TIDMTHL
RNS Number : 0675P
Tongaat Hulett Limited
14 November 2016
Tongaat Hulett Limited
Registration No: 1892/000610/06
JSE share code: TON
ISIN: ZAE000096541
Interim Results for the six months ended 30 September 2016
-- Revenue of R8,503 billion (2015: R7,609 billion) +11,7%
-- Operating profit of R1,350 billion (2015: R1,276 billion) +5,8%
-- Headline earnings of R631 million (2015: R607 million) +4,0%
-- Operating cash flow (after working capital) of R1,061 billion
(2015: R266 million)
-- Interim dividend of 100 cents per share (2015: 170 cents per
share)
COMMENTARY
The results for the half-year ended 30 September 2016 show an
improvement in sugar revenue and operating profit under difficult
conditions. The starch operations delivered a strong performance.
Sales concluded in land conversion and developments in these six
months were lower than in recent periods. Operating cash flow,
after working capital movements, has advanced substantially.
The starch and glucose operation again increased operating
profit, to R306 million (2015: R281 million). The business
benefitted from a better sales mix, including replacing imports
into the coffee/creamer sector following the commissioning of the
R135 million project at the Germiston starch facilities. Overall
volumes remained flat as a result of muted domestic consumer
demand. Higher maize costs during the period were partially offset
by higher co-product revenues and ongoing cost control.
Land conversion and development activities recorded operating
profit of R269 million (2015: R576 million). The major contributors
were Sibaya (high-end residential and retirement - 7 developable
hectares sold), the industrial area of Cornubia (6 hectares), high
intensity mixed use areas of Umhlanga Ridgeside (1 hectare) and
Umhlanga Ridge Town Centre (1 hectare), integrated affordable
residential at Bridge City (2 hectares) and further high end
residential at Izinga (1 hectare) and Kindlewood (1 hectare),
totaling 19 developable hectares sold, compared to 65 hectares sold
in the same period last year. Revenue, costs and profit recorded
per developable hectare vary and are reflective of the degree of
enhancement through urban planning, land use integration and
density, location and the intensity of infrastructure investment
and are in line with the value ranges communicated previously.
The various sugar operations generated operating profit of R825
million (2015: R477 million). This is reflective of improved local
market prices, more effective import protection dynamics in the
countries where Tongaat Hulett produces sugar and higher
international prices, including for exports into regional African
markets and the EU. Overall volumes are still being impacted by
lower cane yields due to the severe drought in KwaZulu-Natal and
poor growing conditions with low rainfall and restricted irrigation
levels in Mozambique and Zimbabwe as a result of low dam levels.
The nature of sugar milling and cane growing is such that there is
a high proportion of fixed costs. The drive to reduce costs
continues across all operations. Sugar production started later in
the current season than last year and is expected to reflect higher
production levels in the second half of the year compared to the
second half of last year.
The South African sugar operations, including agriculture,
milling, refining and various downstream activities produced
operating profit of R306 million (2015: R123 million). Sugar
production is starting to recover and Tongaat Hulett has increased
its share of the total industry production (some 23% this year
compared to 19,5% last year) and local market sales. The local
market has seen more effective import protection and better pricing
dynamics. Voermol animal feeds has contributed well with higher
sales volumes (the previous period had a shortage of raw materials)
and increased margins.
The Mozambique sugar operating profit improved to R219 million
(2015: R94 million). Domestic market sales for the whole industry
increased by 27% as a result of better protection against imports
and improved sugar availability in more remote areas. Local market
price increases and higher export prices have positively impacted
revenue and cane valuations. The Metical weakened substantially
against the Rand and the US dollar, benefitting the operations with
sizeable Metical based costs and revenue that is linked to the US
dollar. A later start to the season and thus lower sugar production
in the first half of the year, given the high proportion of fixed
costs, had a negative impact, which was partially offset by the
higher value of standing cane still to be harvested.
The Zimbabwe sugar operating profit was R251 million (2015: R232
million). Production and sales volumes in the first half of the
year were relatively consistent with the prior year,
notwithstanding a later start to the current season and a higher
proportion of production expected in the second half of the current
year. The first half of the current year has also seen a higher
level of outgrower cane payments compared to the first half of last
year. In addition, the division of proceeds in favour of the
growers is out of line with the region, not taking cognizance of
the full capital employed in the milling operations and is not
sustainable.
