Slide 1: Annual Results
Annual Results For the year ended 31 December 2003
Slide 2: Income Statement (Rmillion)
Rand/US$ average 7,55 10,48 Rand/US$ closing 6,67 8,58 INCOME STATEMENT (Rmillion) 2003 2002 Revenue 6 559 6 103 Underlying operating profit 452 818 Triangle dividend 19 71 Valuation adjustments (398) (215) EBIT 73 674 Net finance costs (152) (134) Headline (loss)/earnings (93) 380
Slide 3: Revenue (Rmillion)
REVENUE (Rmillion) 2003 2002 African Products 1 487 1 470 Hulett Aluminium (50%) 1 600 1 623 Moreland 226 146 Tongaat-Hulett Sugar 3 246 2 864 Group total 6 559 6 103 Rand/US$ average 7,55 10,48 • Low international prices • Hulett Aluminium rolled products sales volumes up 24% • Tongaat-Hulett Sugar
Slide 4: African Products
AFRICAN PRODUCTS 2003 2002 Underlying operating profit (Rmillion) 114 262 Rand/US$ average 7,55 10,48 • Maize cost above R1 350/ton – contracted in 2002 • Local selling price reductions – import threats • Low international starch and glucose prices • Export margins – R/$ pressure • Co-product price
Slide 5: Accounting Policy Maize – Constructive Obligations
Accounting Policy Maize – Constructive Obligations • Maize procurement includes arranging physical deliveries at points in time • Certain maize procurement commitments are now considered constructive obligations • Early recognition of – Inventory – Current liability – Interest element, rather than c
Slide 6: Hulett Aluminium (50%)
HULETT ALUMINIUM (50%) 2003 2002 Underlying operating profit (Rmillion) 22 179 Rand/US$ average 7,55 10,48 • Rolled Products volume up 24% • Sales mix improvement • Manufacturing costs (excl metal) only up 2% • Offset by – Currency effect on margins – Lacklustre international rolling margins – Metal
Slide 7: Moreland
MORELAND 2003 2002 Underlying operating profit (Rmillion) 92 20 • Record performance: >350% • Accelerating returns from a solid platform • Prime land and world class development • Strong property market • Positive cash flow
Slide 8: Tongaat-Hulett Sugar South Africa
TONGAAT-HULETT SUGAR 2003 2002 Underlying operating profit (Rmillion) 263 391 Rand/US$ average 7,55 10,48 South Africa • Sales increase offset by lower margins • Production levels down 24% • Share of industry: 27% • Domestic sugar price: 7% decrease in October 2003 • Export realisations
Slide 9: Tongaat-Hulett Sugar Mozambique
Tongaat-Hulett Sugar Mozambique • Xinavane (associate company) loss includes – Operating loss – Finance costs – Valuation adjustments on foreign loans • Mafambisse • Not yet reached their potential • Production up 15% • Domestic sales up 68%
Slide 10: Tongaat-Hulett Sugar Zimbabwe
Tongaat-Hulett Sugar Zimbabwe Triangle Sugar • Profitable • Remittance of dividends • R19 million in 2003
Slide 11: Valuation Adjustments
VALUATION ADJUSTMENTS 2003 2002 Maize procurement contracts (211) (20) Translation of foreign currency: - offshore cash holdings (80) (151) - loans (57) (15) Export receivables (33) (26) Financial instruments (17) (3) Total (Rmillion) (398) (215) Rand/US$ closing 6,67 8,58 Rand/GBP closing 11,94 13,
Slide 12: Valuation Adjustments on Maize Contracts
Valuation Adjustments on Maize Contracts • Certain maize procurement contracts • Contracted in 2002 • Marked-to-market through income statement First half of 2003 Second half of 2003 • 40 to 45% maize price • Futures position reduced reduction • Price increased to R1 190/ton • Negative valuation • P
Slide 13: Income Statement – Tax
Income Statement Tax • Deferred tax reversal • Permanent differences
Slide 14: Balance Sheet
Balance Sheet • Total assets: R8,3 billion • Equity: R4,2 billion • Net debt/equity: 13,4% (2002: zero) • Strength to capitalise on opportunities
Slide 15: Tongaat-Hulett Sugar
Tongaat-Hulett Sugar TONGAAT-HULETT Tongaat-Hulett Sugar
Slide 16: 2003 Annual Results
2003 Annual Results • Revenue – R3 246 billion – Up 13,3% • Underlying Operating Profits – R263 million – Down 32,7% • Operating earnings margin 8,1%
Slide 17: 2003 Annual Results
2003 Annual Results • EBIT – R214 million – Down 49,0% • Triangle dividend – R19 million received as at 31 December – US$2 million received subsequent to year end
