| Mon 20 Feb 2006, 7:00 | | Tongaat - Audited Group Results and Final Dividend |
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TNT
THGL
Tongaat - Audited Group Results and Final Dividend Declaration
THE TONGAAT-HULETT GROUP LIMITED
Registration No. 1892/000610/06
Share code TNT
Issuer code THGL
ISIN ZAE000007449
AUDITED GROUP RESULTS AND FINAL DIVIDEND DECLARATION
for the year ended 31 December 2005
Revenue of R6,9 billion(2004: R6,3 billion)
Operating profit of R730 million (2004: R358 million)
Headline earnings of R466 million (2004: R206 million)
Annual dividend of 400 cents per share (2004: 170 cents per share)
Unbundling and listing of Hulett Aluminium and introducing BEE equity
participation in Tongaat-Hulett and Hulett Aluminium
COMMENTARY
Headline earnings increased by 126% to R466 million in 2005,compared to R206
million in 2004. The benefits of the multiple management actions underway are
increasingly reflected in the financial results. The past three years have seen
the businesses adapting to a stronger Rand. The Group"s operating profit in 2005
increased to R730 million (2004: R358 million).
African Products continued its earnings recovery with operating profit improving
to R112 million (2004: R61 million). This was achieved through an increase in
domestic volumes and lower maize prices, offset by low co-product prices.
Domestic sales volumes were 3,9% above those of 2004 due to growth in the local
market and the successful recovery of business previously lost to imports.
Export sales volumes were 5,5% above those of 2004. An organisational
restructuring was undertaken during the year, as part of the ongoing process to
ensure operations are able to respond to the competitive environment, the
benefits of which will be realised from 2006. The maize price, after reaching
low levels early in 2005, rose strongly to levels close to import parity late in
the year. Continuing with its back-to-back pricing model, African Products has
priced 33% of its maize requirements for 2006.
Tongaat-Hulett Sugar"s operating profit increased by 183% to R232 million (2004:
R82 million), before dividends from Triangle Sugar in Zimbabwe. Sales volumes in
South Africa increased to 474 000 tons (2004: 464 000 tons) and raw sugar export
volumes grew by 33% to 387 000 tons (2004: 292 000 tons). The improved sales
volumes, higher export realisations and lower costs per ton led to increased
margins. The 2005 results include an effective world sugar price of 8,98 US c/lb
(2004: 7,27 US c/lb), which is well below the current price of 17 US c/lb. The
benefits of actions taken to enhance earnings are increasingly being realised.
These include optimisation of milling capacity, reduction in milling costs, cane
procurement initiatives, head office closure, the new white sugar milling
technology, leveraging the Huletts brand and other refining value chain
initiatives. A dividend of R19 million (2004: R51 million) was received from
Triangle Sugar in Zimbabwe, which continues to operate profitably in a difficult
environment.
The South African crop harvested in 2005 was larger than the 2004 crop although
still below the longer-term average. Production from the South African
operations increased to 753 000 tons (2004: 723 000 tons). In Swaziland,
Tambankulu produced a record raw sugar equivalent of 56 000 tons (2004: 50 000
tons). Triangle Sugar in Zimbabwe produced 236 000 tons (2004: 222 000 tons). In
Mozambique, the rehabilitation and expansion of the sugar estates continued with
production rising by 35% to 115 000 tons (2004: 85 000 tons). Total sugar
production for the 2005 year thus improved to 1,160 million tons from 1,080
million tons in 2004.
Moreland continued to accelerate its development of the Group"s prime land
holdings, capitalising on its platform comprising resort, residential,
commercial and industrial portfolios, in a favourable property market. Operating
profit increased by 28% to R231 million (2004: R181 million). Strong
contributions were achieved from developments at Zimbali Coastal Resort,
RiverHorse Valley Business Estate, La Lucia Ridge residential and the Umhlanga
Ridge New Town Centre. Substantial progress has been made towards securing
approvals for several key developments, which are expected to be launched in
2006, including Sibaya at Umdloti, Umhlanga Triangle, Izinga, Umhlanga Ridge New
Town Centre residential precincts, Cornubia at Mount Edgecombe North, Kindlewood
at Mount Edgecombe South and Shongweni.