Tongaat Hulett's net debt at 30 September was R5,5 billion,
compared to R5,3 billion last year. Finance costs of R408 million
(2015: R314 million) were commensurate with the borrowing levels in
the period and the higher interest rates.
Operating cash flow (after working capital movements) was R1,061
billion which is a R795 million improvement on the first half of
last year. The half year reflects an absorption of cash in working
capital, as is the norm, due to higher sugar stock and debtor
levels in the middle of the sugar season. The Developments
operation generated a stronger operating cash flow, including
significant proceeds being received and development expenditure
related payments being made, with substantial receipts expected in
the second half of the year, following the previous periods when a
number of large transactions were concluded having lead times
before transfer. Capital expenditure is below last year and the
sugar cane root planting costs have been curtailed substantially in
the drought conditions. Overall, the current half year has seen a
total net cash outflow of R277 million, compared to a total net
cash outflow of R1,349 billion in the same period last year.
Taking all of the aforementioned into account, headline earnings
for the half year amounted to R631 million (2015: R607 million).
The intention going forward is to place more emphasis on the final
dividend as distinct from the interim dividend given the
agricultural nature of Tongaat Hulett's activities. Against this
background, an interim dividend of 100 cents per share has been
declared (2015: 170 cents per share).
LOOKING AHEAD
Tongaat Hulett will continue to enhance its strategic
positioning, focusing on multiple strategic thrusts, all with a
positive impact on earnings and cash flow, through the various
cycles that the business experiences, to extract higher returns
from the existing asset base.
Multiple Strong Sugar Market Positions with a Domestic Market
Focus
Prices for sugar in the international market have increased by
some 50% over the past six months with the upcoming second year of
a global supply deficit and continuing steady increases in global
demand levels. Prices have now begun to stabilise and forecasts for
the next 18 months are for prices to remain at current levels. In
the medium term, there are emerging concerns of the ability of
global supply to match global demand at prevailing price levels.
Global sugar consumption is predicted to continue to grow at a rate
of some 1,5% per annum, with most of this growth coming from low
per capita consumption developing countries.
The domestic markets in countries where Tongaat Hulett produces
sugar remain its primary focus. They have significant protection
from imports, with Government support, given the high rural job
impact of these industries. In Zimbabwe and Mozambique, sugar
refining matters are being addressed, which should lead to the
replacement of imported industrial white sugar. Growth is expected
in consumption per capita, off a low base, particularly in
Mozambique and partly in Zimbabwe, supported by distribution,
industrialisation and marketing initiatives. In South Africa, with
its current low sugar production level, Tongaat Hulett is having to
source other producers' raw sugar for refining, to supply its local
market white sugar position and plans to replace this with its own
production in future. Tongaat Hulett has the leading sugar brands
in South Africa, Zimbabwe, Botswana and Namibia. The proposed sugar
sweetened beverage tax in South Africa and its socio impact is
being assessed and debated. Depending on the eventual outcome, it
could reduce local demand and the impact would inter alia depend on
the level of the prevailing world sugar price.
Tongaat Hulett has key market positions and experience in both
the region (southern and eastern Africa) and the EU for the sale of
its additional sugar. It is developing and expanding its positions
in regional deficit markets as well as broadening its footprint in
key value-add markets in the EU where it enjoys preferential
access.
Growing Sugar Production from the Current Low Point
Recent weather and growing conditions are masking the
substantial progress that is being made with intensive agricultural
improvement programs, increased hectares under cane, irrigation
efficiency and power reliability. The estimated impact is some 500
000 tons of annual sugar production. The imminent completion in
Zimbabwe of the Tokwe-Mukorsi dam and, in Mozambique (Xinavane),
the raising of the Corumana dam wall and the construction of the
new Moamba dam on the Incomati river will diversify the water
catchment area and provide increased stability in future water
supply.
Reducing the Cost of Sugar Production
The sustained decrease in costs achieved over the previous three
years (equivalent to some R1,4 billion in real terms) provides a
good base for the next steps in the concerted cost reduction
process in the sugar operations, particularly focused on bought-in
goods, services, transport, marketing, salaries and wages. There is
scope for considerable further reduction, with man-hour reductions
focusing on flexible components and natural attrition. The
paradigms around costs that have traditionally been viewed as fixed
are being challenged, to mitigate against future potential volume
volatility. Unit costs of sugar production will reduce further as
these cost reduction processes continue, benefitting from future
volume increases.
