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Voluntary Trading Statement for the half-year ended 30 September 2017
Tongaat Hulett Limited
Registration number 1892/000610/06
Share code: TON
ISIN ZAE000096541
VOLUNTARY TRADING STATEMENT FOR THE HALF-YEAR ENDED 30
SEPTEMBER 2017
The following trading statement is issued for the six months ended 30 September
2017.
Tongaat Hulett’s operating profit for the half-year is expected to be R1,471 billion
(2016: R1,350 billion), an increase of some 9%. Headline earnings are expected to be
approximately R661 million, compared to the R631 million earned in the previous
half-year, an increase of some 4,8%. This period has seen a considerable increase
from land conversion and developments. The sugar operations have seen the
beginning of the production volume recovery after the drought conditions of the
previous two years. This benefit was offset by the impact of lower world sugar prices
and a period of high imports into South Africa while there was a gap in duty
protection which has subsequently been resolved. The starch operations experienced
the carry over effect, into the first half of the year, of maize costs at import parity as a
result of the previous season’s drought, simultaneously with lower co-product
revenues.
Land conversion and development activities are expected to generate operating profit
of R441 million (2016: R269 million) from the sale of 68 developable hectares (2016:
19 hectares), of which a total of 35 developable hectares were sold for integrated
affordable neighbourhoods in the newly launched Umhlanga Hills and Marshall Dam
in Cornubia.
Operating profit for the half-year from the various sugar operations is expected to
total approximately R835 million (2016: R825 million). The major components are
the South African sugar operations, including various downstream activities, with
expected operating profit of R211 million (2016: R306 million), Mozambique with
R232 million (2016: R219 million), Zimbabwe with R358 million (2016: R251
million) and Swaziland with R34 million (2016: R49 million).
Operating profit from the starch and glucose operation is expected to be
approximately R240 million (2016: R306 million). Margins have been negatively
impacted in this half-year by the elapsing carry over effect of maize costs which were
at import parity levels following the drought of the previous season. Co-product
revenues have been under pressure. A recovery in local market sales volumes is being
experienced with the replacement of customers’ imports with local production.
Taking all of the aforementioned into account together with the centrally accounted
items, Tongaat Hulett’s operating profit for the half-year is expected to total R1,471
billion (2016: R1,350 billion).
Operating cash flow (before working capital movements) is R2,447 billion compared
to R2,317 billion in the first six months of last year. The half-year reflects a R2,500
billion absorption of cash in working capital (2016: R1,256 billion absorption), which
is the normal mid-season increase in sugar stocks and debtor levels, combined with
the particularly large increase in South African sugar production this year, higher
sugar stock levels at the half-year, together with the mix between local and export
sales and the timing of export shipments. The land conversion and developments cash
flow includes both proceeds being received and development expenditure related
payments being made and the large positive net cash flow anticipated this year is
expected to be in the second half of the year. Tongaat Hulett’s net debt at the mid-
year is R6,5 billion (2016: R5,5 billion).
Total net profit per share is expected to be approximately 628 cents per share (2016:
554 cents per share) while headline earnings per share for the year are expected to be
approximately 573 cents per share (2016: 547 cents per share), which is an increase of
4,8%.
This trading statement is issued in accordance with the JSE Listings Requirements.
The above information has not been reported on by the auditors.
The interim results for the half-year ended 30 September 2017 are scheduled for
release on Monday, 13 November 2017.
Tongaat
2 November 2017
Sponsor
Investec Bank Limited
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