Home
/
Latest News
/
Page 11

Interim results for the half-year ended 30 September 2010

INTERIM RESULTS FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2010

Revenue of R4,724 billion (2009: R4,011 billion)
Profit from operations of R963 million (2009: R873 million)
Headline earnings of R507 million (2009: R452 million)
Interim dividend of 110 cents per share (2009: 100 cents per share)

Commentary by Peter Staude, CEO of Tongaat Hulett:

The past six months have been characterised by counteractive factors. Tongaat Hulett is starting to benefit from the targeted sugar production growth in Mozambique and Zimbabwe. Sugar production in South Africa has been affected by the severe drought in the current season. Sugar realisations in this period have not yet reflected the benefits of the recent surge in world sugar prices brought about by supply and demand dynamics. Exchange rates have been less favourable than in the corresponding six months in 2009. In the current economic climate, the sale of development land remained depressed. Tongaat Hulett’s headline earnings increased by 12% to R507 million for the half-year ended 30 September 2010, compared to the R452 million earned in the six months to 30 September 2009. The profit from operations for the half-year grew by 10% to R963 million from the R873 million earned in the same period in 2009.

Profit from the starch operations for the six months was R125 million, compared to R117 million in the same period last year. A third consecutive year of favourable agricultural conditions in South Africa yielded a large maize crop in 2009/10 of 13 million tons (2008/9: 12 million tons) and resulted in local maize prices trading close to world prices. The margin benefit of lower maize costs was partially offset by lower co-product prices and the effect of a firmer Rand. Starch and glucose sales volumes in the local market were similar to the corresponding prior period. Volumes in the alcoholic beverage, coffee creamer and confectionary sectors started recovering while the canning and prepared food sectors reflected lower volumes.

The profit from sugar operations in Zimbabwe was R303 million (US$ 41 million) in the first half of the financial year, compared to R326 million (US$ 40 million) in the same period last year. Sales volumes in the first half of the year were 3% higher than the same period last year. Sugar production commenced later than normal at the Hippo Valley mill following the extensive rehabilitation work undertaken during the off-season. The crush rate has since increased closer to capacity as the refurbished second extraction line was brought into production.

In Mozambique, profit from the sugar operations for the six months to September 2010 increased to R163 million (Metical 739 million) from R79 million (Metical 263 million) in the same period last year, benefiting from substantially higher volumes. The rapid depreciation of the Metical has resulted in a situation where domestic sugar prices need to increase by more than 50% to be in line with regional pricing.

The South African sugar milling, refining and agriculture operations contributed R47 million to profit for the six months ended September 2010 (2009: R77 million). The drought conditions in KwaZulu-Natal have led to a reduction in the current sugar crop and higher costs per ton of sugar produced. Sales volumes in the first half of the year grew by 7% together with higher local and export sales realisations.; Almost all of Tongaat Hulett’s sugar production is effectively sold in the local market under the Huletts brand. In terms of the South African sugar industry legislated regulations, 79% of the sales in the current season are deemed to be local and 21% are recognised and valued as exports. Raw sugar export volumes from South Africa were sold at an effective world sugar price of 19,0 US c/lb (prior season: 16,5 US c/lb) at an average exchange rate of R7,67/US$ (prior season: R8,16/US$).

The downstream sugar value added activities contributed R136 million to profit (2009: R127 million). This includes Voermol animal feeds, South African refined exports, regional marketing, sales, packing and distribution activities.

In Swaziland, the Tambankulu sugar estate generated operating profit of R19 million for the half-year (2009: R29 million). The exchange rate of the Rand against the Euro has negatively impacted export earnings. Production for the full year is expected to be similar to the previous season.

Tongaat Hulett’s land and property development activity is currently focused on value creation for all stakeholders in the growth corridor north of Durban, including the new international air platform at King Shaka, targeting land conversion at the appropriate time and value. In the current economic climate, with the sale of development land across most sectors being depressed, few hectares are being converted to development in the higher value prime locations on the coastline and to the west of Durban. Tongaat Hulett owns 13 807 gross hectares for development in South Africa. Operating profit from land conversion and development for the six months to September 2010 amounted to R97 million (2009: R72 million) with a further R4 million in capital profits (2009: R2 million) being realised. During this period, 39 developable hectares (56 gross hectares) were sold in the area north of Durban. Revenue was generated mainly from sales in the Umhlanga Ridgeside and Izinga areas, together with a benefit and associated land sale for the golf course at Zimbali Lakes, which is currently being constructed by Tongaat Hulett’s joint venture partner. In the current economic climate there has been increased attention on controlling development expenditure, with cost savings being brought to account.

The centrally accounted and consolidation items included a gain of R130 million (2009: R82 million) on the recognition of an unconditional entitlement to an employer surplus account allocation in the Tongaat Hulett pension fund.

The tax charge in the income statement includes the attractive Mozambique tax rate for agricultural operations and a lower tax rate in Zimbabwe compared to the first half of the previous financial year.

Finance costs for the first half of the 2010/11 year increased to R231 million from R142 million in the first half of the 2009/10 year. The capitalisation of interest on the Mozambique expansion project ended in the 2009/10 year, with the commissioning having been completed.

Cash inflow from operations, before working capital, was R929 million for the six months to September 2010 (2009: R867 million). Cash flow was adversely impacted by full production of sugar commencing later than expected due to unseasonal rain in Mozambique and the extensive rehabilitation work in Zimbabwe. The September half-year coincides with a peak working capital absorption point in the year. Tongaat Hulett’s net debt at the end of September 2010 was R3,741 billion. This compares to R3,245 billion at September 2009. The last two years have seen significant capital expenditure on the Mozambique expansion and cash being absorbed in the establishment of the expanded cane crops, the replanting of sugar cane and mill refurbishment in Zimbabwe.

The Board has declared an interim dividend of 110 cents per share (2009: 100 cents per share).