Growing Starch and Glucose
The starch and glucose operation is well positioned
strategically and is focused on growing its sales volume, with an
enhanced product mix, by reducing imports and on the back of
customer growth. This includes the replacement of imports in the
coffee/creamer sector and a number of similar actions underway in
other sectors. Working together with customers, further
opportunities are being targeted for growth through customer
exports. Market development work to increase the production of
value added modified starches, inter alia for the prepared foods
sector, is underway following the capital expenditure completed
last year at the Meyerton plant. This is all underpinned by
improving the use of the available capacity and the efficiency of
operations.
Value Creation from Land Conversion and Development
Tongaat Hulett is focused on its portfolio of prime land,
comprising some 7 951 developable hectares, to create stakeholder
value through its conversion over time to the highest value and
best land use beyond its current use. At the same time Tongaat
Hulett is driving ongoing rural agricultural development in the
cane catchment area of its sugar mills in KwaZulu-Natal. Over the
past four years more than 20 000 hectares of new cane land, mainly
in communal areas, have been developed.
The value being created through the land conversion and
development activities continues to increase, with good progress in
the important value drivers. This includes sound relationships with
key stakeholders; growing demand in selected usage areas;
increasing the supply of land through planning processes and
unlocking infrastructure; selected bigger transactions that are
de-linked from short term market dynamics and growing the range of
transacting mechanisms to increase value created, with particular
emphasis on transformation opportunities. The recent achievements
that led to over 3 000 developable hectares being released from
agriculture through Act 70 of 1970 approvals are being consolidated
through ongoing planning. Currently some 3 399 developable hectares
are in various stages of EIA processes, with new impetus gained
through a joint process having been finalised with the eThekwini
Municipality defining how to enhance the resilience of the city
through the appropriate use of this land.
A detailed and enhanced update on the land conversion portfolio
is available on the www.tongaat.com website. It gives details of
all these activities, provides insights relating to each portion of
land making up the portfolio and includes an update of the possible
5-year sales outcomes, indicating a range of hectares for each
demand driver and the expected range of profit per hectare across
the various demand drivers.
Near Term Outlook
Tongaat Hulett should continue to benefit substantially from
improved local sugar market revenues (volumes and prices) with the
improved import protection measures and better export revenues.
Actions to reduce costs continue.
Total sugar production in 2016/17 is continuing to be impacted
by the effects of the drought in KwaZulu-Natal and irrigation
having been reduced as a mitigation measure against poor rainfall
and low dam levels in Zimbabwe, Mozambique and Swaziland. The
estimate for sugar production in total for 2016/17 is between 1 000
000 and 1 100 000 tons, compared to 1 023 000 tons last year.
The weather forecast for the coming summer in the key growing
and catchment areas is for average to above average rainfall. The
recent encouraging rainfall in the coastal areas of KwaZulu-Natal
is positive for the 2017/18 crop. The 2017/18 crop in Zimbabwe and
Mozambique will be impacted to some extent by the current reduced
irrigation. Given ongoing average to above average rainfall and a
recovery of key dam levels, total sugar production is expected to
recover over 2 years, to between some 1 200 000 and 1 300 000 tons
in 2017/18 and to between some 1 500 000 and 1 600 000 tons in
2018/19. Tongaat Hulett's marginal cost of additional sugar
production is typically US$110 per ton from own cane (45%) and
US$340 per ton from third party cane (55%). Realisations, ex-mill,
based on current regional and EU market dynamics are above US$420
per ton. Should the drought continue over the next summer in the
catchment areas of the key dams in Zimbabwe and Mozambique then it
could lead to a reduction in sugar production in 2017/18, compared
to 2016/17, of some 150 000 tons and 50 000 tons respectively.
Starch and glucose volume growth for the remainder of the year
is expected to remain subdued with lower consumer spending. Further
replacement of imported volumes is expected, particularly in the
last quarter of the year. The drought conditions have resulted in
South Africa having to import maize for the current maize season
with maize prices trading at import parity levels and expected to
remain at these levels for the remainder of the year. Lower
co-product prices in the second half of the year are expected to
result in margins that are below those achieved in the first half.
Looking to the next maize season, improved planting intentions and
the outlook for better rainfall should see maize prices moving
towards export parity levels.
