| Mon 30 Jul 2007, 7:00 | | TON - Tongaat Hulett Limited - Interim Results and |
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TON - Tongaat Hulett Limited - Interim Results and dividend declaration
Tongaat Hulett Limited
(formerly The Tongaat-Hulett Group Limited)
Registration number: 1892/000610/06
JSE share code: TON
ISIN: ZAE000096541
INTERIM RESULTS
for the half-year ended 30 June 2007
- Profit from Tongaat Hulett operations of R308 million (2006: R307 million)
- Once-off corporate structuring costs of R354 million
- Total net profit of R3,209 billion - includes valuation of Hulamin prior
to unbundling
- Headline loss of R155 million (2006: R297 million headline profit)
- Interim dividend of 150 cents per share (2006: 200 cents per share)
CEO Peter Staude said "After last year`s record earnings, these results are
another step along a journey. Tongaat Hulett possesses the advantage of owning
an unmatched mix of agri-processing and land assets which together with the
ability to make things happen enables us to exploit a rapidly changing global
agriculture, land, energy and trade environment. The profit from operations in
the first half of 2007 was achieved in difficult conditions. We expect to
deliver real growth in profit from operations for the full 2007 year."
COMMENTARY
The Tongaat-Hulett Group has unbundled its shareholding in Hulamin to its
shareholders following the listing of Hulamin on the JSE. Two focussed,
separately listed entities have been established in the form of Tongaat Hulett
and Hulamin. Tongaat Hulett is an agri-processing business, which includes
integrated components of land management, property development and
agriculture. Hulamin is an independent niche producer of rolled, extruded and
other semi-fabricated aluminium products.
Pursuant to the listing and unbundling of Hulamin at the end of June 2007,
Tongaat Hulett`s 50% share in Hulamin was valued through the income statement
by R3,348 billion and thereafter unbundled as a distribution in specie.
Hulamin`s net profit (which does not include the investment fair valuation)
for the period up to the unbundling is reflected as a discontinued operation.
The corporate transactions being undertaken by Tongaat Hulett include a 25%
BEE equity participation and a return of capital to shareholders by way of a
share buy-back. All the transactions were approved by shareholders with a 99%
vote in favour at a general meeting held on 11 June 2007, where 84% of
shareholders were represented. The 18% strategic partner, cane and
infrastructure BEE equity participation cost was measured and recognised at
the grant date in June 2007, resulting in a once-off IFRS 2 cost of R320
million being charged to the income statement. Advisory and other transaction
related costs of R34 million have also been brought to account. The share buy-
back, totalling R506 million including STC and implemented in July 2007, will
be accounted for in the second half of 2007. The IFRS 2 costs relating to the
7% BEE employee transaction will be amortised over 5 years, commencing in the
second half of 2007 with a cost of approximately R15 million in that period.
Net finance costs increased to R37 million (2006: R15 million income) as a
result of higher interest rates and the non-recurrence of financial instrument
income received in 2006 on the Hulamin finance structure.
Profit from Tongaat Hulett operations in the first six months of the year was
R308 million (2006: R307 million).
Tongaat Hulett`s total net profit for the six months to 30 June 2007 is R3,209
billion (2006: R320 million). Headline earnings, which exclude the Hulamin
fair valuation and include the transaction costs and BEE IFRS 2 costs, reflect
a headline loss of R155 million (2006: R297 million headline profit) for the
half-year.
Profit from sugar operations was R167 million (2006: R159 million excluding
dividends from Triangle in Zimbabwe). The 2006 crop in South Africa was the
second lowest in the past 10 years, with the resultant increased cost per ton
of sugar and the lower export stocks carried forward into the first half of
2007. Raw sugar export volumes from South Africa reduced to 84 079 tons (2006:
162 301 tons) and were sold at an effective world sugar price of 14,4 US c/lb
(2006: 11,1 US c/lb). South African domestic sales were 209 765 tons (2006:
209 311 tons). Improved contributions were achieved from non-South African
operations including the consolidation of Xinavane in Mozambique. No dividends
from Triangle in Zimbabwe were brought to account in the first half of 2007
(2006: R8 million). A dividend equivalent to 8 million US dollars has been
declared by Triangle and approved by the Zimbabwe Reserve Bank, which is
expected to be brought to account in the second half of 2007.