Outlook

Regional sugar prices are now starting to rise in response to the higher world prices. The demand for raw sugar into the European Union is intensifying. Sugar available for export from the current season’s production is limited. The drought experienced in South Africa has brought forward the closure of the sugar mills for the 2010/11 season. The mills in Zimbabwe and Mozambique are likely to close in December for start-up in April and May for the 2011/12 season.

Tongaat Hulett expects to make further progress in growing sugar production towards the target of doubling the 2009/10 production, utilising the available milling capacity, with a simultaneous reduction in unit costs.

Zimbabwe sugar production in the 2010/11 season is expected to be between 330 000 and 350 000 tons (2009/10: 259 000 tons). In the 2011/12 season, production is expected to increase to between 380 000 and 400 000 tons of sugar, with better cane age and yields on a similar number of hectares being harvested, as well as improved sugar extraction in the mills.

In Mozambique, sugar production in the 2010/11 season is expected to be between 185 000 and 205 000 tons (2009/10: 134 000 tons). In order to improve the ongoing profile and age of the crop, some sugar cane originally targeted for milling in the 2010/11 season will now be milled early in the 2011/12 season. Production in the 2011/12 season is projected to be between 270 000 and 290 000 tons of sugar, with an increase in hectares harvested, higher cane yields and; improved sugar extraction in the mills.

The drought in KwaZulu-Natal has resulted in the current season’s South African sugar production being more than 100 000 tons below the 564 000 tons produced in the 2009/10 season, notwithstanding the additional 2 000 hectares under cane supplying Tongaat Hulett’s mills. An additional 6 000 hectares of new cane land is currently being planted.

The South African Department of Energy’s Integrated Resource Plan for Electricity now includes bagasse as one of the preferred options for electricity generation. Tongaat Hulett has the potential to generate 189 megawatts, excluding tops and trash, in South Africa.

Agricultural land conversion and development activity is currently focused on development and bulk sale opportunities in the growth corridor north of Durban, including industrial and business park land adjacent to the new international airport and at Cornubia. Industrial land in Durban/eThekwini remains in short supply.

The large South African maize harvest in 2010 and the high maize stock levels from the previous two seasons should maintain local maize prices close to world prices and contribute to the competitiveness of the starch operation. Higher international starch prices are countering the impact of the exchange rate.

Peter Staude
Chief Executive Officer

About Tongaat Hulett

Tongaat Hulett is an agri-processing business which includes integrated components of land management, property development and agriculture. Through its sugar and starch operations in Southern Africa, Tongaat Hulett produces a range of refined carbohydrate products from sugar cane and maize. It has considerable expertise in downstream agricultural products, biofuel production and electricity generation. Competition for water and alternative land usages is an ongoing dynamic. Tongaat Hulett optimises land conversion and development at the appropriate times. New dimensions for agriculture are emerging with the continued increase in demand for food products together with a world having to contend with climate change. Agricultural trade regimes are changing, with Africa and the European Union (EU) moving closer as a trade bloc. Opportunities for expansion and growth in Africa are thus emerging. Tongaat Hulett has the established business platform and size to capitalise on these opportunities.

Amanzimnyama
Tongaat, KwaZulu-Natal

Lauch of Operation Vuselela

LAUNCH OF OPERATION VUSELELA

KwaZulu-Natal Department of Economic Development & Tourism (DEDT) in partnership with Tongaat Hulett has taken the concept of public-private partnership to a higher level in their collective drive to accelerate socio-economic transformation in various rural communities in the province. This has been demonstrated in their collaboration and commitment towards the development of small-scale sugar cane farmers with the launch of the Operation Vuselela project. The initiative is aimed at encouraging emerging cane farmers acknowledge the importance of following cane farming methods that ensure higher yields and the improved profit margins necessary to build a sustainable sugar cane farming enterprise. The beneficiaries are ordinary rural citizens who through this joint venture would gradually be extricated from poverty and high levels of unemployment common in most rural communities.

Having helped communities in different parts of the province to organise themselves into co-operatives enterprises through the integration of their pieces of land into viable commercial cane fields, on 20^th August 2010, MEC for Economic Development & Tourism, Mr Michael Mabuyakhulu and Chief Executive Officer of Tongaat Hulett, Mr Peter Staude and numerous other dignitaries joined approximately 3 000 members of the Mabhokweni community at Gingindlovu on the north coast in celebrating the official commencement of the project, named Operation Vuselela.

While the province has been synonymous with the sugar industry for more than a century, production in the traditionally rural black communities has not been adequately co-ordinated along profit oriented commercial ventures. This partly contributed to some emerging farmers getting lower returns from their cane farming, leading to them abandoning their fields to be exposed to increased levels of poverty. Operation Vuselela as the Zulu word implies, is geared towards reviving sugar cane farming amongst poverty struck communities as part of government’s strategy to stimulate economic activities even in the remotest rural parts of our province where agriculture appears to be a viable economic option.;

Commenting on the project, Mr Mabuyakhulu said the repositioning of the role of small scale sugar cane growers in the Sugar Industry would serve as a catalyst in the promotion of meaningful and empowering economic development in the historically deprived rural communities. Operation Vuselela, he stressed would also restore confidence in the agricultural sector as possible career of choice amongst the youth having witnessed increasing returns scored by their parents through this project. `We are not only here today to celebrate the revival of sugar cane business in our rural communities, but to demonstrate to our young people as well that farming was still one of the most important professional or business pursuits to be considered to ensure sustainable national food security and equitable socio-economic advancement across the province’. He therefore challenged the participants in the project to aim for the sky in terms of product quantity and quality that would result in high profits that could motivate young people to the highly diversified commercial farming. Mabuyakhulu also added that the partnership with Tongaat Hulett was a reflection of growing understanding and co-operation between government and the private sector in capitalizing on specific sectors that would ensure the province’s competitiveness in the global market.

