ILLOVO SUGAR (MALAWI) LIMITED
(Incorporated in Malawi on 31 May 1965 under registration number 839)
EXTRACTS FROM THE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016
FINANCIAL PERFORMANCE | GROUP Audited 31 Mar 2016 | GROUP Audited 31 Mar 2015 | COMPANY Audited 31 Mar 2016 | COMPANY Audited 31 Mar 2015 | GROUP Audited 31 Mar 2016 | GROUP Audited 31 Mar 2015 | COMPANY Audited 31 Mar 2016 | COMPANY Audited 31 Mar 2015 | |||
Summarised statement of profit or loss and other comprehensive income | K'm | K'm | K'm | K'm | Summarised statement of cash flows | K'm | K'm | K'm | K'm | ||
Revenue | 99 925 | 92 508 | 55 094 | 52 286 | Cash generated from operations before working capital changes | 8 981 | 14 490 | 906 | 6 134 | ||
Working capital requirements | (29 217) | 7 857 | (26 883) | 5 619 | |||||||
Operating profit | 18 248 | 23 429 | 7 367 | 11 412 | Finance costs, taxation & dividends paid | (10 951) | (8 856) | (6 825) | (4 670) | ||
Dividend income | 40 | 52 | - | 5 000 | Net cash (outflow)/inflow from operating activities | (31 187) | 13 491 | (32 802) | 7 083 | ||
Net finance cost | (10 146) | (3 931) | (7 791) | (2 460) | Cash flow from investing activities | (3 059) | (6 013) | (1 444) | 395 | ||
Profit /(loss) before taxation | 8 142 | 19 550 | (424) | 13 952 | Net cash (outflows)/inflows before financing activities | (34 246) | 7 478 | (34 246) | 7 478 | ||
Taxation | (2 632) | (6 019) | (15) | (2 813) | Cash flow from financing activities | 29 713 | - 29 713 | - | |||
Net profit /(loss) for the year | 5 510 | 13 531 | (439) | 11 139 | |||||||
Other comprehensive income | (438) | 479 | (438) | 479 | (Decrease)/ increase in cash and cash equivalents | (4 533) | 7 478 | (4 533) | 7 478 | ||
Total comprehensive income | 5 072 | 14 010 | (877) | 11 618 | |||||||
Adjusted for: | |||||||||||
Other comprehensive income | 438 | (479) | 438 | (479) | |||||||
Headline earnings | 5 510 | 13 531 | (439) | 11 139 | Summarised statement of changes in equity | ||||||
Share capital & premium | |||||||||||
Number of shares in issue ('000) | 713 444 | 713 444 | Balance at beginning/end of the year | 782 | 782 | 782 | 782 | ||||
Weighted average number of shares on | |||||||||||
which net profit per share is based ('000) | 713 444 | 713 444 | Retained earnings | ||||||||
Balance at beginning of the year | 41 052 | 40 241 | 23 088 | 24 669 | |||||||
Net profit per share (tambala) | 772 | 1 897 | |||||||||
Headline earnings per share (tambala) | 772 | 1 897 | Net profit /(loss) for the year | 5 510 | 13 531 | (439) | 11 139 | ||||
Dividend per share (tambala) | - | 750 | |||||||||
Non-distributable reserve | (438) | 479 | (438) | 479 |
Quality of earnings statement Dividends declared - (13 199) - (13 199)
18 248
23 429
Operating profit
Adjust for:
Change in fair value of cane roots & growing cane
Balance at end of year 46 124 41 052 22 211 23 088
(10 359)
(9 737)
Capital and reserves 46 906 41 834 22 993 23 870
Operating profit less fair value changes
7 889
13 692
Revenue
Sugar production Cane growing
58 782
41 143
99 925
53 543
38 965
92 508
Business segmental analysis
OVERVIEW
Overall profit from operations for the year declined by 22% (42% excluding fair value gains on biological assets) compared with the previous year, with overall headline earnings on a year on year basis declining 59%.
Adverse weather conditions at the commencement of the 2015/16 season resulted in inconsistent supply of both water and electricity for irrigation purposes. This impacted negatively on crop yields and contributed to widespread pest infestations of the stressed crop. Plant operational performance at Nchalo was below expectation for the season, although generally improved on the prior crushing season. Dwangwa, on the other hand, had a generally satisfactory plant performance at similar levels to the prior year. Final sugar production for the year totaled 269 000 tons sugar which reflected an overall 5% decrease season on season.
Overall sugar sales into the local and export markets amounted to 255 000 tons - a decrease of 7% over the previous year's total of 273 000 tons sugar. Domestic market sales were significantly down by 40 000 tons sugar on a year on year basis mainly as a result of local unfavourable economic conditions and, for some time, the illegal entry of foreign sugar into the Malawi market. The prompt intervention from both Malawi Revenue Authority and Ministry of Industry and Trade helped to eventually stem this illegal importation of sugar. Efforts by the commercial teams to switch product from the lower priced EU bulk raw sugar markets to the better priced regional markets delivered improved revenues to the business.
