Slide 1: May 2013
MAY 2013
Slide 2: Profit from Tongaat Hulett Operations
Profit from Tongaat Hulett Operations R million 2,500 2 145 2,000 1 921 1 501 1,500 1 338 1 132 1,000 838 726 550 500 323 150 0 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013 December year end March year end 2
Slide 3: Financial Results for the Year Ended 31 March 2013
FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2013 3
Slide 4: Financial Highlights
Financial Highlights 12 months to 12 months to R million % Change 31 March 2013 31 March 2012 Revenue 14 373 12 081 + 19,0% Profit from Operations 2 145 1 921 + 11,7% Cash Flow from Operations 2 126 1 363 + 56,0% Headline Earnings 1 058 891 + 18,7% Annual Dividends per share 340 cents 290 cents + 17
Slide 5: Tongaat Hulett Profit from Operations
Profit from Tongaat Hulett Revenue Operations 12 months to 12 months to 12 months to 12 months to R million 31 March 2013 31 March 2012 31 March 2013 31 March 2012 Sugar operations SA agriculture, milling, refining and 308 354 5 739 5 269 downstream value added activities Zimbabwe 630 621 3 222 2 26
Slide 6: Starch Operations
Starch Operations • Operating profit: R388 million (2012: R363 million) +7% • Starch and glucose processing margins favourably influenced by higher co-product realisations and local maize costs close to international prices • Overall sales volumes flat compared to prior year • Improved manufacturing
Slide 7: Land Conversion and Developments
Land Conversion and Developments • Revenue generated from 65 developable hectares sold • Cornubia Industrial, Izinga, Umhlanga Ridge Town Centre, Ridgeside, La Lucia Ridge Office Estate, Zimbali, Kindlewood and Mount Moriah • Financial results for the year to 31 March 2013 • Profit from operations:
Slide 8: Zimbabwe Sugar Operations
Zimbabwe Sugar Operations Triangle and Hippo Valley Estates • Profit from operations: R630 million (2012: R621 million) US$ 74 million (2012: US$ 84 million) • Revenue per ton (US$) 2012/13 vs 2011/12: unchanged on average • Volume growth: positive operating gearing • Milling costs have a high propo
Slide 9: Mozambique Sugar Operations
Mozambique Sugar Operations • Profit from operations: R421 million (2012: R402 million) Metical 1,408 billion (2012: Metical 1,493 billion) • Production levels - consolidation after last year’s 42% increase • Margin pressure • Nexus of selling price changes and input cost pressures • Export proceeds
Slide 10: South African Sugar and Downstream Operations
South African Sugar and Downstream Operations Profit from operations: R308 million (2012: R354 million) • Agriculture, sugar milling and refining: R52 million (2012: R93 million) • Sugar production unchanged at 486 000 tons • Reduced local market sales • Margin pressure • Downstream sugar value adde
Slide 11: Cash Flow - Past 6 Years
Cash Flow - Past 6 Years July 2007 to March 2013 R billion • Operating Cash Flow + 9,5 (before root planting) • Working Capital - 0,1 • Capex and sugar root investment New plant and equipment 4,3 - New plant and equipment - 4,3 New roots/accelerated replant/replacement 1,8 6,1 - Replacement capital
Slide 12: Land Conversion and Developments Picking up the Pace
Land Conversion and Developments Picking up the Pace 12
Slide 13: Accelerating Improvement in Fundamentals and Prospects
Accelerating Improvement in Fundamentals and Prospects • Major sales prospects in 2013/14 from active developments • Izinga/Kindlewood • Cornubia South Industrial • Umhlanga Ridge Town Centre • Ridgeside • Bulk sale interest increasing • Substantial bulk offer turned down • Airport expansion and con
Slide 14: Izinga / Kindlewood - developable hectares available