Mr Peter Staude said, “Operation Vuselela reflects Tongaat Hulett’s belief in the future of the South African Sugar Industry, small-scale sugar growers as well as our objective of increasing cane supplies to our mills. The small-scale grower community has a key role to play in the future success of the Sugar Industry and the agricultural sector of KwaZulu-Natal. In addition, Tongaat Hulett continues to promote the establishment of a workable renewable energy framework in South Africa which will further contribute to the financial viability and growth of this industry.”

Staude stated, “As part of the partnership 3 534 hectares of cane will be planted over a three year period which commenced in the 2009/2010 planting season, with 291 hectares being planted to date. Approximately 2 500 small/medium sugar cane growers will be established, at least 726 permanent, and more than 6 000 seasonal jobs will be created through the project over a ten year period and sugar cane generated through the project will be supplied to Tongaat Hulett’s sugar mills. A total amount of R46,7 million will be contributed by DEDT and Tongaat Hulett will make a direct contribution of R10,1 million and an indirect contribution in excess of R20 million in the form of technical, managerial and logistical support over a three year period.”

“Tongaat Hulett is the implementing agent for Operation Vuselela and in line with the spirit of the project all goods and services will be sourced locally, with preference being given to SMME’s that are run by target groups including woman, local people and the youth. The underlying aim of Operation Vuselela is to create employment and general economic development opportunities in the targeted areas with the active part of the project being the Small Scale Grower areas of rural KwaZulu-Natal,” said Staude.

Peter Staude concludes, “Tongaat Hulett has the ability and willingness to be a substantive partner to the rural agricultural communities that surround the areas in which we do business. Together with the KwaZulu-Natal Department of Economic Development & Tourism and the small-scale sugar cane growing communities, we continue to work together for the future success of agriculture and the sugar industry in KwaZulu-Natal.”

Issued by:

KwaZulu-Natal Department of Economic Development & Tourism:

Mr Bheko Madlala

Project Manager for Media Liaison & Publicity

Telephone: 031-3105300

Cell: 082 808 1984

e-mail: madlalab@kznded.gov.za

website: www.kznded.gov.za

Tongaat Hulett:

Mrs Michelle Jean-Louis

Communications Executive

Telephone: 032-439 4101

Cell: 083 386 3846

e-mail: michelle.jean-louis@tongaat.co.za

Website: www.tongaat.co.za

ENDS

AGM Update by the CEO of Tongaat Hulett

At today’s Annual General Meeting, Tongaat Hulett’s Chief Executive Officer, Peter Staude, gave the following update on the operations and trading conditions.

The total South African maize harvest in 2010 is projected to be above 13 million tons, the largest crop in 29 years. The price of maize in South Africa through to July 2011 is trading close to the world price, which contributes significantly to the competitiveness of the starch operation. Sales volumes of starch and glucose in the last three months have continued to show evidence of the contraction in consumer spending, particularly in the prepared foods, confectionary and canning sectors.

Increasing sugar production from the 957 000 tons milled in the 2009/10 season to the installed sugar milling capacity of 1,9 million tons per annum, with a simultaneous reduction in the unit cost of production, is one of Tongaat Hulett’s key focus areas.

Tongaat Hulett’s sugar production for the 2010/11 season in Zimbabwe is expected to be between 330 000 and 350 000 tons (from 259 000 tons in 2009/10) and in Mozambique to be between 230 000 and 250 000 tons (from 134 000 tons in 2009/10). Sugar production started later than expected due to unseasonal rain in Mozambique and extensive rehabilitation work on the Hippo Valley mill in Zimbabwe. Consistent mill throughput rates close to capacity, without substantial disruptions, are now required to crush the available cane crop and conclude the sugar sales by the end of the season.

In South Africa, rainfall in the KwaZulu-Natal north coast region during the sugar cane growing months of January to June 2010 was 252 millimetres compared to a long-term mean of 491 millimetres. Tongaat Hulett’s sugar production in South Africa is now expected to be slightly below that of 2009/10 notwithstanding the hectares under cane supplying Tongaat Hulett’s mills increasing by some 2 000 hectares.

Tongaat Hulett’s financial results remain sensitive to movements in the Rand, US dollar, Euro and Mozambique Metical. These impact on the revenue streams, costs incurred and the conversion of profits into Rands. Exchange rate movements over the past few months have not been in Tongaat Hulett’s favour. The Rand is currently 16% stronger against the Euro than it was for the 2009/10 reporting period.

Tongaat Hulett’s land and property development activity is currently focused on value creation for all stakeholders in the growth corridor north of Durban. The new international air platform at King Shaka and the development of an aerotropolis present particular opportunities for land conversion at the appropriate time and value. In the current economic climate, with the sale of development land across most other sectors being depressed, few hectares are being converted to development in the higher value prime locations on the coastline and to the west of Durban.

Tongaat Hulett remains well positioned to benefit from the favourable global fundamentals of increasing demand for agricultural products, food, renewable energy and land usage.

Tongaat

27 July 2010

Audited results for the 15 months ended 31 March 2010

AUDITED RESULTS FOR THE
15 MONTHS ENDED 31 MARCH 2010

• Revenue of R11,136 billion (prior period: R9,453 billion)
• Profit from operations of R1,691 billion (prior period: R1,323 billion)
• Headline earnings of R858 million (prior period: R626 million)
• Recovery of Zimbabwe operations underway
• Scrip distribution with cash dividend alternative of 175 cents per share

Commentary by Peter Staude, CEO of Tongaat Hulett:

Profit from operations increased by 28% to R1,691 billion for the 15 months ended March 2010, compared to the corresponding 15 month prior period, with headline earnings growing by 37% to R858 million. Tongaat Hulett has increased profit from continuing operations every year since 2003 as the company benefits from its growing operations and the emerging global dynamics of increasing demand for agricultural products, food, renewable energy and land usage.