Total sugar production in 2007 is forecast at 1,327 million tons, an increase
of 24% compared to the 1,067 million tons produced in 2006. Production in
South Africa is estimated at 704 000 tons (2006: 666 000 tons). In Swaziland,
Tambankulu Estates is expected to produce the raw sugar equivalent of 54 000
tons (2006: 55 000 tons). In Zimbabwe, sugar production is expected to
increase to 442 000 tons (including 201 000 tons at Hippo Valley) from the 240
000 tons produced by Triangle in 2006. In Mozambique, sugar production at
Xinavane is expected to increase to 77 000 tons (2006: 65 000 tons) with
Mafambisse increasing to 50 000 tons (2006: 41 000 tons). New cane expansion
and procurement initiatives continue across all the regions. The Mozambique
expansion projects at Xinavane and Mafambisse are progressing well.
Profit from starch operations reduced to R37 million (2006: R43 million) as
margins remained under pressure from high domestic maize prices. Poor weather
conditions during the South African summer rainfall period resulted in local
maize prices increasing to import parity levels. Improved local co-product
selling prices partially reduced the impact of the increase in maize prices.
Domestic sales volumes of starch based products grew by 6,7% with strong
demand seen in the alcoholic beverages and confectionery sectors. Local maize
prices are expected to remain at import parity levels for the remainder of
2007 given the current supply and demand balance. International maize prices
have increased by 70% since the fourth quarter of 2006, driven by increased
demand for biofuels. They are likely to remain at relatively high levels,
supporting an increase in planting in South Africa for the 2007/2008 season.
This should result in domestic maize prices moving below import parity levels.
International starch margins have started to improve after coming under
pressure during the latter part of 2006 and early 2007 as a result of the
sharp increases in the international maize price.
Profit from land and property developments of R127 million (2006: R117
million) was achieved from restricted levels of zoned stock. Progress is being
made on securing development approvals at Umhlanga Ridgeside, Sibaya Resort at
Umdloti, Zimbali Lakes, Assagay Valley residential area at Shongweni, further
phases of Izinga and Umhlanga Ridge Town Centre residential precincts at
Umhlanga Ridge. Significant contributions in the first half of 2007 came from
RiverHorse Valley Business Estate, Bridge City, Umhlanga Ridge Town Centre,
Zimbali Coastal Resort, Izinga Ridge and Kindlewood. Demand across all
portfolios remains strong and the shortage of stock of zoned and serviced
sites throughout the region, as a result of ongoing delays in obtaining
development approvals, is contributing to higher prices.
The Board has declared an interim dividend for the half-year of 150 cents per
share (2006: 200 cents per share).
OUTLOOK
Headline earnings for 2007 will include the significant effects of the once-
off costs of the corporate transactions, as reported for the half-year to 30
June 2007 and as indicated in the circular to shareholders dated 18 May 2007.
Profit from Tongaat Hulett operations in the second half of the year is
expected to exceed that achieved in the first half of 2007. Real growth in
profit from operations is expected for the full 2007 year.
For and on behalf of the Board
C M L Savage P H Staude
Chairman Chief Executive Officer
Amanzimnyama,
Tongaat, KwaZulu-Natal
27 July 2007
DIVIDEND DECLARATION
Notice is hereby given that the Board has declared an interim dividend (number
160) of 150 cents per share for the half-year ended 30 June 2007 to
shareholders recorded in the register at the close of business on Friday 24
August 2007.
The salient dates of the declaration and payment of this interim dividend are
as follows:
Last date to trade ordinary shares
"CUM" dividend Friday 17 August 2007
Ordinary shares trade "EX" dividend Monday 20 August 2007
Record date Friday 24 August 2007
Payment date Thursday 30 August 2007
Share certificates may not be dematerialised or re-materialised, nor may
transfers between registers take place between Monday 20 August 2007 and
Friday 24 August 2007, 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 17 August 2007.