Izinga / Kindlewood - 177 developable hectares available R598 million net cash profit • Two new Izinga phases released March • Markets - inland and sea facing • > R60 million net cash profit (March 2013) • Sales approach under review • Phase 3 Kindlewood launched 14
Slide 15: Cornubia South
Cornubia South • Industrial and Business Estate • Permission to sell March 2012 • 60 developable hectare sold to date • First transfers March 2013 • First factory opening late 2013 • 42 developable hectares available - sell out 2013/14 • Value optimisation 15
Slide 16: Umhlanga Ridge Town Centre - developable hectares available
Umhlanga Ridge Town Centre - 18 developable hectares available R314 million net cash profit • New private hospital and 4 high density residential developments underway • Buyer competition for further residential opportunities 16 16
Slide 17: Umhlanga Ridgeside - developable hectares available
Umhlanga Ridgeside - 62 developable hectares available R962 million net cash profit • 0,6 developable hectare sold March 2013 • Current negotiations - R60 million net cash profit • Possible semi-bulk sale - 20 developable hectare 17 17 17
Slide 18: King Shaka International Airport - Southerly Expansion
King Shaka International Airport - Southerly Expansion • Mega Integrated Industrial Township (MIIT) • Action Group – India plus Dube TONGAAT HULETT TradePort • R2 billion investment KING SHAKA INTERNATIONAL AIRPORT TONGAAT HULETT N2 18
Slide 19: uShukela Highway - KSIA Northern Expansion
uShukela Highway - KSIA Northern Expansion • 49 developable hectares at end of runway • Bulk sale • Trade Zone access road 19 • EIA with DTP well advanced 19
Slide 20: Sibaya Nodes 1 & 5
Sibaya Nodes 1 & 5 Bulk Sale Yes? R6,8 million per developable hectare R850 million • “Shovel ready” on 125 developable hectares Maybe? • Significant market interest for own R5,4 million per developable development sites hectare R675 million • Serious enquiries for bulk sales 20 No? 20
Slide 21: Cornubia Town Centre
Cornubia Town Centre • Phase 1 retail near Mt Edgecombe – 2013/14 target activation and sale • EIA well advanced both phases 21 21
Slide 22: Starch Operations
Starch Operations 22
Slide 23: Starch and Glucose
Starch and Glucose • Competitiveness of local maize industry remains in line with international markets • Margins expected to remain largely in line with H2 2012/13 • Expanding product range and downstream capacity • Phase 1 modified starches investment commissioning June 2013 • Acid/Enzyme project
Slide 24: Tongaat Hulett Starch
24 01-04-13 04-02-13 10-12-12 15-10-12 20-08-12 25-06-12 30-04-12 05-03-12 09-01-12 14-11-11 19-09-11 Impacted margins 25-07-11 30-05-11 H1 – 2012/13 04-04-11 07-02-11 13-12-10 10,36 million tons 11,83 million tons 11,56 million tons 18-10-10 CBOT - $ 23-08-10 28-06-10 South African Maize Crop 03-05
Slide 25: Sugar Operations
Sugar Operations 25
Slide 26: Progress - Growing Sugar Production
Progress - Growing Sugar Production Unutilised Milling Capacity > 850 000 tons (Replacement - R13,6 billion) 2010/11 2011/12 2012/13 2013/14 Early Season Tons Raw Sugar Actual Actual Actual Forecast South Africa 455 000 486 000 (7%) 486 000 605 000 (24%) Zimbabwe 333 000 372 000 (12%) 475 000 (28%)
Slide 27: South Africa
South Africa • Improving our understanding of the +/- 130 000 hectares supplying our mills • Land verification exercise underway • Electricity and ethanol regimes • Key consideration - job creation (3,5 new hectares = 1 new job) • MOU with Ingonyama Trust Board (ITB) • 200 000 hectares available for
Slide 28: South Africa - Cane
South Africa - Cane Actual Actual Estimate Estimate Estimate Net hectare position 2011/12 2012/13 2013/14 2014/15 2015/16 Cumulative new plantings - milled 4 090 9 696 18 383 29 937 40 437 (2011/12) Cumulative cane losses/gains 13 948 14 732 17 757 18 134 18 254 (2007/08 to 2011/12) Net hectares - 9
Slide 29: South Africa New Plantings
South Africa New Plantings Actual Actual Actual Actual Target Categories - new hectares 2014/15 2015/16 2009/10 2010/11 2011/12 2012/13 2013/14 # Small scale farmers 1 636 3 689 4 411 4 297 4 445 Commercial and medium 630 371 1 831 1 884 635 scale farmers Tongaat Hulett leased land 1 824 1 546 2 445
Slide 30: Zimbabwe
Zimbabwe • Water - three main water supply systems providing water for 44 814 hectares • Mutirikwe - Tokwe 77% • Manjirenyi - Siya 18% • Manyuchi 5% • New Tokwe-Mukozi dam impounding water in 2013 • Socio-economic-political dynamics 30
Slide 31: Volatility: World Sugar Price / Currency
Volatility: World Sugar Price / Currency 35.00 11.00 Raw Sugar US c/lb 30.00 10.00 25.00 9.00 Raw Sugar US c/lb Rand /US$ rate 20.00 8.00 15.00 Rand /US$ rate 7.00 10.00 6.00 5.00 - 5.00 Beginning Mid Mid Mid Mid 2009 2010 2011 2012 2013 31
Slide 32: EU Market
EU Market Current Regime (October 2009) 2012/13 “Estimates” • No end date to unlimited duty free access • Stock increasing (ACP/LDC countries) • Additional 1,1 million tons • In place to September 2015 • Beet production • Beyond September 2015? • Quota: 13,659 million tons • Structural review starte
Slide 33: Fundamental Review of all Bought In Goods and Services
Fundamental Review of all Bought In Goods and Services Z 2012/13 > R4 billion for Tongaat Hulett Excluding Maize and Cane Category 2012/13 Logistics > R1 billion Equipment, spares, tyres and accessories > R900 million Other > R720 million • Quantum Fertilizer, agriculture and other chemicals > R330
Slide 34: Volume / Yield to Unit Cost Relationship
Volume / Yield to Unit Cost Relationship • Overheads - 90% fixed • Milling costs - 80% to 85% fixed • Agriculture • 90% fixed/per hectare • Improved yields and better cane to sugar ratio leads to less hectares farmed • Wage and salaries settlements 2013/14 • Zimbabwe - 6,66% and 4,5% • Mozambique -
Slide 35: Additional Information
Additional Information @ Tongaat Hulett
Slide 36: Active Developments - Hectares Unsold
Active Developments - 490 Hectares Unsold 2005: 151 Hectares Indicative cash Status - Indicative cash Developable realisation# Area Developable hectares realisation# hectares to sell (R m/developable sold Still to come hectare) Ridgeside 42 ha sold 62 15,5 R962 million Umhlanga Ridge Town Centre 124
Slide 37: Additional Active Developments - 80% by March 2014
Additional Active Developments - 80% by March 2014 Movement in Planning Progress Developable Area September 2012 to March 2013 hectares to sell Cornubia New Town - Phase 1 30% 75% EIA complete 26 Cornubia New Town - Phase 2 30% 50% EIA complete 252 iNyaninga 55% 65% EIA complete 550 uShukela Drive 5
Slide 38: Aerotropolis KZN
Aerotropolis KZN • Promising FDI intentions with DTP • Indian conglomerate on Industrial Park (MIIT) • Chinese conglomerate on hotel development • Dube TradePort - construction set to commence on new logistics facilities in TradeZone • Aerotropolis Strategy being formally rolled out by Provincial De
Slide 39: Bridge City
Bridge City • Successful PPP with eThekwini Municipality • Mixed use, high density Town Centre and Business Estate • Regional 450 bed public hospital - building to commence late 2013 • 48 000 m2 shopping centre • 13 000 m2 second phase and 45 000 m2 residential to be built • Regional Magistrates cou
Slide 40: Inyaninga
Inyaninga Bulk Sale / Partnership / Tongaat Hulett Own Development Bulk Sale Gross hectares: 707 Developable hectares: 550 Yes? R6,3 million per developable hectare R3,465 billion Maybe? R4,4 million per developable hectare R2,420 billion No? • Planning aligned with Municipal plans for Northern Urba
