Slide 1: Tongaat Hulett February 2008
Se @ Tongaat Hulett ane FEBRUARY 2008
Slide 2: Financial Results
FINANCIAL RESULTS @ Tongaat Hulett
Slide 3: Year to 31 December 2007
Year to 31 December 2007 • Revenue from continuing operations of R6,395 billion (2006 : R5,110 billion) • Profit from Tongaat Hulett operations of R838 million (2006 : R726 million) • Corporate structuring transactions • Once-off BEE IFRS 2 cost : R320 million • BEE MSOP ESOP IFRS 2 cost : R13 milli
Slide 4: Corporate Structuring Transactions
Corporate Structuring Transactions • Approved by shareholders and sanctioned by Court in June 2007 • General Meeting : 84% of shareholders represented, with 99% voting in favour • Major components • The listing and unbundling of Hulamin : completed during June 2007 • Investment in Hulamin fair value
Slide 5: Profit from Tongaat Hulett Continuing Operations
Profit from Tongaat Hulett Continuing Operations R million 2007 2006 Developments 428 325 Starch 105 96 Sugar 307 295 Triangle dividend 53 61 838 Centrally accounted costs (55) (51) 726 Total 838 726 550 323 150 2003 2004 2005 2006 2007 5
Slide 6: Land and Property Developments
Land and Property Developments 2007 2006 Operating profit (Rm) 428 325 Capital Profit (Rm) 48 26 Value of additional agricultural land Increasing with development potential • 83 hectares of developable land sold Umhlanga Ridgeside, RiverHorse Valley Business Estate, Bridge City, Umhlanga Ridge Town
Slide 7: Starch Operations
Starch Operations 2007 2006 Operating profit (Rm) 105 96 • SA maize price at significant premium to international price • International starch margins improved in the last quarter after being under pressure from sharp increases in international maize prices • Domestic prime product sales volume grow
Slide 8: Sugar Operations
Sugar Operations 2007 2006 Operating profit (Rm) 360 356 • Triangle dividends of R53 million brought to account (2006: R61 million) • Mozambique, Swaziland and Zimbabwe contributed R176 million (2006: R99 million) to operating profits • Xinavane mill consolidated in 2007 (2006 : R10 million operatin
Slide 9: Other Income Statement Items
Other Income Statement Items • Finance costs • R119 million in 2007 (2006: R88 million income) • Income from Hulamin finance structure in 2006, finance costs in discontinued operations segment of the income statement • Higher interest rates in 2007 • Tax • Includes STC on March 2007 dividend for Ton
Slide 10: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet • Cash inflow from operations : Cash generated R970 million Tax payments - R293 million Working capital - R175 million R502 million • Capital expenditure : R755 million • Tongaat Hulett net borrowings : R991 million Net debt % equity - Consolidated balance sheet 34% • BEE
Slide 11: Tongaat Hulett
a Se @ Tongaat Hulett
Slide 12: Sugar Cane Processing: Increase sugar production
SUGAR CANE Increase sugar production PROCESSING Increase realizations per ton
Slide 13: Increase Sugar Production
Increase Sugar Production Tons Per 2007 2009 Annum Production Capacity South Africa 604 000 > 1 000 000 Zimbabwe 349 000 > 600 000 Mozambique 108 000 > 285 000 Swaziland RSE 58 000 > 60 000 Total 1 119 000 > 1 945 000 • Further develop expansion opportunities 13
Slide 14: Sugar Cane Processing
Sugar Cane Processing Molasses • Ethanol • Potable • Industrial • Fuel • Other fermentation products • Animal feeds Raw Sugar • Refined sugar • Ethanol • Fructose • Other value add products Bagasse • Electricity • Animal feeds • Paper • Bio-oil Tops and trash • Steam • Burnt • Cellulosic ethanol • O
