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Illovo Sugar Limited interim report for the six months ended 30 September 2002
Company Registration No. 1906/000622/06
The principal accounting policies used in this report are in all
material respects consistently applied, and conform with South
African Statements of Generally Accepted Accounting Practice.
Review
This report incorporates alternative financial statements which
reflect results on both the basis of sugar industry norms (which
is necessary to achieve fair presentation pursuant to South
African Generally Accepted Accounting Practice Statement AC101/14
but requires the departure from AC000 and AC111) and the
requirements of the JSE Securities Exchange South Africa (with
regard to its strict interpretation and application of AC127
relative to interim financial reporting).
As the sugar season runs from 1 April to 31 March, operational
profits from cane growing and sugar milling incorporated in the
results comprise the company`s view of the position at 30
September 2002 as it relates to the season as a whole. All other
reported results are based on actual performance. The sugar
industry is a seasonal agriculturally-based business and is
therefore unique and complex in nature. The payment processes
are such that cash flows throughout the season are derived from
the expected tonnages and prices that will be achieved for the
season as a whole. The effect of this is that product sales
tonnages and prices received, and raw material prices paid are
provisional in nature until the conclusion of the season. For
this reason it is considered that profit figures based on actual
cash flows would not represent a fair presentation of the
performance and the results for the period.
The group achieved pleasing results for the half year with
headline earnings of R210.0 million reflecting a 44% improvement
over the same period in the previous year. Headline earnings per
share of 63.3 cents represent a 43% increase.
Group operating profits increased by 43% as a result of good
performances in South Africa, Malawi, Swaziland and Zambia. Net
financing costs have increased by R19.9 million to R112.0 million
largely due to exchange rate movements and higher interest rates,
whilst the tax rate has increased to a more normal 28%. Cash
generation was positive with net borrowings decreasing by R213.8
million to R1 531.3 million, thereby reducing gearing to 72%.
The contributions to operating profits by sugar manufacture were
63%, cane growing 20% and downstream 17%. The contributions to
profit by country, excluding Tanzania and Mozambique which are
currently still under development and are therefore not
consolidated, were South Africa 46%, Malawi 19%, Zambia 17%,
Swaziland 14% and the United States 4%.
The current season to-date has been characterised by favourable
growing conditions and in general the sugar factories have
performed very well. Assuming normal growing and operating
conditions for the remainder of the season, group sugar
production for the year is expected to be 2 219 000 tons, which
is 266 000 tons (14%) higher than the previous season`s record,
whilst company cane production is anticipated to be 5 551 000
tons which will be 679 000 tons higher than last season. The beet
slicing campaign at Monitor in the United States commenced as
normal in early October and is progressing satisfactorily.
Downstream production performance at the furfural, diacetyl,
acetoin, ethyl alcohol and lactulose plants has been good with
weekly record outputs being achieved. Downstream production
levels are expected to be similar or better than those achieved
last season.
The world sugar price has been very volatile as a result of
market concerns that world sugar production is likely to be in
surplus. However, regional and periodic monthly physical
shortages have resulted in short term price rallies. The South
African industry has taken advantage of these rallies and has
priced approximately 90% of anticipated export sales at US6c/lb.
A weaker rand has impacted favourably on earnings with around 70%
of anticipated currency receipts having been priced at around
R11.0/US$.
Progress towards the commercialisation of furfural as an
agricultural chemical continues to make good headway.
Dividend
An interim dividend of 26.0 cents per share (2001 : 20.0 cents)
has been declared.
Prospects
The record cane and sugar production estimates, good downstream
product output and the effects of favourable exchange rates are
expected to result in good growth in earnings for the full year.
Any dry weather conditions in the ensuing summer months would not
negatively impact the current season`s production levels.
However, the percentage profit increase for both the second half
and the full year, relative to the comparable periods in the
previous year, will be lower than that achieved for the first six
months.