Negotiations have commenced on some 227 developable hectares,
reflecting an increase in the number of substantial transaction
opportunities, in various demand categories, following encouraging
advancements in the land conversion and development activities,
boding well for near term future sales. There is strong interest in
the remaining 38 prime hectares at Ridgeside. The opening up of the
Sibaya node has created new interest and opportunities.
Construction works related to the early sales have now commenced
and the relevance of this as a completely new development node is
becoming increasingly obvious to new purchasers. Substantial
interest is being experienced at Ntshongweni, west of Durban and,
as infrastructure solutions are developed for further land in this
area, this is likely to convert into a growing momentum in this new
node. The new infrastructure currently going into the uMhlanga
Ridge Town Centre western expansion into Cornubia New Town is
likely to open up further short term sales potential in this area.
Various interfaces with the public sector continue to be
constructive and productive.
Overall, Tongaat Hulett's profit for the full 2016/17 year will
continue to be influenced by a number of substantial and varying
dynamics, both positive and negative, and the full impact is
difficult to predict at this stage. The proportion of earnings in
the second half of the current year is likely to be significantly
higher than that of last year. Cash flow is expected to advance
substantially, including a release of the working capital absorbed
in the 2015/16 year.
Tongaat Hulett strives to be a proactive and resilient
organisation working in collaboration with all its stakeholders
through different business and agricultural cycles in a
constructive, mutual value-adding and developmental manner. It has
operations in six countries in SADC, significant sugar cane and
maize processing facilities, a unique land conversion platform, a
sizeable animal feeds thrust and possibilities to grow ethanol and
electricity generation.
For and on behalf of the Board
Bahle Sibisi Peter Staude
Chairman Chief Executive Officer
Amanzimnyama
Tongaat, KwaZulu-Natal
10 November 2016
DIVID DECLARATION
Notice is hereby given that the Board has declared an interim
gross cash dividend (number 178) of 100 cents per share for the
half-year ended 30 September 2016 to shareholders recorded in the
register at the close of business on Friday 27 January 2017.
The salient dates of the declaration and payment of this interim
dividend are as follows:
Last date to trade ordinary shares
"CUM" dividend Tuesday 24 January 2017
Ordinary shares trade "EX" dividend Wednesday 25 January 2017
Record date Friday 27 January 2017
Payment date Thursday 2 February 2017
Share certificates may not be dematerialised or re-materialised,
nor may transfers between registers take place between Wednesday 25
January 2017 and Friday 27 January 2017, 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 20 January
2017.
The dividend has been declared from income reserves. A net
dividend of 85 cents per share will apply to shareholders liable
for the local 15% dividend withholding tax and 100 cents per share
to shareholders exempt from paying the dividend tax. The issued
ordinary share capital as at 10 November 2016 is 135 112 506
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
10 November 2016
Income Statement
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2016 2015 2016
(restated (restated
- note - note
Rmillion 10) 10)
----------------------------------------------- ----------------------- ----------------------- -------------------
Revenue 8 503 7 609 16 676
----------------------- ----------------------- -------------------
Operating profit 1 350 1 276 1 669
Net financing costs
(note 1) (408) (314) (680)
Profit before tax 942 962 989
Tax (note 2) (255) (288) (326)
Net profit for the
period 687 674 663
----------------------- ----------------------- -------------------
Profit attributable
to:
Shareholders of
Tongaat Hulett 639 635 716
Minority (non-controlling)
interest 48 39 (53)
687 674 663
----------------------- ----------------------- -------------------
Earnings per share
(cents)
Basic 553.7 551.8 620.1
Diluted 553.7 551.8 620.1
---------------------------------------------------------------------------------
Headline earnings
attributable to
Tongaat Hulett shareholders
(note 3) 631 607 679
----------------------- ----------------------- -------------------
Headline earnings
per share (cents)
Basic 546.7 527.4 588.0