Slide 15: Increased Realization from Raw Sugar
Increased Realization from Raw Sugar Liquid Fructose • Start-up May 2008 • Production capacity 3 000 tons per annum 15
Slide 16: Increase Realizations from Molasses
Increase Realizations from Molasses Production Tons Possible Ethanol (litres) 2007 386 000 97 000 000 2009 full milling capacity 670 000 168 000 000 2007 • Lowest molasses realization (Mafambisse ex works) $22 / ton • Imported molasses into South Africa (3rd Party) $90 / ton
Slide 17: Increase Realizations from Bagasse and Tops & Trash
Increase Realizations from Bagasse and Tops & Trash Power Generation All Mills at Full Capacity using Current Technology, 67% Tops & Trash In season Out of season Power contribution to grid 660 MW 495 MW Price 60 c/kWh 50 c/kWh Revenue R1,978 billion R648 million Less : Indicative cost of coal (2007
Slide 18: Co-generation Expansion at Felixton
Co-generation Expansion at Felixton • Timing • Start-up 22 months after go-ahead • Additional capital - R220m (today’s money) Without Tops & Trash + Conventional Technology After Expansion Internal consumption 20 MW Exported to the national grid (in season) 38 MW Exported to the national grid (out o
Slide 19: Cane Expansion in South Africa
Cane Expansion in South Africa • 65% mill capacity utilisation of mills during 2007 • Equivalent profit gap > R205 million • Yields : • 2007 Estimate - 45+ tcp hectare • 2000 Actual - 64+ tcp hectare • 32% Gap Rainfall Statistics for Tongaat Hulett SA Mills Land under cane supplying TH Mills (ha) Pe
Slide 20: Zimbabwe
Zimbabwe Normalised Operating profit > $100m / R760m - TH share > $85m / R646m TH 2007 results : Dividends $8m / R53m Two major factors that impacted on current profitability • Distorted domestic realizations • 349 000 tons sugar production out of 600 000 capacity 20
Slide 21: Zimbabwe - Distorted Domestic Pricing
Zimbabwe - Distorted Domestic Pricing • 2007 Domestic realizations • Domestic - parallel rate (217 000 tons at $87 per ton): $19m / R144m • Regional average - (217 000 tons at > $500 per ton) : > $109m / R828m • Revenue gap on local market : > $90m / R684m • Currently Zambia brown sugar : > $600 per
Slide 22: Zimbabwe - Sugar Production
Zimbabwe - Sugar Production • Milling capacity > 600 000 tons per annum • Record year 2002 • 580 000 tons • 2007 - 349 000 tons • 6 000 ha carried over to 2008 • 72 000 tons sugar • Major focus on increasing cane particularly from outgrowers 22
Slide 23: Xinavane - Mozambique
XINAVANE - MOZAMBIQUE
Slide 24: EU Sugar Market
EU Sugar Market • Tongaat Hulett in base load negotiations with 5 short listed customers EU Reference Price (€ per ton) Season Raw Sugar (EU) Refined Sugar (EU) Past 15 years to 2007 496,80 631,90 2008 448,80 541,50 2009 up to 2015 335,20 404,40 • Imports 2009 / 2010 • LDC – 1,9 million tons • €335,
Slide 25: Mozambique
Mozambique Latest Sugar Production Expectation Tons Per Annum 2007 Actual 2008 Forecast 2009 Forecast 2009 Milling Capacity Xinavane 67 000 80 000 180 000 204 000 Mafambisse 41 000 60 000 82 000 82 000 Total 108 000 140 000 262 000 286 000 • Expansions being considered • Ethanol / Refined sugar (Xin
Slide 26: International Corn / Maize Prices
International Corn / Maize Prices Currently > $200 per ton vs Long-term average $85- $90 per ton • Biofuels growth continues • U.S. Energy Bill signed into law • Target 136 billion litres biofuels by 2022 • Requires 100% of current U.S. corn output if cellulosic ethanol not successful • Chinese dema
Slide 27: Continued Upward Pressure on Starch-based Product Prices
