Chairman's address to shareholders at the 111th annual general meeting, Amanzimnyama, Tongaat
The details of the Group's performance and activities for the year ended 31 December 2002 are fully covered in the Annual Report that was circulated to shareholders during March this year, and I would like to assume that the Report and Chairman's Statement have been read. In addition to the financial results, the Annual Report also refers to the steady progress being made by the Group on important issues such as Safety, Health & Environment, Black Economic Empowerment, Community Investments, Human Resources Training & Development and Corporate Governance. I am mentioning these non-financial matters to re-emphasize that they are important to us, as they are to any responsible company in our country.
From a strategic and operational point of view your Group has been working well. Last year's revenue from continuing operations increased by 22% to R6,1 billion and operating earnings were up 24% to R738 million. There was an unrealized translation loss of R151 million pertaining to the year-end valuation of offshore cash resources, compared with a corresponding gain of R255 million in 2001. The unrealized translation loss was the main reason for headline earnings per share reducing by 36% to 388,1 cents. Nevertheless the total dividend for 2002 was maintained at 270 cents.
Ladies & gentlemen: in recent years, the Group's investments in major manufacturing projects in Southern Africa have generated the planned growth in sales, boosted by exports, and while many new opportunities in marketing and sales have been created, the Group's results are now more sensitive to exchange rate fluctuations. The movement in the Rand is not helping us at the moment; it continued to strengthen in the first quarter of 2003, and in that period the domestic maize price almost halved. The financial effects of the application of AC 133 on maize procurement contracts are currently being assessed. Furthermore a lower sugar crop is expected this year following poor rainfall in the cane growing areas. Earnings for the first six months of 2003 are therefore likely to show a major reduction, with some improvement expected during the second half.
Against the background of an uncertain world economy and exchange rate volatility, I'm pleased to say that our underlying operations remain sound, with continued growth in sales revenues. Management is focused on reducing overheads, minimizing expenditure and maximizing cash flows. The Group's balance sheet is strong and despite the anticipated setback in earnings, the Group will endeavour to maintain its interim dividend for the half year.
In any company, the succession of a CEO is always a major event. As you know, Peter Staude was appointed Chief Executive at our last AGM. He has had a difficult and challenging year in which to manage, and is leading the executive team particularly well in doing an excellent job.
The Board has also been working hard and we are fortunate indeed to have 10 non-executives and 9 executive directors with a wide range of talent and experience, as well as the will to make the company succeed. Corporate governance is an issue regularly addressed and while the Group already complies with the King I recommendations, it is the Board's intention to comply with the King II report by the end of this financial year.
The Board has appointed me as non-executive Chairman for the year ahead and I would like to thank them for this honour and for their confidence shown.
Ladies & gentlemen: in conclusion, I would also like to take this opportunity to pay tribute to and thank my colleagues on the Board and to express my sincere appreciation for their advice, support and wise counsel. My thanks are also extended to Peter and his executive team, together with all the people at Tongaat-Hulett for their loyalty, dedication and contributions to the Group.
It is now my pleasure to move the adoption of the Directors' Report and Annual Financial Statements for the year ended 31 December 2002.
C M L Savage