Tongaat Hulett Limited · JSE:TON
Tongaat Hulett — H1 FY2021 Earnings Presentation
37 slides from Tongaat Hulett's earnings presentation, Dec 11, 2020
Slide 1: Interim Results for the six months ended 30 September 2020
INTERIM RESULTS For the six months ended 30 September 2020 11 DECEMBER 2020
Slide 2: Presentation Outline
Presentation Outline Business update 01 Gavin Hudson Chief Executive Officer Financial results 02 Rob Aitken Chief Financial Officer Business outlook 03 Gavin Hudson Chief Executive Officer
Slide 3: We continue to respond to Covid-19
We continue to respond to Covid-19 R75m ~20 000 Medical equipment and infrastructure Allocated to COVID-19 Employees donated initiatives assessed (COF) Contributions to Solidarity Fund Ongoing review of ~1 million safety protocols 120 tons Litres sanitiser donated Porridge and Food security feeding
Slide 4: Reminder – where we come from
Reminder – where we come from A business in distress Lack of investment in Inadequate processes assets and people and procedures Material A significant debt restatements of burden previous financial results 4
Slide 5: We committed to improve the business
We committed to improve the business Rightsize and fix the fundamentals Create a platform for sustainable profitable growth Drive efficiencies to leverage our asset base Build capability in our people Through our four (4) strategic pillars 5
Slide 6: We are making great progress
We are making great progress SA Sugar Mozambique +217% Adj. EBIDTA +22% Adj. EBITDA Reduced debt +24% volume growth 100% growth in refined sugar +9% refined sugar share Zero - rated VAT until 2023 R6.4 / R8.1 bn transactions concluded +5% market share growth R5.8 bn cash received Zimbabwe Property +
Slide 7: Material focus on governance and sustainability
Material focus on governance and sustainability Decisive effort on safety performance Significant progress against ESG parameters Reviewed and strengthened policies Regulatory processes concluded and procedures Criminal and civil matters Reinforcing strategic partnerships progressing well Capability
Slide 8: A convincing interim financial performance
A convincing interim financial performance* Cash flow from operating Revenue Adj. EBITDA activities to R8.2 bn to R2.5 bn to R1.3 bn 37% 127% 318% From R6.0 bn From R1.1 bn From R615 m outflow Operating profit Headline loss Net borrowings to R1.9 bn to R6 m From R11.9 bn 95% 99% R10.9 bn Sep’20 From
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Slide 10: Group financial results
Strong financial results notwithstanding a very challenging market Credible results in starch Strong performance in all Continued progress in and glucose - sugar operations property sold on 31 Oct 2020 Recovery countered by A step change in debt net finance cost and Excellent cash generation levels
Slide 11: Salient financial features indicating positive trends
Salient financial features indicating positive trends (Continuing operations) Revenue Net monetary loss Segmental cash Up 37% flow* R301 m to R8.2 bn Effect of hyperinflation Up 180% Adjusted EBITDA* Headline loss to R1.4 bn Up 127% improved 99% to R2.5 bn to R6 m Operating profit Operating profit e
Slide 12: Zimbabwe hyperinflation inflates financial results
Zimbabwe hyperinflation inflates financial results As reported Sensitivity • Application of IAS 29 Financial Reporting in (Official FX (Unofficial Difference Hyperinflationary Economies R 'million rate) FX rate) • Official inflation rate: 659% (September 2020) Exchange rate (vs US$) ZWL 81 ZWL 97 •
Slide 13: Zimbabwe hyperinflation masks strong performance in other operations
Zimbabwe hyperinflation masks strong performance in other operations Non-Zim revenue Non-Zim operating profit Non-Zim adjusted EBITDA up 19%* up 740%*# up 66%* 5239 378 617 4407 3747 371 R million R million R million 45 -296 -3 Sep 18 Sep 19 Sep 20 Sep 18 Sep 19 Sep 20 Sep 18 Sep 19 Sep 20 *Continui
Slide 14: Statement of Profit or Loss (Continuing operations – excl starch)
Statement of Profit or Loss (Continuing operations – excl starch) 6 months ended 6 months ended 30 September 30 September Strong operational 2020 2019 progress, impact of hyperinflation, profit on disposal of Namibia R ‘million (Reviewed) (Unaudited) packaging operation included Revenue 8 248 5 984
Slide 15: Revenue up 37% to R8.2bn
Revenue (from continuing operations) up 37% to R8.2bn • Local market sales up • Average sugar • Revenue • 35ha of large land • Local market sugar volumes • Sales to 24% pricing up 18% impacted sales declined during period in alcoholic • Sales volumes in by Namibia • Townships sales which a price fre
Slide 16: Adjusted EBITDA up 127% to R2.5bn
Adjusted EBITDA (from continuing operations) up 127% to R2.5bn • Higher revenue translated Improved EBITDA • Centralisation of • Reduction in land Impact of hyper Lower sales into improved EBITDA profits impacted by Regional Sugar sales inflation and volumes and • Benefit of continued cost impacted
Slide 17: Improved cash and borrowings position
Improved cash and borrowings position Gross Borrowings (R millions)* 12 465 12 596 Net Borrowings (R millions)* 11 726 11 171 -9% -44% 11 936 11 421 10 898 10 214 6 049 28 12 465 12 596 p 20 Mar 19 Sep 19 Mar 20 Sep 20 11 726 11 171 957 529 Cash Balances (R millions)* Mar 19 Sep 19 Mar 20 Sep 20 10
