| Mon 3 Aug 2009, 7:05 | | TON - Tongaat Hulett - Interim Results for the half-year ended 30 June 2009 |
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TON - Tongaat Hulett - Interim Results for the half-year ended 30 June 2009
Tongaat Hulett Limited
Registration No: 1892/000610/06
JSE share code: TON
ISIN: ZAE000096541
Interim Results for the half-year ended 30 June 2009
- Revenue of R3,9 billion (2008: R3,1 billion)
- Profit from operations of R864 million (2008: R443 million)
- Headline earnings of R440 million (2008: R252 million)
- Interim dividend of 100 cents per share (2008: 160 cents per share)
- Consolidation of Zimbabwe operations
COMMENTARY
The first half of 2009 was characterised by the restoration of key
macroeconomic fundamentals for the sugar business in Zimbabwe and limited
opportunity for agricultural land conversion as a result of testing market
conditions for property developers in South Africa. Headline earnings
increased to R440 million compared to R252 million in the first half of 2008.
Operating profit from agricultural land conversion and development amounted to
R64 million (2008: R115 million) with a further R2 million in capital profits
(2008: R15 million) being realised. During the first half of the year, 95
developable hectares (183 gross hectares) were sold, of which, 93 hectares
were for affordable housing in the eThekwini growth corridor. Market
conditions for property development in the prime residential, resorts and
commercial sectors continued to be depressed, while the demand for land for
affordable housing and industrial property in the Durban area remained
positive. There is a shortage of established industrial logistics, support and
service locations north of Durban, which continues to be the focus of
attention, particularly with the new international airport under construction
for 2010. Good progress has been made in areas such as Sibaya, Cornubia and
Canelands in the planning and acquisition of development rights, with the
conversion from agricultural land to take place at the appropriate time.
The South African agriculture, sugar milling and refining operations
contributed R77 million to profit (2008: R37 million). In the first half of
2009, raw export volumes from South Africa increased to 93 000 tons (2008: 66
000 tons) and were sold at an effective world sugar price of 12,9 US c/lb
(2008: 10,8 US c/lb) at an average exchange rate of R8,34/US$ (2008:
R7,50/US$). South African domestic sales were 240 000 tons (2008: 230 000
tons). In 2009, sugar production is estimated to be 638 000 tons compared to
the 644 000 tons produced in 2008.
The downstream sugar value added activities contributed R94 million to profit
(2008: R75 million). The South African refined exports, domestic marketing,
sales and distribution activities benefited from increased realisations and
delivered another good performance, as did Voermol and the Botswana and
Namibian sugar packing and distribution operations.
In Swaziland, Tambankulu Estates is expected to produce a raw sugar equivalent
of 53 000 tons (2008: 56 000 tons) and has benefited from higher realisations
within the Swaziland sugar industry. Operating profit grew to R34 million
(2008: R29 million).
The Mozambique profit from operations increased to R134 million (2008: R77
million), with the growth in the agricultural activities contributing
significantly. The expanded mill at Xinavane commenced limited crushing in
June and will be in a ramp-up phase until the end of August. Production at
Xinavane this year is expected to be above 150 000 tons (2008: 63 000 tons) in
an extended season, weather permitting. Mafambisse`s sugar production is
expected to be 83 000 tons (2008: 45 000 tons), following the expansion
completed in 2008.
The Zimbabwe sugar operations are now consolidated in Tongaat Hulett`s
financial results. This consolidation follows the macroeconomic changes that
essentially occurred when Zimbabwe moved to a US dollar and Rand based economy
and, in so doing, restored relevant key fundamentals to the economy. The
accounting treatment, in terms of International Financial Reporting Standards,
on the commencement of consolidation of these operations gives rise to a
balance sheet take-on gain of R1,969 billion, which is recognised in the
income statement. This gain is excluded from the profit from operations and
excluded from headline earnings. The profit from operations in the first half
of 2009 in Zimbabwe was R305 million (compared to the dividend received of R35
million in 2008). Sales to the domestic market were undertaken in US dollars
at levels in line with regional pricing and export shipments to the European
Union were fulfilled. The milling campaign got underway in the second quarter,
with sugar production in Zimbabwe in 2009 expected to be similar to the 298
000 tons produced in 2008.
