| Mon 28 May 2012, 7:15 | | TON - Tongaat Hulett Limited - Audited Results for the year ended 31 March 2012 |
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TON - Tongaat Hulett Limited - Audited Results for the year ended 31 March 2012
Tongaat Hulett Limited
Registration No: 1892/000610/06
JSE share code: TON
ISIN: ZAE000096541
Audited Results for the year ended 31 March 2012
- Revenue of R12,081 billion (2011: R9,681 billion) +24,8%
- Sugar production of 1,150 million tons (2011: 1,006 million
tons) +14,3%
- Profit from operations of R1,921 billion (2011: R1,338 billion)
+43,6%
- Headline earnings of R891 million (2011: R806 million) +10,5%
- Annual dividend of 290 cents per share (2011: 250 cents per
share) +16,0%
COMMENTARY
Tongaat Hulett`s total sugar production for the 2011/12 year grew by 14% to
1,150 million tons. This included increases of 42% in Mozambique, 12% in
Zimbabwe and 7% in South Africa. The cane supplied to all the sugar mills grew
to 9,6 million tons, with significant momentum building in the various on-going
cane supply initiatives. The starch operations benefitted from world competitive
maize costs and improved co-product recoveries. An increasing number of hectares
of land are moving towards becoming active developments, with the first sales of
industrial land in Cornubia having been concluded in March 2012.
Revenue for the year of R12,081 billion was 24,8% above the prior year, mainly
as a result of increased sugar production together with improved realisations in
the regional and European Union sugar markets. The total profit from the various
operating areas grew by 53% and exceeded R2 billion for the first time. Headline
earnings grew to R891 million (2011: R806 million).
Good progress is being made across all the sugar operations to drive growth in
future cane supply (including hectares under cane, cane yields and cane quality)
in order to fully utilise the existing sugar milling capacity and reduce unit
costs as volumes increase. New plantings in the past year increased the area
under cane by some 13 520 hectares and the replanting of existing roots is being
accelerated for the benefit of future milling seasons. The many initiatives
underway to improve root age, farming practices and crop positioning are aimed
at improving cane yields and sucrose content.
Profit from the Mozambique sugar operations grew by 198% to R402 million (2011:
R135 million), with sugar production having grown by 42% to 233 000 tons (2011:
164 000 tons). Following the previous expenditure on establishing the cane, it
is now being harvested and the sugar produced and sold, with the operating cash
flow in Mozambique having increased by more than R400 million over the previous
year. Both the Mozambique and Zimbabwe operations benefitted from higher export
realisations and domestic prices in line with regional pricing levels. The
Zimbabwe sugar operations generated profit of R621 million (US$84 million)
compared to the previous year of R454 million (US$63 million). Sugar production
in Zimbabwe increased by 12% to 372 000 tons (2011: 333 000 tons), with the
majority of the increase coming from Hippo Valley.
Operating profit from the South African sugar operations including the
downstream sugar value added activities increased by 51% to R354 million (2011:
R234 million). Raw sugar production increased by 7% to 486 000 tons (2011: 455
000 tons). The gap between the hectares under cane and the hectares milled was
unusually large as a result of the substantial cane root planting following the
drought in the previous two years and the approximate 15 month lead time
required from planting to first harvesting. New cane planting driven by Tongaat
Hulett in the last year totalled 8 687 hectares, following the 9 696 hectares
planted in the previous two years. Sales by Tongaat Hulett into the local market
increased by 10%. Tongaat Hulett`s share of industry production increased from
23% to 26%. Operating profit in the South African agriculture, sugar milling and
refining operations started recovering and improved to R93 million (2011: loss
of R7 million). The various downstream sugar value added activities recorded
profit of R261 million (2011: R241 million). The Voermol animal feeds operation
experienced pressure on sales volumes and margins.
In Swaziland, the Tambankulu sugar estate`s operating profit recovered to R51
million (2011: R17 million), returning to 2009/10 levels. The raw sugar
equivalent production increased to 59 000 tons (2011: 54 000 tons), with higher
cane yields and sucrose content being achieved. Export pricing levels improved,
as did exchange rates.