Slide 18: Cash flows improved and new borrowings reduced
Cash flows improved and new borrowings reduced September September R million 2020 2019 Operating cash flows before working capital 2 844 1 478 • Cash generated from operations of R1.341 bn, Working capital movements (1 503) (2 093) relative to cash outflow of Cash generated from operations 1 341 (61
Slide 19: Net finance costs impacted by debt restructure and FX losses
Net finance costs impacted by debt restructure and FX losses Risk premium applied External and Amortisation Extension of leases in Mozambique South African to restructured debt internal funding of debt (R21m), discounting of provisions prime lending facilities c.2.3% applied balances (including rais
Slide 20: Borrowings restructured to accommodate COVID-19 induced delays
Borrowings restructured to accommodate COVID-19 induced delays South Africa debt structure Commentary • At 30 September 2020, net borrowings decreased by 30 September 2020 10 December 2020 R577 m to R10.372 bn Facility Facility type • Second restructuring of existing debt facilities, agreed Total Ut
Slide 21: Good progress with debt reduction milestones
Good progress with debt reduction milestones Pricing Milestones P Milestone met O Milestone missed R500m R500m R4bn R4bn R6bn R6bn R8.1bn R8.1bn Signed Agreements Nov 19 P Mar 20 P Jun 20 P Sep 20 O Sep 20 P Pricing Proceeds Jun 20 P Dec 20 Mar 21 No. milestones met 1 2 3 4 5 No. milestones missed 1
Slide 22: A significant reduction in debt levels since December 2019
A significant reduction in debt levels since December 2019 11 592 512 111 Completed In progress 4 641 Cash proceeds 389 107 5 572 5 572 148 42 70 only, excluding R450m escrow balance SA Facilities TH DB Namibia Starch Tambankulu Various T-H Pension Working Various Remaining Various (ex. Seasonal) Pe
Slide 23: Mozambican debt decreasing and standstill in place
Mozambican debt decreasing and standstill in place Mozambique Debt Standstill Commentary September September • Net debt in Mozambique decreased from R1.059 bn to Type 2020 2019 R760 m Short term Term loans (MZN) 494 692 • Improved operational cash flows, with some translation benefit from a weaker M
Slide 24: Divisional Performance
Divisional Performance TongaatHulett:
Slide 25: Sugar
Est. 1892 TongaatHulett: | Sugar
Slide 26: Sugar South Africa delivered a strong turnaround
Sugar South Africa delivered a strong turnaround Adjusted EBITDA Bridge Commentary R million • Adjusted EBITDA of R339 m (Sep 2019: loss of R156 m) Sep 2019 -156 • Sugar mills crushed 3.507 m tons cane (Sep 2019: 3.467 m tons) Export Markets 251 • Raw sugar produced 404 060 tons (Sep 2019: 387 210)
Slide 27: Sugar Mozambique delivered a solid performance
Sugar Mozambique delivered a solid performance Adjusted EBITDA Bridge Commentary R million • Adjusted EBITDA up 22% to R342 million Sep 2019 280 • Crushed 1 538 824 tons cane (Sep 2019: 1 478 125 tons) • Raw sugar produced 173 668 tons (Sep 2019: 164 547 tons). Local Sales Mix 23 • Xinavane – excell
Slide 28: Sugar Zimbabwe had a steady performance impacted by hyperinflation
Sugar Zimbabwe had a steady performance impacted by hyperinflation Adjusted EBITDA Bridge Commentary R million • Adjusted EBITDA of R1.926 bn (Sep 2019: R717 million) Sep 2019 717 • Margins improved through prepayments of goods to preserve 158 currency value Pricing • Crushed 2.473 m tons of cane (S
Slide 29: Property
Ww & TongaatHulett: 4 Property
Slide 30: Property produced an acceptable result given significant COVID-19 impact
Property produced an acceptable result given significant COVID-19 impact Adjusted EBITDA Bridge Commentary R million • Adjusted EBITDA loss of R46 million (Sep 2019: profit of R243 Sep 2019 243 million) Large Land • Large land sales in line with prior period (2 transactions) 2 Sales • Township prope
Slide 31: Starch
Est 1892 TongaatHulett | Starch
Slide 32: Starch was sold on 31 October 2020
Starch was sold on 31 October 2020 Adjusted EBITDA Bridge Commentary R million • Adjusted EBITDA down to R283 million Sep 2019 366 • Domestic sales volumes down 13% to 189 749 tons • Exports sales were 18% lower at 29 057 tons 50 Price • Alcoholic beverage sector sales down 39%, due to lockdown rest
Slide 33: Business Outlook
Slide 34: Tongaat is a formidable business
Tongaat is a formidable business 13 Production facilities 60k 1.5m South Africa Sugar • 3 mills • 1 sugar refinery Hectares farmed Tons per annum in sugar • 1 animal feeds mill production capacity 177k ha total farmed Leading Agri business in Zimbabwe Sugar, Ethanol, Animal Feeds • 2 mills • 1 sugar
Slide 35: It's time to pivot and look towards the future
It’s time to pivot and look towards the future • Deepening our focus on ESG Sustainability and transformation • 19 opportunities in 4 countries Diversification • SA Sugar Industry Master Plan is a Our ambition catalyst remains to • Market share, per capita consumption create value Growth and exports
Slide 36: Outlook
Outlook 1 Review our capital structure in light of debt reduction glidepath and remaining milestones 2 Continued growth in sugar EBITDA 3 The reduced debt levels to benefit future finance costs 4 Increased capital investment aligned with depreciation 5 We remain on track to meet our R3 bn cash flow
Slide 37: Questions?
Questions? TongaatHulett: