Tongaat-Hulett Group produces strong earnings growth

Despite a slowing world economy and tough domestic trading conditions, the Tongaat-Hulett Group increased headline earnings by 20 percent from 498,0 cents to 598,4 cents per share.;

Revenue from continuing operations rose 12 percent to R5,1 billion and operating earnings 14 percent to R584 million. Total net earnings for the year amounted to R609 million. The good results were boosted by exchange rate translation gains of R255 million.

A final dividend of 208,0 cents per share has been declared which, together with the interim dividend of 62,0 cents amounts to a total dividend of 270,0 cents per share, covered 2,2 times compared with 212,0 cents per share for last year.

“The Group’s strategy of investing some R4 billion over the past four years to create three internationally competitive businesses, growing through exports, has proved to be well timed in the light of recent events,” said Cedric Savage, executive chairman of the Tongaat-Hulett Group.

“The substantially enhanced capacity created by these businesses should continue to provide the Group with export driven growth,” he said. Exports currently account for 35 percent of total revenue.

Whilst on the theme of investment and exports, Mr Savage complimented the President and his Cabinet, particularly the Minister of Trade and Industry, on their initiatives to liberalise and reform international trade. Having returned recently from the World Economic Forum in New York, he said: “The influential role of South African leaders in NEPAD and the WTO has become widely recognised throughout the world and their efforts to address the imbalance that currently exists in the unfair subsidisation of agricultural products in the developed countries are highly commended.”

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 division’s other Southern African operations also performed well.;

The performance of the starch and glucose division improved substantially, supplemented by increased exports, resulting in total revenue exceeding R1 billion for the first time. Earnings before interest rose 48 percent to R148 million.;

“This performance justifies the R800 million investment we made at Kliprivier some three years ago. The major cost impact of this investment has been absorbed, placing the division firmly into a growth phase,” said Mr Savage.;

The aluminium division generated 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, of which 50 percent accrues to the Group.

“The aluminium 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,” he said.

During the year, it concentrated on establishing and maintaining its growing international presence through increased sales and market share in more than 45 countries.

The year for the property division was characterised by firmer demand in commercial, residential and the resort portfolios. Its earnings before interest increased by 22 percent to R28 million.;

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 this year with the commencement of the uShaka Island Marine Theme Park and the Effingham-Avoca developments.

In the year ahead, Mr Savage said: “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 year’s 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.”;

On the subject of executive succession planning, he said: “At the end of January this year, I had the pleasure of announcing that my successor as chief executive officer would be Peter Staude, with effect from our AGM on 10 May 2002. Peter, currently managing director of Hulett Aluminium, will also become chairman of that division. I would like to take this opportunity to congratulate him publicly and wish him the greatest success in his well-deserved appointments. He has played a crucial role in the management and expansion of Hulett Aluminium and has contributed to the Group’s activities as a director on the board since 1996 and on the board’s executive committee since 1997.;

“In turn, congratulations are extended to Alan Fourie, currently the financial director at Hulett Aluminium, who has been appointed to succeed Peter as MD of that division. Alan is a Chartered Accountant with an MBA from Cape Town University and, over the past 19 years, has held various executive responsibilities in Hulett Aluminium and its subsidiary companies, including the responsibility for the Commercial Products businesses since 1997.”

With regard to the chairmanship of the Group, the board at its meeting on Friday, 8 February 2001, asked Mr Savage to remain as chairman of the Group in a non-executive capacity.

Appointment of managing director of Hulett Aluminium (Pty) Limited

The Boards of The Tongaat-Hulett Group Limited and Hulett Aluminium (Pty) Limited are pleased to announce that following the appointment of Mr Peter Staude as Chief Executive Officer of the Tongaat-Hulett Group Limited and as Chairman of Hulett Aluminium (Pty) Limited, Mr Alan Fourie has been appointed Managing Director of Hulett Aluminium (Pty) Limited with effect from 10 May 2002.