The financial year-end has changed to the end of March, which corresponds with the sugar season in all the countries in which Tongaat Hulett operates. The current financial results are thus for the 15 months to 31 March 2010 and include the revenue of a single sugar milling season and the increased value of the growing crop. The costs are for a 15 month period, including those costs incurred from January to March in the off-crop period that are required to be expensed in the income statement.

Profit from the starch operations for the 15 months was R301 million, compared to R290 million in the prior period. Starch and glucose sales volumes in the local market declined by 5% over this period, with the rate of decline slowing in the first quarter of 2010. Lower demand was experienced in the alcoholic beverage, paper, coffee creamer and confectionary sectors, with the contraction in consumer spending. The negative effect of the lower demand was offset by improved starch and glucose margins. A second consecutive year of favourable agricultural conditions in South Africa yielded a large maize crop in 2009 of 12,9 million tons (previous crop: 12,7 million tons) and resulted in local maize prices trading closer to world prices for most of the year. Co-product revenues decreased as a result of lower prices for edible oils and animal feeds.

Land and property development activity is currently focused on the growth corridor north of Durban that commences inland of Umhlanga/Umdloti, extends around the new King Shaka International Airport and includes the greater Tongaat area. In the present economic conditions, with the sale of development land across most sectors being depressed, few hectares are being converted to development in the higher value, prime locations on the coastline and to the west of eThekwini. Good progress is being made, working with all spheres of Government, on processes leading to the conversion of agricultural land to optimal land usage and accelerated socio economic development, including tourism in KwaZulu-Natal. Tongaat Hulett owns 13 863 gross hectares for development in South Africa. Operating profit from land conversion and development for the 15 months to March 2010 amounted to R187 million (prior period: R256 million) with a further R52 million in capital profits (prior period: R22 million) being realised. During this period, 169 developable hectares (280 gross hectares) were sold comprising 159 hectares in the eThekwini growth corridor, including new airport related activities, and 10 hectares in the prime coastal corridor.

The South African sugar milling, refining and agriculture operations contributed R158 million to profit for the 15 months ended March 2010 (prior period: R95 million), with higher local and export sales realisations.; Sugar production decreased to 564 000 tons compared to the 644 000 tons produced in the previous season. Almost all of Tongaat Hulett’s sugar production was sold in the local market under the Hulett’s brand in 2009/10. In terms of the South African sugar industry legislated regulations, only 65% of the sales were deemed to be local and 35% were recognised and valued as exports. Raw sugar export volumes from South Africa were sold at an effective world sugar price of 15,4 US c/lb (prior year: 12,1 US c/lb) at an average exchange rate of R8,20/US$ (prior year: R8,05/US$).

The downstream sugar value added activities contributed R226 million to profit (prior period: R230 million). This includes Voermol animal feeds, South African refined exports, regional marketing, sales, packing and distribution activities.

In Swaziland, Tambankulu Estates produced a raw sugar equivalent of 54 000 tons (previous season: 56 000 tons). Operating profit for the 15 months, including the value of the cane growth in the period of January to March 2010, was R63 million, compared to R56 million in the prior period.

Sugar production in Mozambique increased to 134 000 tons from 108 000 tons in the previous season. The start-up problems that limited sugar production in 2009/10 at the expanded and modernised Xinavane mill have now been resolved, including replacing the diffuser chain and modifying conveyer systems. This resulted in a large portion of the crop on the substantially expanded cane growing estates being carried over, for harvesting at the start of the 2010/11 season. Production of sugar at Xinavane was 89 000 tons (previous season: 63 000 tons). Mafambisse’s sugar production of 45 000 tons (previous season: 45 000 tons) was adversely affected by a number of factors, including the harvesting of young cane in the newly established cane areas and overcoming irrigation bottlenecks. The Mozambique operation’s raw sugar export volumes to the European Union totaled 49 000 tons (prior: 39 000 tons) and sales to the domestic market increased to 85 000 tons (prior: 69 000 tons). The currency gains of R122 million realised in 2008, when financial structures were finalised, were not repeated in 2009/10. The Mozambique profit from operations amounted to R192 million (prior period: R301 million).

The profit from sugar operations in Zimbabwe was R576 million in the 15 months to March 2010, as relevant economic fundamentals were reintroduced into the local economy and the business. Sales to the domestic market of 188 000 tons were undertaken in US dollars at levels in line with regional pricing and 146 000 tons were exported to the European Union. Sugar production in Zimbabwe amounted to 259 000 tons (previous season: 298 000 tons). The situation that prevailed in Zimbabwe in 2008 had a negative impact on the 2009 harvest and sugar production levels.

The recovery of the Zimbabwe sugar operations commenced in 2009, coinciding with the US dollarisation of the Zimbabwe economy and the return to more normal economic fundamentals relevant to the sugar business, including the restoration of domestic sales prices to regional levels. As reported in the interim results, the Zimbabwe operations are consolidated in Tongaat Hulett’s financial results from the beginning of 2009.; The accounting treatment, in terms of International Financial Reporting Standards, on the commencement of consolidation of these operations gave rise to a balance sheet take-on gain of R1,969 billion, which is recognised in the income statement. This gain is excluded from the profit from operations and excluded from headline earnings.

The centrally accounted and consolidation items include a R82 million gain (prior period: R86 million) on the recognition of an unconditional entitlement in 2009 to an employer surplus account allocation in the Tongaat Hulett pension fund.

The tax charge in the income statement includes the benefit of a release from the deferred tax provision following the reduction of the Zimbabwe tax rate from 30% to 25% at the end of 2009 and the advantage of an attractive Mozambique tax rate for agricultural operations.

Finance costs for the 15 months to March 2010 increased to R452 million from R367 million in the equivalent prior period, commensurate with the borrowings in the business.

Cash inflow from operations was R1,955 billion for the 15 months to March 2010. Tongaat Hulett’s net debt at the end of March 2010 was R3,040 billion (compared to R3,370 billion at December 2009 and R2,356 billion at December 2008) with significant capital expenditure, mainly on the Mozambique expansion, cash absorption in the establishment of the expanded cane crops and replanting of sugar cane in Zimbabwe.