In the land conversion and development activities, various sales strategies
(bulk sale, partnership or own development) are constantly reviewed for each
land holding and implemented as appropriate. Offers for bulk and semi-bulk land
sales received over the past two years that did not represent optimal value were
turned down. Revenue was generated from 22 developable hectares sold in Cornubia
and a further 20 developable hectares that were sold primarily in the Umhlanga
Ridge, Zimbali, Bridge City and Izinga areas. Operating profit grew by 30% to
R215 million (2011: R166 million) with a further R3 million in capital profits
(2011: R23 million) being realised.
Profit from the starch operations increased by 20% to R363 million, compared to
R303 million last year. Improved co-product revenues and local maize costs that
were previously contracted below Chicago (CBOT) prices resulted in an
improvement in starch and glucose processing margins. Manufacturing plant
performance has continued to improve and sales volumes in the local market were
1,4% above last year.
The "centrally accounted and consolidation items" component of the income
statement reflects the effect of the pension fund employer surplus account
allocation of 2010/11 not being repeated in 2011/12. Profit from operations,
after centrally accounted items, grew by 43,6% to R1,921 billion.
Finance costs increased to R507 million from R472 million in the 2011/12 year
and are commensurate with the level of borrowings.
Operating cash flow, before working capital, improved by R863 million to R1,757
billion for the year. This follows the previous absorption of cash in the
various expansion and on-going sugar cane establishment programs. The net cash
outflow, after dividends, of R293 million reflected an improvement of R534
million over the prior year. Tongaat Hulett`s net debt at 31 March 2012 was
R4,404 billion. A first long-term bond issuance of R750 million was successfully
concluded.
Total net profit was R1,021 billion (2011: R871 million). The gain in respect of
the pension fund accounting of R288 million and the R129 million employer
surplus account allocation in the prior year did not arise again in the current
year. The minority shareholders` interests increased to R132 million (2011: R38
million) as a result of higher profits at the sugar milling operations in
Mozambique and at Hippo Valley in Zimbabwe. Headline earnings were R891 million,
compared to the R806 million earned in the prior year.
The Board has declared a final dividend of 170 cents per share, bringing the
annual dividend to 290 cents per share (2011: 250 cents per share).
OUTLOOK
Tongaat Hulett`s drive to increase the cane available for its mills is
continuing to build momentum (including hectares under cane, yields and cane
quality), towards fully utilising its existing milling capacity of more than 2
million tons of sugar. At full capacity utilisation, sugar production would
increase by more than 75% over the 1,150 million tons of the 2011/12 season.
Unit costs will benefit substantially from increasing volumes and yields, as
milling costs are mostly fixed and many of the agricultural costs are fixed per
hectare, countering the effect of current cost pressures including wage
increases.
The strategy to increase cane supply in South Africa is focused on commercial
farmers, small scale farmers and increasing Tongaat Hulett`s influence in cane
development through leasing additional land and collaborating with Government to
rehabilitate cane supply on land reform farms that have gone out of cane. The
gap between hectares under cane and hectares milled will remain a feature of the
next three years as a result of accelerated root replanting to improve cane age,
generate better yields and increase the crop`s ability to withstand variable
weather conditions. Hectares available for milling in 2012/13 will increase as a
result of the 9 696 hectares which were planted in the 2009/10 and 2010/11
years. The additional 8 687 hectares that were planted in the 2011/12 season in
the catchment areas of Tongaat Hulett`s South African mills will largely be
harvested for the first time in the 2013/14 season.
Co-operation between the Zimbabwe Government, the eastern lowveld communities
and Tongaat Hulett is focused on the "Successful Rural Sugar Cane Farming
Community" project. Some 15 900 hectares have been allocated to approximately
870 indigenous farmers. In this past season, these farmers delivered 532 000
tons of cane (equivalent to 65 000 tons of sugar) from some 9 000 hectares. The
target is to uplift this to over 1,4 million tons of cane (equivalent to 180 000
tons of sugar) from the available hectares, with the pace of planting new roots
being targeted to average some 4 000 hectares per annum. It is thus pleasing
that some 6 000 hectares were planted in the 2011/12 year. This, together with
Tongaat Hulett`s improvement of its own agricultural yields, is key to achieving
the target of increasing sugar production in Zimbabwe to full milling capacity
of some 640 000 tons per annum.
Sugar production in Mozambique is expected to grow by a further 30% over the
next three years to above 310 000 tons per annum together with a reduction in
unit costs.
High levels of South African maize exports in the past season and dry weather
conditions during the current maize season have resulted in local maize prices
rising to levels slightly above international maize prices and this is expected
to place some pressure on starch margins. Exposure to future movements of the
maize price in the forthcoming year has been reduced with 59% of maize
requirements having been priced with customers or hedged below the international
maize price.
Tongaat Hulett has targeted some 8 600 developable hectares (13 607 gross
hectares) for development in South Africa. There are on-going processes on most
of the developable land to enhance its usage and value to all stakeholders. The
extent and pace of planning, in collaboration with Government, has increased
substantially. Cornubia industrial (80 hectares still to be sold) and Sibaya
node 1 (49 hectares) have recently become available for sale. Tongaat Hulett
continues to explore bulk land sale opportunities within its land holdings. The
exact timing of land sales, including bulk sales, remains variable in the
current economic climate.
Overall, as one of the main drivers of revenue and earnings, sugar production is
expected to increase by between 12% and 25% in the 2012/13 season. It is
anticipated that regional sugar prices will be stable and export realisations
into the European Union should remain attractive, with the business`s direct
exposure to the more volatile world sugar market being of the order of 10%.
Tongaat Hulett`s financial results remain sensitive to movements in exchange
rates, which impact particularly on export realisations and the conversion of
profits from Zimbabwe and Mozambique into Rands.
The future revenue stream would benefit significantly from electricity and
ethanol developments. Tongaat Hulett continues to interface with Government
towards establishing an appropriate regulatory framework for both electricity
generation and ethanol production from sugar cane.
For and on behalf of the Board
J B Magwaza Peter Staude
Chairman Chief Executive Officer
Amanzimnyama
Tongaat, KwaZulu-Natal
24 May 2012
DIVIDEND DECLARATION
Notice is hereby given that the Board has declared a final gross cash dividend
(number 169) of 170 cents per share for the year ended 31 March 2012 to
shareholders recorded in the register at the close of business on Friday 13 July
2012.
The salient dates of the declaration and payment of this final dividend are as
follows:
Last date to trade ordinary shares
"CUM" dividend Friday 6 July 2012
Ordinary shares trade "EX" dividend Monday 9 July 2012
Record date Friday 13 July 2012
Payment date Thursday 19 July 2012
Share certificates may not be dematerialised or re-materialised, nor may
transfers between registers take place between Monday 9 July 2012 and Friday 13
July 2012, 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 6 July 2012.
