Tongaat Hulett Limited · JSE:TON
Tongaat Hulett — Merrill Lynch Conference March 2014
32 slides from Tongaat Hulett's conference presentation, March 2014
Slide 1: Location of operations
Location of operations Harare ZIMBABWE Mafambisse NAMIBIA Triangle Beira CSI Hippo Valley BOTSWANA Gaborone Windhoek Sugar Industries CSI Xinavane Walvis Bay CSI Tambankulu Estates Maputo Chloorkop Germiston Mill SWAZILAND Kliprivier Mill Meyerton Mill Felixton Mill Amatikulu Mill Darnall Mill SOUTH
Slide 2: Sugar - Markets
Sugar - Markets Sugar operations contributed 65% of Tongaat Hulett’s Operating Profit in 2012/13 South Africa • Production 2013/14 season - 2,34 million tons (SA industry) • Tongaat Hulett production - 635 000 tons • Local market 2013/14 season - 2,28 million tons • Imports - 450 000 tons • Swazilan
Slide 3: Sugar - Markets (cont.)
Sugar - Markets (cont.) Zimbabwe Mozambique • Production 2013/14 season - 488 000 tons • Production 2013/14 season - 383 000 tons • Local market 2013/14 season - 300 000 tons • Tongaat Hulett production - 250 000 tons • Imports - 120 000 tons • Local market 2013/14 season - 200 000 tons • Supplied b
Slide 4: Growing Sugar Production
Growing Sugar Production > 2,1 million Tons from Existing Capacity 2010/11 2013/14 2017/18 Tons Raw Sugar Actual Actual* Indicative Tongaat Hulett unutilised milling capacity > R13,3 billion (replacement South Africa 455 000 635 000 808 000 value for 700 000 tons) Zimbabwe 333 000 488 000 628 000 Mo
Slide 5: Reducing Input Costs
Reducing Input Costs Total for Tongaat Hulett > R2,7 billion Salaries and Wages > R5 billion Goods and Services Costs Tongaat Hulett – Sugar operations Lower versus previous year Targeted Costs - 2013/14 versus 2012/13* US$/Metical Rand Zimbabwe - Total operations (US$) $29 million R290 million Moza
Slide 6: Starch and Glucose
Starch and Glucose 18% of Operating Profit 2012/13 • Cost of maize in prime products is 40% of prime product revenue • Improving capacity utilisation and market mixes • Available capacity upstream - 20% • > R100 million investment in downstream capacity - higher value products • Coffee creamer (60%
Slide 7: Land Conversion
Land Conversion 17% of Operating Profit 2012/13 • Some 8 300 developable hectares (13 100 gross hectares) earmarked for conversion* • Urban expansion: Durban to Ballito - 4 700 developable (7 300 gross) • Urban expansion to the West of Durban - 1 100 developable (2 050 gross) • Coastal North of Ball
Slide 8: 2013/14 - 2017/18 Sales to Come From the Following Areas
2013/14 - 2017/18 Sales to Come From the Following Areas Developable Developable Area Area hectares to sell hectares to sell Ridgeside remaining Precinct 1 and 2 42 Sibaya Node 1 49 Ridgeside Precinct 4 20 Sibaya Node 5 76 Umhlanga Ridge Town Centre 17 Sibaya Node 4 ^ 103 Izinga/Kindlewood 163 iNyan
Slide 9: Socio-Economic Position that is SADC Wide, Proactive, Sustainable and Innovative
Tongaat Hulett has a Socio-Economic Position that is SADC Wide, Proactive, Sustainable and Innovative Muda Dam Launch - 19 May 2007 SusCo Launch - 4 November 2011 President of Mozambique - Armando Guebuza Cornubia Visit - 8 November 2012 Operation Vuselela - 5 June 2011 Ingonyama Trust Board Signing
Slide 10: Index - Detailed Information
Index - Detailed Information Slide Title No Slide Title No World Sugar Market 11 Greater Umhlanga Area 24 Volatility: World Sugar Price 12 Izinga 25 Raw Sugar Production 13 Ridgeside 26 Growing Sugar Production 14 Compensation 27 Cane Ownership Mix 15 Extracts from Financial Results 28 South Africa
Slide 11: World Sugar Market (Deficit to Surplus to?)