The Board has declared a final distribution, as a scrip distribution with a cash dividend alternative of 175 cents per share, bringing the total distribution for the full period to 275 cents per share. There is a separate detailed announcement on the scrip distribution and the related circular will be posted to shareholders.

Outlook

Tongaat Hulett’s land and property development activity is currently focused on opportunities in the growth corridor north of Durban, including those related to the new international air platform.

The South African maize harvest in 2010 is projected to be above 13 million tons, the largest crop in 29 years, which should maintain local maize prices close to world prices and contribute to the competitiveness of the starch operation.

The world sugar price, after rising substantially, has recently declined sharply to a level similar to the average earned on exports from South Africa in 2009/10. These exports currently constitute some 20% of Tongaat Hulett’s total sugar sales and this percentage will reduce as the Zimbabwe and Mozambique production increases. Movements in the Rand, US dollar and Euro exchange rates have a direct impact on export proceeds and the conversion of earnings into Rands by the operations outside South Africa.

The business is driving to increase sugar production from the 957 000 tons milled in the 2009/10 season to the installed sugar milling capacity of 1,9 million tons per annum, with a simultaneous reduction in the unit cost of production. Sugar production in the 2010/11 season is expected to be 20% to 25% above the previous season. Plans are in place to increase sugar production over the next two seasons in Mozambique from the 134 000 tons in 2009/10 to the newly installed milling capacity of 300 000 tons per annum, with the cane supply already well established. A recovery programme is currently underway in Zimbabwe, focused on the two sugar factories, improving cane yields and re-establishing outgrower cane lands, so as to restore sugar production to the existing installed capacity of 600 000 tons per annum. In South Africa, the rainfall in the cane growing months has been below average for the 2010/11 season, which will affect the sugar operations. The focus in South Africa is on working with commercial and small scale growers on increasing hectares under cane, areas to be replanted and farming practices to improve yields, leading to higher milling capacity utilisation.

Tongaat Hulett remains well positioned to benefit from the medium to longer term global fundamentals of increasing demand for agricultural products, food, renewable energy and land usage.

Peter Staude
Chief Executive Officer

About Tongaat Hulett

Amanzimnyama
Tongaat, KwaZulu-Natal

28 May 2010

Results for the 12 months ended 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)
Recovery of Zimbabwe operations underway

Commentary by Peter Staude, CEO of Tongaat Hulett:

Tongaat Hulett has overcome a number of challenges in 2009 and is well on its way to fully utilise its newly installed sugar production capacity in Mozambique and to re-establish cane supply and milling capacity utilisation in Zimbabwe. The recovery of the Zimbabwe sugar operations has commenced, coinciding with the US dollarisation of the Zimbabwe economy in 2009 and the return to more normal economic fundamentals relevant to the sugar business, including the restoration of domestic sales prices to regional levels. Both Mozambique and Zimbabwe have preferential access to the attractive European Union markets.

The significantly improved global sugar dynamics are beginning to be reflected in the financial results of the various sugar operations. At the same time, market conditions for the sale of development land across most sectors remained depressed.

Tongaat Hulett’s profit from operations grew by 37% to R1,555 billion in 2009 and headline earnings increased by 44% to R839 million.

Profit from the starch operations was R256 million (2008: R240 million). Starch and glucose sales volumes in the local market declined by 5,5%. Lower demand was experienced in the alcoholic beverage, paper and coffee creamer sectors, with the contraction in consumer spending. The negative effect of the lower demand was offset by improved starch and glucose margins. A second consecutive year of favourable agricultural conditions in South Africa yielded a large maize crop of 12,05 million tons (2007/08: 12,7 million tons) and resulted in local maize prices trading closer to world prices for most of the year. Co-product revenues decreased as a result of lower prices for edible oils and animal feeds.

Land and property development activity is currently focused on the growth corridor north of Durban that commences inland of Umhlanga/Umdloti, extends around the new international airport at La Mercy and includes the greater Tongaat region. In the present economic conditions, few hectares are being converted to development in the higher value, prime locations on the coastline and to the west of eThekwini. Good progress is being made, working with all spheres of Government, in planning for optimal land usage and accelerated socio economic development. Tongaat Hulett owns 13 895 gross hectares for development in South Africa. Operating profit from land conversion and development in 2009 amounted to R148 million (2008: R263 million) with a further R57 million in capital profits (2008: R22 million) being realised.; During the year, 150 developable hectares (247 gross hectares) were sold comprising 144 hectares in the eThekwini growth corridor, including new airport related activities, and 6 hectares in the prime coastal corridor.

The South African sugar milling, refining and agriculture operations contributed R159 million to profit (2008: R73 million). Raw sugar export volumes from South Africa increased to 232 000 tons (2008: 210 000 tons) and were sold at an effective world sugar price of 15,0 US c/lb (2008: 12,1 US c/lb) at an average exchange rate of R8,19/US$ (2008: R8,05/US$). South African domestic sugar sales increased by 17% to 545 000 tons (2008: 466 000 tons). Sugar production decreased to 564 000 tons compared to the 644 000 tons produced in 2008. There has been a reduction in stock levels at the end of the year. The current dynamics of a higher world sugar price are encouraging for the South African sugar industry as improved returns from sugar cane farming will stimulate an improvement in farming practices and an increase in hectares under cane, leading to improved milling capacity utilisation.

The downstream sugar value added activities contributed R209 million to profit (2008: R204 million). This includes Voermol animal feeds, South African refined exports, regional marketing, sales, packing and distribution activities.

In Swaziland, Tambankulu Estates produced a raw sugar equivalent of 54 000 tons (2008: 56 000 tons). Operating profit was R43 million, compared to last year’s R44 million.

