Tongaat Hulett Limited · JSE:TON
Tongaat Hulett — FY2009 Earnings Presentation
65 slides from Tongaat Hulett's earnings presentation, March 2010
Slide 1: fi |
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Slide 2: Financial Results
FINANCIAL RESULTS ee @ Tongaat Hulett S| 2
Slide 3: Results for 12 months to 31 December 2009
Results for 12 months to 31 December 2009 • Revenue of R9,1 billion (2008: R7,1 billion) • Profit from operations of R1,555 billion (2008: R1,132 billion) • Headline earnings of R839 million (2008: R583 million) • Recent substantial expansion of operations has been funded • Significantly improved gl
Slide 4: Profit from Operations and Revenue
Profit from Revenue Operations R million 2009 2008 2009 2008 Sugar operations Zimbabwe (2008 dividends) 548 35 1 457 - Swaziland 43 44 137 137 Mozambique 185 250 629 527 SA agriculture, milling and refining 159 73 3 138 2 424 Downstream value added activities 209 204 1 321 1 456 Starch operations 25
Slide 5: Zimbabwe Sugar Operations
Zimbabwe Sugar Operations • Profit from operations: R548 million - Relevant fundamentals for a sugar business re-introduced - Local market prices restored to regional levels - Sugar production volumes affected by conditions in 2008 - Profit from operations is separate from consolidation balance shee
Slide 6: Mozambique Sugar Operations and Swaziland - Tambankulu Estate
Mozambique Sugar Operations • Profit from operations: R185 million (2008: R250 million) • R122 million currency gain in 2008 (when financial structures were finalised) not repeated in 2009 • Xinavane - mill start-up problems overcome - limited production in 2009 - portion of expanded crop carried ov
Slide 7: South African Sugar Agriculture, Milling and Refining; Downstream and Sugar Value Added
South African Sugar Agriculture, Milling and Refining • Profit from operations: R159 million (2008: R73 million) • Higher export and domestic sugar sales volumes and realisations • Lower sugar production volumes Downstream and Sugar Value Added Activities • Profit from operations: R209 million (2008
Slide 8: Starch Operations
Starch Operations • Operating profit: R256 million (2008: R240 million) • Domestic sales volumes of starch and glucose declined by 5,5% • Contraction in consumer spending – alcoholic beverage, paper and coffee creamer sectors • Margin improvement • Local maize prices trading close to world prices •
Slide 9: Land Conversion and Development
Land Conversion and Development • 13 895 gross hectares (8 821 developable hectares) for development in SA • Sales of 150 developable hectares (247 gross hectares) in 2009 • 144 hectares in eThekwini growth corridor north of Durban, including around new international airport • 108 hectares: profit o
Slide 10: Income Statement
Income Statement • Centrally accounted and consolidation items • Recognition of pension fund 2007 employer surplus account allocation - unconditional entitlement in 2009: R82 million • Finance costs R million Interest costs on debt 321 Interest on maize obligation 34 BEE SPV interest 78 Interest pai
Slide 11: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet 2009 2008 (R million) (R million) • Cash inflow from operations: Cash from operating profit before tax and working capital R1 686 R1 045 Working capital - R296 R83 Cash inflow from operations before tax R1 390 R1 128 Tax - R227 - R163 R1 163 R965 At 31 December 2009 • Ton
Slide 12: Change in Financial Year-end
Change in Financial Year-end • Financial year-end change to 31 March 2010 15 months results will include • Revenue from single sugar production season • Costs for a 15 month period, including costs incurred from January to March in the off crop period that are required to be expensed in the income s