Profit from the starch and glucose operations was R112 million (2008: R103
million). A second successive season of favourable agricultural conditions in
South Africa resulted in local maize prices trading close to world prices for
a large part of the period. The positive effects of improved margins were
offset by reduced demand. Sales volumes in the local market declined by 4,3%
with growth in confectionary and coffee creamer sectors being offset by
declines in the paper and alcoholic beverage sector. Sales to the industrial
sector are expected to remain below last year, while sales to the alcoholic
beverage sector are expected to recover in the second half of the year with
the commissioning of a new brewery in Gauteng that will replace current
imported beer sales. Approximately 90% of customer sales contracts for the
current year have been concluded with maize procured close to world price
levels.
The centrally accounted and consolidation items include an R82 million gain on
the recognition of an unconditional entitlement in the first half of 2009 to
an employer surplus account allocation in the Tongaat Hulett pension fund.
Cash inflow from operations was R253 million (2008: R180 million). Tongaat
Hulett`s net debt has increased to R3,064 billion from R2,356 billion at the
end of 2008 with significant capital expenditure, mainly on the Mozambique
expansion and the cash absorption in sugar cane growing crops. Finance costs
increased to R151 million, commensurate with the borrowings in the business.
The Board has declared an interim dividend of 100 cents per share (2008: 160
cents per share).
OUTLOOK
Profit from operations in the second half of the year is expected to be below
that achieved in the first six months. Agricultural land conversion
opportunities are limited in current market conditions. A stronger Rand would
affect export realisations from South Africa and the profit in Rands reported
by the operations outside South Africa. Profit from operations in Zimbabwe in
the second half is likely to be well below the first half of the year, which
included the benefit of the recovery of pricing and its impact on sugar stocks
and the value of cane. The seasonal nature of cane growing leads to operating
profit in the first six months which includes the increased value from the
growth in the cane crop. Following the anticipated cash absorption in the
Mozambique expansion, significant cash inflow is expected to commence in the
latter part of 2009 and early 2010.
In Zimbabwe, management attention is focused on improving cane yields and the
re-establishment of outgrower cane lands, so as to restore sugar production to
the existing installed capacity of 600 000 tons per annum from the current
production level of some 298 000 tons. Similarly, the attention in Mozambique
is on moving from the 105 000 tons produced in 2008 to the newly installed
milling capacity of 300 000 tons per annum. Both Zimbabwe and Mozambique
benefit from preferential access to the attractive European Union markets.
The current dynamics of a higher world sugar price are encouraging for the
South African sugar industry. Improved returns from sugar cane farming will
encourage an improvement in farming practices and increased hectarage under
cane, leading to improved milling capacity utilisation.
The structural changes that are taking place in international agricultural
commodity markets are resulting in improved competitiveness of South African
maize and the starch operations, which have additional capacity for local and
export growth. Southern Africa has the opportunity to become a sustainable net
exporter of maize in the medium term.
Land and property development activity is currently focused on 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 5 906 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.
Tongaat Hulett, with its established agricultural and agri-processing
operations in Southern Africa, remains well positioned for the emerging global
food, agricultural products and renewable energy demands.
(This outlook statement has not been reviewed and reported on by the
auditors).
For and on behalf of the Board
J B Magwaza Peter Staude
Chairman Chief Executive Officer
Amanzimnyama
Tongaat, KwaZulu-Natal
29 July 2009
DIVIDEND DECLARATION
Notice is hereby given that the Board has declared an interim dividend (number
164) of 100 cents per share for the half-year ended 30 June 2009 to
shareholders recorded in the register at the close of business on Friday 11
September 2009.
The salient dates of the declaration and payment of this interim dividend are
as follows:
Last date to trade ordinary shares
"CUM" dividend Friday 4 September 2009
Ordinary shares trade
"EX" dividend Monday 7 September 2009
Record date Friday 11 September 2009
Payment date Thursday 17 September 2009
Share certificates may not be dematerialised or re-materialised, nor may
transfers between registers take place between Monday 7 September 2009 and
Friday 11 September 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 4 September 2009.
