Earnings releases


Audited Results & Final Dividend Declaration for the year ended 31 December 2001


COMMENT ON RESULTS
 
The Groupís strategy of creating three internationally competitive businesses growing through exports, supported by the substantial investment of some R4 billion over the past few years, has proved to be well timed in the light of recent events. The substantially enhanced capacity has provided a platform for growth driven by exports which now account for some 35 percent of total revenue.

Notwithstanding the slowing world economy and tough domestic trading conditions, the divisions did well to increase revenue from continuing operations by 12 percent to R5,1 billion and operating earnings by 14 percent to R584 million. The results were boosted by exchange rate gains of R255 million on translation of strategic cash resources offset by net interest payable of R75 million. Total net earnings for the year amount to R609 million compared to R368 million last year and headline earnings per share increased by 20 percent from 498,0 cents to 598,4 cents.

The Groupís balance sheet remains strong. Shareholdersí equity has increased to R4 389 million and net asset value per share to R43,40. Net borrowings have reduced from R723 million to R377 million, which represents a net debt to equity ratio of 7,1 percent.

A final dividend of 208 cents per share has been declared, which, together with the interim dividend of 62 cents amounts to a total dividend of 270 cents per share compared with 212 cents per share for last year.

The decision taken to exit from the remaining non-core activities culminated in the disposal of the building materials division, effective 31 May 2001, and the textiles division effective 30 September 2001.

DIVISIONAL REVIEWS
Even though its South African sugar production reduced to 756 000 tons, the sugar division maintained earnings before interest at R320 million, largely as a result of a recovery in world raw sugar prices and the weak rand. In addition, the white sugar premium in US dollar terms improved in the second half of the year and the divisionís other Southern African operations also performed well. 

The performance of the starch & glucose division improved substantially, supplemented by increased exports, resulting in total revenue exceeding R1 billion for the first time, and earnings before interest growing 48 percent to R148 million. The R800 million investment at Kliprivier some three years ago has been justified and the major cost impact of this investment has been absorbed, placing the division firmly into a growth phase. The emphasis on the export of value added products, which grew by more than 80 percent, resulted in export revenue doubling.

The aluminium division achieved an important benchmark by generating a substantial positive cash flow against a background of difficult and turbulent market conditions. Total revenue of Hulett Aluminium increased by 25 percent to R2,5 billion, and operational earnings grew by 31 percent to R267 million,  50 percent of which accrues to the Group. These results were achieved against a decline in the US dollar margins of a range of products. The division has demonstrated its ability to adapt quickly to changing market conditions by developing new higher value added products and has shifted its targeted sales and geographic mix in line with market dynamics. During the period, it concentrated on establishing  and maintaining its growing international presence through increased sales and market share in more  than 45 countries. Its drive to stimulate domestic downstream aluminium production is producing gratifying results.

The property divisionís earnings before interest increased by 22 percent to R28 million. The year was characterised by firmer demand in commercial, residential and resort portfolios. Substantial investments were undertaken in the Umhlanga Ridge New Town Centre and La Lucia Ridge areas. The division's private/public partnership with the eThekwini Municipality (Durban) will progress further in the current year with the commencement of the uShaka Island Marine Theme Park and the Effingham-Avoca developments.

PROSPECTS
In the year ahead, the Group expects strong growth in volumes, revenue and operating earnings from its divisions. The attainment of the prime objective of real growth in earnings per share in 2002, taking into consideration last yearís currency translation boost, will depend mainly on the relative strength of the rand. Cash flows will however remain positive and the Group is well placed to deliver increased shareholder value.


For and on behalf of the board

C M L Savage
Executive Chairman
D G Aitken
Group Financial Director

Amanzimnyama, Tongaat, KwaZulu-Natal
8 March 2002