Mr Fourie, who is a Chartered Accountant and an MBA graduate from Cape Town University, joined the Tongaat-Hulett Group in 1979 and moved to Hulett Aluminium in 1983. He is currently the Financial Director of Hulett Aluminium and has held various executive responsibilities in Hulett Aluminium and its subsidiary companies, including the responsibility for the Commercial Products businesses since 1997.

M A Kennedy
Group Secretary

Tongaat-Hulett Group head office not affected

The Tongaat-Hulett Group’s head office was not affected by the fire, which broke out in the North Coast town of Tongaat on Monday.

Part of a small agricultural personnel office complex belonging to the Tongaat-Hulett Sugar Division at Klipfontein, near the Group head office Amanzimyama, was damaged.

The fire damaged a large lecture room, the clinic, security office and storerooms.

Forensic investigations are underway and at this stage the cause of the fire is unknown. Early estimates of the damage costs are between R1 million and R2 million.

There were no injuries.

Appointment of CEO of the Tongaat-Hulett Group Limited and retirement of Mr. CML Savage from executive duties

APPOINTMENT OF CEO OF THE TONGAAT-HULETT GROUP LIMITED AND RETIREMENT OF MR CML SAVAGE FROM EXECUTIVE DUTIES

The Board of The Tongaat-Hulett Group Limited is pleased to announce that Mr;Peter;H;Staude, currently Managing Director of Hulett Aluminium (Pty) Limited, has been appointed Chief Executive Officer of The Tongaat-Hulett Group Limited with effect from 10;May;2002, the date of the forthcoming Annual General Meeting. He succeeds Mr;Cedric;ML;Savage, who will be retiring from executive duties on the same date.

Mr Staude has held various operational and managerial positions at Hulett Aluminium since 1978, including the position of Managing Director of Hulett Aluminium Rolled Products since 1990 and Managing Director of Hulett Aluminium since 1996.;He has served as a director of the Group Board since 1996 and has been a member of the Executive Committee of the Board since 1997. As additional duties, he was appointed a Director of the Sugar Division in January 2000 and non-executive Chairman of the Starch & Glucose division in May 2000.

Mr Staude will also become Chairman of Hulett Aluminium from 10 May 2002. This will result in some management changes within that company and a further announcement will be made in due course.

Mr Savage has served the company for 24 years, of which 21 years were as an Executive Director of the Group Board.;In the past two, years he has carried out the dual role of CEO and Chairman of the Board.

MA KENNEDY
Group Secretary

28 January 2002

Strike at Hulett Aluminium not good for future investment

Peter Staude, Managing Director of Hulett Aluminium says, “The longer term impact of what is happening at Hulett Aluminium could well be more serious than the short term consequences. Hulett Aluminium has made one of the few major investments in manufacturing in South Africa in recent times. The Company is actively involved in attracting local and foreign investment in downstream aluminium businesses, to be supplied from its R2.4 billion new facilities. A strike such as ours, which is not based on a rejection of the wage offer is not good news when one is busy encouraging future investment.”
Peter Staude is a board member of the recently established Trade and Investment KwaZulu-Natal.

Annual wage negotiations have been concluded with both NETU (National Employee Trade Union) and SAEWA (South African Electrical Workers Association). Improvements were made to a number of conditions of service with wage increases ranging from 8.1% to 9%. Total cost to company amounts to approximately 9.5%.

Numsa (National Union of Metalworkers of South Africa) have rejected Hulett Aluminium’s conditional offer, which has now been withdrawn. Numsa members, who make up approximately 28% of the total Company’s employees, have been on strike since midday on Monday August 13, 2001. The impact on the Company has thus far been minimal.

Tongaat-Hulett Group revenue rises on strong divisional export performance

In line with expectations, the Tongaat-Hulett Group saw revenue from continuing operations driven by strong export performance rise by 20 percent to R2,6 billion and earnings rise 23 percent to R311 million, in the six months ended June 30, 2001.

The Group’s three internationally competitive businesses – sugar, starch & glucose and aluminium- as well as its property division produced good results.

As forecast, headline earnings were down by 4 percent to R204 million. This was mainly as a result of the financing costs now being expensed for the R2,4 billion Hulett Aluminium plant commissioned in November last year.

“While the Group is on track to record solid growth and operating earnings, we are unlikely to escape entirely the effects of the slowing world economy, ” said Cedric Savage, Group executive chairman.

“On a divisional level all companies performed well. The sugar division turned in a 19 percent increase in operating income. It is pleasing to see that there was an increased contribution from our operations in Mozambique and Swaziland.”

Sugar production from the South African operations is expected to be about 865 000 tons. Although this estimate is down on last year’s record season because of lower rainfall, increased world sugar prices and a favourable exchange rate has offset the effect of the lower volume.

The Starch and Glucose division has sought out new international business opportunities which provided strong growth in exports of both value-added and commodity products. Sales of prime products into the domestic market improved by 2 percent and export volumes by 68 percent. Yields improved at all of the division’s mills and earnings before interest and tax, rose 81 percent to R58 million.

Hulett Aluminium continued its good progress following the commissioning of its expanded plant and increased sales by 40 percent with new records in turnover and operating profits.

The business is steadily entering a wide range of niche markets driven by the capability that is being developed on its new facilities. It has responded quickly to changing world markets and conditions, adjusting its product range and markets to optimise its competitive position. This strategy is proving to be particularly advantageous in the present local and international market circumstances, enabling the business to capitalise on some attractive market opportunities in spite of a disconcerting reduction in global demand.

Hulett Aluminium’s operating income before depreciation increased by 36 percent and after taking depreciation into account increased by 23 percent to R116 million before interest and tax of which the Group’s 50 percent share was R58 million.

Higher residential and commercial sales were achieved by Moreland Estates, the Group’s property division, improving revenue earned by 53 percent.

During the six months the Group disposed of two non-core operations – the sale of the Building Materials division was finalised at the end of May and the sale of the Textiles division is still subject to certain preconditions, including the approval of the Competition Commission.

An interim dividend of 62 cents a share was declared.

With regard to the year ending 2001, Mr Savage said “as indicated in our 2000 annual report, the higher financing costs will tend to offset increases in operational earnings, with headline earnings for the year slightly lower than those of last year. Thereafter as strong cash flows progressively drive down debt, operating growth should translate into real growth in earnings per share.”

Tongaat-Hulett Group sells its textiles division

As disclosed in the Executive Chairman’s review in the annual report for the year ended 31 December 2000, the Tongaat-Hulett Group has been engaged in a process of disposing of its two remaining non-core businesses, namely Corobrik and Tongaat Textiles. The sale of Corobrik became unconditional at the end of May 2001.

An agreement has now been reached on the sale of the Group’s Textiles interests to Stefano Magni, Executive Chairman of Aranda Textile Mills (Pty) Limited. Aranda is a vertically integrated manufacturer of yarns, blankets and fabrics established since 1951.

The agreement is subject to the fulfilment of certain preconditions which include Competition Commission approval.

Corobrik sens

The Tongaat-Hulett Group Limited and the Scandinavian Building Systems Company are pleased to advise that all conditions precedent relating to the sale by the Tongaat-Hulett Group of its Building Materials Division to Scandinavian Building Systems were met and the sale was concluded on 30 May 2001.

The sale of textiles division

The Tongaat-Hulett Group Limited is pleased to advise that all conditions precedent relating to the sale of its Textiles Division, David Whitehead & Sons (S.A.) (Pty) Limited, to a company represented by Stefano Magni have been fulfilled effective 30 September 2001.

Whiteheads will continue to focus on apparel and home textiles with a view to growing its domestic and export business.

S J SAUNDERS