Slide 13: Creating Stakeholder Value
Creating Stakeholder Value Conversion of Developable Land in South Africa • 13 895 gross hectares • 8 821 developable hectares 13
Slide 14: Bulk Land Sales vs Smaller Land Parcels
Smaller land parcels sold Bulk Land Sales vs from within a Tongaat Hulett development • Ridgeside development - R9,9 million per developable hectare • 108 hectares located in the North West of Cornubia - R725 000 per developable hectare • 36 hectares North East of the airport - R3,4 million per deve
Slide 15: Umhlanga - Ridgeside
Umhlanga - Ridgeside Gross hectares : 128 Developable hectares : 106 Sold to date : 44 developable hectares Targeted cash profit : > R9,9 million per developable hectare (today’s money) : R1,049 billion 15
Slide 16: Inyaninga Airport Inner Ring
Airport cities - “Even in today’s rocky economic times, airports and their immediate environments Airport Inner Ring are becoming 21st century commercial anchors, Tongaat Hulett Landholding taking on many features of destination retail 2 515 Gross hectares and urban centers.” Existing rail 1 517 Dev
Slide 17: Inyaninga: Bulk Land Sale / TH Development / Partnership
Inyaninga: Bulk Land Sale / TH Development / Partnership 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? 17
Slide 18: Sibaya (nodes 1 and 5): Bulk Land Sale / Own Development
Sibaya (nodes 1and 5): Bulk Land Sale / Semi Bulk Land Sales / Own Development EIA approved : Nodes 1 and 5 Gross hectares : 231 Developable hectares : 125 UMDLOTI SIBAYA CASINO M4 Yes? R6,8 million per developable hectare R850 million Maybe? R5,4 million per developable hectare R675 million No? 18
Slide 19: Tongaat South West
Tongaat South West Gross hectares : 195 TONGAAT SOUTH WEST Developable hectares : 125 INYANINGA 19
Slide 20: Climate Change, CO2 Emissions, Sugar and Maize Prices, Ethanol
Climate Change, CO2 Emissions, World/Regional Sugar and Maize Prices, EU Sugar Pricing, Ethanol and Power from Sugar Cane Early CO2 emission reduction targets 2020 Target Baseline EU 20% 1990 USA 17% 2005 “Business as South Africa 34%* usual” 2020 Limit global temperature rise to 20C 45% deviation b
Slide 21: Low Carbon Energy markets worldwide Under Construction
Low Carbon Energy markets worldwide “Under Construction” • Potential carbon credit market for electricity produced by Tongaat Hulett - including tops and trash from current milling capacity • R1,7 billion per annum (€40/ton Carbon Dioxide) • 60% of fuel in Brazil in 2009 - ethanol • Every 10% of Sou
Slide 22: World Sugar Price Dynamics
World Sugar Price Dynamics • Current usage 166 million tons per annum • Deficit for the past 2 years of 26 million tons • Brazil • State owned development finance company • Ceased to finance greenfield sugar - 3 years ago • Increased finance for ethanol and electricity • Ethanol production increased
Slide 23: Who will Invest in New Sugar Production?
Who will Invest in New Sugar Production? Annual growth estimated at 3 million tons per annum Produced Consumed Sugar Production by Country million tons million tons Brazil 35 13 India 13-30 25 European Union 17 20 United States 7 11,4 Rest of Asia 21-29 45 Thailand 7-8 2,6 Africa 11 16 LDC countries
Slide 24: Maize Price Dynamics
Maize Price Dynamics • Maize and sugar cane’s interrelationship is becoming increasingly important • US maize crop expected to be largest recorded crop (334 million tons) • 42% of global production • Current maize price: US$145 - US$170 per ton • Long-term average (last 15 years): US$80 - US$100 per
Slide 25: Consumption of Corn in the US
Consumption of Corn in the US Source: USDA 300 40% 250 30% 200 Tons (Millions) 150 20% 100 10% 50 0 0% 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 Food Products Feed Ethanol % Ethanol 25
