Tongaat Hulett posts R155m loss

Johannesburg - South African sugar group Tongaat Hulett posted a first-half headline loss of 145.1 cents per share, the firm said on Monday.

The group, which said on July 27 it expected the headline loss, said profit from operations was R308m compared with R307m in the year-ago period.

The group reported once-off corporate structuring costs of R354m.

Tongaat Hulett (TON) is one of the separately listed entities established following the unbundling of The Tongaat Hulett Group.

Tongaat Hulett's total net profit for the six months amounted to R3.209bn, compared with 2006's R320m. Headline earnings, which exclude the Hulamin fair valuation and include the transaction costs and BEE IFRS2 costs, reflect a headline loss of R155m compared with a previous R297m headline profit.

"After last year's record earnings, these results are another step along a journey. Tongaat Hulett possesses the advantage of owning an unmatched mix of agri-processing and land assets, which together with the ability to make things happen enables us to exploit a rapidly changing global agriculture, land, energy and trade environment.

"The profit from operations in the first half of 2007 was achieved in difficult conditions. We expect to deliver real growth in profit from operations for the full 2007 year," said CEO Peter Staude.

Following the listing and unbundling of Hulamin at the end of June, Tongaat Hulett's 50% share in Hulamin was valued through the income statement by R3.348bn and thereafter unbundled as a distribution in specie.

Hulamin's net profit (which does not include the investment fair valuation) for the period up to the unbundling is reflected as a discontinued operation.

The corporate transactions being undertaken by Tongaat Hulett include a 25% BEE equity participation and a return of capital to shareholders by way of a share buy-back.

All the transactions were approved by shareholders with a 99% vote in favour at a general meeting held on June 11, where 84% of shareholders were represented.

Profit from sugar operations was R167m, compared with 2006's R159m excluding dividends from Triangle in Zimbabwe.

The 2006 crop in South Africa was the second lowest in the past 10 years, with the resultant increased cost per ton of sugar and the lower export stocks carried forward into the first half of 2007.

Raw sugar export volumes from South Africa reduced to 84 079 tons from 162 301 tons and were sold at an effective world sugar price of 14.4 US c/lb (2006: 11.1 US c/lb). South African domestic sales were 209 765 tons (2006: 209 311 tons).

A dividend equivalent to US$8m has been declared by Triangle and approved by the Zimbabwe Reserve Bank, which is expected to be brought to account in the second half of 2007.

Looking ahead, the group said headline earnings for 2007 will include the significant effects of the once-off costs of the corporate transactions.

Profit from Tongaat Hulett operations in the second half of the year is expected to exceed that achieved in the first half of 2007. Real growth in profit from operations is expected for the full 2007 year.

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