On behalf of the Board
R A Williams D G MacLeod Durban
Chairman Managing Director 13 November 2002
GROUP INCOME
STATEMENTS
Sugar JSE
industry requiremen
norms t
Unaudited Unaudited Audited
Six months Six months Year ende
ended ended
30 30 31 March
September September
2002 2001 Change 2002 2001 2002
Notes Rm Rm % Rm Rm Rm
Revenue 3 535.4 2 780.6 27 4 191.6 2 737.8 6 001.0
Profit from 466.3 325.1 43 552.8 320.1 763.4
operations
Net 1 112.0 92.1 112.0 92.1 228.0
financing
costs
Profit 354.3 233.0 52 440.8 228.0 535.4
before
abnormal
items
Abnormal 2 0.2 30.5 0.2 30.5 20.1
items
Profit 354.5 263.5 35 441.0 258.5 555.5
before
taxation
Taxation 99.6 53.9 123.8 52.6 121.9
Profit after 254.9 209.6 22 317.2 205.9 433.6
taxation
Attributable
to outside
shareholders
in
subsidiary 43.2 33.0 66.3 38.5 72.2
companies
Net profit 211.7 176.6 20 250.9 167.4 361.4
from
ordinary
activities
Extraordinar - - - - 186.7
y item
Net profit
attributable
to
shareholders
in Illovo 211.7 176.6 20 250.9 167.4 174.7
Sugar
Limited
Determinatio
n of
headline
earnings :
Net profit 211.7 176.6 20 250.9 167.4 361.4
from
ordinary
activities
Adjusted for
:
Profit /
(loss) on
disposal of
property,
plant
and 1.4 5.3 1.4 5.3 (2.8)
equipment
Profit on - 25.2 - 25.2 23.3
disposal of
subsidiary
companies
Amortisation 0.3 - 0.3 - 0.6
of goodwill
Headline 210.0 146.1 44 249.2 136.9 340.3
earnings
Number of 332.1 330.8 332.1 330.8 331.7
shares in
issue
(millions)
Weighted
average
number of
shares on
which
headline
earnings per
share
are based 331.9 330.4 331.9 330.4 330.9
(millions)
Headline 63.3 44.2 43 75.1 41.4 102.8
earnings per
share
(cents)
Diluted 62.5 43.9 73.8 41.2 100.1
headline
earnings per
share
(cents)
Dividend per 26.0 20.0 30 51.0
share
(cents)
13.11.02
15:50
ABRIDGED GROUP BALANCE SHEETS
Sugar JSE
industry requirement
norms
Unaudited Unaudited Audited
30 September 30 September 31 March
2002 2001 2002 2001 2002
Rm Rm Rm Rm Rm
ASSETS
Non-current 3 003.3 2 848.9 3 003.3 2 848.9 2 982.6
assets
Property, 2 583.6 2,544.9 2 583.6 2,544.9 2 730.3
plant and
equipment
Investments 430.9 304.0 430.9 304.0 263.8
Goodwill ( 11.2) - ( 11.2) - ( 11.5)
Current 2 955.6 2 875.9 2 955.6 2 875.9 2 557.8
assets
Total assets 5 958.9 5 724.8 5 958.9 5 724.8 5 540.4
EQUITY AND
LIABILITIES
Capital and 1 771.0 1 557.3 1 810.2 1 548.1 1 786.3
reserves
Interest of 356.6 320.6 379.7 326.1 357.9
outside
shareholders
in
subsidiaries
Deferred 558.4 525.5 582.6 524.2 574.5
taxation
Net 1 531.3 1,745.1 1 531.3 1,745.1 1 459.5
borrowings
Current 1 741.6 1 576.3 1 655.1 1 581.3 1 362.2
liabilities
Total equity 5 958.9 5 724.8 5 958.9 5 724.8 5 540.4
and
liabilities
OTHER
SALIENT
FEATURES
Operating 13.2 11.7 13.2 11.7 12.7
margin (%)
Gearing (%) 72.0 92.9 69.9 93.1 68.1
Depreciation 116.8 102.0 116.8 102.0 200.1
Capital 126.2 81.3 126.2 81.3 166.4
expenditure
- expansion 18.7 28.5 18.7 28.5 41.8
- 107.5 52.8 107.5 52.8 124.6
replacement
Capital 156.9 135.7 156.9 135.7 264.5
commitments
- contracted 44.7 31.2 44.7 31.2 27.9
- approved 112.2 104.5 112.2 104.5 236.6
but not
contracted
Lease 621.5 605.6 621.5 605.6 618.2
commitments
- land and 530.8 534.7 530.8 534.7 513.9
buildings
- other 90.7 70.9 90.7 70.9 104.3
Contingent 397.9 349.4 397.9 349.4 469.5
liabilities
13.11.02
15:50
ABRIDGED GROUP CASH FLOW STATEMENTS
Sugar JSE
industry requirement
norms
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2002 2001 2002 2001 2002
Rm Rm Rm Rm Rm
Cash flows from operating and investing activities
Cash 592.7 479.6 679.2 474.6 977.4
operating
profit
Working (110.2) (516.0) (196.7) (511.0) (246.9)
capital
requirements
Replacement (107.5) (52.8) (107.5) (52.8) (139.6)
capital
Interest, (332.9) (189.6) (332.9) (189.6) (440.9)
taxation and
dividend
Proceeds on - 390.4 - 390.4 389.7
disposal of
Mauritius
operations
Investment (208.8) (221.3) (208.8) (221.3) (249.9)
in future
operations
Other 7.7 9.5 7.7 9.5 81.5