Hulett Aluminium (Hulamin) more than doubled its operating profit to R319
million (2004: R148 million), with 50% thereof being the Group"s share. The
rolled products operation succeeded in growing volumes, improving product mix
and reducing unit costs. Sales volumes of rolled products increased by 20% to
173 000 tons, despite disruptions in the supply of rolling ingot in the second
half of the year. Output of more than 180 000 tons annualised was attained for
several periods of 2005. Rolled product conversion costs per ton were reduced by
8%. Sales mix improvements included increased local market sales and growth in
exports of Treadbright and Can End Stock of 27% and 33% respectively. The plate
plant expansion, which will increase high margin heat-treated plate capacity by
50%, is progressing well and will come on stream in the second half of 2006. The
extrusion operation again performed well. Local market growth in both extruded
and rolled products was driven by increased local consumption and customers"
exports.
The Board has declared a final dividend of 280 cents per share, which brings the
total annual dividend to 400 cents per share (2004: 170 cents per share).
A POSITIVE OUTLOOK
Considerable earnings growth is expected in the year ahead. Earnings enhancing
actions are underway throughout Tongaat-Hulett. The changing global sugar
fundamentals and the rising world sugar price are positive developments.
Continued growth is expected in aluminium rolled product volumes, together with
sales mix optimisation and conversion cost per ton reductions.
UNLOCKING FURTHER VALUE FOR SHAREHOLDERS
An extensive strategic review to further enhance shareholder value, building on
the achievements of the last two years and the ongoing actions to increase
earnings in all operating companies, has been completed. This resulted in a
Board decision to embark on the unbundling of the Group"s 50% interest in
Hulamin to Tongaat-Hulett shareholders, the listing of Hulamin and the
simultaneous introduction of Black Economic Empowerment equity participation in
both Tongaat-Hulett and Hulamin.
Tongaat-Hulett has made significant strides in the areas of employment equity,
preferential procurement, skills development, enterprise development and
community involvement. The unbundling will create the opportunity to attract
value-add BEE equity partners into Tongaat-Hulett and Hulamin.
The unbundling of Hulamin will increase Tongaat-Hulett"s focus on its core
businesses, thereby creating further opportunities to enhance operating
performance, increase benefits from the overlaps and synergies, improve delivery
on growth opportunities and taking advantage of the changing global sugar
dynamics. Tongaat-Hulett has developed the Hulamin business over the past 30
years, transforming it into a successful independent niche aluminium rolled
products and extrusion company. The business now has the requisite critical mass
to prosper on a focused, stand-alone basis, with numerous growth opportunities.
The unbundling will provide direct access to two attractive investment vehicles,
with clear information on these two entities and their prospects.
Significant preparatory work, including the relevant approvals and regulatory
compliance, will be required to implement the aforementioned initiatives.
Further announcements with progress in this regard will be made in due course.
For and on behalf of the Board
C M L Savage P H Staude
Chairman Chief Executive Officer
Amanzimnyama, Tongaat, KwaZulu-Natal
17 February 2006
DIVIDEND DECLARATION
Notice is hereby given that the Board has declared a final dividend (number 157)
of 280 cents per share for the year ended 31 December 2005 to shareholders
recorded in the register at the close of business on Friday 17 March 2006.
The salient dates of the declaration and payment of this final dividend are as
follows:
Last date to trade ordinary shares
"CUM" dividend Friday 10 March 2006
Ordinary shares trade "EX" dividend Monday 13 March 2006
Record date Friday 17 March 2006
Payment date Thursday 23 March 2006
Share certificates may not be dematerialised or re-materialised, nor may
transfers between registers take place between Monday 13 March 2006 and Friday
17 March 2006, 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 10 March 2006.
For and on behalf of the Board
M M L Mokoka
Group Secretary
Amanzimnyama, Tongaat, KwaZulu-Natal
17 February 2006
INCOME STATEMENT 2005 2004
Restated
Rmillion Note for IFRS
Revenue 6 926 6 298
Operating profit 1 730 358
Net financing costs 2 (60) (93)
Share of associate company"s (loss)/profit (25) 6
Profit before tax 645 271
Tax 3 (162) (41)
Net profit 483 230
Attributable to:
Shareholders 472 220
Minority interest 11 10
483 230
Headline earnings attributable to shareholders 466 206
Earnings per share (cents)
Net profit per share
Basic 458,2 216,3
Diluted 447,2 214,0
Headline earnings per share
Basic 452,4 202,5
Diluted 441,5 200,4
Annual dividend per share (cents) 400,0 170,0
Interim paid 120,0 50,0
Final proposed 280,0 120,0
Currency conversion
Rand/US dollar average 6,37 6,44
Rand/US dollar closing 6,35 5,65
Rand/GB pound closing 10,92 10,84
HEADLINE EARNINGS
Profit attributable to shareholders 472 220
Less after tax effect of:
Surplus on disposal of property, plant and equipment (8) (21)
Estate closure costs 2 7
Headline earnings 466 206
BALANCE SHEET 2005 2004
Restated
Rmillion for IFRS
Assets
Non-current assets
Property, plant and equipment 4 093 4 106
Growing crops 182 185
Long-term receivable 203 210
Goodwill 21 23
Intangible assets 12 9
Investments 57 23
4 568 4 556
Current assets 3 360 3 596
Inventories 1 456 1 649
Trade and other receivables 1 337 1 108
Derivative instruments 41 36
Cash and cash equivalents 526 803
Total assets 7 928 8 152
Equity and liabilities
Capital and reserves
Share capital 104 102
Share premium 821 759
Retained income 3 651 3 426
Other reserves 37 60
Shareholders" interest 4 613 4 347
Minority interests in subsidiaries 75 71
Equity 4 688 4 418
Non-current liabilities 1 357 1 380
Deferred tax 936 854
Long-term borrowings 138 255
Provisions 283 271
Current liabilities 1 883 2 354
Trade and other payables (note 7) 1 119 1 171
Short-term borrowings 702 1 125
Derivative instruments 18 52
Tax 44 6
Total equity and liabilities 7 928 8 152
Number of shares (000)
- in issue 103 896 102 248
- weighted average (basic) 103 018 101 718
- weighted average (diluted) 105 552 102 791
Debt to equity 17,9% 31,2%
Net debt to equity 6,7% 13,1%
STATEMENT OF CHANGES IN EQUITY 2005 2004
Restated
Rmillion for IFRS
Balance at beginning of year 4 347 4 193
Effect of transition to IFRS (15)
Accounting for fair value hedges as
required by IAS 39 (Revised) (5)
Restated balance 4 342 4 178
Net profit 472 220
Dividends paid (247) (132)
Share capital issued 62 30
Share-based payment reserve 17 10
Hedge reserve released to income statement (4) 27
Gain from cash flow hedges 9 9
Share of associate"s movement in currency
translation reserve (7) (4)
Currency exchange rate changes (31) 9
Shareholders" interest 4 613 4 347
Minority interests in subsidiaries 75 71
Balance at beginning of year 71 6
Share of profit 11 10
Currency exchange rate changes (7) 1
Shares of a subsidiary issued to the minority 54
Equity 4 688 4 418
CASH FLOW STATEMENT 2005 2004
Restated
Rmillion for IFRS
Operating profit 730 358
Net financing costs (60) (93)
Non-cash items:
Depreciation 265 230
Other non-cash items 18
Tax payments (38) (71)
Change in working capital (109) (203)
Cash flow from operating activities 788 239
Expenditure on property, plant and equipment:
New (169) (78)
Replacement (101) (78)
Major plant overhaul costs capitalised (35) (32)
Expenditure on intangible assets (4) (3)
Growing crops disposals 5 20
Proceeds on disposal of property, plant and equipment 42 44
Investments (72) (19)
Net cash flow before dividends and financing activities 454 93
Dividends paid (247) (132)
Net cash flow before financing activities 207 (39)
Borrowings (repaid)/raised (558) 32
Hedges of foreign loans (2) (35)
Shares issued 62 30
Shares of a subsidiary issued to the minority 54
Net (decrease)/increase in cash and cash equivalents (291) 42
Balance at beginning of year 803 808
Exchange rate translation gain/(loss) 14 (47)
Cash and cash equivalents at end of year 526 803
