Hulett shareholders
(note 3) 631 607 679
Headline earnings per share
(cents)
Basic 546,7 527,4 588,0
Diluted 546,7 527,4 588,0
Dividend per share (cents) 100,0 170,0 230,0
Currency conversion
Rand/US dollar closing 13,96 13,85 14,84
Rand/US dollar average 14,60 12,57 13,81
Rand/Metical average 0,25 0,35 0,35
Rand/Euro average 16,29 13,95 15,20
US dollar/Euro average 1,12 1,11 1,10
SEGMENTAL ANALYSIS
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months to
30 Sept 30 Sept 2015 31 March 2016
2016 (restated- (restated-
Rmillion note 10) note 10)
REVENUE
Sugar
Zimbabwe 2 371 1 863 3 549
Swaziland 124 148 205
Mozambique 1 325 1 394 1 664
South Africa 2 197 1 603 5 964
Sugar operations – total 6 017 5 008 11 382
Starch operations 2 114 1 750 3 640
Land Conversion and
Developments 372 851 1 654
Consolidated total 8 503 7 609 16 676
OPERATING PROFIT
Sugar
Zimbabwe 251 232 9
Swaziland 49 28 36
Mozambique 219 94 25
South Africa 306 123 (85)
Sugar operations – total 825 477 (15)
Starch operations 306 281 658
Land Conversion and
Developments 269 576 1 115
Centrally accounted and
consolidation items (42) (49) (70)
BEE IFRS 2 charge and
transaction costs (8) (9) (19)
Consolidated total 1 350 1 276 1 669
FURTHER ANALYSIS OF SUGAR OPERATING PROFIT
Sugar operations – before
cane valuations 1 184 1 052 (156)
Zimbabwe 557 603 138
Swaziland 47 58 26
Mozambique 288 322 (94)
South Africa 292 69 (226)
Cane valuations – income
statement effect (359) (575) 141
Zimbabwe (306) (371) (129)
Swaziland 2 (30) 10
Mozambique (69) (228) 119
South Africa 14 54 141
Sugar operations – after
cane valuations 825 477 (15)
Zimbabwe 251 232 9
Swaziland 49 28 36
Mozambique 219 94 25
South Africa 306 123 (85)
STATEMENT OF FINANCIAL POSITION
Condensed consolidated Unaudited Unaudited Audited
30 Sept 30 Sept 2015 31 March 2016
2016 (restated- (restated-
Rmillion note 10) note 10)
ASSETS
Non-current assets
Property, plant and
equipment 13 478 15 845 16 415
Long-term receivable 592 541 564
Goodwill 393 416 438
Intangible assets 290 59 212
Investments 25 28 26
14 778 16 889 17 655
Current assets 14 590 13 890 13 037
Inventories 4 889 4 721 2 866
Growing crops (note 4) 2 083 2 108 2 914
Trade and other receivables 5 059 5 094 5 380
Cash and cash equivalents 2 559 1 967 1 877
TOTAL ASSETS 29 368 30 779 30 692
EQUITY AND LIABILITIES
Capital and reserves
Share capital 135 135 135
Share premium 1 544 1 544 1 544
BEE held consolidation shares (640) (642) (625)
Retained income 8 779 8 331 8 191
Other reserves 587 3 731 4 028
Shareholders' interest 10 405 13 099 13 273
Minority (non-controlling)
interest 1 968 2 141 2 152
Equity 12 373 15 240 15 425
Non-current liabilities 7 973 7 865 8 086
Deferred tax 2 606 2 668 2 864
Long-term borrowings 4 547 3 795 3 791
Non-recourse equity-settled
BEE borrowings 622 605
Provisions 820 780 826
Current liabilities 9 022 7 674 7 181
Trade and other payables
(note 5) 4 605 3 969 3 897
Short-term borrowings 3 542 3 446 3 187
Non-recourse equity-settled
BEE borrowings 620
Tax 255 259 97
TOTAL EQUITY AND LIABILITIES 29 368 30 779 30 692
Number of shares (000)
– in issue 135 113 135 113 135 113
– weighted average (basic) 115 414 115 083 115 471
– weighted average (diluted) 115 414 115 083 115 471
STATEMENT OF CHANGES IN EQUITY
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months to
30 Sept 30 Sept 2015 31 March 2016
2016 (restated- (restated-
Rmillion note 10) note 10)
Balance at beginning of
period 13 273 11 889 11 889
Total comprehensive income
for the period (2 787) 1 426 1 763
Retained income 639 635 698
Movement in hedge reserve (6) (2) 7
Foreign currency
translation (3 420) 793 1 058
