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GIANT sugar producer, Tongaat Hulett increased its expenditure on community development initiatives by 67 percent to $2,5 million in the year ended March 31, 2016.
In the prior year, the company spent $1,5 million on various community development initiatives.
In a statement accompanying its financial results for the year ended March 31, 2016, Tongaat Hulett said it continues to develop and implement initiatives meant to improve the quality of its workers and the surrounding communities at large.
“Key amongst such initiatives was the growing of a winter maize crop to alleviate the food shortage in Masvingo province and assisting surrounding communities in the growing of a drought tolerant sorghum crop.
“As part of the company’s ongoing community empowerment drive under its socio-economic development programme, a total of $2,5 million was spent in various community development initiatives, an increase of 67 percent from the prior year,” it said.
It said private farmers are also continuing to make a significant contribution towards the overall performance of the industry.
“During the 2015/16 season, private farmers replanted 1,393 hectares of sugar cane under the Successful Rural Communities (SusCo) project bringing the total private farmer developed area to 16,309 hectares.
“During the past season, total private farmer cane deliveries to the mills amounted to 1,009,303 tonnes cane from 875 active farmers employing in excess of 8,000 workers,” said Tongaat Hulett.
During the period under review, the company’s revenue amounted to $116,8 million compared to last year’s $146,8 million while the operating loss and net loss for the year amounted to $6,2 million and $8,5 million.
In 2015, operating profit and net profit was $16,2 million and $7,3 million respectively.
“The disappointing results were a direct consequence of the significant reduction in sugar production volumes amounting to 24,000 tonnes from prior year due to restricted irrigation and resultant drop in cane yields and the generally unfavourable local and international trading environment,” it said.
The largely fixed cost structure of the business further compounded by low capacity utilisation at 64 percent and the low price realisations on domestic and export markets, on account of liquidity challenges and global sugar dynamics further negatively impacted on the results for the year.
Tongaat Hulett said a $2 million fair value loss on cane was recorded for the year ended March 31, 2016 compared to a gain of $6,6 million in the previous year.
Cash generated from operations totalled $5,4 million for the year under review in line with operating losses recorded.
“Working capital decreased marginally by $600,000 as sugar stocks, debtors and creditors were maintained at similar levels year-on-year,” it said.
The company net debt amounted to $35 million as at March 31, 2016 compared to $31,1 million in the prior period.
“A total of $6,4 million was incurred in finance costs compared to $7,2 million incurred in the prior year, at average interest rates of 9,62 percent and 10,51 percent respectively, in line with the level of borrowing over the 12 months period under review,” it said.
derick.khumalo