Slide 18: Sales Volumes THS (SA)
Sales Volumes THS (SA) Tons Actual Actual Sugar Year to Dec 2003 Year to Dec 2002 Local Market 498 919 471 380 Export Raws 344 388 340 400
Slide 19: Raw Sugar Export Realisations
Raw Sugar Export Realisations South African Industry Raw Sugar Year to Dec 2003 Year to Dec 2002 Price in US c/lb 6,59 6,48 Average Rand/US $ R8,85 R9,91 Table includes raw sugar for refined exports
Slide 20: THS - Southern Africa Sugar Production
THS - Southern Africa Sugar Production Installed Tons ‘000 2000 2001 2002 2003 capacity South Africa 969 755 861 652 974 Mozambique 39 36 71 82 156 Swaziland RSE 41 45 50 54 55 Zimbabwe 282 264 296 264 315 Total Sugar 1 331 1 100 1 278 1 052 1 500
Slide 21: SA Sugar Production
SA Sugar Production 3 Tons Sugar - Millions Industry: 2 410 435 tons 2.5 THS: 652 000 tons 27,1% share of industry 2 1.5 THS Industry 1 Lowest THS 0.5 production in 7 years as a consequence of 0 low rainfall 1999 2000 2001 2002 2003 Year
Slide 22: Value-adding Activities
Value-adding Activities • Animal Feeds in South Africa and Zimbabwe • Retail packing operations in South Africa, Mozambique, Zimbabwe, Namibia and Botswana • Refined and direct consumption raw sugar exports from South Africa and Zimbabwe
Slide 23: Value-adding Activities
Value-adding Activities • Speciality sugars and high intensity sweeteners in South Africa • Alcohol production in Zimbabwe • Technology and royalty revenue in South Africa
Slide 24: Distorted World Sugar Market
Distorted World Sugar Market Production Production Market Price cost Tons millions US c/lb Tons millions US c/lb EU 16 28 15 32 USA 8 17 9 26 Brazil 26 ? 10 6.2 “Dumped” world price 40 <6 Total world 144
Slide 25: Rainfall - Critical Growing Months
Rainfall - Critical Growing Months 700 600 500 400 300 200 100 0 Long term mean 1999 2000 2001 2002 2003
Slide 26: Increase Capacity Utilisation of SA Mills
Increase Capacity Utilisation of SA Mills Cane Tons millions Current capacity 9,3 36 week season Capacity after closure of Entumeni 8,9 (Cost of running Entumeni: R28m p.a.) Best season in recent times 8,3 2003 season 5,9 Current cane procurement initiatives 0,6 Over next few years
Slide 27: Turnaround in Mozambique
Turnaround in Mozambique • Actions over the next few years – Increase production from 82 000 tons to 156 000 tons – Grow domestic market – Increase SACU / LDC / ACP access – Reduce cost base – Government support
Slide 28: SA’s Value-adding Activities
SA’s Value-adding Activities • Revenue – R679,8 million (2002: R604,5 million) • Underlying Operating Profits – R92,4 million (2002: R95,7 million)
Slide 29: African Products
African Products TONGAAT-HULETT African Products
Slide 30: Introduction
Introduction • Currently operating in a highly volatile environment – Maize market volatility – Pressure on co-product pricing – Import parity pricing – Export margins impacted by R/US$ and maize price
Slide 31: Volume Data
Volume Data Volume H2 2003 H2 2002 % 2003 2002 % Local Starch 41 645 40 621 2,5 84 618 84 429 0,2 Local Glucose 151 499 169 159 (10,4) 297 753 303 763 (2,0) Total Local 193 144 209 780 (7,9) 382 371 388 192 (1,5) Export Starch 20 342 19 108 6,5 43 932 42 692 2,9 Export Glucose 11 055 10 805 2,3 21 3
Slide 32: Financial Data
Financial Data 2002 Rmillion 2003 % Restated Revenue: Domestic 1 067 117 984 909 8,3 Exports 166 827 199 288 (16,3) Co-Products 257 112 291 339 (11,8) Underlying Operating Profits 114 039 261 210 (56,3) Valuation Adjustments Maize (211 096) (19 669) (973,2) Other (7 211) (5 262) (37,0) EBIT (104 268
Slide 33: South African Maize Price - Inflation Adjusted
- 500 1 000 1 500 2 000 2 500 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 SAFEX Price Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Afprod Cost Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 South African Maize Price - Inflation Adjusted Apr-03 Jul-03 Oct-03 Jan-04
Slide 34: Afprod’s Maize Position
Afprod’s Maize Position Tons 30 Jun 2003 31 Dec 2003 Maize in Silo 435 571 316 322 Committed Physical Contracts 188 593 167 480 (not yet delivered) Futures Contracts 366 100 165 200 Not Hedge Accounted Futures Contracts 45 800 3 600 Hedge Accounted
