Illovo Sugar, the African business majority-owned by Associated British Foods, saw its full-year headline earnings increase today (27 May), and said it plans to hold a rights offer to raise capital for its expansion plans.

For the year ended 31 March headline earnings increasing by 24% to ZAR741.8m, while headline earnings per share rose by 23% to 211.6 cents.

Group operating profit increased by 30% to reach ZAR1.39bn, boosted by improved domestic market sales, higher world and regional market sugar prices, weaker exchange rates and good results from downstream operations.

Lower sugar production in Zambia, Swaziland and Tanzania however, partly offset these benefits.

Domestic market sugar sales across the group were “encouraging”, the company said, with all operations achieving “an improvement in offtake”.

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Illovo announced today that in order to meet the “ongoing financing requirements” of the group, it plans to hold a rights offer in order to raise “fresh capital to provide for current and longer term growth plans”.

“This initiative has the full backing of the holding company which has indicated a willingness to support a rights offer to shareholders at or around the prevailing share price. Shareholders will be advised further as this matter is progressed,” the company said.

Illovo said own cane and sugar production are anticipated to “exceed the levels achieved in the last season”, whilst downstream production is expected to be at “similar levels to those of last year”.

“World sugar prices are anticipated to remain above last year’s average levels but to continue to be volatile. Provided they remain at current levels, it will be favourable for revenues from both world and regional markets.”

The company declared a final dividend of 106 cents per share, up 24%.