Diluted 546.7 527.4 588.0
Dividend per share
(cents) 100.0 170.0 230.0
Currency conversion
Rand/US dollar closing 13.96 13.85 14.84
Rand/US dollar average 14.60 12.57 13.81
Rand/Metical average 0.25 0.35 0.35
Rand/Euro average 16.29 13.95 15.20
US dollar/Euro average 1.12 1.11 1.10
Segmental Analysis
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2016 2015 2016
(restated (restated
- note - note
Rmillion 10) 10)
-------------------------- ------------- ------------- ----------
REVENUE
Sugar
Zimbabwe 2 371 1 863 3 549
Swaziland 124 148 205
Mozambique 1 325 1 394 1 664
South Africa 2 197 1 603 5 964
------------- ------------- ----------
Sugar operations -
total 6 017 5 008 11 382
Starch operations 2 114 1 750 3 640
Land Conversion and
Developments 372 851 1 654
Consolidated total 8 503 7 609 16 676
------------- ------------- ----------
OPERATING PROFIT
Sugar
Zimbabwe 251 232 9
Swaziland 49 28 36
Mozambique 219 94 25
South Africa 306 123 (85)
------------- ------------- ----------
Sugar operations -
total 825 477 (15)
Starch operations 306 281 658
Land Conversion and
Developments 269 576 1 115
Centrally accounted
and consolidation
items (42) (49) (70)
BEE IFRS 2 charge
and transaction costs (8) (9) (19)
Consolidated total 1 350 1 276 1 669
------------- ------------- ----------
FURTHER ANALYSIS OF
SUGAR OPERATING PROFIT
Sugar operations -
before cane valuations 1 184 1 052 (156)
Zimbabwe 557 603 138
Swaziland 47 58 26
Mozambique 288 322 (94)
South Africa 292 69 (226)
------------- ------------- ----------
Cane valuations -
income statement effect (359) (575) 141
Zimbabwe (306) (371) (129)
Swaziland 2 (30) 10
Mozambique (69) (228) 119
South Africa 14 54 141
------------- ------------- ----------
Sugar operations -
after cane valuations 825 477 (15)
Zimbabwe 251 232 9
Swaziland 49 28 36
Mozambique 219 94 25
South Africa 306 123 (85)
------------- ------------- ----------
Statement of Financial Position
Condensed consolidated Unaudited Unaudited Audited
31
30 September 30 September March
2016 2015 2016
(restated (restated
-
- note note
Rmillion 10) 10)
------------------------------------------------ ----------------- ------------------------------------- -------- ----------
ASSETS
Non-current assets
Property, plant and 16
equipment 13 478 15 845 415
Long-term receivable 592 541 564
Goodwill 393 416 438
Intangible assets 290 59 212
Investments 25 28 26
----------------- ------------------------------------- ----------
17
14 778 16 889 655
13
Current assets 14 590 13 890 037
Inventories 4 889 4 721 2 866
Growing crops (note
4) 2 083 2 108 2 914
Trade and other receivables 5 059 5 094 5 380
Cash and cash equivalents 2 559 1 967 1 877
----------------- ------------------------------------- -------- ----------
30
TOTAL ASSETS 29 368 30 779 692
----------------- ------------------------------------- ----------
EQUITY AND LIABILITIES
Capital and reserves
Share capital 135 135 135
Share premium 1 544 1 544 1 544
BEE held consolidation
shares (640) (642) (625)
Retained income 8 779 8 331 8 191
Other reserves 587 3 731 4 028
----------------- ------------------------------------- ----------
13
Shareholders' interest 10 405 13 099 273
Minority (non-controlling)
interest 1 968 2 141 2 152
----------------- ------------------------------------- ----------
15
Equity 12 373 15 240 425
Non-current liabilities 7 973 7 865 8 086
Deferred tax 2 606 2 668 2 864
Long-term borrowings 4 547 3 795 3 791
Non-recourse equity-settled
BEE borrowings 622 605
Provisions 820 780 826
----------------- ------------------------------------- -------- ----------
Current liabilities 9 022 7 674 7 181
Trade and other payables
(note 5) 4 605 3 969 3 897
Short-term borrowings 3 542 3 446 3 187
Non-recourse equity-settled
BEE borrowings 620
Tax 255 259 97
----------------- ------------------------------------- -------- ----------
30
TOTAL EQUITY AND LIABILITIES 29 368 30 779 692
----------------- ------------------------------------- ----------
------------------------------------------------------------------------------------
Number of shares (000)
135
- in issue 135 113 135 113 113
- weighted average 115
(basic) 115 414 115 083 471
- weighted average 115
(diluted) 115 414 115 083 471
Statement of Changes in Equity
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2016 2015 2016
(restated (restated
- note - note
Rmillion 10) 10)
----------------------------------------------- ----------------- ------------------------------------- ----------------------
Balance at beginning