Slide 35: Futures Position
Futures Position 30 June 2003 31 December 2003 Not Hedge Accounted Tons Price Tons Price White maize: Sep 03 Dec 03 140 000 907 Mar 04 137 600 938 47 700 1 155 Jul 04 107 500 1 192 Sep 04 Yellow maize: Jul 03 400 877 Sep 03 Dec 03 84 400 945 Mar 04 3 700 969 Jul 04 10 000 1 135 Sep 04
Slide 36: Value-added Products
Value-added Products Tons 2003 2002 Local 34 330 38 294 Export 13 406 10 461 Total: 47 736 48 755 Revenue (R’000) 2003 2002 Local 140 084 142 856 Export 54 575 49 713 Total: 194 659 192 569
Slide 37: Hulett Aluminium
Hulett Aluminium TONGAAT-HULETT Hulett Aluminium
Slide 38: Hulett Aluminium
Hulett Aluminium 2003 2002 Average R/US$ 7,55 10,48 Sales volumes – Rolled Products (t) 130 400 105 000 - Other 16 300 15 600 - Total 146 700 120 600 Revenue (R’m) 3 200 3 245 Underlying operating profit 44 358 Valuation adjustments (39) (86) EBIT 5 272
Slide 39: Half-yearly Analysis of 2003
Half-yearly Analysis of 2003 H1 H2 Average R/US$ 8,04 7,08 Sales volumes – Rolled Products (t) 59 400 71 000 - Other 8 100 8 200 - Total 67 500 79 200 Revenue (R’m) 1 545 1 655 Underlying operating profit (16) 60 Valuation adjustments (21) (18) EBIT (37) 42
Slide 40: 2003 Underlying Operating Profit
2003 Underlying Operating Profit • Reduced from R358m to R44m • Currency effect on rolling margins approximately R400 million • Metal price lag swing of R170 million • Increase of R40 million in depreciation • R300 million improvement from improved volumes, mix and costs
Slide 41: Industry Climate
Industry Climate • International markets generally quiet • Competitor dynamics – Alcan acquires Pechiney – “Big Four” now “Big Three” – Ormet files for Chapter 11 protection • Recent improvements in demand and margins in the USA
Slide 42: Rolled Products Capacity Utilisation
Rolled Products Capacity Utilisation Sales Volumes % Increase (000t) 2001 91 7 2002 105 15 2003 130 24 2004 >155 >20
Slide 43: Capacity Utilisation
Capacity Utilisation • Original feasibility – 143 000 tons in 2003 • Current estimate – >200 000 tons beyond 2006 • All products developed for specific customers and applications • Exports now 70% of sales • Incremental effect on EBIT – 10 000 tons Æ R55m
Slide 44: Most Profitable Sales Mix
Most Profitable Sales Mix • Can stock exports up 114% • Painted exports up 37% • Coated products now 27% of total exports • Heat treated plate, treadbright and foil export volumes maintained • Promising developments for clad products
Slide 45: Moreland
Moreland TONGAAT-HULETT Moreland
Slide 46: Umhlanga Ridge
Umhlanga Ridge
Slide 47: 2003 Performance
2003 Performance • Accelerating unlocking value of Group’s land holdings • Continued property market bull-run • Revenue up 54% to R226m – R161m in 2nd half • EBIT up 350% to R90m • Strong cash generation • All record performances • Further R½ billion invested by customers
Slide 48: Residential Sales R85m (up 33%)
Residential Sales R85m (up 33%) Mount Edgecombe Country Club Estate La Lucia Ridge
Slide 49: Commercial/Industrial Sales R83m (up 135%)
Commercial/Industrial Sales R83m (up 135%) Umhlanga Ridge New Town Centre RiverHorse Valley Business Estate La Lucia Ridge Office Estate
Slide 50: Resort Sales R62m (up 30%)
Resort Sales R62m (up 30%)
Slide 51: 2004 Highlights – Unlocking JV
2004 Highlights – Unlocking JV R90m sales already achieved Zimbali South and West
Slide 52: 2004 Highlights - Openings
2004 Highlights - Openings Sibaya Entertainment Kingdom uShaka Marine World
Slide 53: 2004 Project Pipeline
2004 Project Pipeline Executive Village – La Lucia Izinga Ridge
Slide 54: Unlocking Prime Land Holdings
Unlocking Prime Land Holdings Zinkwazi Mhlanga Forest Estate Umhlanga Triangle
Slide 55: Conclusion
Conclusion • On-going market strength – Low interest rates • KZN North Coast market leader • Increasing government infrastructural spend – Regional growth stimulation • Prime / extensive Group land holdings • Skills competency • Exciting project pipeline
Slide 56: Tongaat Hulett – Taking Action
Tonmgaa t= Hulett TONGAAT-HULETT Taking Action