World Sugar Market (Deficit to Surplus to?) ‘000 Tons 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 Sugarcane and Beet 171 292 151 134 156 008 168 024 178 872 185 201 182 564 Production Consumption 162 823 165 029 166 583 168 194 171 235 174 395 177 860 Surplus/(Deficit) 8 469 (13 895) (10
Slide 12: Volatility: World Sugar Price
Volatility: World Sugar Price Int Raw Sugar 35.00 30.00 25.00 Raw Sugar US c/lb 20.00 15.00 10.00 5.00 - Beginning Mid Mid Mid Mid Feb 2009 2010 2011 2012 2013 2014 12
Slide 13: Raw Sugar Production
Raw Sugar Production Milling Season Tons ‘000 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 South Africa 977 762 868 659 731 760 674 612 652 573 455 486 486 635 Mozambique 39 36 71 82 85 115 106 108 108 134 164 233 235 250 Swaziland 41 45 50 54 50 56 55 58 56 54
Slide 14: Growing Sugar Production
Growing Sugar Production Indicative - Next 4 Years Additional Hectares Yield and Sugar 2013/14 2017/18 Tons Raw Sugar Recovery Actual * Indicative Tongaat Hulett - 3rd Parties / TH Improvements Direct Supported South Africa 635 000 808 000 4% 89% 7% 488 000 Zimbabwe 449 000 628 000 - 26% 74% 39 000
Slide 15: Cane Ownership Mix
Cane Ownership Mix Supply of Cane to Tongaat Hulett Sugar Mills 2013/14 2017/18 Actual Indicative Tons Cane Tongaat Hulett 3rd Parties Tongaat Hulett 3rd Parties South Africa 2 571 804 2 909 427 3 796 112 3 206 948 Tongaat Hulett 1 020 003 - 1 066 361 - Tongaat Hulett supported 1 551 801 - 2 729 751
Slide 16: South Africa
South Africa New Plantings and Net Gain in Hectares Actual Actual Actual Actual Target South Africa 2013/14 # 2014/15 2015/16 2009/10 2010/11 2011/12 2012/13 (Nov 2013) Small scale farmers 1 636 3 689 4 411 4 297 4 043 Commercial and medium scale 630 371 1 831 1 884 670 farmers Tongaat Hulett leased
Slide 17: Off-crop: Milling Costs
Off-crop: Milling Costs • Seasonal milling costs • Costs incurred from April to mill shutdown (normally November/December) • Costs include all expenses associated with running the mill • Costs expensed in the current financial year • Off-crop costs • Costs incurred from mill shutdown to March of the
Slide 18: Renewable Energy - Electricity and Ethanol
Renewable Energy - Electricity and Ethanol Electricity Ethanol • Currently produce 52 MW at 4 Tongaat Hulett • South African fuel market - 12 billion litres petrol South African sugar mills per annum • Ability to produce between 320 MW - 360 MW at South African mills • Tongaat Hulett opportunity (co
Slide 19: Starch and Glucose - Markets
Starch and Glucose - Markets 2012/13 2013/14 % Growth 2013/14 vs Tons Actual Estimate 2012/13 Alcoholic beverages 173 822 175 888 1,2% Coffee and Coffee Creamer 65 122 75 588 16,1% Confectionery 59 202 61 122 3,2% Paper 59 416 56 980 - 4,1% Prepared foods 14 197 15 159 6,8% Other 47 698 47 210 - 1,0
Slide 20: Starch and Glucose
Starch and Glucose Outlook for South African maize 1979/80 2009/10 2010/11 2011/12 2012/13 2013/14* Hectares planted (000 ha) 4 031 2 742 2 372 2 699 2 781 2 668 Yield (t/ha) 3,37 4,38 4,37 4,38 4,21 4,65 Production (000 tons) 13 583 12 016 10 360 12 121 11 723 12 402 Carry in stock (000 tons) 2 115
Slide 21: Co-product Pricing
