Earnings releases

Audited Results & Final Dividend Declaration for the year ended 31 December 2002

The Group has delivered strong growth in volumes, revenue and operating earnings for the year to 31 December 2002, assisted by the weak Rand which prevailed generally throughout the year but which had strengthened significantly by year end. 

Revenue from continuing operations rose by 22 percent to R6,1 billion and operating earnings were 24 percent higher at R738 million. The year end valuation of underlying reserves of GBP 42 million pertaining to offshore cash resources resulted in an unrealised translation loss of R151 million, compared with a corresponding gain of R255 million last year. This has resulted in headline earnings per share declining by 36 percent. Excluding the translation adjustment, headline earnings per share increased by 30 percent to 523,4 cents. 

At 31 December 2002, the Group was in a net cash positive position for the first time since the commencement of the major investments in African Products and Hulett Aluminium. Over the past two years, the Group has approved some R550 million for investment in projects all focussed on unlocking more value from existing businesses. 

The board has declared a final dividend of 190 cents per share, which, together with the interim dividend of 80 cents per share, amounts to an unchanged total dividend for the year of 270 cents per share. 


African Products delivered a strong performance in 2002. Overall volumes grew from 578 000 tons in 2001 to 616 000 tons driven by the ten percent growth in domestic sales. A drop in export volumes from 71 000 tons in 2001 to 64 000 tons, precipitated by the high maize price and a strong Rand was offset by improved product mix that realized higher margins. Operating earnings for the year before interest but after AC133 (Financial Instruments: Recognition and Measurement) adjustments were R220 million (2001- R199 million). During the year African Products changed its accounting policy for maize procurement contracts and in compliance with AC133 now marks to market derivative instruments. As a consequence operating earnings for 2002 have reduced by R20 million and those for 2001 have increased by R51 million. 

In a year in which the international market has seen depressed demand and pressure on margins, Hulett Aluminium increased revenue by 28 percent to R3,2 billion, showing a 35 percent compound annual growth rate over the last three years. Growth in sales volumes was achieved in both the local and export markets, including increased sales of more profitable products. Rolled Products sales volumes in the last quarter improved significantly and were 23 percent ahead of the average sales in the first nine months of the year. The financial benefits of the improved sales during the last quarter were offset by pressure on international rolling margins and by the sharp movement in the value of the Rand. Operating earnings before interest grew by two percent to R272 million, the Groupís 50 percent share of which amounted to R136 million (2001 Ė R134 million). Moreland achieved a strong cash flow performance in 2002 and increased revenue by eight percent to R146 million in spite of the four interest rate hikes and high property rates on vacant land in Durban. 

Increased cane and sugar production, improved export realizations as well as higher returns and restructuring in Swaziland and Mozambique enabled Tongaat-Hulett Sugar to increase operating earnings by 49 percent to R420 million for 2002 (2001- R281 million). The results incorporate the adoption of AC 137 (Agriculture) and the move away from seasonal accounting. Overall this had the effect of reducing operating earnings in 2001 by R39 million and increasing 2002 by R32 million. Triangle Sugar, in Zimbabwe, which is accounted for to the extent that dividends are received, continues to operate resiliently in a demanding environment. In 2002 dividends received from 

Triangle totalled R71 million (2001- R76 million) net of withholding tax, representing a seven percent reduction on last year. Difficult trading conditions are likely to persist in 2003. Concerns exist over the future remitability of dividends from Zimbabwe. 


The accounting policies of the Group conform with South African Statements of Generally Accepted Accounting Practice and are consistent with those applied in the previous year, except for the changes detailed below. 

The Group has adopted AC 137 (Agriculture) and as a consequence no longer accounts for its sugar operations on a seasonal basis. In addition maize futures and option contracts are accounted for as derivatives or cash flow hedges where the requirements for hedge accounting have been met. Comparative figures have been restated for these accounting policy changes, where applicable. This has had a R9 million favourable effect on the prior yearís earnings after tax and resulted in equity reducing by R18 million, property, plant and equipment by R84 million, working capital by R89 million and deferred tax by R14 million with increases in growing crops of R132 million and derivative assets of R9 million. Current year earnings after tax have increased by R9 million as a result of the change in accounting policies.


The results for the year ended 31 December 2002 have been audited by Deloitte & Touche. Their unqualified audit opinion is available for inspection at the registered office of the company. 


The Groupís results are increasingly impacted by changes in the value of the Rand, particularly when substantial moves away from inflation differentials occur. Changes to international accounting standards and their application, a more volatile Rand, a maize price with a stronger dollar correlation, and increased exports all add to the impact on results. 

The Group is focussing on all controllables and has the ability and the capacity to increase revenues during the coming year and will continue efforts to reduce its cost base. 

In the near term, the business climate for all operations, mainly as a result of the strengthening of the Rand, is challenging. Should the Rand remain at current levels, earnings for 2003 will be lower than those for 2002. 

For and on behalf of the board 

C M L Savage
P H Staude
Chief Executive
19 February 2003