Voluntary Trading Statement for the Year ended 31 March 2015

Tongaat Hulett Limited

Registration number 1892/000610/06

Share code: TON

ISIN ZAE000096541

Voluntary Trading Statement for the Year ended 31 March 2015

The following trading statement is issued for the year ended 31 March 2015. 

Operating profit from the various sugar operations is expected to total approximately R806 million for the year (2014: R908 million), a decrease of 11 . The benefit of cost reductions over the past two years together with the negative cane valuation effect recorded in the income statement last year not being repeated this year was offset by a reduction in sugar production volumes and lower prices. Revenue was particularly impacted by a substantial reduction in prices for exports into the EU as a result of the changes to the EU agricultural markets. Tongaat Hulett’s sugar production for the year has totalled 1,314 million tons compared to 1,424 million tons in the prior year. Sugar production in South Africa was 541 000 tons (2014: 634 000 tons), Zimbabwe was 445 000 tons (2014: 488 000 tons), Mozambique was 271 000 tons (2014: 249 000 tons) and the raw sugar equivalent in Swaziland was 57 000 tons (2014: 53 000 tons). This follows the dry conditions in South Africa and, in Zimbabwe, production in the 2014/15 year that did not yet benefit from the new / replanting of cane that commenced with the dam levels having recovered early in 2014. In Mozambique, the local market was impacted by substantial imports which occurred prior to an increase in the reference price to protect against unfair import competition, which is expected soon.

Operating profit from the starch and glucose operation is expected to increase by some 16 to approximately R560 million (2014: R482 million), benefitting from further improvements in the sales mix, co-product recoveries, capacity utilisation and plant efficiencies. 

Land development and conversion activities led to 108 developable hectares being sold, with operating profit of R828 million expected to be reported, which is a 23 reduction compared to the prior year (2014: 259 developable hectares were sold and profit of R1,080 billion was earned). The momentum on larger land sales has continued, with a single sale of 19 developable hectares in Izinga and a sale of 27 developable hectares in a new area of Cornubia. The sale of 42 developable hectares of highly valued land in Umhlanga Ridgeside, precincts 1 and 2, which was previously expected to be finalised by the end of March 2015, was not concluded in this financial year. Negotiations with four parties are at various stages, all aimed towards reaching an imminent conclusion. The development proposals received for Ridgeside are confirming the value that has previously been attributed to the land. 

Details of Tongaat Hulett’s extensive portfolio of some 8 100 developable hectares of land for conversion in KwaZulu-Natal are available on the website. Further detail, providing increased insight into the composition of the portfolio, prospective usage, growing market momentum and development themes, possible timing and values, will be released during the roadshow, at the end of May 2015, following the release of Tongaat Hulett’s annual results. 

Taking all of the aforementioned into account together with the centrally accounted items, Tongaat Hulett’s operating profit is expected to decrease by some 12 from the previous best of R2,374 billion earned last year to approximately R2,089 billion, with strong cash flow from operations generated of approximately R2,5 billion. Headline earnings are expected to be approximately R945 million for the year, compared to the R1,106 billion earned in the previous year, a decrease of some 14,5 . Total net profit per share is expected to be approximately 865 cents per share (2014: 1 034 cents per share) while headline earnings per share for the year are expected to be approximately 826 cents per share (2014: 990 cents per share), both reflecting a decrease of some 16,5 . 

This trading statement is issued in accordance with the JSE Listings Requirements. The above information has not been reported on by the auditors.


5 May 2015


Investec Bank Limited