Sugar production in Mozambique increased to 134 000 tons from 108 000 tons in 2008. The start-up problems experienced during Xinavane’s 2009 milling season, that limited sugar production, have now been resolved, including having to replace the diffuser chain following numerous chain link failures. This resulted in a large portion of the crop on the substantially expanded cane growing estates being carried over, for harvesting at the start of the 2010/11 season. Production of sugar at Xinavane to the end of December 2009 was 83 000 tons, with a further 6 000 tons produced in January 2010 in an extended crushing season (2008: 63 000 tons). Mafambisse’s sugar production of 45 000 tons (2008: 45 000 tons) was adversely affected by a number of factors, including the harvesting of young cane in the newly established cane areas and overcoming irrigation bottlenecks. The Mozambique operation’s raw sugar export volumes to the European Union totaled 49 000 tons (2008: 39 000 tons) and sales to the domestic market increased to 85 000 tons (2008: 69 000 tons). The currency gains of R122 million realised in 2008, when financial structures were finalised, were not repeated in 2009. The Mozambique profit from operations amounted to R185 million (2008: R250 million). Over the next two seasons, the Mozambique operations are targeting to increase sugar production from the 134 000 tons in 2009/10 to the newly installed milling capacity of 300 000 tons per annum, with the cane supply already well established.

The profit from sugar operations in Zimbabwe was R548 million in 2009, as relevant economic fundamentals were reintroduced into the local economy and the business. Sales to the domestic market of 153 000 tons were undertaken in US dollars at levels in line with regional pricing and 146 000 tons were exported to the European Union. Sugar production in Zimbabwe in 2009 amounted to 259 000 tons (2008: 298 000 tons). The situation that prevailed in Zimbabwe in 2008 had a negative impact on the 2009 harvest and sugar production levels. A recovery programme is currently underway, focused on improving cane yields and the re-establishment of outgrower cane lands, so as to restore sugar production to the existing installed capacity of 600 000 tons per annum.

As reported in the interim results to 30 June 2009, the Zimbabwe operations are now consolidated in Tongaat Hulett’s financial results.; The accounting treatment, in terms of International Financial Reporting Standards, on the commencement of consolidation of these operations gave rise to a balance sheet take-on gain of R1,969 billion, which is recognised in the income statement. This gain is excluded from the profit from operations and excluded from headline earnings.

The centrally accounted and consolidation items include a R82 million gain (2008: R86 million) on the recognition of an unconditional entitlement in 2009 to an employer surplus account allocation in the Tongaat Hulett pension fund.

The tax charge in the income statement includes the benefit of a release from the deferred tax provision following the reduction of the Zimbabwe tax rate from 30% to 25% at the end of 2009 and the advantage of an attractive Mozambique tax rate for agricultural operations.

Finance costs increased to R343 million (2008: R280 million), commensurate with the borrowings in the business.

Cash inflow from operations, before tax payments, was R1,390 billion (2008: R1,128 billion). Tongaat Hulett’s net debt at the end of December was R3,370 billion (compared to R3,064 billion at June 2009 and R2,356 billion at the end of 2008) with significant capital expenditure, mainly on the Mozambique expansion, cash absorption in sugar cane growing crops and replanting of sugar cane in Zimbabwe.

Outlook

Tongaat Hulett’s financial year-end has changed to 31 March, with effect from the current financial year. A March year-end corresponds with the sugar season in all the countries in which Tongaat Hulett operates. This is increasingly significant with the growth in the agriculture and agri-processing components of the business. Audited results will be published for the 15 months ending 31 March 2010. The final dividend declaration will coincide with the financial year-end of 31 March 2010.

The financial results for the 15 months to 31 March 2010 will include the revenue from a single sugar production season while the costs will be for a 15 month period, including those costs incurred from January to March in the off-crop period that are required to be expensed in the income statement.

A focal point for the business is the drive to increase sugar production from the 957 000 tons milled in the 2009/10 season to the installed sugar milling capacity of 1,9 million tons per annum, with a simultaneous reduction in the unit cost of production.

Tongaat Hulett, with its established and growing operations in agriculture, agri-processing and land conversion, remains well positioned for the emerging global dynamics of increasing demand for agricultural products, food, renewable energy and land usage.

Peter Staude
Chief Executive Officer

About Tongaat Hulett

Tongaat Hulett is an agri-processing business which includes integrated components of land management, property development and agriculture. Through its sugar and starch operations in Southern Africa, Tongaat Hulett produces a range of refined carbohydrate products from sugar cane and maize. It has considerable expertise in downstream agricultural products, biofuel production and electricity generation. Competition for water and alternative land usages is an ongoing dynamic. Tongaat Hulett optimises land conversion and development at the appropriate times. New dimensions for agriculture are emerging with the continued increase in demand for food products together with a world having to contend with climate change. Agricultural trade regimes are changing, with Africa and the European Union (EU) moving closer as a trade bloc. Opportunities for expansion and growth in Africa are thus emerging. Tongaat Hulett has the established business platform and size to capitalise on these opportunities.

Anglo American plc Disposes its Shareholding in Tongaat Hulett

Tongaat Hulett Limited
Registration number (1892/000610/06)
Share code: TON
SIN ZAE000096541

Tongaat Hulett shareholders are referred to the announcement made today by Anglo American plc on the completion of its sale of the shares it owned in Tongaat Hulett to institutional investors.

The 51.2 million shares held by Anglo American were all sold in their bookbuild equity placing process. No exchangeable bonds will be issued by Anglo American.

Peter Staude, CEO of Tongaat Hulett, says “The bookbuild process highlighted interest by institutional fund managers, with Tongaat Hulett shares now widely held both locally and internationally.”

The Anglo American announcement is available on the Stock Exchange News Service (SENS) on the JSE and the Regulatory News Service (RNS) on the LSE.