Continued Upward Pressure on Starch-based Product Prices • >80% of World’s Starch and Glucose is corn-based • Main alternates • Cassava (Thailand) – increasingly used to make ethanol • Wheat (EU, Australia) – prices at extremely high levels • China • Limiting production • Discouraging exports • Remo
Slide 28: South African Maize Dynamics
South African Maize Dynamics • Two small crops • 2005/06 - 6,6 m tons due to very low plantings • 2006/07 - 7,1 m tons due to drought Prices at or near import parity • Expectation for a large crop in 2008 • Areas planted – 2,785,800 Hectares • Crop > 10 million tons likely Prices nearer to export pa
Slide 29: Starch and Glucose Volume Growth
Starch and Glucose Volume Growth • Local market • Consumption per capita < 50% of developed countries • Usage per capita follows GDP per capita growth • 6% local market growth in 2007 • Export markets can be attractive! • Local maize prices need to be close to world prices • Established trading netw
Slide 30: Value Creation out of Agricultural Land Conversion
Value Creation out of Agricultural Land Conversion 30
Slide 31: Key elements that enable value optimisation
Key elements that enable value optimisation • Leading development skills and competencies • Bulk / concentrated prime land ownership • Planning partnership with eThekwini and KwaDukuza Municipalities • Optimise pace of transition for value, in the development cycle La Lucia Ridge : 1995 La Lucia Rid
Slide 32: Key elements that enable value optimisation (cont)
Key elements that enable value optimisation (cont) • Continue to use land up to final transition • Minimal land holding costs / responsibilities / rates exposure • A number of land use options • Provides options to secure cane and maize supplies • Opportunities for land reform process to increase bo
Slide 33: Rising Profitability out of Land and Property Development
Rising Profitability out of Land and Property Development Operating Profit Capital Year (Rm) Gain (Rm) 2002 20 7 2003 90 13 2004 181 11 2005 231 5 2006 325 26 2007 428 48 33
Slide 34: Distinction between Gross, Developable and Saleable Hectares
Distinction between Gross, Developable and Saleable Hectares Gross = full title deed extent of land hectares (e.g. including wetlands and forests) Developable = gross extent, less undevelopable hectares land (e.g. too steep) and environmentally sensitive areas (e.g. wetlands) Saleable = developable
Slide 35: Value Creation out of Agricultural Land Conversion
Value Creation out of Agricultural Land Conversion February 2008 • Developments within 5 years (1 416 Gross Ha 893 Developable Ha) • Bulk transfer value of cane land R 744m • Expected operating profit contributions R2 470m • Bulk land : developments 5 years + (12 599 Gross Ha 8 042 Developable Ha) •
Slide 36: Comparison to July 2007: Changing Dynamics for Land Developers
Comparison to July 2007 Changing Dynamics for Land Developers February July 2008 2007 Gross Hectares - total 14 015 14 057 - within 5 years 1 416 1 772 - 5 years + 12 599 12 285 Within 5 years • Bulk transfer value of cane land (R million) 744 814 • Expected operating profit contributions (R million
Slide 37: Bulk value of land for development: 5 years +
Bulk value of land for development : 5 years + Market value as bulk agricultural land with development potential Gross Affected by Value per Locality Extent Developable gazetted land developable Bulk Value (Ha’s) (Ha’s) claims Ha (Rm) (Rm) (Gross Ha’s) # eThekwini: Izinga – future 151 121 0,42 51 Si
Slide 38: Value of land for development within 5 years