SEGMENTAL ANALYSIS
Revenue Operating Total
R million Profit Assets
2005
African Products 1 293 112 1 558
Hulett Aluminium (50%) 2 081 159 2 695
Moreland 459 231 645
Tongaat-Hulett Sugar 3 093 232 2 423
Triangle dividend 19
Corporate (44) 607
Exchange rate translation gain 14
Exceptional items 7
Group total 6 926 730 7 928
2004(Restated for IFRS)
African Products 1 344 61 1 666
Hulett Aluminium (50%) 1 671 74 2 665
Moreland 420 181 453
Tongaat-Hulett Sugar 2 863 82 2 454
Triangle dividend 51
Corporate (52) 914
Exchange rate translation loss (47)
Exceptional items 8
Group total 6 298 358 8 152
Total Capital Capital Depreciation
R million Liabilities Employed Expenditure
2005
African Products 224 1 333 58 88
Hulett Aluminium (50%) 564 2 403 69 89
Moreland 287 383
Tongaat-Hulett Sugar 355 2 061 177 88
Triangle dividend
Corporate 830 567 1
Exchange rate
translation gain
Exceptional items
Group total 2 260 6 747 305 265
2004(Restated for IFRS)
African Products 381 1 286 40 82
Hulett Aluminium (50%) 621 2 371 38 56
Moreland 222 257
Tongaat-Hulett Sugar 386 2 128 109 91
Triangle dividend
Corporate 1 264 881 1 1
Exchange rate
translation loss
Exceptional items
Group total 2 874 6 923 188 230
NOTES 2005 2004
Restated
Rmillion for IFRS
1. Operating profit
Operating profit includes results of operations, Triangle dividends,
restructure costs, valuation adjustments and exceptional items, as disclosed in
the segmental analysis.
2. Net financing costs
Interest paid (131) (275)
Financial instrument income 33 112
Interest received 38 70
(60) (93)
3. Tax
Normal (51) (51)
Deferred (113) 22
Rate change adjustment (deferred) 28
Secondary tax on companies (26) (12)
(162) (41)
4. Capital expenditure commitments
Contracted 112 52
Approved but not contracted 187 86
299 138
5. Operating lease commitments 39 57
6. Guarantees and contingent liabilities 44 34
7. Trade and other payables
Included in trade and other payables is the maize obligation (interest
bearing) of R110 million (2004: R218 million).
8. Audited results
The results for the year ended 31 December 2005 have been audited by Deloitte &
Touche. Their unqualified audit opinion is available for inspection at the
registered office of the company.
RECONCILIATION OF PREVIOUS SA GAAP TO IFRS
IFRS
Audited transition
Year ended date
31 December 1 January
Rmillion 2004 2004
Balance sheet
Equity
As previously reported - SA GAAP 4 357 4 193
Effect of goodwill now recorded in Metical
and translated at the closing exchange rate (14) (15)
Share-based payment reserve 13 3
Effect of changes on income statement:
Current year (6)
Prior year (3) (3)
Shareholders" interest 4 347 4 178
Minority interests in subsidiaries previously reported
separately from equity 71 6
Equity restated - IFRS 4 418 4 184
Income statement
Net profit as previously reported 226
Effect of transition to IFRS (6)
Share-based payment charge (8)
Goodwill no longer amortised 2
Net profit attributable to shareholders restated - IFRS 220
Basis of preparation
The audited results of the Group for the year ended 31 December 2005 have been
prepared in accordance with the Group"s accounting policies which comply fully
with International Financial Reporting Standards (IFRS). The Group is reporting
under IFRS for the first time for the year ended 31 December 2005. Comparative
figures have accordingly been restated. The transition to IFRS has resulted in
the Group adopting IFRS 2 Share-based Payment and accounting for goodwill in
terms of IFRS 3 Business Combinations. The Group continues to account for its
Zimbabwean operations, including Triangle Sugar, on a dividend received basis.
The disclosures required by IFRS 1 First-time Adoption of International
Financial Reporting Standards concerning the transition from South African
Statements of Generally Accepted Accounting Practice (SA GAAP) to IFRS and the
requisite changes in accounting policies are set out in the table above.
CORPORATE INFORMATION
Non-executive directors: D D Barber, P M Baum, I Botha, L Boyd, E le R Bradley,
M W King, J B Magwaza, M Mia, T H Nyasulu, C M L Savage (Chairman), R H J
Stevens, A M Thompson
Executive directors: B G Dunlop, A Fourie, G R Hibbert, G P N Kruger, M H Munro,
S J Saunders, M Serfontein, P H Staude (Chief Executive Officer)
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 the Group is available at our website:
www.tongaat.co.za
Date: 20/02/2006 07:00:13 AM Produced by the JSE SENS Department