The dividend has been declared from income reserves. There are no STC credits
available for utilisation. A net dividend of 144,5 cents per share will apply to
shareholders liable for the local 15% dividend withholding tax and 170 cents per
share for shareholders exempt from paying the new dividend tax. The issued
ordinary share capital as at 24 May 2012 is 105 143 181 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
24 May 2012
INCOME STATEMENT
Condensed consolidated 2012 2011
Rmillion
Revenue 12 081 9 681
Profit from operations 1 921 1 338
Bulk sales / capital profit on land 3 23
Capital profit on other items 4
BEE IFRS 2 charge and transaction costs (48) (46)
Defined benefit pension fund asset
recognition 288
Valuation adjustments 2 (1)
Operating profit 1 878 1 606
Share of associate company`s profit/(loss) 1 (2)
Net financing costs (note 1) (507) (472)
Profit before tax 1 372 1 132
Tax (note 2) (351) (261)
Net profit for the year 1 021 871
Profit attributable to:
Shareholders of Tongaat Hulett 889 833
Minority (non-controlling) interest 132 38
1 021 871
Headline earnings attributable to
Tongaat Hulett shareholders (note 3) 891 806
Earnings per share (cents)
Net profit per share
Basic 837,0 786,0
Diluted 817,6 764,3
Headline earnings per share
Basic 838,9 760,5
Diluted 819,4 739,6
Dividend per share (cents) 290,0 250,0
Currency conversion
Rand/US dollar closing 7,67 6,80
Rand/US dollar average 7,44 7,19
Rand/Metical average 0,27 0,21
Rand/Euro average 10,24 9,49
US dollar/Euro average 1,38 1,32
SEGMENTAL ANALYSIS
Condensed consolidated 2012 2011
Rmillion
REVENUE
Starch operations 2 580 2 357
Land Conversion and Developments 366 207
Sugar
Zimbabwe operations 2 266 1 646
Swaziland operations 163 126
Mozambique operations 1 437 715
SA agriculture, milling and refining 3 465 2 991
Downstream value added activities 1 804 1 639
Consolidated total 12 081 9 681
PROFIT FROM OPERATIONS
Starch operations 363 303
Land Conversion and Developments 215 166
Sugar
Zimbabwe operations 621 454
Swaziland operations 51 17
Mozambique operations 402 135
SA agriculture, milling and refining 93 (7)
Downstream value added activities 261 241
Profit from the operating areas 2 006 1 309
Centrally accounted and consolidation items (85) 29
Consolidated total 1 921 1 338
STATEMENT OF FINANCIAL POSITION
Condensed consolidated 2012 2011
Rmillion
ASSETS
Non-current assets
Property, plant and equipment 9 026 7 665
Growing crops 3 575 2 608
Defined benefit pension fund asset 294 294
Long-term receivable 115 135
Goodwill 260 230
Intangible assets 65 32
Investments 12 7
13 347 10 971
Current assets 4 435 3 520
Inventories 1 483 1 365
Trade and other receivables 1 976 1 457
Major plant overhaul costs 380 331
Derivative instruments 4 11
Tax 6
Cash and cash equivalents 592 350
TOTAL ASSETS 17 782 14 491
EQUITY AND LIABILITIES
Capital and reserves
Share capital 140 140
Share premium 1 528 1 524
BEE held consolidation shares (799) (868)
Retained income 5 888 5 305
Other reserves (48) (1 301)
Shareholders` interest 6 709 4 800
Minority interest in subsidiaries 1 087 840
Equity 7 796 5 640
Non-current liabilities 4 706 3 981
Deferred tax 1 663 1 365
Long-term borrowings 1 732 1 345
Non-recourse equity-settled
BEE borrowings 737 761
Provisions 574 510
Current liabilities 5 280 4 870
Trade and other payables (note 4) 1 997 1 938
Short-term borrowings 3 264 2 930
Derivative instruments 1 2
Tax 18
TOTAL EQUITY AND LIABILITIES 17 782 14 491
Number of shares (000)
- in issue 105 143 105 014
- weighted average (basic) 106 209 105 986
- weighted average (diluted) 108 739 108 984
STATEMENT OF CHANGES IN EQUITY
Condensed consolidated 2012 2011
Rmillion
Balance at beginning of year 4 800 4 573
Total comprehensive income for the year 2 125 358
Retained earnings 889 833
Movement in hedge reserve (2) (3)
Foreign currency translation 1 238 (472)
Dividends paid (279) (191)
Share capital issued - ordinary 4 6
BEE held consolidation shares 42 42
Share-based payment charge 47 42
Settlement of share-based payment awards (30) (27)
Reallocation (3)
Shareholders` interest 6 709 4 800
Minority interest in subsidiaries 1 087 840
Balance at beginning of year 840 870