Value of land for development within 5 years Affected by Expected Bulk Gross gazetted operating Developable transfer Locality Extent land claims profit (Ha’s) value (Ha’s) (Gross contribution (Rm) Ha’s) # (Rm) eThekwini: Umhlanga Ridge Town Centre 48 38 24 186 Umhlanga Ridgeside 122 96 207 684 Izing
Slide 39: Umhlanga Ridgeside
Umhlanga Ridgeside RE @ Tongaat Hulett
Slide 40: Umhlanga Ridgeside
Umhlanga Ridgeside • Bulk transfer value of unsold land : R207 million • Expected future operating profit contribution : R684 million • Commercial : R301 million over 3 years • Residential : R383 million over 5 years Total : R891 million • 96 hectares developable – magnificent sea views / M4 / N2 ac
Slide 41: Cornubia
Cornubia Sought After Commercial and Industrial Location • 840 developable hectares in total • Within 5 years : R536 million • 207 developable hectares • R150 million bulk transfer value • R386 million expected operating profit contribution • N2 freeway / M41 highway access / Umhlanga Ridge road lin
Slide 42: Cornubia
Cornubia @ Tongaat Hulett 42
Slide 43: La Mercy Airport, Tongaat - Dube Tradeport
La Mercy Airport, Tongaat 43 Dube Tradeport
Slide 44: Conclusion
Conclusion Profit from Continuing Operations (R's million) 838 726 550 323 ? ? 150 2003 2004 2005 2006 2007 2008 2009 44
Slide 45: Additional Information
ADDITIONAL INFORMATION @ Tongaat Hulett
Slide 46: Previous Group Structure
Previous Group Structure Other Anglo American plc IDC shareholders 49.7% 50.3% 20.0% The Tongaat-Hulett Group 100% 50% Tongaat Hulett Hulett Aluminium 46
Slide 47: New Tongaat Hulett Structure
New Tongaat Hulett Structure Sangena Masithuthukisane Ayavuna Mphakathi Trust Trust 30% 70% 30% 70% Other Anglo BEE BEE BEE shareholders American yoMoba Infrastructure ESOP/MSOP plc SPV SPV 38% 37% 8% 10% 7% Tongaat Hulett 47
Slide 48: Sugar Production
Sugar Production Tons ’000 2000 2001 2002 2003 2004 2005 2006 2007 South Africa 969 755 860 652 723 753 666 604 Mozambique 39 36 71 82 85 115 106 108 Swaziland RSE 41 45 50 54 50 56 55 58 Zimbabwe * 282 264 296 264 222 236 240 349 Total 1 331 1 100 1 277 1 052 1 080 1 160 1 067 1 119 Capacity 1 500
Slide 49: Cane Production
TH Miller Cum Planter Cane Production 7 000 000 6 000 000 5 000 000 Tons 4 000 000 3 000 000 2 000 000 1 000 000 0 2005 2006 2007 2009 T South Africa Mozambique Zimbabwe Swaziland 49
Slide 50: TH Crop Disposition
TH Crop Disposition 100% 80% 60% 40% 20% 0% 2005 2006 2007 2009 T Domestic Regional Preferential World 50
Slide 51: Hectares under Cane
Hectares under Cane Tongaat Hulett Outgrowers Total South Africa (2008) 10 401 135 539 145 940 Mozambique (2009) 21 411 3 200 24 611 Zimbabwe (current) 30 055 16 279 46 334 Swaziland (current) 3 818 - 3 818 TOTAL 65 685 154 334 220 019 • To date 11 700 hectares transferred to new black farmers in So
Slide 52: Sugar Production - SA
Sugar Production - SA 3 Tons Sugar - Millions Industry: 2 273 000 tons THS: 604 000 tons 2.5 Share of industry 26,6% (2006: 29,9%) 2 1.5 THS Industry 1 Share of industry affected by 0.5 • Poor rainfall in Northern KZN • No impact on compititor 0 irrigated land 2000 2001 2002 2003 2004 2005 2006 2007
Slide 53: Total Volumes – THS (SA)
Total Volumes – THS (SA) Tons sugar FY 2007 FY 2006 Opening stock 226 120 282 560 Production 604 313 665 978 Prior season adjustment (459) (203) Sugar purchased in 82 367 63 153 Sales (705 848) (785 368) Closing Stock 206 493 226 120 53
Slide 54: Local Market Volumes – THS (SA)
