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Voluntary Trading Statement for the year ended 31 March 2016
Tongaat Hulett Limited
Registration number 1892/000610/06
Share code: TON
ISIN ZAE000096541
VOLUNTARY TRADING STATEMENT FOR THE YEAR ENDED 31
MARCH 2016
The following trading statement is issued for the year ended 31 March 2016.
Tongaat Hulett’s operating profit for the year is expected to be R1,808 billion (2015:
R2,089 billion), a decrease of some 13,5%. Headline earnings are expected to be
approximately R783 million, compared to the R945 million earned in the previous
year, a decrease of some 17,1%. Record performances from the land conversion and
development activities and the starch operation have been negated by the impact of
the substantial reduction in Tongaat Hulett’s sugar production as a result of poor
growing conditions, with the nature of sugar milling and cane growing being such that
there is a high proportion of fixed costs.
Operating profit for the year from the various sugar operations is expected to total
approximately R124 million (2015: R806 million). In line with previous
communication, total sugar production in the year to March 2016 reduced by a further
291 000 tons to 1,023 million tons (2015: 1,314 million tons and 2014: 1,424 million
tons). The operations in South Africa produced 323 000 tons of sugar (2015: 541 000
tons), Mozambique 232 000 tons (2015: 271 000 tons), Zimbabwe 412 000 tons
(2015: 445 000 tons) and in Swaziland the raw sugar equivalent was 56 000 tons
(2015: 57 000 tons). Export revenues were impacted by a lower international sugar
price, with regional deficit markets and EU exports linked to that price. There has
been a significant decrease in the cost base over the past three years which, together
with the impact of lower volumes, has resulted in a reduction of some R1,39 billion in
real terms compared to 2012/13 in respect of the cost of goods, services, transport,
marketing, salaries and wages. The benefit of improved import protection and higher
prices in the various local markets was largely not yet reflected in revenue earned.
Operating profit from the starch and glucose operation is expected to reflect an
increase to approximately R658 million (2015: R561 million). There is an ongoing
improvement in sales mix, enhanced by value added products. Maize costs were
competitive and there were improvements in operating efficiencies, co-product
recoveries and cost control. Total sales volumes of prime products were 1% below
last year.
The momentum in Tongaat Hulett’s land conversion and development activities
continues, with good progress on numerous value unlocking activities. In the past
year, 121 developable hectares have been sold and operating profit of R1,115 billion
is expected to be reported, compared to the previous year when 108 developable
hectares were sold and profit of R829 million was earned. Sales in this period came
from Umhlanga Ridgeside Precinct 1 (high-intensity urban mixed use – 3 hectares),
Ridgeside Precinct 4 (high-end residential – 20 hectares), Sibaya Node 1 (high-end
residential – 19 hectares), Cornubia (industrial and office – 25 hectares), Umhlanga
Ridge Town Centre (high-intensity urban mixed use – 3 hectares), Ntshongweni
(retail – 14 hectares), Kindlewood (17 hectares), Izinga (19 hectares) and Bridge City
(1 hectare). An additional milestone achieved in the year was the approval received
for release from agriculture for development, in terms of Act 70 of 70, of a further
2 600 developable hectares.
Taking all of the aforementioned into account together with the centrally accounted
items, Tongaat Hulett’s operating profit for the year is expected to total R1,808 billion
(2015: R2,089 billion).
Cash flow from operations was some R1,3 billion (2015: R2,5 billion), after the
absorption of R989 million in working capital (R44 million in the prior year). Debtors
increased by some R1,3 billion, largely as a result of the timing of inflows in respect
of the land conversion activities. Net debt at 31 March 2016 was R5,1 billion (2015:
R4,0 billion).
Total net profit per share is expected to be approximately 710 cents per share (2015:
865 cents per share) while headline earnings per share for the year are expected to be
approximately 678 cents per share (2015: 826 cents per share), both reflecting a
decrease of some 17,9%.
This trading statement is issued in accordance with the JSE Listings Requirements.
The above information has not been reported on by the auditors.
The results for the year ended 31 March 2016 are scheduled for release on Monday,
30 May 2016.
Tongaat
20 May 2016
Sponsor
Investec Bank Limited
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