Tongaat Hulett Limited · JSE:TON
Tongaat Hulett — H1 2020 Earnings Presentation
32 slides from Tongaat Hulett's earnings presentation, Jan 31, 2020
Slide 1: Interim Results – September 2019
Interim Results – September 2019 31 January 2020
Slide 2: Agenda
Agenda 1. Group Overview and business update Gavin Hudson 2. Financial Results Rob Aitken 3. Segment Performance Rob Aitken 4. Forward look Gavin Hudson 5. Q and A IT’S A NEW DAWN, IT’S A NEW DAY, IT’S THE TONGAAT HULETT WAY 2
Slide 3: Today's presenters
Today’s presenters Gavin Hudson Rob Aitken Chief Executive Officer Chief Financial Officer IT’S A NEW DAWN, IT’S A NEW DAY, IT’S THE TONGAAT HULETT WAY 3
Slide 4: Interim Results – September 2019
Interim Results – September 2019 ▪ Operating profit of R1,278 billion, up from R315 million ▪ EBITDA at R1,586 billion, up from R703 million ▪ Headline loss improves to R314 million ▪ Revenue marginally down -1.5%, to R8,085 billion ▪ Operating cash flows of R1,478 billion, up from R1,076 billion (b
Slide 5: Operational performance
Operational performance Starch Sugar Property ✓ Operating profit : R305m vs ✓ Operating profit : R855m vs ✓ Operating (loss)/profit : R243m vs R305m in Sep 2018 R68m in Sep 2018 (+170%) (R6m) in Sep 2018 ✓ Adjusted EBITDA : R366m vs ✓ Adjusted EBITDA : R968m vs ✓ Adjusted EBITDA : R243m vs R359m in
Slide 6: Tongaat Hulett: a leading player in the sectors which we operate
Tongaat Hulett: a leading player in the sectors which we operate One of the largest Founded in 1893 A leader in Starch & Glucose, Sugar, Ethanol, portfolios of premier - 127 year history Cattle and Animal Feeds markets Commercial land in KZN/SA 4 ~10.5m ~1.7m ~11.7k Starch Plants Tons of cane crushe
Slide 7: Reasons to believe in Tongaat Hulett
Reasons to believe in Tongaat Hulett 1• Critical indicators are moving in the right direction – we are doing the right things to turn this company around 2• We have stabilised and streamlined the business and continue rightsizing it for recovery and growth 3• We are improving our governance and repo
Slide 8: Progress to date
Progress to date Rebasing the business and closure Good progress with cash generation on the past • Cash flow targets will be met and exceeded • PwC audit findings are being by year end addressed • Achieved and exceeded first debt reduction • Making significant Progress on milestone (R610m vs R500m
Slide 9: Financial Results
Financial Results m TongaatHulett:
Slide 10: Introduction
Introduction To consider in reviewing our results: • Financial policies and frameworks strengthened and consistently applied • Restatements applied in the 2018 annual results were carried forward for the September 2018 interim results used in the comparatives • Restatements amended to provide for th
Slide 11: Financial features
Financial features Revenue Operating profit Adj EBITDA Strong improvement in operating profit R8,085 bn R1,278 bn R1,452 bn Sep’18: R8,207 bn Sep’18: R315 m Sep’18: R1,092 bn Net finance cost Headline loss HEPS Hyperinflation implemented for R894 m (R315 m) (233) cents Zimbabwe Sep’18: R608 m Sep’18
Slide 12: Hyperinflation
Hyperinflation • IAS 29 Financial Reporting in September 2019 Hyperinflationary Economies applied As reported: Sensitivity 1: Sensitivity 2: Hyperinflation Hyperinflation + • Official inflation rate has increased No hyperinflation + + official rate parallel rate to 350% (30 September) official rate
Slide 13: Income Statement
Income Statement 6 months ended 6 months ended 12 months ended 30 September 30 September 31 March 2019 2018 2019 Operational progress, Restated hyperinflation, re- recognition of land R' million (Unaudited) (Unaudited) (Audited) deals Revenue 8 085 8 207 17 069 Cost of sales (5 353) (6 295) (12 447)
Slide 14: Revenue
Revenue Revenue (1) (Rbn) Commentary YoY 2% (38)% 34% 362% 12% (1)% #% Change • Zimbabwe sales volumes decreased – lower production, conscious management of supply 8,2 8,1 • Mozambique benefited from new refinery, recovery of local market sales volumes and export sales brought forward Sep 18 • Only
Slide 15: Adjusted EBITDA
Adjusted EBITDA Adjusted EBITDA(1) (Rm) Commentary (410)% (3)% n/m n/m 2% 33% #% YoY • SA operations impacted by lower local sales volumes Change and write-down of Net Realisable Value (NRV) on export stocks in current period 1 452 Sep 18 1092 • Zimbabwean local volumes declined. Prices are 736 717
Slide 16: Operating profit
Operating profit Operating profit (2) (Rm) Commentary (134)% 203% n/m n/m 0% 306 #% YoY Change • A significant improvement on the prior comparable 1 278 Sep 18 928 period Sep 19 306 305 305 315 • Reflects: 243 122 o operational progress on a variety of fronts (6) (121) (211) (283) o the application