of period 13 273 11 889 11 889
Total comprehensive
income for the period (2 787) 1 426 1 763
Retained income 639 635 698
Movement in hedge
reserve (6) (2) 7
Foreign currency
translation (3 420) 793 1 058
----------------- ------------------------------------- ----------------------
Dividends paid (66) (231) (417)
BEE share-based payment
charge 7 8 17
Share-based payment
charge 25 40 60
Settlement of share-based
payment awards (47) (33) (39)
Shareholders' interest 10 405 13 099 13 273
Minority (non-controlling)
interest 1 968 2 141 2 152
Balance at beginning
of period 2 152 1 887 1 887
Total comprehensive
income for the period (180) 258 284
Retained income 48 39 (53)
Foreign currency
translation (228) 219 337
================= ===================================== ======================
Dividends paid to
minorities (4) (4) (19)
----------------- ------------------------------------- ----------------------
Equity 12 373 15 240 15 425
----------------- ------------------------------------- ----------------------
Statement of Other Comprehensive Income
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2016 2015 2016
(restated (restated
- note - note
Rmillion 10) 10)
---------------------------------- ------------- ------------- ----------
Net profit for the period 687 674 663
Other comprehensive
income (3 654) 1 010 1 384
Items that will not
be reclassified to profit
or loss:
Foreign currency translation (3 648) 1 012 1 395
Actuarial loss (24)
Tax on actuarial loss 6
Items that may be reclassified
subsequently to profit
or loss:
Hedge reserve (8) (3) 10
Tax on movement in
hedge reserve 2 1 (3)
Total comprehensive
income for the period (2 967) 1 684 2 047
------------- ------------- ----------
Total comprehensive
income attributable
to:
Shareholders of Tongaat
Hulett (2 787) 1 426 1 763
Minority (non-controlling)
interest (180) 258 284
(2 967) 1 684 2 047
------------- ------------- ----------
Statement of Cash Flows
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2016 2015 2016
(restated (restated
- note - note
Rmillion 10) 10)
------------------------------- ------------- ------------- ----------
Operating profit 1 350 1 276 1 669
Surplus on disposal
of property, plant and
equipment (11) (34) (84)
Depreciation 589 757 1 231
Growing crops and other
non-cash items 389 656 36
Operating cash flow 2 317 2 655 2 852
Change in working capital (1 256) (2 389) (989)
Cash flow from operations 1 061 266 1 863
Tax payments (190) (109) (221)
Net financing costs (408) (314) (680)
Cash flow from operating
activities 463 (157) 962
Expenditure on property,
plant and equipment:
New (95) (240) (488)
Replacement (228) (296) (668)
Major plant overhaul
cost changes (139) (57) 34
Root planting costs (133) (381) (668)
Intangible assets (82) (28) (123)
Other capital items 7 45 109
Net cash flow before
dividends and financing
activities (207) (1 114) (842)
Dividends paid (70) (235) (436)
Net cash flow before
financing activities (277) (1 349) (1 278)
Borrowings raised 1 267 1 550 1 273
Non-recourse equity-settled
BEE borrowings 15 (32) (49)
Settlement of share-based
payment awards (47) (33) (39)
Net increase/(decrease)
in cash and cash equivalents 958 136 (93)
Balance at beginning
of period 1 877 1 668 1 668
Foreign currency translation (276) 163 302
Cash and cash equivalents
at end of period 2 559 1 967 1 877
------------- ------------- ----------
Notes
Condensed consolidated Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2016 2015 2016
(restated (restated
- note - note
Rmillion 10) 10)
--------------------------------- ------------- ------------- ----------
1. Net financing
costs
Interest paid (472) (350) (778)
Interest capitalised 16 3 28
Interest received 48 33 70
(408) (314) (680)
------------- ------------- ----------
2. Tax
Normal (355) (316) (277)
Deferred 100 28 (49)
(255) (288) (326)
------------- ------------- ----------
3. Headline earnings
Profit attributable
to shareholders 639 635 716
Adjusted for:
Capital profit
on disposal of land
and buildings (8) (26) (42)
Loss on other capital
items 4
Surplus on disposal
of property, plant
and equipment (3) (4)
Minority (non-controlling)
interest 1 (1)
Tax on the above
items 2 2 2
631 607 679
------------- ------------- ----------
4. Growing crops
Growing crops, comprising standing cane,
is measured at fair value which is determined
using an estimate of cane yields and prices
which are unobservable inputs and, in accordance
with IFRS, categorised as level 3 under
the fair value hierarchy. Changes in fair
value are recognised in profit or loss.
