| Wed 12 Jul 2006, 16:31 | | Illovo Sugar Limited - Annual General Meeting - 12 |
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ILV
ILV
Illovo Sugar Limited - Annual General Meeting - 12 July 2006: Chairman"s Address
Illovo Sugar Limited
(Incorporated in the Republic of South Africa)
Company registration number 1906/000622/06
Share Code: ILV
ISIN: ZAE000003547
ANNUAL GENERAL MEETING - 12 JULY 2006: CHAIRMAN"S ADDRESS
In respect of the year ended 31 March 2006, as already reported, the group
achieved excellent results with headline earnings per share increasing by 127%
to 104,2 cents. This was largely due to increased sugar production, a general
improvement in domestic sales, a good increase in world and regional sugar
prices, cost savings and a reduction in financing costs. The change in the
value of growing cane, largely due to improved sugar prices, also enhanced
earnings from cane growing.
Cash generation was strong with group borrowings of R441,0 million reflecting a
major decrease of R360,6 million, resulting in gearing of 24,3%.
The existing factory and field operations have significant expansion potential.
In the current year, the group will commence these expansions which will be
phased-in over a four year period. New investment opportunities elsewhere in
Africa continue to be pursued. The group"s feasibility studies on power
generation are well advanced.
The reform of the European Union Sugar Regime was finalised in early 2006. The
new Regime was implemented from 1 July this year and will be effective until
30 September 2015. The finalisation of the reform package creates a period of
certainty in respect of the EU market until that date, and will underpin the
sugar expansion plans of the group.
This shareholders" meeting provides the opportunity to update you on the current
state of the group"s operations.
Generally climatic conditions have been good across the group and favourable to
crop growth. Good rainfall was received in South Africa during the summer
months, although this has resulted in the sucrose content in the cane being
lower than last year. In Tanzania, it was very dry for a long period, although
once the rains came, the rainfall was considerably above the long term mean.
However the dry period has impacted on the cane yields of outgrowers who do not
have irrigation.
For the group as a whole, sugar production is forecast to be around
1,875 million tons for the season (a small increase compared to the previous
season), whilst cane production is expected to be around 5,5 million tons
(approximately 2% above last year).
Generally, the sugar factories have been operating well, whilst the downstream
plants at Sezela and Merebank have performed up to expectations and production
is anticipated to be marginally above that of last year.
The world sugar price has continued to be strong, although like many other
commodities it remains volatile. The current world raw sugar futures prices are
above 16,0c/lb. In respect of the 2006/07 season, the South African Sugar
Association has priced around 675 000 tons raw sugar for export at
15,54 cents/lb (58% of anticipated raw sugar exports).
Overall, operations are generally performing well and the world sugar price and
current rand/US dollar exchange rate are more favourable for the company than in
the previous year. These factors will impact positively on profits for the
current financial year.
Mount Edgecombe
12 July 2006
Sponsor
J.P.Morgan Equities Limited
Date: 12/07/2006 04:31:37 PM Produced by the JSE SENS Department