Local Market Volumes – THS (SA) Tons sugar FY 2007 FY 2006 Opening stock 150 243 156 010 Production 372 122 400 345 Prior season adjustment 85 (1) Sugar purchased in 82 367 63 153 Sales (460 420) (469 264) Closing Stock 144 397 150 243 54
Slide 55: Export Volumes – THS SA
Export Volumes – THS SA Tons sugar FY 2007 FY 2006 Opening stock 75 877 126 550 Production 232 191 265 633 Prior season adjustment (544) (202) Sales (245 428) (316 104) Closing stock 62 096 75 877 55
Slide 56: Raw Export Realizations: South Africa
Raw Export Realizations: South Africa Raw Sugar FY 2007 FY 2006 Price in US c/lb* 11,77 12,81 Average Rand/US$ realisation R7,12 R6,56 Average Rand realisations per ton R1 944 R1 999 • Table includes raw sugar for refined exports • * Excludes preferential markets and premiums 56
Slide 57: Sunsweet (Brown) Price Statistics – 2007 (Zimbabwe)
Sunsweet (Brown) Price Statistics – 2007 (Zimbabwe) Month Z$ Price/ton Parallel Rate US$ Equiv/ton January 491,000 5,000 98 February 1,373,000 6,000 229 March 1,373,000 20,000 69 April 5,184,200 38,000 136 May 5,184,200 60,000 86 June 13,368,240 140,000 95 July 13,368,240 180,000 74 August 32,675,32
Slide 58: Raw Sugar Price Statistics – 2007 (Zimbabwe)
Raw Sugar Price Statistics – 2007 (Zimbabwe) Month Z$ Price/ton Parallel Rate US$ Equiv/ton January 328,438 5,000 66 February 918,856 6,000 153 March 918,856 20,000 46 April 3,467,800 38,000 91 May 3,467,800 60,000 58 June 8,943,560 140,000 64 July 8,943,560 180,000 50 August 21,814,550 200,000 109
Slide 59: Refined Sugar Price Statistics – 2007 (Zimbabwe)
Refined Sugar Price Statistics – 2007 (Zimbabwe) Month Z$ Price/ton Parallel Rate US$ Equiv/ton January 566,500 5,000 113 February 1,585,000 6,000 264 March 1,585,000 20,000 79 April 5,875,000 38,000 155 May 5,875,000 60,000 98 June 15,150,000 140,000 108 July 15,150,000 180,000 84 August 37,031,460
Slide 60: LDC Countries
LDC Countries • 50 LDC countries • 22 sugar producing LDC countries • Total production 2,5 million tons • Countries that have exported into EU • Ethiopia Tanzania Togo Senegal • Nepal Malawi Mozambique Zambia • Sierra Leone Sudan Congo Benin • LDC criteria • Gross national income per capita < US$750
Slide 61: SA Regulatory Framework
SA Regulatory Framework • Sugar Act of 1978 and Sugar Industry Agreement of 2000 under review by DTI • Need for ongoing regulation accepted by DTI • Any changes implemented by 1 April 2009 earliest • Growers and Millers at odds on • Default cane price formula • Definition of net actual price for Div
Slide 62: Value-adding Activities
Value-adding Activities • Animal feeds in South Africa and Zimbabwe • Retail packing operations in South Africa, Mozambique, Zimbabwe, Namibia and Botswana • Refined and direct consumption raw sugar exports from South Africa and Zimbabwe • Speciality sugars and high intensity sweeteners in South Afr
Slide 63: Impact of Gap between SA and International Maize Price
Impact of Gap between SA and International Maize Price Possible Operating Profit Swing > R300 million per annum International Good local maize crop maize and cassava prices increase SA maize prices move towards export parity World starch & glucose price Gap between SA increase (4-6 maize price & mon
Slide 64: Starch Operations Financial Data
Starch Operations Financial Data R millions FY 2007 FY 2006 Revenue: 1 684 1 320 Domestic 1 302 1 038 Exports 62 74 Co-Products 320 207 Operating Profit 105 96 64
Slide 65: Maize: Safex vs CBOT
-$50 $0 $50 $100 $150 $200 $250 $300 $350 Aug-00 65 Nov-00 Feb-01 May-01 Aug-01 Nov-01 Feb-02 May-02 Aug-02 Nov-02 Feb-03 May-03 Spread Aug-03 Nov-03 Feb-04 May-04 Safex Aug-04 Maize: Safex vs CBOT Nov-04 Feb-05 May-05 Cbot Aug-05 Nov-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07 May-07 Aug-07 Nov-07 Feb-08