Generally the economic conditions remained challenging with significant exchange and interest rate movements. The business embarked upon deploying further continuous improvement initiatives with a structural review of the cost base of the business to counter some of the negative financial impacts.
PROSPECTS
With a return to more normal weather patterns, changes to the cane land fallow programme at both Estates and expected yield improvements at Nchalo, the crop is expected to be marginally up on the current year to slightly over 2.2 million tons of cane for the 2016/17 season. This expected increase is despite further declining cane yields from Outgrower operations at both Dwangwa and Nchalo.
Summarised statement of financial position
GROUP GROUP COMPANY COMPANY
Audited Audited Audited Audited 31 Mar 2016 31 Mar 2015 31 Mar 2016 31 Mar 2015
Operating profit
Sugar production Cane growing
14 122
4 126
18 248
15 237
8 192
23 429
In terms of operational parameters the Company is confident that both Dwangwa and Nchalo factories will reflect improved performances in the season ahead. These expected improvements together with the slightly increased cane crop should result in an overall increase in sugar make by 2% to 274 000 tons of sugar for the new season.
Local domestic market sugar sales are expected to recover on a year on year basis with net exports remaining relatively flat but with a continuing movement away from the lower priced EU bulk raw market to an anticipated better priced regional market. The Company will take full advantage of every opportunity to grow sugar sales in the better priced EU and USA specials markets.
Inflation rates, together with exchange and interest rate movements, will continue to have a marked effect on profitability. Cost control initiatives embarked upon by the Company will continue in the new year and is expected to fundamentally change the structural cost base of the business and deliver value in improving operating margins.
ASSETS Property, plant & equipment | 24 951 | 22 945 | 17 736 | 17 067 | |
Cane roots | 32 302 | 25 827 | 22 760 | 17 967 | |
Investment - - 324 324 | |||||
Non-current assets | 57 253 | 48 772 | 40 820 | 35 358 | |
Current assets | 67 244 | 52 375 | 47 739 | 36 227 | |
Total Assets | 124 497 | 101 147 | 88 559 | 71 585 | |
EQUITY AND LIABILITIES | |||||
Capital and reserves | 46 906 | 41 834 | 22 993 | 23 870 | |
Deferred taxation | 23 351 | 20 867 | 13 629 | 13 762 | |
Long-term borrowings | 19 444 | - | 19 444 | - | |
Current liabilities | 34 796 | 38 446 | 32 493 | 33 953 |
DIVIDENDS
Due to the adverse trading conditions and related cash flow constraints of the group no interim dividends were payable for the year ended 31 March 2016 (2015: 750 tambala per share).
The Directors will also propose at the forthcoming annual general meeting of Members, to be held on 19 August 2016, that no final dividend be payable for the year due to the current high debt levels exacerbated by the high interest rate environment.
By order of the Board Malawi Sugar Limited Secretaries
5 May 2016
Total Equity and Liabilities 124 497 101 147 88 559 71 585
Depreciation 1 168 902 810 639
Capital expenditure 3 229 6 169 1 535 4 711
AUDITORS REPORT TO THE MEMBERS OF ILLOVO SUGAR (MALAWI) LIMITED
The accompanying summarised consolidated financial statements, which comprise the summarised statements of financial position as at 31 March 2016 and the summarised statements of comprehensive income, the summarised statements of changes in equity and the summarised statements of cash flows for the year then ended, are derived from the audited financial statement of Illovo Sugar (Malawi) Limited for the year ended 31 March 2016. We expressed an unmodified opinion on those financial statements in our report dated 5 May 2016. Those financial statements, and the summarised financial statements, do not reflect the effect of events that occurred subsequent to the date of our report on those financial statements.
The summarised consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards and the Companies Act, 1984, as applicable to annual financial statements. Reading the summarised consolidated financial statements, therefore, is not a substitute for reading the audited financial statement of Illovo Sugar (Malawi) Limited.
Directors' Responsibility for the Summarised Consolidated Financial Statements
The directors are responsible for the preparation of the summarised financial statements in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards, and for such internal control as the directors determine is necessary to enable the preparation of summarised financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on the summarised financial statements based on our procedures which were conducted in accordance with International Standard on Auditing 810, Engagements to Report on Summary Financial Statements.
Opinion
In our opinion, the summarised consolidated financial statements derived from the audited financial statements of Illovo Sugar (Malawi) Limited for the year ended 31 March 2016 are consistent, in all material respects, with those financial statements, in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards and the Companies Act, 1984.
Deloitte. Chartered Accountants 5 May 2016
Blantyre Malawi
Illovo Sugar Limited published this content on 12 May 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 12 May 2016 06:57:10 UTC.
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