| Mon 23 Feb 2009, 7:05 | | TON - Tongaat Hulett Limited - Audited results and final dividend declaration |
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TON - Tongaat Hulett Limited - Audited results and final dividend declaration
for the year ended 31 December 2008
Tongaat Hulett Limited
Registration number: 1892/000610/06
JSE share code: TON
ISIN: ZAE000096541
Audited Results and Final Dividend Declaration for the year ended 31 December
2008
- Revenue of R7,1 billion (2007: R6,4 billion)
- Profit from operations of R1,132 billion (2007: R838 million)
- Headline earnings of R583 million (2007: R61 million)
- Annual dividend of 310 cents per share (2007: 310 cents per share)
COMMENTARY
Revenue increased by 11% to R7,1 billion in 2008 and profit from operations grew
by 35% to R1,132 billion. Headline earnings improved to R583 million (2007: R61
million which were affected by corporate structuring transactions).
Profit from the starch and glucose operations grew to R240 million (2007: R105
million), as margins recovered in improved market conditions. The South African
maize crop increased to 12 million tons (2007: 7 million tons), with the larger
area planted and good weather conditions, resulting in local maize prices
trading close to world prices from April 2008. Prices in the international
starch and glucose markets improved as demand for agricultural commodities
increased with changing dietary habits. Sales volumes in the domestic market
grew by 1% through the successful recovery of volumes in the coffee creamer
sector previously supplied by imported product and good growth in the
confectionary sector. This was offset by declines in the alcoholic beverage
sector due to the increased competition from imported product and declines in
the papermaking sector.
Profit from the various sugar operations grew to R606 million (2007: R360
million), with the Zimbabwean operations being accounted for on a dividend
received basis.
In Swaziland, Tambankulu Estates produced a raw sugar equivalent of 56 000 tons
(2007: 58 000 tons) and has benefited from higher realisations within the
Swaziland sugar industry. Operating profit increased by 26% to R44 million.
Dividends of R35 million (2007: R53 million) were received from Triangle Sugar
in Zimbabwe. In the 2008 season, under extremely difficult circumstances, sugar
production was 298 000 tons compared to the 349 000 tons produced in 2007. The
business has had to contend, inter alia, with the extreme effects of
hyperinflation, exchange rate movements, foreign currency shortages and price
controls.
In the Mozambique expansion projects, 8 150 hectares have been planted-up to
date and the cane is growing well. The Xinavane mill expansion is far advanced,
with project activities taking place simultaneously with the ongoing sugar
production processes. Sugar production at Xinavane was 63 000 tons (2007: 67 000
tons). In addition 64 000 tons of cane representing approximately 8 000 tons of
sugar was used as seed cane in the plant-up process. Mafambisse`s sugar
production was 45 000 tons (2007: 41 000). At Mafambisse, following the
completion of the agriculture expansion plant-up, Tongaat Hulett`s shareholding
increased from 75% to 85%. At both Mafambisse and Xinavane, as the plant-up
areas of the agriculture expansion reached completion, shareholder loans have
been converted to equity and the benefit of currency gains realised. The
Mozambique operations` contribution to profit increased to R250 million (2007:
R88 million).
The South African agriculture, sugar milling and refining operations contributed
R73 million to profit (2007: R46 million). In 2008, 644 000 tons of sugar were
produced (2007: 604 000 tons). The low 2007 and 2008 crops resulted in lower raw
sugar exports and continued upward pressure on costs per ton. Export volumes
from South Africa were 210 000 tons (2007: 245 000 tons) and were sold at an
effective world sugar price of 12,1 US c/lb (2007: 11,8 US c/lb) at an average
exchange rate of R8,05/US$ (2007: R7,12/US$). South African domestic sales
increased to 466 000 tons (2007: 460 000 tons).
The downstream sugar value added activities contributed R204 million to profit
(2007: R138 million). The South African refined exports, domestic marketing,
sales and distribution activities delivered another good performance, as did the
Botswana and Namibian sugar packing and distribution operations. Voermol, the
downstream animal feeds operation increased profits, with improved margins.
Operating profit from agricultural land conversion and developments amounted to
R263 million (2007: R428 million) with a further R22 million in capital profits
(2007: R48 million) being realised. Market conditions for property development
in the prime residential, resorts and commercial sectors were depressed during
the year, while the demand for land for affordable housing and industrial
property in the Durban area remained positive. The shortage of established
industrial logistics, support and service locations continues to delay
development north of Durban. During the year 181 developable hectares (368 gross
hectares) were sold, comprising 21 hectares in prime locations, mainly Umhlanga
Ridgeside and Umhlanga Ridge Town Centre, and 160 hectares for affordable
housing in the Cornubia area. Approval for the 260 hectare Zimbali Lakes
development was secured late in 2008.