Slide 66: Volume Data
Volume Data Volume (tons) FY 2007 FY 2006 Local Starch 95 731 91 706 Local Glucose 332 302 312 144 Total Local 428 033 403 850 Export Starch 14 010 14 307 Export Glucose 6 849 13 344 Total Exports 20 798 27 685 Co-Products 153 525 141 632 Total 602 356 573 133 66
Slide 67: Co-product Pricing
Co-product Pricing Price movement 2007 Co-product Major price drivers on 2006 50%: International edible oil price Germ Up 59,4% 50%: Local maize International protein (Soya, Gluten-60 Up 12,8% fishmeal) prices Gluten-20 Up 57,2% Local maize price 67
Slide 68: Umhlanga Ridge Town Centre (within 5 years)
Umhlanga Ridge Town Centre (within 5 years) • Bulk transfer value of unsold land : R24 million • Expected future operating profit contribution : R186 million Total : R210 million • Commercial : R86 million • Residential : R100 million • 38 developable hectares unsold • N2 / M4 accessibility • Gatewa
Slide 69: Sibaya – Mdloti (within 5 years)
Sibaya – Mdloti (within 5 years) • Bulk transfer value of unsold land : R63 million • Expected future operating profit contribution: Total : R259 million • within next 5 years : R196 million • 50 developable hectares • Beach and river frontage • N2 / M4 excellent access • Includes 5 hotel sites • R8
Slide 70: Zimbali West / Lakes
Zimbali West / Lakes • Relocated M4 has improved access • 7-star Fairmont Hotel and Gary Player Zimbali Lakes golf course to commence 2008 • Zimbali Lakes launch 2008 70
Slide 71: Izinga – Umhlanga Ridge
Izinga – Umhlanga Ridge • First phase successfully sold out • Prime location – convenience of Umhlanga Ridge • Suburban lifestyle and inland views • 193 developable hectares 71
Slide 72: Kindlewood
Kindlewood • 550 unit gated estate without golf / adjacent Mt Edgecombe Country Club Estates • Single residential / cluster housing mix • Development rights secured December 2006 • Excellent market response 72
Slide 73: Bridge City
Bridge City PPP with eThekwini Municipality • Significant mixed-use town centre development • Strong support from National, Provincial and Local Government • Major rail link • Government hospital, magistrates court and shopping centre sites sold • Regional shopping center under construction 73
Slide 74: RiverHorse Valley Business Estate
RiverHorse Valley Business Estate PPP with eThekwini Municipality • 110 hectares developed • Environmental rehabilitation • Bridging historically divided city / straddling N2 at Effingham • eThekwini Municipality’s Queen Nandi Drive link road access (R250 million) • Sold out 74
Slide 75: Shongweni
Shongweni • 971 developable hectares • North & South of N3 / M13 Shongweni interchanges / great accessibility • Potential PPP for infrastructural delivery • Mixed use development (major retail, offices, residential, service industrial, intensive agriculture) • Mixed density niche residential develop
Slide 76: Tinley Manor
Tinley Manor • 571 developable hectares new resort node • Coastal fronting / North and South bank of Mhlali River • N2 access • 5 000 potential units (processing EIA and zoning) • Hotel, Residential and Retail • Golf course, small craft harbour potential • Future opportunities 5+ years 76
Slide 77: Zinkwazi / Thukela
Zinkwazi / Thukela • 1459 developable hectares • N2 access • Coastal fronting • Between Nonoti and Thukela Rivers • Future opportunities 5+ years 77
Slide 78: Tongaat Hulett February 2008
Se @ Tongaat Hulett ane FEBRUARY 2008