Slide 26: Update on Tongaat Hulett Starch
Update on Tongaat Hulett Starch • Outlook for South African maize 2009/10 1979/80 2008/09 Forecast Hectares Planted (‘000 ha) 4 031 2 428 2 756 Yield (t/ha) 3,37 4,96 4,67 Production (‘000 tons) 13 583 12 050 12 876* • Volumes * Maize stocks at the end of 2009/10 after exporting 1,8 million tons wil
Slide 27: Substantially Increase Sugar Production, Reduce Unit Cost
Substantially Increase Sugar Production Reduce the Unit Cost of Production Utilising Available Milling Capacity 27
Slide 28: Growth in Sugar Production
Growth in Sugar Production Zimbabwe, Mozambique 2009 Target % Increase Swaziland* and South Africa Sugar Production - tons 1 010 955 1 987 000* 97% Cane harvested - tons 8 985 694 16 445 000 83% Hectares under cane Own 63 839 68 375 7% 3rd Parties / own 127 665 169 614 33% • 7% improvement in cane q
Slide 29: Costs
Costs • Aggressive organisational focus to reduce costs • Replanting • Cane replanted on average every 9 years • R7 000 to R11 000 per hectare • Farming (input costs per hectare) • Fertiliser/chemicals, manpower, equipment and irrigation • Harvesting and delivery of cane to the mill • Average cost b
Slide 30: South Africa
South Africa 2009 • Sugar production: 564 000 tons • Sold within SACU: 545 000 tons • Refined sugar production: 611 000 tons 30
Slide 31: Hectares Harvested Supplying TH SA Mills
Hectares Harvested Supplying TH SA Mills • 52% projected cane price (RV) increase in 2010 season versus cane price paid in 2007 season Hectares harvested* Net Growth Hectares harvested in 2008 119 891 1 683 Hectares harvested in 2009 111 005 (8 886) Targeted hectares to be harvested 2012 123 715 12
Slide 32: Cane Yields - South Africa
Cane Yields - South Africa • Harvested cane yields • 2000 - 63,8 tcph • 2008 - 46,6 tcph • 2009 - 44,8 tcph • 2012 - 60,1 tcph • Cane replanting • Replanting on average lags by 2 years • Farming practice • Fertilizer sales at Tongaat Hulett depot for small/medium scale growers in 2009 up 19% on 2008
Slide 33: Zimbabwe
Zimbabwe • Political and socio economic issues • Sugar production 2009/2010: 258 965 tons versus target 600 000 tons 2009 Target Own hectares under cane 29 000 29 000* Own yields (tcph) 92 >112 Outgrower hectares under cane 4 700 15 800* Outgrower yields (tcph) 78 >100 * Examining how much by outgro
Slide 34: Mozambique
Mozambique 2009 Actual 2010 Estimate 2011 Estimate Sugar production (tons) 133 802 230 000 - 250 000 290 000 - 310 000 • Hectares under cane • Current - 24 931 • Target - 27 791 • Yields • Current - 76 tcph • Forecast 2010 - 87 tcph • Target - > 100 tcph 34
Slide 35: Mozambique
Mozambique • Cofamosa expansion • Next phase of the Xinavane expansion • Increase area under cane by 11 280 hectares • Project to commence in late 2011 • First production 2014 35
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Slide 37: Additional Information
ee @ Tongaat Hulett S| ADDITIONAL INFORMATION 37
Slide 38: Starch Operations Financial Data
Starch Operations Financial Data R millions 2009 2008 Revenue 2 231 2 150 Domestic 1 693 1 553 Exports 150 131 Co-Products 388 466 Operating Profit 256 240 38
Slide 39: Volume Data
Volume Data Volume (tons) 2009 2008 Local Starch 84 082 96 720 Local Glucose 325 376 336 539 Total Local 409 458 433 259 Export Starch 25 485 18 823 Export Glucose 9 163 8 199 Total Exports 34 648 27 022 Co-Products 147 070 157 222 Total 591 176 617 503 39
Slide 40: Co-product Pricing
Co-product Pricing Price movement Co-product Major price drivers 2009 on 2008 50%: International edible oil price Germ Down 27,8% 50%: Local maize International protein (Soya, fishmeal) Gluten-60 Up 17,7% prices Local maize price/hominy chop Gluten-20 Down 17,8% surplus 40