13 August 2009

Tongaat

Sponsor

INVESTEC BANK LIMITED

Anglo American Plc Shareholding in Tongaat Hulett

Tongaat Hulett Limited

Registration number (1892/000610/06)

Share code: TON

ISIN ZAE000096541

Tongaat Hulett shareholders are referred to the announcement made today by Anglo American plc in respect of a bookbuild process (involving Tongaat Hulett ordinary shares and exchangeable bonds issued by Anglo American) to dispose of the shares it owns in Tongaat Hulett to institutional investors.

Peter Staude, CEO of Tongaat Hulett, says “This is an opportunity to increase the liquidity of Tongaat Hulett’s listed equity and enhance the extent and spread of local and foreign shareholders. This transaction by Anglo American should remove the uncertainty that has existed in respect of its shareholding in Tongaat Hulett and enable increased investment by emerging market fund managers, who were previously constrained by the limited liquidity.”

The Anglo American announcement is available on the Stock Exchange News Service (SENS) on the JSE and the Regulatory News Service (RNS) on the LSE.

12 August 2009

Tongaat

Sponsor

INVESTEC BANK LIMITED

Interim Results for the Half-Year Ended 30 June 2009

Revenue of R3,9 billion (2008: R3,1 billion)
Profit from operations of R864 million (2008: R443 million)
Headline earnings of R440 million (2008: R252 million)
Interim dividend of 100 cents per share (2008: 160 cents per share)
Consolidation of Zimbabwe operations

Commentary by Peter Staude, CEO of Tongaat Hulett:

The first half of 2009 was characterised by the restoration of key macroeconomic fundamentals for the sugar business in Zimbabwe and limited opportunity for agricultural land conversion as a result of testing market conditions for property developers in South Africa. Headline earnings increased to R440 million compared to R252 million in the first half of 2008.

Operating profit from agricultural land conversion and development amounted to R64 million (2008: R115 million) with a further R2 million in capital profits (2008: R15 million) being realised. During the first half of the year, 95 developable hectares (183 gross hectares) were sold, of which, 93 hectares were for affordable housing in the eThekwini growth corridor. Market conditions for property development in the prime residential, resorts and commercial sectors continued to be depressed, while the demand for land for affordable housing and industrial property in the Durban area remained positive. There is a shortage of established industrial logistics, support and service locations north of Durban, which continues to be the focus of attention, particularly with the new international airport under construction for 2010. Good progress has been made in areas such as Sibaya, Cornubia and Canelands in the planning and acquisition of development rights, with the conversion from agricultural land to take place at the appropriate time.

The South African agriculture, sugar milling and refining operations contributed R77 million to profit (2008: R37 million). In the first half of 2009, raw export volumes from South Africaincreased to 93 000 tons (2008: 66 000 tons) and were sold at an effective world sugar price of 12,9 US c/lb (2008: 10,8 US c/lb) at an average exchange rate of R8,34/US$ (2008: R7,50/US$). South African domestic sales were 240 000 tons (2008: 230 000 tons). In 2009, sugar production is estimated to be 638 000 tons compared to the 644 000 tons produced in 2008.

The downstream sugar value added activities contributed R94 million to profit (2008: R75 million). The South African refined exports, domestic marketing, sales and distribution activities benefited from increased realisations and delivered another good performance, as did Voermol and the Botswana and Namibian sugar packing and distribution operations.

In Swaziland, Tambankulu Estates is expected to produce a raw sugar equivalent of 53 000 tons (2008: 56 000 tons) and has benefited from higher realisations within the Swazilandsugar industry. Operating profit grew to R34 million (2008: R29 million).

The Mozambique profit from operations increased to R134 million (2008: R77 million), with the growth in the agricultural activities contributing significantly. The expanded mill at Xinavane commenced limited crushing in June and will be in a ramp-up phase until the end of August. Production at Xinavane this year is expected to be above 150 000 tons (2008: 63 000 tons) in an extended season, weather permitting. Mafambisse’s sugar production is expected to be 83 000 tons (2008: 45 000 tons), following the expansion completed in 2008.

The Zimbabwe sugar operations are now consolidated in Tongaat Hulett’s financial results. This consolidation follows the macroeconomic changes that essentially occurred when Zimbabwe moved to a US dollar and Rand based economy and, in so doing, restored relevant key fundamentals to the economy. The accounting treatment, in terms of International Financial Reporting Standards, on the commencement of consolidation of these operations gives rise to a balance sheet take-on gain of R1,969 billion, which is recognised in the income statement. This gain is excluded from the profit from operations and excluded from headline earnings. The profit from operations in the first half of 2009 in Zimbabwe was R305 million (compared to the dividend received of R35 million in 2008). Sales to the domestic market were undertaken in US dollars at levels in line with regional pricing and export shipments to the European Union were fulfilled. The milling campaign got underway in the second quarter, with sugar production in Zimbabwein 2009 expected to be similar to the 298 000 tons produced in 2008.

Profit from the starch and glucose operations was R112 million (2008: R103 million). A second successive season of favourable agricultural conditions in South Africa resulted in local maize prices trading close to world prices for a large part of the period. The positive effects of improved margins were offset by reduced demand. Sales volumes in the local market declined by 4,3% with growth in confectionary and coffee creamer sectors being offset by declines in the paper and alcoholic beverage sector. Sales to the industrial sector are expected to remain below last year, while sales to the alcoholic beverage sector are expected to recover in the second half of the year with the commissioning of a new brewery in Gauteng that will replace current imported beer sales. Approximately 90% of customer sales contracts for the current year have been concluded with maize procured close to world price levels.

The centrally accounted and consolidation items include an R82 million gain on the recognition of an unconditional entitlement in the first half of 2009 to an employer surplus account allocation in the Tongaat Hulett pension fund.

Cash inflow from operations was R253 million (2008: R180 million). Tongaat Hulett’s net debt has increased to R3,064 billion from R2,356 billion at the end of 2008 with significant capital expenditure, mainly on the Mozambique expansion and the cash absorption in sugar cane growing crops. Finance costs increased to R151 million, commensurate with the borrowings in the business.

The Board has declared an interim dividend of 100 cents per share (2008: 160 cents per share).