Dividends paid (66) (231) (417)
BEE share-based payment charge 7 8 17
Share-based payment charge 25 40 60
Settlement of share-based
payment awards (47) (33) (39)
Shareholders' interest 10 405 13 099 13 273
Minority (non-controlling)
interest 1 968 2 141 2 152
Balance at beginning of
period 2 152 1 887 1 887
Total comprehensive income
for the period (180) 258 284
Retained income 48 39 (53)
Foreign currency
translation (228) 219 337
Dividends paid to minorities (4) (4) (19)
Equity 12 373 15 240 15 425
STATEMENT OF OTHER COMPREHENSIVE INCOME
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months to
30 Sept 30 Sept 2015 31 March 2016
2016 (restated- (restated-
Rmillion note 10) note 10)
Net profit for the period 687 674 663
Other comprehensive income (3 654) 1 010 1 384
Items that will not be
reclassified to profit
or loss:
Foreign currency
translation (3 648) 1 012 1 395
Actuarial loss (24)
Tax on actuarial loss 6
Items that may be reclas-
sified subsequently to
profit or loss:
Hedge reserve (8) (3) 10
Tax on movement in hedge
reserve 2 1 (3)
Total comprehensive income
for the period (2 967) 1 684 2 047
Total comprehensive income
attributable to:
Shareholders of Tongaat
Hulett (2 787) 1 426 1 763
Minority (non-controlling)
interest (180) 258 284
(2 967) 1 684 2 047
STATEMENT OF CASH FLOWS
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months to
30 Sept 30 Sept 2015 31 March 2016
2016 (restated- (restated-
Rmillion note 10) note 10)
Operating profit 1 350 1 276 1 669
Surplus on disposal of
property, plant and equipment (11) (34) (84)
Depreciation 589 757 1 231
Growing crops and other
non-cash items 389 656 36
Operating cash flow 2 317 2 655 2 852
Change in working capital (1 256) (2 389) (989)
Cash flow from operations 1 061 266 1 863
Tax payments (190) (109) (221)
Net financing costs (408) (314) (680)
Cash flow from operating
activities 463 (157) 962
Expenditure on property,
plant and equipment:
New (95) (240) (488)
Replacement (228) (296) (668)
Major plant overhaul
cost changes (139) (57) 34
Root planting costs (133) (381) (668)
Intangible assets (82) (28) (123)
Other capital items 7 45 109
Net cash flow before dividends
and financing activities (207) (1 114) (842)
Dividends paid (70) (235) (436)
Net cash flow before financing
activities (277) (1 349) (1 278)
Borrowings raised 1 267 1 550 1 273
Non-recourse equity-settled
BEE borrowings 15 (32) (49)
Settlement of share-based
payment awards (47) (33) (39)
Net increase/(decrease) in
cash and cash equivalents 958 136 (93)
Balance at beginning of
period 1 877 1 668 1 668
Foreign currency translation (276) 163 302
Cash and cash equivalents at
end of period 2 559 1 967 1 877
NOTES
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months to
30 Sept 30 Sept 2015 31 March 2016
2016 (restated- (restated-
Rmillion note 10) note 10)
1. Net financing costs
Interest paid (472) (350) (778)
Interest capitalised 16 3 28
Interest received 48 33 70
(408) (314) (680)
2. Tax
Normal (355) (316) (277)
Deferred 100 28 (49)
(255) (288) (326)
3. Headline earnings
Profit attributable to
shareholders 639 635 716
Adjusted for:
Capital profit on disposal
of land and buildings (8) (26) (42)
Loss on other capital items 4
Surplus on disposal of
property, plant and
equipment (3) (4)
Minority (non-controlling)
interest 1 (1)
Tax on the above items 2 2 2
631 607 679
4. Growing crops
Growing crops, comprising standing cane, is measured at fair
value which is determined using an estimate of cane yields and
prices which are unobservable inputs and, in accordance with
IFRS, categorised as level 3 under the fair value hierarchy.
Changes in fair value are recognised in profit or loss. A
change in yield of one ton per hectare on the estimated yield
of 73 tons cane per hectare (30 September 2015: 83 tons per
hectare and 31 March 2016: 73 tons per hectare) would result
in a R31 million (30 September 2015: R25 million and 31 March
2016: R37 million) change in fair value while a change of one
percent in the cane price would result in a R23 million
(30 September 2015: R26 million and 31 March 2016: R33 million)
change in fair value.
5. Trade and other payables
Included in trade and other payables is the maize obligation
(interest bearing) of R712 million (30 September 2015:
R573 million and 31 March 2016: R376 million).
6. Capital expenditure commitments
Contracted 94 261 196
Approved 152 338 213
246 599 409
7. Operating lease commitments 70 94 75
8. Guarantees and contingent
liabilities 129 68 101
9. Basis of preparation and accounting policies
The condensed consolidated unaudited results for the half-year
ended 30 September 2016 have been prepared in accordance with
and containing the information required by IAS 34 Interim
Financial Reporting, the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee, Financial
Reporting Pronouncements as issued by the Financial Reporting
Standards Council and the requirements of the Companies Act of
South Africa. The additional disclosure required in terms of
paragraph 16A(j) of IAS 34 is available on the website, at the
registered office or on request. Except as described below,
the report has been prepared using accounting policies that
comply with IFRS which are consistent with those applied in
the financial statements for the year ended 31 March 2016 and
were prepared under the supervision of the Chief Financial
Officer, M H Munro CA (SA). Any reference to future financial
performance that may be included in this announcement has not
been reviewed and reported on by the company's auditor.
10. Adoption of new or revised accounting standards
Tongaat Hulett has adopted all the new or revised accounting
pronouncements as issued by the IASB which were effective for
Tongaat Hulett from 1 January 2016. The adoption of these
standards had no recognition and measurement impact on the
financial results, other than for the compulsory adoption of
the revised IAS 16 and IAS 41 which has resulted in cane roots
being reclassified from growing crops to property, plant and
equipment in the statement of financial position, root
planting costs being capitalised to the cost of the roots and
thereafter the roots depreciated over their estimated useful
lives. Standing cane is now disclosed as a current asset.
Comparative figures have been restated. The restated
consolidated financial statements for the year ended 31 March
2016 have been prepared and audited in accordance with the
recognition and measurement criteria of IFRS. The effect of
the adoption of the revised IAS 16 and IAS 41 on profit or
loss for the 6 months ended 30 September 2015 (with the full
year ended 31 March 2016 in brackets) was a decrease in
operating profit of R85 million (2016: R139 million), deferred
tax relief of R17 million (2016: R32 million) and a decrease
in net profit for the period of R68 million (2016: R107
million). The effect on earnings per share and headline
earnings per share (basic and diluted) was a decrease of
57,4 cents per share (2016: 90,1 cents per share). There was
no impact on other comprehensive income (2016: decrease in
foreign currency translation of R2 million). The effect on the
statement of financial position at 30 September was the
reclassification of cane roots of R3 060 million (2016: R3 234
million) from growing crops to property, plant and equipment,
a decrease of R85 million (2016: R137 million) in the carrying
value of cane roots, and decreases in equity and deferred tax
of R68 million (2016: R105 million) and R17 million (2016:
R32 million) respectively.
11. Subsequent events
There were no material events between 30 September 2016 and
the date of this report.
CORPORATE INFORMATION
Directorate: C B Sibisi (Chairman), P H Staude (Chief Executive
Officer)*, S M Beesley, F Jakoet, J John, R P Kupara^,
T N Mgoduso, N Mjoli-Mncube, M H Munro*, S G Pretorius,
T A Salomão +
* Executive directors + Mozambican ^ Zimbabwean
Registered office: Amanzimnyama Hill Road, Tongaat, KwaZulu-Natal
P O Box 3, Tongaat 4400
Telephone: +27 32 439 4019
Facsimile: +27 31 570 1055
Transfer secretaries:
Computershare Investor Services (Pty) Limited
Telephone: +27 11 370 7700
Sponsor:
Investec Bank Limited
Telephone: +27 11 286 7000
www.tongaat.com
e-mail: info@tongaat.com
Date: 14/11/2016 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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