Slide 17: HY 2020 loss driven by higher finance cost and hyperinflation
HY 2020 loss driven by higher finance cost and hyperinflation Bridge from Operating Profit to Total Comprehensive Loss (HY 2020, Rm) IT’S A NEW DAWN, IT’S A NEW DAY, IT’S THE TONGAAT HULETT WAY 17
Slide 18: Headline earnings
Headline earnings September September September September 2018 2018 2019 2019 As reported Restated As reported % change Loss for the period (Rm) -R110 million -R392 million -R318 million +19% Headline loss for the period (Rm) -R87 million -R354 million -R315 million +11% Weighted average number of s
Slide 19: Cash flow highlights
Cash flow highlights September September 2019 2018 R' million Restated Net cash (outflow) / inflow generated from operating activities (685) 470 Additions to property, plant and equipment (120) (718) Finance costs (645) (558) • Strong conversion of operating profit to cash flow Borrowings 1 599 1 06
Slide 20: Capex
Capex Capex (1) (Rm) Commentary • Capital expenditure during the period was confined to essential replacement items and has reduced from 727 R727 million to R130 million • Capital expenditure requirements will lighten considerably now that the Xinavane refinery has come Sep 18 on stream Sep 19 • Con
Slide 21: Borrowings
Borrowings South Africa Refinancing Commentary Type Total (Rm) • Outstanding borrowings of R13,0bn (Sep 18: R12,6bn) but distorted by R1,2bn reduction in trade payables Facility A Term Loan Facility 9,092 • SA refinancing agreements should be effective in February 2020 Facility B Revolving Loan Faci
Slide 22: Segment Performance
Segment Performance w 1892
Slide 23: Sugar SA – Revenue, operating profit and adjusted EBITDA
Sugar SA – Revenue, operating profit and adjusted EBITDA 2662 Commentary 2611 • Milling performance improved during the season with sugar Net Revenue production to 30 September 2019 up 10% year on year. (Rm) • Local market prices on average 14% higher after full year impact Sep 2018 Sep 2019 of Sept
Slide 24: South African Sugar bridge of operating profit
South African Sugar bridge of operating profit Bridge of Operating Profit from H1 2018 to H1 2019 (Rm) IT’S A NEW DAWN, IT’S A NEW DAY, IT’S THE TONGAAT HULETT WAY 24
Slide 25: Sugar Mozambique – Revenue, operating profit and adjusted EBITDA
Sugar Mozambique – Revenue, operating profit and adjusted EBITDA Commentary 909 676 • Revenue growth driven by a 17% increase in domestic sales, Net Revenue accelerated exports and the sale of refined sugar domestically (Rm) (Previously imported) Sep 2018 Sep 2019 • Operating profit and EBITDA benef
Slide 26: Sugar Zimbabwe – Revenue, operating profit and Adjusted EBITDA
Sugar Zimbabwe – Revenue, operating profit and Adjusted EBITDA Commentary 2589 1600 • Comparatives financial information not restated at Group level Net Revenue as reported in a non-hyperinflationary currency (Rm) • Sugar production is marginally lower than H1 2018 Sep 2018 Sep 2019 o 303 000 tons c
Slide 27: Property – Revenue, Operating profit and Adjusted EBITDA
Property – Revenue, Operating profit and Adjusted EBITDA Commentary • Sales revenue increased due to re-recognition of revenue 425 under new revenue recognition policy. Net Revenue (Rm) 92 • R398m represents sale of 141 000 sqm of bulk in the Greater Umhlanga Region. Sep 2018 Sep 2019 • Profit incre
Slide 28: Starch – Revenue, operating profit and adjusted EBITDA
Starch – Revenue, operating profit and adjusted EBITDA Commentary 2101 1871 Net Revenue • Starch and glucose sales volume growth of 4,5% (Rm) Sep 2018 Sep 2019 o Recovery in alcoholic beverage sector 305 305 Operating Profit o Improvement in coffee creamer and confectionary (Rm) sectors Sep 2018 Sep
Slide 29: Forward Look
Forward Look m w enee2 TongaatHulett: 29
Slide 30: Looking forward
Looking forward • Expecting better sugar production in the F2021 season • Revenue will benefit from a 6,5% increase in local sugar prices in South Africa • Kilimanjaro project expected to improve throughput in Zimbabwe Sugar • Mozambican operation continues to drive cost control and cash generation
Slide 31: Unique and attractive investment case as a group
Unique and attractive investment case as a group • Diversified African agriculture leader 1 • Largest starch and glucose producer in Africa 2 • Leading sugar producer in Southern Africa 3 • Premier commercial property portfolio with meaningful embedded value 4 • Profitable growth driven by strategic
Slide 32: Questions?
Questions? w