The centrally accounted and consolidation items include an R86 million gain on
the recognition of an unconditional entitlement, in 2008, to an employer surplus
account in respect of the 2001 surplus apportionment in the Tongaat Hulett
pension fund.
Cash inflow from operations increased to R965 million for 2008 (2007: R502
million). Tongaat Hulett`s net debt has increased to R2,356 billion from R991
million at the end of 2007 with significant capital expenditure, mainly on the
Mozambique expansion and investment in sugar cane growing crops. Finance costs
increased to R280 million, with the higher interest rates and the increased
borrowings in the business.
The 2007 financial results included the main effects of the completed corporate
structuring transactions - the listing and unbundling of Hulamin, a share buy-
back and the 25% BEE equity participation transactions. The 2008 results include
the ongoing amortisation of the employee BEE equity transactions` IFRS2 charge
to the income statement and the consolidation of the BEE special purpose
vehicles, as required by International Financial Reporting Standards (IFRS). The
balance sheet reflects the consolidation of the debt in the BEE equity
participation entities, which is independent of the Tongaat Hulett net debt and
is to be effectively equity settled.
The Board has declared a final dividend of 150 cents per share. This brings the
total annual dividend to 310 cents per share.
OUTLOOK
Tongaat Hulett has the advantage, in the prevailing global economic turbulence,
of operating in a number of less affected market sectors, having specific
opportunities in its operations and being favoured by a weaker Rand.
Land and property development sales in the short term are expected to come from
the growth corridor north of Durban that commences inland of Umhlanga/Umdloti,
extends around the new international airport at La Mercy and includes the
greater Tongaat region. Tongaat Hulett owns 6 086 gross hectares in this
corridor. Given the housing backlog and Government`s commitment to
infrastructure spend, there is both opportunity and socio-economic urgency to
establish communities with affordable housing in this area and to accelerate
land conversion for airport services and support logistics, niche industrial,
health care, education and social facilities. In the present economic
conditions, few hectares are likely to be converted to development in the high
value, prime locations on the coastline (Tongaat Hulett`s 6 006 hectares) and to
the west of eThekwini (2 050 hectares) and the focus is on securing
infrastructure and development rights, for conversion at the appropriate time.
Current developments in Zimbabwe are encouraging. In normalised conditions the
Zimbabwean sugar operations would have twice the capacity of the expanded
Mozambique operations, with similar market access and lower costs. The South
African sugar milling, agriculture and refining operations will be influenced by
the size of the current crop and the cane supply dynamics in northern KwaZulu-
Natal. In Mozambique, sugar production in 2009 is targeted to be more than
double the production in 2008, as the expansions come on stream, moving towards
the 300 000 ton per annum level and benefiting from preferential access to the
European Union market at premium prices. Following the anticipated cash
absorption in the Mozambique expansion continuing into 2009, cash inflow is
expected to commence in the latter part of 2009 and early 2010.
The starch operations have the prospect of a full year with maize prices close
to the world price. Approximately 70% of the operation`s maize requirements for
2009 have already been procured on this basis and there are good weather and
planting indications for the current maize season.
For and on behalf of the Board
C M L Savage P H Staude
Chairman Chief Executive Officer
Amanzimnyama
Tongaat, KwaZulu-Natal
19 February 2009
DIVIDEND DECLARATION
Notice is hereby given that the Board has declared a final dividend (number 163)
of 150 cents per share for the year ended 31 December 2008 to shareholders
recorded in the register at the close of business on Friday 20 March 2009.
The salient dates of the declaration and payment of this final dividend are as
follows:
Last date to trade ordinary shares
"CUM" dividend Friday 13 March 2009
Ordinary shares trade
"EX" dividend Monday 16 March 2009
Record date Friday 20 March 2009
Payment date Thursday 26 March 2009
Share certificates may not be dematerialised or re-materialised, nor may
transfers between registers take place between Monday 16 March 2009 and Friday
20 March 2009, 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 13 March 2009.
For and on behalf of the Board
D McIlrath
Company Secretary
Amanzimnyama
Tongaat, KwaZulu-Natal
19 February 2009
INCOME STATEMENT
Condensed consolidated
Rmillion Note 2008 2007
Revenue - continuing operations 7 106 6 395
Profit from Tongaat Hulett operations 1 132 838
Capital profit on land 22 48
Capital profit on insurance claim 49
BEE IFRS2 charge and transaction costs (33) (383)
Valuation adjustments 1 2 (1)
Fair value adjustment of investment in Hulamin 3 348
Operating profit after corporate transactions 1 172 3 850
Net financing costs 2 (280) (119)
Profit before tax 892 3 731
Tax 3 (212) (288)
Net profit after tax 680 3 443
Discontinued operation
Hulamin unbundling 42
Net profit for the year 680 3 485
Attributable to:
Shareholders 649 3 457
Minority interest 31 28
680 3 485
Headline earnings attributable to shareholders 583 61
Earnings per share (cents)
Net profit per share
Basic 629,7 3 292,8
Diluted 616,8 3 220,7
Headline earnings per share
Basic 565,6 58,1
Diluted 554,1 56,8
Annual dividend per share (cents) 310,0 310,0
Interim paid 160,0 150,0
Final declared 150,0 160,0
Currency conversion
Rand/US dollar average 8,27 7,05
Rand/US dollar closing 9,30 6,84
Rand/GB pound closing 13,45 13,61
HEADLINE EARNINGS
Condensed consolidated
Rmillion 2008 2007
Profit attributable to shareholders 649 3 457
Less after tax effect of:
Profit on disposal of land (22) (48)
Profit on insurance claim (46)
Loss on disposal of other fixed assets 2
Reversal of fair value adjustment of Hulamin (3 348)
Headline earnings 583 61
BALANCE SHEET
Condensed consolidated
Rmillion 2008 2007
ASSETS
Non-current assets
Property, plant and equipment 4 659 3 210
Growing crops 742 353
Long-term receivable 196 203
Goodwill 99 42
Intangible assets 6 6
Investments 268 267
5 970 4 081
Current assets 3 587 3 546
Inventories 1 709 1 331
Trade and other receivables 1 647 1 742
Derivative instruments 2 12
Tax 65
Cash and cash equivalents 229 396
TOTAL ASSETS 9 557 7 627
EQUITY AND LIABILITIES
Capital and reserves
Share capital 138 138
Share premium 1 506 1 517
BEE held consolidation shares (1 023) (1 053)
Retained income 2 087 1 796
Other reserves 351 337
Shareholders` interest 3 059 2 735
Minority interests in subsidiaries 276 223
Equity 3 335 2 958
Non-current liabilities 2 865 2 156
Deferred tax 582 673
Long-term borrowings 1 212 410
Non-recourse equity-settled BEE borrowings 792 812
Provisions 279 261
Current liabilities 3 357 2 513
Trade and other payables (note 7) 1 849 1 494
Short-term borrowings 1 373 977
Derivative instruments 23 2
Tax 112 40
TOTAL EQUITY AND LIABILITIES 9 557 7 627
Number of shares (000)
- in issue 103 247 103 005
- weighted average (basic) 103 070 104 987
- weighted average (diluted) 105 225 107 337
STATEMENT OF CHANGES IN EQUITY
Condensed consolidated
Rmillion 2008 2007
Balance at beginning of year 2 735 4 957
Net profit 649 3 457
Reallocation of minority interest (22) (7)
Dividends paid (336) (531)
Share capital issued - ordinary shares 7 49
Share capital issued - B ordinary shares 227
Share capital issued - A preferred
ordinary shares 839
Repurchase of ordinary shares (450)
BEE held consolidation shares 30 (1 053)
Share issue expenses (9)
Share-based payment charge 27 374
Settlement of share-based payment awards (15) (81)
Movement in hedge reserve (15)
Foreign currency translation (1) 19
Distribution in specie on unbundling of Hulamin (5 056)
Shareholders` interest 3 059 2 735
Minority interest in subsidiaries 276 223
Balance at beginning of year 223 76
Share of profit 31 28
Reallocation of minority interest 22 7
Dividends paid to minorities (19) (20)
Change of holding in subsidiary (8)
Equity contribution by BEE minorities 18
Consolidation of subsidiaries 129
Hulamin unbundling (19)
Foreign currency translation 27 4
Equity 3 335 2 958
CASH FLOW STATEMENT
Condensed consolidated
Rmillion 2008 2007
Operating profit 1 172 3 850
Profit on disposal of property,
plant and equipment (74) (48)
Adjustments for:
Depreciation 244 222
Corporate transactions (3 011)
Other non-cash flow items (297) (43)
Tax payments (163) (293)
Change in working capital 83 (175)
Cash flow from operations 965 502
Net financing costs (280) (119)
Cash flow from operating activities 685 383
Expenditure on property, plant and equipment:
New (1 317) (516)
Replacement (221) (193)
Major plant overhaul costs capitalised (38) (46)
Expenditure on intangible assets (2) (4)
Expenditure on growing crops (167) (14)
Proceeds on disposal of property,
plant and equipment 96 58
Investments (55) (2)
Long-term receivable 7
Net cash flow before dividends and
financing activities (1 012) (334)
Dividends paid (355) (551)
Net cash flow before financing activities (1 367) (885)
Borrowings raised 1 160 712
Non-recourse equity-settled BEE borrowings (20) 812
Shares issued 7 49
Equity contribution by BEE minorities 18
Share repurchase (450)
Settlement of share-based payment awards (11) (73)
Share issue expenses (9)
Net (decrease)/increase in cash and
cash equivalents (231) 174
Balance at beginning of year 396 509
Foreign exchange adjustment 55 15
Exchange rate translation gain/(loss) 9 (1)
Subsidiaries consolidated 46
Hulamin unbundling (347)
Cash and cash equivalents at end of year 229 396
NOTES
Condensed consolidated
Rmillion 2008 2007
1. Valuation adjustments
Exchange rate translation gain/(loss) 9 (1)
Fair value adjustment on long-term receivable (7)
2 (1)
2. Net financing costs
Interest paid (428) (208)
Interest capitalised 103 15
Interest received 45 74
(280) (119)
3. Tax
Normal (256) (98)
Deferred 66 (63)
Rate change adjustment (deferred) 22
Secondary tax on companies (44) (127)
(212) (288)
4. Capital expenditure commitments
Contracted 587 539
Approved but not contracted 114 796
701 1 335
5. Operating lease commitments 28 23
6. Guarantees and contingent liabilities 122 35
7. Trade and other payables
Included in trade and other payables is the maize obligation (interest bearing)
of R373 million (2007: R163 million).
8. Audited results
The consolidated financial statements for the year ended 31 December 2008 have
been audited by Deloitte & Touche. Their unqualified audit opinion is available
for inspection at the registered office of the company.
9. Basis of preparation
The audited financial statements for the year ended 31 December 2008, from which
these condensed financial statements were derived, have been prepared in
accordance with the accounting policies which fully comply with International
Financial Reporting Standards, IAS 34 Interim Financial Reporting, Schedule 4 of
the Companies Act and the JSE Limited Listing Requirements and are consistent
with those applied in the previous year. Tongaat Hulett continues to account for
its Zimbabwean operations on a dividend received basis.
SEGMENTAL ANALYSIS
Condensed consolidated Revenue Profit Total Total
R million from Assets Liabilities
Operations
2008
Starch operations 2 150 240 1 841 585
Land and property 412 263 1 260 579
developments
Sugar operations 4 544 606 6 432 676
Zimbabwe dividends 35
Swaziland 44
operations
Mozambique 250
operations
SA agriculture, 73
milling and refining
Downstream value 204
added activities
Centrally accounted 23 24 2 896
and consolidated items
7 106 1 132 9 557 4 736
2007
Starch operations 1 679 105 1 658 317
Land and property 892 428 1 671 699
developments
Sugar operations 3 824 360 4 260 193
Zimbabwe dividends 53
Swaziland 35
operations
Mozambique 88
operations
SA agriculture, 46
milling and refining
Downstream value 138
added activities
Centrally accounted (55) 38 1 932
and consolidated items
6 395 838 7 627 3 141
Condensed consolidated Capital Capital Depreciation
R million Employed Expenditure
2008
Starch operations 1 257 85 92
Land and property 625 3 2
developments
Sugar operations 5 721 1 487 150
Zimbabwe dividends
Swaziland
operations
Mozambique
operations
SA agriculture,
milling and refining
Downstream value
added activities
Centrally accounted (30) 1
and consolidated items
7 573 1 576 244
2007
Starch operations 1 340 76 91
Land and property 948 8 1
developments
Sugar operations 3 807 671 130
Zimbabwe dividends
Swaziland
operations
Mozambique
operations
SA agriculture,
milling and refining
Downstream value
added activities
Centrally accounted (4)
and consolidated items
6 091 755 222
CORPORATE INFORMATION
Directorate: C M L Savage (Chairman), P H Staude (Chief Executive Officer)*, P M
Baum, E le R Bradley, B G Dunlop*, F Jakoet, J John, J B Magwaza, T V Maphai, M
Mia, N Mjoli-Mncube, M H Munro*, T H Nyasulu, C B Sibisi, R H J Stevens, J G
Williams
* Executive directors
Registered office: Amanzimnyama Hill Road, Tongaat, KwaZulu-Natal
P O Box 3, Tongaat 4400
Telephone: +27 32 439 4000, Facsimile: +27 32 945 3333
Transfer secretaries: Computershare Investor Services (Pty) Limited
Telephone: +27 11 370 7700
Sponsor: Investec Bank Limited
Telephone: +27 11 286 7000
www.tongaat.co.za e-mail: info@tongaat.co.za
23 February 2009
Date: 23/02/2009 07:05:07 Produced by the JSE SENS Department.
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