A change in yield of one ton per hectare
on the estimated yield of 73 tons cane
per hectare (30 September 2015: 83 tons
per hectare and 31 March 2016: 73 tons
per hectare) would result in a R31 million
(30 September 2015: R25 million and 31
March 2016: R37 million) change in fair
value while a change of one percent in
the cane price would result in a R23 million
(30 September 2015: R26 million and 31
March 2016: R33 million) change in fair
value.
5. Trade and other
payables
Included in trade and other payables is
the maize obligation (interest bearing)
of R712 million (30 September 2015: R573
million and 31 March 2016: R376 million).
6. Capital expenditure
commitments
Contracted 94 261 196
Approved 152 338 213
246 599 409
------------- ------------- ----------
7. Operating lease
commitments 70 94 75
------------- ------------- ----------
8. Guarantees and
contingent liabilities 129 68 101
------------- ------------- ----------
9. Basis of preparation
and accounting policies
The condensed consolidated unaudited results
for the half-year ended 30 September 2016
have been prepared in accordance with and
containing the information required by
IAS 34 Interim Financial Reporting, the
SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee,
Financial Reporting Pronouncements as issued
by the Financial Reporting Standards Council
and the requirements of the Companies Act
of South Africa. The additional disclosure
required in terms of paragraph 16A(j) of
IAS 34 is available on the website, at
the registered office or on request. Except
as described below, 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 2016 and were
prepared under the supervision of the Chief
Financial Officer, M H Munro CA (SA). Any
reference to future financial performance
that may be included in this announcement
has not been reviewed and reported on by
the company's auditor.
10. Adoption of
new or revised accounting
standards
Tongaat Hulett has adopted all the new
or revised accounting pronouncements as
issued by the IASB which were effective
for Tongaat Hulett from 1 January 2016.
The adoption of these standards had no
recognition and measurement impact on the
financial results, other than for the compulsory
adoption of the revised IAS 16 and IAS
41 which has resulted in cane roots being
reclassified from growing crops to property,
plant and equipment in the statement of
financial position, root planting costs
being capitalised to the cost of the roots
and thereafter the roots depreciated over
their estimated useful lives. Standing
cane is now disclosed as a current asset.
Comparative figures have been restated.
The restated consolidated financial statements
for the year ended 31 March 2016 have been
prepared and audited in accordance with
the recognition and measurement criteria
of IFRS. The effect of the adoption of
the revised IAS 16 and IAS 41 on profit
or loss for the 6 months ended 30 September
2015 (with the full year ended 31 March
2016 in brackets) was a decrease in operating
profit of R85 million (2016: R139 million),
deferred tax relief of R17 million (2016:
R32 million) and a decrease in net profit
for the period of R68 million (2016: R107
million). The effect on earnings per share
and headline earnings per share (basic
and diluted) was a decrease of 57,4 cents
per share (2016: 90,1 cents per share).
There was no impact on other comprehensive
income (2016: decrease in foreign currency
translation of R2 million). The effect
on the statement of financial position
at 30 September was the reclassification
of cane roots of R3 060 million (2016:
R3 234 million) from growing crops to property,
plant and equipment, a decrease of R85
million (2016: R137 million) in the carrying
value of cane roots, and decreases in equity
and deferred tax of R68 million (2016:
R105 million) and R17 million (2016: R32
million) respectively.
11. Subsequent events
There were no material events between
30 September 2016 and the date
of this report.
CORPORATE INFORMATION
Directorate: C B Sibisi (Chairman), P H Staude (Chief Executive
Officer)*,
S M Beesley, F Jakoet, J John, R P Kupara^, T N Mgoduso, N
Mjoli-Mncube,
M H Munro*, S G Pretorius, T A Salomão +
* Executive directors + Mozambican ^ Zimbabwean
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:
South Africa:
Computershare Investor Services (Pty) Limited
Telephone: +27 11 370 7700
United Kingdom:
Capita Registrars
Telephone: +44 20 8639 2406
Sponsor: Investec Bank Limited
Telephone: +27 11 286 7000
www.tongaat.com
e-mail: info@tongaat.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GMMMMRDZGVZG
(END) Dow Jones Newswires
November 14, 2016 03:06 ET (08:06 GMT)
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