Slide 41: Cornubia
Cornubia • Ministerial priority project • 1 200 ha mixed use, mixed income development • 517 gross hectares sold to eThekwini Municipality • Over 19 000 subsidised homes by Government • Total planned yields • 40 000 homes • 1,5 million square metres commercial bulk • 1 million square metres industri
Slide 42: Bridge City
Bridge City • PPP with eThekwini Municipality • A new Town Centre in a previously disadvantaged area / township • Mixed use high density town centre • Regional 450 bed public hospital • 48 000 m2 shopping centre opened October 2009 • Phase 2: 13 000 m2 retail scheduled for 2012 • Regional Magistrate
Slide 43: Umhlanga Ridge Town Centre
Umhlanga Ridge Town Centre • Only 1 commercial site remaining for sale • Infrastructure installation for sold sites complete • Chris Saunders Park construction complete • Liberty Life - occupation of regional head office in March 2010 • Residential phase – 3 000 units with limited commercial approve
Slide 44: Umhlanga Ridgeside
Umhlanga Ridgeside • M41 interchange under construction – completion October 2010 • Office Park Precinct contract to be completed May 2010 and Mixed Use Precinct Phase 1 April 2010 • Holiday Inn Express hotel in Mixed Use Precinct to open May 2010 • New office for Nedbank in the Mixed Use Precinct c
Slide 45: Izinga – Umhlanga Ridge
Izinga – Umhlanga Ridge • Medium to low density residential suburb • Open suburb with cameras and visible street security patrols • Indigenous landscaping • 280 homes in first phase • First phase of civil infrastructure (portion of Campbell drive) completed January 2010 • Second phase of civil infra
Slide 46: Kindlewood
Kindlewood • 550 Unit gated estate development • Comprises • Special residential • Maisonette • Planned unit developments • Phase 1: sold out • Phase 2: 53% sold • Total 178 units sold • 22 homes occupied • 5 new structures started in January 2010 46
Slide 47: Sibaya – Mdloti (first phase)
Sibaya – Mdloti (first phase) • 1,6 km coastal frontage • EIA approved for Nodes 1 and 5 • Extents: Extents Node 1 Node 5 Gross Ha 125 106 Dev Ha 49 76 Forest /Open Space Ha 76 30 • ROD Rights approved: Node Commercial Hotel Res Units bulk (m2) Rooms 1 65,800 241 1,140 5 37,914 267 1,184 47
Slide 48: Zimbali South & West
Zimbali South & West • Additional recreational resident’s facility handed over December 2009 • Final few sites remaining • Heritage Place of the Fairmont Hotel opened December 2009 • Well established Zimbali brand being extended to the Lakes 48
Slide 49: Zimbali Lakes
Zimbali Lakes • Office Park civils infrastructure completed and sites transferred • Sales being progressed in Phases 1 and 2 • Mixed-use resort node with golf course, beach access and man-made lake adjacent to river 49
Slide 50: Tinley Manor
Tinley Manor • Largest consolidated property surrounding a river on north coast • Full coastal frontage (3,9km) and access to both sides of Umhlali Lagoon and River Basin • New Waste Water Treatment works recently completed • Inland Marina potential • Tinley Manor launch site license issued to Tonga
Slide 51: Sugar Production
Sugar Production Tons ’000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 South Africa 969 755 860 652 723 753 666 604 644 564 Mozambique 39 36 71 82 85 115 106 108 108 134 Swaziland RSE 41 45 50 54 50 56 55 58 56 54 Zimbabwe * 282 264 296 264 222 236 240 349 298 259 Total 1 331 1 100 1 277 1 052
Slide 52: Expanded Sugar Production
Expanded Sugar Production Tons Per Annum 2009 Production Capacity South Africa 564 000 > 1 000 000 Zimbabwe 259 000 > 600 000 Mozambique 134 000 > 327 000 Swaziland RSE 54 000 > 60 000 Total 1 011 000 > 1 987 000 52
Slide 53: EU Sugar Market Update