Co-product Pricing Price movement Co-product September 2013 over Major price drivers Comparative six month Period 50%: International edible oil price and Germ Up 7,3% local oil seeds 50%: Local maize International protein (soya, fishmeal) Gluten-60 Up 28,4% prices Gluten-20 Up 2,7% Local maize price
Slide 22: Aerotropolis
Aerotropolis AMANZIMNYAMA • USHUKELA DRIVE Sale to DubeTradeport USHUKELA • R350 million “cash profit” • R2,32 million per developable hectare • 328 gross (151 developable) hectares • Option exercised by DTP to acquire additional INYANINGA land • 161 gross hectares • Inyaninga East N2 R102 • 707 gro
Slide 23: Sibaya Nodes 1 & 5
Sibaya Nodes 1 & 5 • “Shovel ready” on 125 developable hectares • Node 4 EIA well advanced (further 103 developable hectares) 2323
Slide 24: Greater Umhlanga Area
Greater Umhlanga Area IZINGA IZINGA N2 PARK M4 MARSHALL DAM MARSHALL PHASE DAM N2 2A UMHLANGA HILLS BUSINESS PARK RETAIL M41 PARK UMHLANGA TOWN ROCKS CENTRE UMHLANGA RIDGE TOWN CENTRE MT EDGECOMBE COUNTRY CLUB ESTATE GATEWAY R102 PRECINCTS 1&2 RIDGESIDE Existing road Under construction or future roa
Slide 25: Izinga
Izinga • > R99 million sales (H1 - 2013/14) • Sales constrained due to construction • Sell out Izinga Park in 2013/14 financial year? 25 25
Slide 26: Ridgeside
Ridgeside Sold Precinct 3 Precinct 2 Remainder of Precinct 1 • Remainder of precinct 1 and precinct 2 Sold Precinct 1 • 42 developable hectares or 485 000 m2 • Above ground development expected to exceed R12 billion • Single purchaser or consortium 26
Slide 27: Compensation
Compensation • 224 hectares industrial/logistics park • Potential industrial platform sizes between 20 hectares and 65 hectares R102 • Strategically located approximately 13 km’s COMPENSATION north of the Dube Tradeport • Quick access to the R102, N2 and northern rail N2 line M4 • Northern inter mod
Slide 28: Extracts from Financial Results
Extracts from FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2013 28
Slide 29: Cash Flow: H1 2013/14
Cash Flow: H1 2013/14 6 months 6 months R million 2013/14 2012/13 Operating profit + 1 381 + 1 288 Includes all agricultural costs Growing crop fair value adjustment + 773 + 235 As per income statement Root planting costs (direct planting, excluding other + 67 + 337 Included below # agricultural cos
Slide 30: Cash Flow - Past 7 Years
Cash Flow - Past 7 Years July 2007 to September 2013 R billion • Operating cash flow + 11,9 (before root planting) • Working capital - 2,2 • Capex and sugar root investment - New plant and equipment - 4,4 - Replacement capital expenditure - 2,2 New plant and equipment 4,4 New roots/accelerated repla
Slide 31: Average Exchange Rates
Average Exchange Rates 2013/14 2012/13 Average H1 H1 Rand/US$ 9,78 8,18 Rand/Euro 12,87 10,40 Rand/Metical 0,33 0,30 US$/Euro 1,32 1,27 Metical/Euro 38,92 35,02 • Export proceeds: US$ and Euro (exchange rates at time of export - Mozambique and Zimbabwe) • Earnings conversion on consolidation (at ave
Slide 32: If you require further information
If you require further information Visit www.tongaat.com or contact Michelle Jean-Louis Office: +27 32 439 4101 Mobile: +27 83 386 3846 Email: michelle.jean-louis@tongaat.com 32