movements
Net cash (159.0) (100.2) (159.0) (100.2) 371.3
(outflow)/in
flow before
financing
activities
STATEMENTS OF CHANGES IN EQUITY
Share
capital and
share
premium
Balance at 254.6 247.8 254.6 247.8 247.8
beginning of
the period
Movements 1.5 1.6 1.5 1.6 6.8
during the
period
Balance at 256.1 249.4 256.1 249.4 254.6
end of the
period
Non-
distributabl
e reserves
Balance at 466.1 417.9 466.1 417.9 417.9
beginning of
the period
Movements (125.9) 131.4 (125.9) 131.4 48.2
during the
period
Balance at 340.2 549.3 340.2 549.3 466.1
end of the
period
Retained
surplus
Balance at 1,065.6 667.9 1,065.6 667.9 667.9
beginning of
the period
Dividends (102.9) (62.8) (102.9) (62.8) (129.0)
paid
Other 212.0 153.5 251.2 144.3 526.7
movements
during the
period
Balance at 1,174.7 758.6 1,213.9 749.4 1,065.6
end of the
period
Ordinary 1 771.0 1 557.3 1 810.2 1 548.1 1 786.3
shareholders
` equity
13.11.02
15:50
NOTES TO THE Unaudited Audited
FINANCIAL
STATEMENTS
Year ended
Six months
ended
31 March
30 September
2002 2001 2002
Rm Rm Rm
1. Net
financing
costs
Interest 131.4 118.9 288.7
paid
Interest ( 19.4) ( 26.5) ( 58.6)
received
Dividend - - ( 1.7)
income
Interest
incurred
prior to the
commencement
of
production
and
capitalised
as part of
the
cost of - ( 0.3) ( 0.4)
property,
plant and
equipment
112.0 92.1 228.0
2. Abnormal
items
Profit / 0.2 5.3 ( 3.2)
(loss) on
disposal of
property
Profit on - 25.2 23.3
disposal of
subsidiary
companies
Abnormal 0.2 30.5 20.1
profit
before
taxation
Taxation - - -
Minority - - -
share of
abnormal
items after
taxation
Abnormal
profit
attributable
to
shareholders
in Illovo 0.2 30.5 20.1
Sugar
Limited
13.11.02
15:50
BUSINESS SEGMENTAL ANALYSIS
Sugar JSE requirement
industry Unaudited
norms Six months ended
30 September
Unaudite Audited
d
Six Year ended
months
ended
30 31 March
Septembe
r
2002 2001 2002 2001 2002
Rm % Rm % Rm Rm Rm
Revenue
Su 2,710.4 77 2,141.0 77 3,197.2 2,017.6 4 561.0
ga
r
pr
od
uc
ti
on
Ca 537.2 15 375.8 14 706.6 456.4 816.1
ne
gr
ow
in
g
Do 287.8 8 263.8 9 287.8 263.8 623.9
wn
st
re
am
3 535.4 2 780.6 4 191.6 2 737.8 6 001.0
Profit from operations
Su 293.5 63 204.9 63 346.1 193.1 481.8
ga
r
pr
od
uc
ti
on
Ca 91.8 20 66.6 20 125.7 73.4 165.8
ne
gr
ow
in
g
Do 81.0 17 53.6 17 81.0 53.6 115.8
wn
st
re
am
466.3 325.1 552.8 320.1 763.4
Company Registration no. 1906/000622/06
Share code ILV
ISIN ZAE000003547
DECLARATION OF DIVIDEND NO. 22
Notice is hereby given that an interim dividend of 26,0 cents per
share has been declared on the ordinary shares of the company in
respect of the six months ended 30 September 2002.
In accordance with the settlement procedures of STRATE, the
company has determined the following salient dates for the
payment of the dividend :
Last day to trade cum-dividend Friday, 3 January 2003
Shares commence trading ex-dividend Monday, 6 January 2003
Record date Friday, 10 January 2003
Payment of dividend Monday, 13 January 2003
Share certificates may not be dematerialised / rematerialised
between Monday, 6 January 2003 and Friday, 10 January 2003, both
days inclusive.
By order of the Board
G D Knox Durban
Secretary 13 November 2002
Directors :
R A Williams (Chairman)*, D G MacLeod (Managing Director),
W M A Buchanan, G J Clark (Australian), B P Connellan*, R D
Hamilton*, N M Hawley, R L Hetzler (USA), G D Knox (British),
D Konar*, A R Mpungwe (Tanzanian)*, R A Norton*, J T Russell, M J
Shaw*, B M Stuart
* Non-executive
Registered office :
Illovo Sugar Park, 1 Montgomery Drive, Mount Edgecombe, KwaZulu-
Natal, South Africa
Postal address :
P O Box 194, Durban, 4000
Website : www.illovosugar.com
Transfer Secretaries :
Computershare Investor Services Limited, 70 Marshall Street,
Johannesburg, 2001
Auditors :
Deloitte & Touche
Sponsor :
ING Bank N.V. South Africa Branch
Date: 13/11/2002 05:28:46 PM Produced by the JSE SENS Department
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