EU Sugar Market Update • Long-term supply agreement signed • 100 000 tons per annum from Mozambique and Zimbabwe • 6-year agreement • Price guaranteed above reference price • Reference price per ton • Raw €335,2 (US$ 21,3c/lb) • Refined €404,4 (US$ 25,7c/lb) Supply Balance (million tons) Season 2005
Slide 54: Mozambique Sugar Operations
Mozambique Sugar Operations • Mafambisse • Expansion completed in 2008 • Mill: Tongaat Hulett owns 85% • Agriculture: Tongaat Hulett owns 100% • Xinavane • Mill: Tongaat Hulett owns 88% after major expansion • Agriculture: Tongaat Hulett owns 100% 54
Slide 55: Triangle Hippo Tambankulu
Triangle Hippo Mafambisse Tambankulu Xinavane 55
Slide 56: LDC Countries
LDC Countries • 50 LDC countries • 22 sugar producing LDC countries • Countries that have exported into EU Ethiopia Tanzania Togo Senegal Nepal Malawi Mozambique Zambia Sierra Leone Sudan DRC Benin Bangladesh • LDC criteria • Gross national income per capita < US$750 • Human asset index based on nut
Slide 57: Consolidation of Zimbabwe Operations
Consolidation of Zimbabwe Operations • Triangle Sugar is 100% owned and Hippo Valley is 50,3% owned • Consolidation followed macroeconomic changes • Zimbabwe moved to a US$ and Rand based economy • Restored relevant key fundamentals, domestic market sales prices • Commencement of consolidation: bala
Slide 58: Consolidation of Zimbabwe Operations (cont.)
Consolidation of Zimbabwe Operations (cont.) Consolidation : Balance Sheet effect at 31 December 2009 R million - Fixed assets 2 623 Depreciated (consolidation take-on was US$373 million) IAS 41 Agriculture: growing crop valuation - Growing crops 574 (consolidation take-on was US$40 million) - Worki
Slide 59: Zimbabwe Replacement Value (TH Holding)
Zimbabwe Replacement Value (TH Holding*) R million Cane Growing Triangle 1 534 Hippo 737 Sugar Milling Triangle 2 134 Hippo 987 Refining and Packing Triangle 327 Hippo 91 Ethanol Plant 261 General Infrastructure Triangle 219 Hippo 110 Total 6 400 *TH Holding - Triangle 100%, Hippo 51% 59
Slide 60: Sugar Production - SA
Sugar Production - SA 3 Industry: 2 117 000 tons Tons Sugar - Millions THS: 564 000 tons 2.5 Share of industry 25,9% (2008/9: 26,8%) 2 1.5 1 0.5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 THS Season ended March Industry 60
Slide 61: Total Volumes – Sugar SA
Total Volumes – Sugar SA Tons sugar 2009 2008 Opening stock 261 473 206 493 Production 563 710 644 173 Prior season adjustment (1 372) (577) Sugar purchased in 143 574 87 172 Sales (777 219) (675 848) Closing Stock 190 166 261 473 61
Slide 62: Local Market Volumes – Sugar SA
Local Market Volumes – Sugar SA Tons sugar 2009 2008 Opening stock 172 667 144 397 Production 360 443 407 970 Prior season adjustment 944 (474) Sugar purchased in 143 574 87 172 Sales (544 980) (466 398) Closing Stock 132 648 172 667 62
Slide 63: Export Volumes – Sugar SA
Export Volumes – Sugar SA Tons sugar 2009 2008 Opening stock 88 806 62 096 Production 203 267 236 203 Prior season adjustment (2 316) (43) Sales (232 239) (209 450) Closing stock 57 518 88 806 63
Slide 64: Raw Export Realizations: Sugar SA
Raw Export Realizations: Sugar SA Raw Sugar 2009 2008 Price in US c/lb* 14,96 12,12 Average Rand/US$ realisation R8,19 R8,05 Average Rand realisations per ton R2 893 R2 316 • Table includes raw sugar for refined exports • * Excludes preferential markets and premiums 64
Slide 65: Value-adding Activities
Value-adding Activities • Animal feeds in South Africa and Zimbabwe • Livestock in Zimbabwe - 9 000 head of cattle • Retail packing operations in South Africa, Mozambique, Zimbabwe, Namibia and Botswana • Refined and direct consumption raw sugar exports from South Africa and Zimbabwe • Speciality su