For and on behalf of the Board
M M L Mokoka
Company Secretary
Amanzimnyama,
Tongaat, KwaZulu-Natal
27 July 2007
INCOME STATEMENT
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
2007 2006 2006
Rmillion Note Restated Restated
Revenue - continuing operations 2 434 2 269 5 110
Profit from Tongaat Hulett
operations 308 307 726
BEE IFRS 2 charge and
transaction costs 1 (354)
Exchange rate translation gain 3 46 57
Exceptional items 5 22 26
Fair value adjustment of
investment in Hulamin 2 3 348
Operating profit after
corporate transactions 3 310 375 809
Share of associate company`s loss (4)
Net financing costs 3 (37) 15 88
Profit before tax 3 273 390 893
Tax 4 (106) (113) (238)
Net profit after tax 3 167 277 655
Discontinued operation
Hulamin (50%) 42 43 69
Net profit for the period 3 209 320 724
Attributable to:
Shareholders 3 198 317 723
Minority interest 11 3 1
3 209 320 724
Headline (loss)/earnings
attributable to shareholders 5 (155) 297 703
Earnings per share (cents)
Net profit per share
Basic 2 993,9 302,1 685,3
Diluted 2 935,0 294,0 667,8
Headline (loss)/earnings per share
Basic (145,1) 283,1 666,4
Diluted (142,3) 275,5 649,4
Dividend per share (cents) 150,0 200,0 550,0
Currency conversion
Rand/US dollar average 7,16 6,31 6,77
Rand/US dollar closing 7,05 7,15 7,00
Rand/GB pound closing 14,14 13,21 13,73
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
2007 2006 2006
Rmillion Restated Restated
SEGMENTAL ANALYSIS
REVENUE
Tongaat Hulett Starch 751 614 1 316
Tongaat Hulett Developments 205 285 598
Tongaat Hulett Sugar 1 478 1 370 3 196
Continuing operations 2 434 2 269 5 110
Discontinued operation
Hulamin (50%) 1 648 1 203 2 738
Total revenue 4 082 3 472 7 848
PROFIT FROM TONGAAT HULETT
OPERATIONS
Tongaat Hulett Starch 37 43 96
Tongaat Hulett Developments 127 117 325
Tongaat Hulett Sugar 167 159 295
Triangle dividend 8 61
Centrally accounted costs (23) (20) (51)
Profit from Tongaat Hulett operations 308 307 726
BALANCE SHEET
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
2007 2006 2006
Rmillion
ASSETS
Non-current assets
Property, plant and equipment 2 847 4 185 4 270
Growing crops 380 263 212
Long-term receivable 203 203 203
Goodwill 42 22 21
Intangible assets 2 13 14
Investments 267 70 320
3 741 4 756 5 040
Current assets 2 787 3 726 4 016
Inventories 972 1 279 1 595
Trade and other receivables 1 575 1 767 1 879
Derivative instruments 8 44 33
Cash and cash equivalents 232 636 509
TOTAL ASSETS 6 528 8 482 9 056
EQUITY AND LIABILITIES
Capital and reserves
Share capital 108 106 107
Share premium 978 902 932
Retained income 1 654 3 674 3 868
Other reserves 315 31 50
Shareholders` interest 3 055 4 713 4 957
Minority interest in subsidiaries 187 80 76
Equity 3 242 4 793 5 033
Non-current liabilities 967 1 375 1 401
Deferred tax 606 980 1 055
Long-term borrowings 109 106 49
Provisions 252 289 297
Current liabilities 2 319 2 314 2 622
Trade and other payables (note 9) 1 150 1 326 1 388
Short-term borrowings 1 118 895 1 174
Derivative instruments 7 71 16
Tax 44 22 44
TOTAL EQUITY AND LIABILITIES 6 528 8 482 9 056
Number of shares (000)
- in issue 107 789 105 698 106 591
- weighted average (basic) 106 816 104 925 105 497
- weighted average (diluted) 108 962 107 818 108 261
STATEMENT OF CHANGES IN EQUITY
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
Rmillion 2007 2006 2006
Balance at beginning of period 4 957 4 613 4 613
Net profit 3 198 317 723
Dividends paid (373) (294) (506)
Share capital issued 48 83 106
Share issue expenses (9)
Share-based payment reserve 364 10 22
Settlement of share-based payment
awards (87)
Hedge reserve released to
income statement (4) (9) (9)
Gains/(losses) from cash flow hedges 3 (21) 8
Share of associate`s movement in
currency translation reserve (1)
Foreign currency translation 2 15
Distribution in specie on unbundling
of Hulamin (5 044)
Shareholders` interest 3 055 4 713 4 957
Minority interest in subsidiaries 187 80 76
Balance at beginning of period 76 75 75
Share of profit 11 3 1
Dividends paid to minorities (16)
Foreign currency translation 3 2
Consolidation of subsidiaries 132
Adjustment for Hulamin minority on
unbundling (19)
Equity 3 242 4 793 5 033
CASH FLOW STATEMENT