Slide 41: Compensation
Compensation Bulk Sale Opportunity / Partnership • Large 224 ha developable flat land strategically located along the R102 and 13 km from the Dube Tradeport • Unique opportunity for general industrial development north of Durban • Adjacent to the main railway line between Durban and Richards Bay • F
Slide 42: Ntshongweni
Ntshongweni Partnership / Tongaat Hulett Own Development • Development supported by Municipal SDP and LAP’s • Important logistics location and in Strategic Integrated Project 2 (SIP 2) of Presidential Infrastructure HILLCREST Coordinating Committee (PICC) • 3 major uses • Residential infill M13 • Mi
Slide 43: Zimbali and Zimbali Lakes
Zimbali and Zimbali Lakes • Zimbali Coastal Resort almost completely sold, 7 sites remaining • Zimbali Lakes • Golf course amendments complete, awaiting environmental approval • Bulk sale of the Resort Node and proposed Retirement Village being pursued 43 43
Slide 44: Tinley Manor
Tinley Manor Bulk Sale Opportunity / Partnership / Tongaat Hulett Own Development • Largest consolidated property surrounding a river on North Coast • > 850 developable ha 1 042 gross ha • EIA for the South Bank progressing well after finalisation of block layout • Resort and low density residential
Slide 45: Starch Operations Financial Data
Starch Operations Financial Data 12 months to 12 months to R millions March 2013 March 2012 Revenue 2 859 2 580 Domestic 2 070 1 865 Exports 246 259 Co-Products 543 456 Operating Profit 388 363 45
Slide 46: Volume Data
Volume Data 12 months to 12 months to Volume (tons) March 2013 March 2012 Local Starch 93 530 90 361 Local Glucose 332 236 332 264 Total Local 425 766 422 625 Export Starch 23 070 36 240 Export Glucose 13 322 12 294 Total Exports 36 392 48 534 Co-Products 157 222 158 111 Total 619 380 629 270 46
Slide 47: Co-product Pricing
Co-product Pricing Price movement Co-product March 2013 over Major price drivers Comparative Period International edible oil price and local Germ Up 30,5% oil seeds Local maize International protein (Soya, fishmeal) Gluten-60 Up 11,1% prices Gluten-20 Up 16,2% Local maize price/hominy chop 47
Slide 48: Tongaat Hulett Starch - Markets
Tongaat Hulett Starch - Markets % Growth % Growth 2011/12 2012/13 2013/14 Tons 2012/13 vs 2013/14 vs Actual Actual Estimate 2011/12 2012/13 Alcoholic beverages 174 039 173 925 176 013 -0,1% 1,2% Coffee creamers 60 307 65 122 73 435 8,0% 12,8% Confectionery 63 748 62 300 61 897 -2,3% -0,6% Paper 56 1
Slide 49: Tongaat Hulett Starch
Tongaat Hulett Starch Outlook for South African maize 2012/13 1979/80 2009/10 2010/11 2011/12 Estimate Hectares planted (000 ha) 4 031 2 742 2 372 2 699 2 781 Yield (t/ha) 3,37 4,38 4,37 4,38 4,16 Production (000 tons) 13 583 12 016 10 360 11 830 11 562 Carry in stock (000 tons) 2 115 2 131 2 336 99
Slide 50: World Sugar Market
World Sugar Market ‘000 Tons 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 Sugarcane and Beet 168 042 171 307 151 131 156 038 168 159 178 953 184 179 Production Consumption 157 600 163 119 165 176 166 672 168 252 171 149 174 090 Surplus/(Deficit) 10 442 8 188 -14 045 -10 634 -93 7 804 10 0
Slide 51: Zimbabwe
Zimbabwe Cane Milled and Actual 2011/12 Actual 2012/13 2013/14 Early Sugar produced Season Season Season Forecast Total hectares farmed as at 38 626 43 185 44 519 1 April (beginning of the season) Hectares milled 35 307 37 473 40 125 % Hectares under cane milled 91,4% 86,8% 90,1% Cane yield (tcphm)
Slide 52: Mozambique