Total comprehensive income for the year 256 (29)
Retained earnings 132 38
Foreign currency translation 124 (67)
Dividends paid to minorities (9) (7)
Loan account movement 2
Reallocation 3
Consolidation of subsidiaries 1
Equity 7 796 5 640
STATEMENT OF OTHER COMPREHENSIVE INCOME
Condensed consolidated 2012 2011
Rmillion
Profit for the year 1 021 871
Other comprehensive income 1 360 (542)
Movement in non-distributable reserves:
Foreign currency translation 1 362 (539)
Hedge reserve (3) (4)
Tax on movement in hedge reserve 1 1
Total comprehensive income for the year 2 381 329
Total comprehensive income attributable to:
Shareholders of Tongaat Hulett 2 125 358
Minority (non-controlling) interest 256 (29)
2 381 329
STATEMENT OF CASH FLOWS
Condensed consolidated 2012 2011
Rmillion
Operating profit 1 878 1 606
Profit on disposal of property,
plant and equipment (10) (35)
Depreciation 366 344
Defined benefit pension fund asset
recognition (288)
Growing crops and other non-cash items (352) (622)
Tax payments (125) (111)
Operating cash flow 1 757 894
Change in working capital (519) (212)
Cash flow from operations 1 238 682
Net financing costs (507) (472)
Cash flow from operating activities 731 210
Expenditure on property, plant and equipment:
New (329) (396)
Replacement and plant overhaul (345) (410)
Expenditure on intangible assets (20) (26)
Capital expenditure on growing crops (57) (43)
Proceeds on disposal of property,
plant and equipment 19 41
Investments (4) (5)
Net cash flow before dividends and
financing activities (5) (629)
Dividends paid (288) (198)
Net cash flow before financing activities (293) (827)
Borrowings raised 516 1 103
Non-recourse equity-settled BEE borrowings (24) (26)
Shares issued 4 6
Settlement of share-based payment awards (30) (27)
Net increase in cash and cash equivalents 173 229
Balance at beginning of year 350 140
Foreign exchange adjustment 69 (18)
Exchange rate translation loss (1)
Cash and cash equivalents at end of year 592 350
NOTES
Condensed consolidated 2012 2011
Rmillion
1. Net financing costs
Interest paid (528) (491)
Interest capitalized 1 7
Interest received 20 12
(507) (472)
2. Tax
Normal (112) (72)
Deferred (187) (160)
Rate change adjustment - deferred (16)
Secondary tax on companies (36) (29)
(351) (261)
3. Headline earnings
Profit attributable to shareholders 889 833
Less after tax effect of:
Capital profit on disposal of land (23)
Capital profit on other items (4)
Fixed assets and other disposals 2
891 806
4. Trade and other payables
Included in trade and other payables is the maize obligation
(interest bearing) of R161 million (2011: R173 million).
5. Capital expenditure commitments
Contracted 132 134
Approved 210 51
342 185
6. Operating lease commitments 95 42
7. Guarantees and contingent liabilities 24 35
8. Basis of preparation
The condensed financial information has been prepared in
accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting
Standards (IFRS), the AC 500 standards as issued by the
Accounting Practices Board, the information as required by
International Accounting Standard 34 Interim Financial
Reporting and the requirements of the Companies Act of South
Africa. 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 2011.
These financial statements were prepared under the supervision
of the Chief Financial Officer, M H Munro CA (SA).
9. Audited results
These condensed financial statements, which have been derived
from the audited annual financial statements and with which
they are consistent in all material respects, have been audited
by Deloitte & Touche. Their unmodified audit opinion on the
annual financial statements is available for inspection at the
registered office of the company.
CORPORATE INFORMATION
Directorate: J B Magwaza (Chairman), P H Staude (Chief Executive Officer)*, B G
Dunlop*, F Jakoet, J John, R P Kupara, A A Maleiane+, T N Mgoduso, M Mia, N
Mjoli-Mncube, M H Munro*, S G Pretorius, C B Sibisi.
* Executive directors Zimbabwean + Mozambican
Company Secretary: M A C Mahlari
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: 28/05/2012 07:15:01 Produced by the JSE SENS Department.
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