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
Rmillion 2007 2006 2006
Operating profit after corporate
transactions 3 310 470 1 020
Net financing costs (37) (19) (23)
Profit on disposal of property,
plant and equipment (6) (22) (45)
Non-cash items:
Depreciation 106 131 272
Other non-cash items (3 084) (105) (59)
Tax payments (108) (97) (152)
Change in working capital 39 (28) (407)
Cash flow from operating activities 220 330 606
Expenditure on property,
plant and equipment:
New (134) (98) (281)
Replacement (141) (74) (163)
Major plant overhaul costs
capitalised (40) (39) (38)
Expenditure on intangible assets (1) (3)
Growing crop disposals 1 7
Proceeds on disposal of property,
plant and equipment 6 22 78
Investments (9) (5) (257)
Net cash flow before dividends and
financing activities (98) 136 (51)
Dividends paid (389) (294) (506)
Net cash flow before financing
activities (487) (158) (557)
Borrowings raised 602 144 358
Hedges of foreign loans (5) 19
Shares issued 48 83 106
Settlement of share-based
payment awards (87)
Share issue expenses (9)
Net increase/(decrease) in cash
and cash equivalents 67 64 (74)
Balance at beginning of period 509 526 526
Adjustment to opening balance on
unbundling of Hulamin (347)
Exchange rate translation gain 3 46 57
Cash and cash equivalents at
end of period 232 636 509
NOTES
1. BEE IFRS 2 charge and transaction costs
A once-off R320 million IFRS 2 charge has been brought to account in
respect of the facilitation of the 18% BEE equity participation
transaction. Advisory and other transaction related costs of
R34 million have been brought to account.
2. Hulamin unbundling and restatement of comparatives
Pursuant to the listing and unbundling of Hulamin at the end of June
2007, Tongaat Hulett`s 50 percent investment in Hulamin was fair
valued through profit or loss by R3 348 million and thereafter
unbundled as a distribution in specie. Comparative figures in the
profit or loss and segmental analysis have been restated to reflect
Hulamin as a discontinued operation, as required by IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations.
3. Net financing costs
Interest paid (90) (22) (38)
Financial instrument income 19 104
Interest received 53 18 22
(37) 15 88
4. Tax
Normal (63) (38) (85)
Deferred 4 (38) (90)
Secondary tax on companies (47) (37) (63)
(106) (113) (238)
5. Headline earnings
Profit attributable to shareholders 3 198 317 723
Less after tax effect of surplus on
sale of fixed assets (5) (20) (20)
Reversal of fair value adjustment
of Hulamin (3 348)
(155) 297 703
6. Capital expenditure commitments
Contracted 196 115 169
Approved 1 298 199 640
1 494 314 809
7. Operating lease commitments 20 34 45
8. Guarantees and contingent
liabilities 27 51 79
9. Trade and other payables
Included in trade and other payables is the maize obligation
(interest bearing) of R160 million (30 June 2006: R75 million and
31 December 2006: R130 million).
10. Basis of preparation
The condensed consolidated unaudited results for the half-year ended
30 June 2007 have been prepared in accordance with the accounting
policies which fully comply with International Financial Reporting
Standards and are consistent with the audited annual financial
statements at 31 December 2006. The interim report has been prepared
in accordance with IAS 34 Interim Financial Reporting. Tongaat Hulett
continues to account for its Zimbabwean operations, including Triangle
Sugar and Hippo Valley Estates, on a dividend received basis.
CORPORATE INFORMATION
Directorate: C M L Savage (Chairman), P H Staude (Chief Executive Officer)*, P
M Baum, I Botha, E le R Bradley, B G Dunlop*, J John,
J B Magwaza, M Mia, M H Munro*, T H Nyasulu, C B Sibisi, R H J Stevens
* Executive directors
Registered office: Amanzimnyama Hill Road, Tongaat, KwaZulu-Natal
P O Box 3, Tongaat 4400
Telephone: +27 32 439 4019, Facsimile: +27 32 945 3333
Transfer secretaries: Computershare Investor Services (2004) (Pty) Limited
Telephone: +27 11 370 7700
Sponsor: Investec Bank Limited
Telephone: +27 11 286 7000
Additional information about Tongaat Hulett is available at our website:
www.tongaat.co.za e-mail: info@tongaat.co.za
Date: 30/07/2007 07:00:06 Produced by the JSE SENS Department.