Mozambique Cane Milled and Actual 2011/12 Actual 2012/13 2013/14 Early Sugar produced Season Season Season Forecast Total hectares farmed as at 26 513 26 789 27 824 1 April (beginning of the season) Hectares milled 24 555 24 333 25 042 % Hectares under cane milled 92,6% 90,8% 90,0% Cane yield (tcphm
Slide 53: Mozambique
Mozambique Cane Yield and Sucrose Content Improvement Plans Field condition/drainage Irrigation/power supply • Positive drainage pumps • Improved irrigation control • Renewal of one-way floodgates on dykes • Improved bulk water supply from pump • Field layouts and row spacing stations • Upgrading of
Slide 54: Cane Ownership Mix
Cane Ownership Mix Supply of Cane to Tongaat Hulett South Africa Sugar Mills % Change SA Cane Supply * Actual Actual Actual from 2011 to Tons cane supplied 2010/11 2011/12 2012/13 2013 Total sugarcane supplies 3 825 956 4 533 619 4 450 634 +16% TH Owned 258 239 285 395 297 006 + 15% TH leased - farm
Slide 55: Financial Information
Financial Information @ Tongaat Hulett
Slide 56: Sugar Cane Growing Crops
Sugar Cane Growing Crops • Accounted for in terms of International Accounting Standard - IAS 41: Agriculture • Measured and recognised at fair value • Changes in fair value are included in the income statement • Replanting and agricultural costs actually incurred are charged to the income statement
Slide 57: Accounting for Sugar Cane Growing Crops
Accounting for Sugar Cane Growing Crops International Accounting Standard - IAS 41: Agriculture • Sugar cane growing crops are accounted for as biological assets • Measured and recognised at fair value • Changes in the fair value are included in the income statement • The fair value of roots is dete
Slide 58: Accounting for Sugar Cane Growing Crops (cont.)
Accounting for Sugar Cane Growing Crops (cont.) • Fair Value adjustments - over time: zero sum equation in the Income Statement • At time of cane establishment / expansion: costs incurred, cash outflow and fair value gain • Approximately 18 months later: standing cane harvested, sugar produced and s
Slide 59: Growing Crops - Balance Sheet
Growing Crops - Balance Sheet 31 March 2012 31 March 2013 South Total Total Swaziland Zimbabwe Mozambique Africa Roots Hectares 81 960 91 179 34 011 3 838 27 978 25 352 Amortised root value 20 355 25 108 20 732 13 658 24 418 33 475 (Rands per ha) Standing Cane Hectares for harvest 77 739 82 969 27 6
Slide 60: Growing Crops - Income Statement
Growing Crops - Income Statement • IAS 41 Fair Value Change included in the Income Statement: Year to 31 March R million 2012/13 2011/12 R million South Africa 265 191 2012/13 2011/12 Swaziland 15 21 Roots 303 201 Zimbabwe 78 214 Standing cane 165 264 Mozambique 110 39 Change in fair value 468 465 C
Slide 61: Cash Flow: Cane Valuations and Root Planting
Cash Flow : Cane Valuations and Root Planting highlighted in a Sugar Business 12 months 12 months 12 months R million 2012/13 2011/12 2010/11 Includes all agricultural Operating profit + 2 119 + 1 878 + 1 606 costs Growing crop fair value adjustment - 468 - 465 - 662 As per Income Statement Root pla
Slide 62: Average Exchange Rates
Average Exchange Rates Average 2012/13 2011/12 % Change Rand/US$ 8,48 7,44 +14% Rand/Euro 10,95 10,24 +7% Rand/Metical 0,30 0,27 +11% US$/Euro 1,29 1,38 -7% Metical/Euro 36,61 37,98 - 4% • Export proceeds: US$ and Euro (exchange rates at time of export - Mozambique and Zimbabwe) • Earnings conversio
Slide 63: Exchange Rates
Exchange Rates Currency Exchange Rates Prices Costs Export Euro US$ proceeds • EU exports: Euro • US$ Zimbabwe Earnings • Local market: US$ • Zim inflation conversion on US$ Rands consolidation Export • Rands Euro Metical proceeds • EU exports: Euro • US$ Mozambique Earnings • Local market: Metical
Slide 64: Thank You
Thank You @ Tongaat Hulett