For and on behalf of the Board
D McIlrath
Company Secretary
Amanzimnyama
Tongaat, KwaZulu-Natal
29 July 2009
INCOME STATEMENT
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
Rmillion Note 2009 2008 2008
Revenue 3 852 3 109 7 106
Profit from operations 864 443 1 132
Capital profit on land 2 15 22
Capital profit on
insurance claim 12 49
BEE IFRS 2 charge and
transaction costs (15) (17) (33)
Zimbabwe consolidation
take-on gain 1 969
Valuation adjustments (1) 6 2
Operating profit 2 831 447 1 172
Share of associate
company`s profit 1
Net financing costs 1 (151) (85) (280)
Profit before tax 2 681 362 892
Tax 2 (208) (84) (212)
Net profit for the period 2 473 278 680
Profit attributable to:
Shareholders of
Tongaat Hulett 2 419 266 649
Minority (non-controlling)
interest 54 12 31
2 473 278 680
Headline earnings attributable
to Tongaat Hulett
shareholders 3 440 252 583
Earnings per share (cents)
Net profit per share
Basic 2 342,9 258,1 629,7
Diluted 2 305,5 251,6 616,8
Headline earnings per share
Basic 426,2 244,6 565,6
Diluted 419,4 238,3 554,1
Dividend per share (cents) 100,0 160,0 310,0
Currency conversion
Rand/US dollar average 9,20 7,66 8,27
Rand/US dollar closing 7,74 7,83 9,30
Rand/GB pound closing 12,73 15,58 13,45
SEGMENTAL ANALYSIS
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
Rmillion 2009 2008 2008
REVENUE
Starch operations 1 085 982 2 150
Agricultural Land Conversion
and Developments 85 322 412
Sugar operations 2 682 1 805 4 544
Consolidated total 3 852 3 109 7 106
PROFIT FROM OPERATIONS
Starch operations 112 103 240
Agricultural Land Conversion
and Developments 64 115 263
Sugar
Zimbabwe operations
(2008: dividends) 305 35 35
Swaziland operations 34 29 44
Mozambique operations 134 77 250
SA agriculture, milling
and refining 77 37 73
Downstream value added
activities 94 75 204
Centrally accounted items 44 (28) 23
Consolidated total 864 443 1 132
STATEMENT OF FINANCIAL POSITION
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
Rmillion 2009 2008 2008
ASSETS
Non-current assets
Property, plant and equipment 7 696 3 855 4 659
Growing crops 1 517 575 742
Long-term receivable 196 196 196
Goodwill 255 86 99
Intangible assets 5 5 6
Investments 7 267 268
9 676 4 984 5 970
Current assets 3 767 3 920 3 587
Inventories 1 605 1 207 1 709
Trade and other receivables 1 922 2 310 1 647
Derivative instruments 22 21 2
Tax 65
Cash and cash equivalents 218 317 229
TOTAL ASSETS 13 443 8 904 9 557
EQUITY AND LIABILITIES
Capital and reserves
Share capital 138 138 138
Share premium 1 512 1 503 1 506
BEE held consolidation shares (1 009) (1 038) (1 023)
Retained income 4 335 1 884 2 087
Other reserves (370) 384 351
Shareholders` interest 4 606 2 871 3 059
Minority interest in
subsidiaries 889 247 276
Equity 5 495 3 118 3 335
Non-current liabilities 4 089 2 564 2 865
Deferred tax 1 562 688 582
Long-term borrowings 1 263 806 1 212
Non-recourse equity-settled
BEE borrowings 780 803 792
Provisions 484 267 279
Current liabilities 3 859 3 222 3 357
Trade and other payables
(note 4) 1 781 1 862 1 849
Short-term borrowings 2 019 1 350 1 373
Derivative instruments 2 23
Tax 57 10 112
TOTAL EQUITY AND LIABILITIES 13 443 8 904 9 557
Number of shares (000)
- in issue 103 247 103 078 103 247
- weighted average (basic) 103 247 103 043 103 070
- weighted average (diluted) 104 924 105 734 105 225
STATEMENT OF CHANGES IN EQUITY
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
Rmillion 2009 2008 2008
Balance at beginning
of period 3 059 2 735 2 735
Total comprehensive income
for the period 1 691 295 633
Retained earnings 2 419 266 649
Movement in hedge reserve 26 (3) (15)
Foreign currency translation (754) 32 (1)
Dividends paid (158) (168) (336)
Reallocation of minority interest (12) (11) (22)
Share capital issued - ordinary 6 5 7
BEE held consolidation shares 14 15 30
Share-based payment charge 14 13 27
Settlement of share-based payment
awards (8) (13) (15)
Shareholders` interest 4 606 2 871 3 059
Minority interest in
subsidiaries 889 247 276
Balance at beginning of period 276 223 223
Total comprehensive income
for the period (119) 32 58
Retained earnings 54 12 31
Foreign currency translation (173) 20 27
Dividends paid to minorities (8) (7) (19)
Reallocation of minority
interest 12 11 22
Change of holding in subsidiary (12) (8)
Consolidation of subsidiaries 728
Equity 5 495 3 118 3 335
STATEMENT OF OTHER COMPREHENSIVE INCOME
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
Rmillion 2009 2008 2008
Profit for the period 2 473 278 680
Other comprehensive income (901) 49 11
Movement in non-distributable
reserves
Foreign currency translation (927) 52 26
Hedge reserve 33 (4) (21)
Tax on movement in
hedge reserve (7) 1 6
Total comprehensive income
for the period 1 572 327 691
Total comprehensive income
attributable to:
Shareholders of
Tongaat Hulett 1 691 295 633
Minority (non-controlling)
interest (119) 32 58
1 572 327 691
STATEMENT OF CASH FLOWS
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
Rmillion 2009 2008 2008
Operating profit 2 831 447 1 172
Profit on disposal of property,
plant and equipment (14) (15) (74)
Non-cash items:
Depreciation 235 120 244
Other non-cash items (2 509) (200) (297)
Tax payments (123) (99) (163)
Change in working capital (167) (73) 83
Cash flow from operations 253 180 965
Net financing costs (151) (84) (280)
Cash flow from operating
activities 102 96 685
Expenditure on property, plant
and equipment:
New (559) (437) (1 317)
Replacement (98) (163) (221)
Major plant overhaul
costs capitalised (31) (38) (38)
Expenditure on intangible assets (2)
Expenditure on growing crops (23) (26) (167)
Proceeds on disposal of property,
plant and equipment 17 16 96
Investments 4 (54) (55)
Long-term receivable 7 7
Net cash flow before dividends
and financing activities (588) (599) (1 012)
Dividends paid (166) (175) (355)
Net cash flow before financing
activities (754) (774) (1 367)
Borrowings raised 727 668 1 160
Non-recourse equity-settled
BEE borrowings (12) (9) (20)
Shares issued 6 5 7
Settlement of share-based
payment awards (8) (9) (11)
Net decrease in cash and cash
equivalents (41) (119) (231)
Balance at beginning of period 229 396 396
Foreign exchange adjustment (38) 27 55
Exchange rate translation
(loss)/gain (1) 13 9
Subsidiaries consolidated 69
Cash and cash equivalents at
end of period 218 317 229
NOTES
Condensed consolidated Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
Rmillion 2009 2008 2008
1. Net financing costs
Interest paid (218) (155) (428)
Interest capitalised 55 42 103
Interest received 12 28 45
(151) (85) (280)
2. Tax
Normal (53) (46) (256)
Deferred (134) (38) 66
Rate change adjustment (deferred) 22 22
Secondary tax on companies (21) (22) (44)
(208) (84) (212)
3. Headline earnings
Profit attributable to
shareholders 2 419 266 649
Less Zimbabwe consolidation
take-on gain (1 969)
Less after tax effect of:
Profit on disposal of land (2) (15) (22)
Profit on insurance claim (10) (46)
Loss on disposal of other
fixed assets 2 1 2
440 252 583
4. Trade and other payables
Included in trade and other payables is the maize obligation (interest
bearing) of R159 million (30 June 2008: R209 million and 31 December 2008:
R373 million).
5. Capital expenditure commitments
Contracted 380 143 587
Approved 59 611 114
439 754 701
6. Operating lease commitments 16 15 28
7. Guarantees and contingent
liabilities 153 86 122
8. Basis of preparation
The condensed consolidated unaudited results for the half-year ended 30 June
2009 have been prepared in accordance with International Accounting Standard
34 Interim Financial Reporting. The accounting policies are consistent with
those used for the audited 2008 annual financial statements which fully comply
with International Financial Reporting Standards, the Companies Act,as amended
and the JSE Limited Listing Requirements. Tongaat Hulett`s Zimbabwean
operations, which were previously accounted for on a dividend received basis,
have now been consolidated giving rise to a balance sheet take-on gain of
R1,969 billion as determined in accordance with IFRS 3 (revised 2008). This
standard has been early adopted and has been applied prospectively with no
restatement of comparatives. In addition, IAS 1 Presentation of Financial
Statements (revised), and IFRS 8 Operating Segments were adopted during the
current financial period. The adoption of these new standards has resulted in
certain disclosure reclassifications but has not resulted in any changes in
accounting policy.
CORPORATE INFORMATION
Directorate: J B Magwaza (Chairman), P H Staude (Chief Executive Officer)*, P
M Baum, B G Dunlop*, F Jakoet, J John, 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
email: info@tongaat.co.za
Date: 03/08/2009 07:05:03 Produced by the JSE SENS Department.
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