The Tongaat-Hulett Group Limited - update on the impact of valuation adjustments on the results for the year ended 31 December 2003
Registration number 1892/000610/06
Share Code: TNT
Issuer Code: THGL
In a trading statement issued on 26 November 2003 Tongaat-Hulett said that conditions for the year to date were such that the Group expected both earnings per share and headline earnings per share for the year ending 31 December 2003 to be substantially below those of the year ended 31 December 2002 and that at the prevailing exchange rate and maize price, the Group expected to report a headline loss for the year to 31 December 2003.
Tongaat-Hulett has previously advised shareholders of factors that impact on its results and has distinguished between underlying operating profit and valuation items in the income statement. The interim results to 30 June 2003 included negative valuation adjustments of R375 million, which exceeded underlying operating profit and a headline loss of R190 million was reported.
The impact of the valuation adjustments relating to the recognition and valuation of certain contracts and balance sheet items at 31 December 2003 can now be determined and an update is included below, in advance of the 2003 results being released.
The mark-to-market valuation adjustment required on maize contracts will result in a charge to the income statement of R211 million for the year. The decrease of the maize price of some 40 to 45 percent in the first six months of the year resulted in a charge at the half year of R255 million. There was an increase in the maize price towards the end of the year and this resulted in a gain of R44 million in the second half of the year.
The application of the exchange rate at 31 December 2003 will result in a translation loss of R80 million for the year relating to offshore cash holdings. Valuation adjustments in respect of export debtors, foreign loan hedges, foreign currency translation items and financial instruments will amount to a charge in the income statement of R107 million for the year.
The impact of these valuation adjustments will result in a headline loss for the year to 31 December 2003.
The above information has not been reviewed or reported on by the Groupís auditors. Shareholders are advised to continue to exercise caution when dealing in the Groupís securities until the Groupís audited results for the year ended 31 December 2003 are published, which will be on 23 February 2004.
4 February 2004