Outlook

Profit from operations in the second half of the year is expected to be below that achieved in the first six months. Agricultural land conversion opportunities are limited in current market conditions. A stronger Rand would affect export realisations from South Africa and the profit in Rands reported by the operations outside South Africa. Profit from operations inZimbabwe in the second half is likely to be well below the first half of the year, which included the benefit of the recovery of pricing and its impact on sugar stocks and the value of cane. The seasonal nature of cane growing leads to operating profit in the first six months which includes the increased value from the growth in the cane crop. Following the anticipated cash absorption in the Mozambique expansion, significant cash inflow is expected to commence in the latter part of 2009 and early 2010.

In Zimbabwe, management attention is focused on improving cane yields and the re-establishment of outgrower cane lands, so as to restore sugar production to the existing installed capacity of 600 000 tons per annum from the current production level of some 298 000 tons. Similarly, the attention in Mozambique is on moving from the 105 000 tons produced in 2008 to the newly installed milling capacity of 300 000 tons per annum. BothZimbabwe and Mozambique benefit from preferential access to the attractive European Union markets.

The current dynamics of a higher world sugar price are encouraging for the South African sugar industry. Improved returns from sugar cane farming will encourage an improvement in farming practices and increased hectarage under cane, leading to improved milling capacity utilisation.

The structural changes that are taking place in international agricultural commodity markets are resulting in improved competitiveness of South African maize and the starch operations, which have additional capacity for local and export growth. Southern Africa has the opportunity to become a sustainable net exporter of maize in the medium term.

Land and property development activity is currently focused on the growth corridor north ofDurban that commences inland of Umhlanga/Umdloti, extends around the new international airport at La Mercy and includes the greater Tongaat region. Tongaat Hulett owns 5 906 gross hectares in this corridor. Given the housing backlog and Government’s commitment to infrastructure spend, there is both opportunity and socio-economic urgency to establish communities with affordable housing in this area and to accelerate land conversion for airport services and support logistics, niche industrial, health care, education and social facilities. In the present economic conditions, few hectares are likely to be converted to development in the high value, prime locations on the coastline (Tongaat Hulett’s 6 006 hectares) and to the west of eThekwini (2 050 hectares) and the focus is on securing infrastructure and development rights, for conversion at the appropriate time.

Tongaat Hulett, with its established agricultural and agri-processing operations in Southern Africa, remains well positioned for the emerging global food, agricultural products and renewable energy demands.

Peter Staude

Chief Executive Officer

About Tongaat Hulett

Tongaat Hulett is an agri-processing business which includes integrated components of land management, property development and agriculture. Through its sugar and starch operations in Southern Africa, Tongaat Hulett produces a range of refined carbohydrate products from sugar cane and maize. It has considerable expertise in downstream agricultural products, biofuel production and electricity cogeneration. Competition for water and alternative land usages is an ongoing dynamic. Tongaat Hulett balances the operational requirement for cane supplies to its sugar cane processing operations with the transition of agricultural land to other uses at the appropriate times. It is well positioned to benefit from the changing world of agriculture and agri-processing.

Amanzimnyama

Tongaat, KwaZulu-Natal

3 August 2009

Trading statement for the half-year to 30 June 2009 and withdrawal of cautionary announcement

Tongaat Hulett issues this Trading Statement on the expected results for the half-year to 30 June 2009, based on the consolidation of the Zimbabwe operations as explained in the cautionary announcement of 18 June 2009.

Tongaat Hulett’s profit from operations for the six months to 30 June 2009 is expected to increase to R864 million (2008: R443 million). This includes profit from the starch operations of R112 million (2008: R103 million) and profit from land and property development of R64 million (2008: R115 million). The profit from the sugar operations totals R644 million, of which Zimbabwe constitutes R305 million (compared to the dividend received of R35 million in 2008) and the various other sugar operations constitute R339 million (2008: R218 million). A net gain of R44 million is reflected in centrally accounted items (2008: R28 million cost), which includes a gain of R82 million on the recognition of Tongaat Hulett’s unconditional entitlement, in 2009, to a pension fund surplus in respect of a 2007 surplus apportionment.

The consolidation of the Zimbabwe operations follows the macroeconomic changes that essentially occurred when Zimbabwe moved to a US dollar and Rand based economy and, in so doing, restored key relevant fundamentals to the economy. This removed many of the distortions that existed in the Zimbabwean economy, which included unrealistic local market sugar price realisations, not receiving the full benefit of export proceeds, exchange rate uncertainty and foreign currency restrictions, shortage of inputs and the effects of extreme hyperinflation. Previously, in terms of the relevant international accounting standard, these operations were not consolidated and were accounted for on a dividend received basis. As a result of the changes at the beginning of 2009, Tongaat Hulett meets the requirement for consolidating its Zimbabwean operations in terms of the relevant international financial reporting standards (IFRS). The accounting treatment in terms of IFRS on the commencement of consolidation of the Zimbabwe operations gives rise to a balance sheet take-on gain of R1,969 billion, which is recognised in the income statement. This gain is excluded from the profit from operations detailed above, excluded from headline earnings and included in total net profit.

Headline earnings for the first half of 2009 are expected to be R440 million (2008: R252 million). Headline earnings per share are expected to be 426 cents per share (2008: 245 cents per share). Total net profit for the six months is expected to be R2,419 billion with net profit per share being 2343 cents per share (2008: total net profit was R266 million and net profit per share was 258 cents per share).

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

The cautionary announcement of 18 June 2009 is hereby withdrawn.

The interim results for the half-year ended 30 June 2009 are scheduled for release on Monday, 3 August 2009.
Tongaat
22 July 2009

Hippo Valley Estates Limited

The Country’s accelerated economic decline reached unprecedented levels during the year under review, with hyperinflation reaching a last recorded peak of 231 million per cent in July 2008, on the back of a rapidly shrinking industrial and commercial base.

More >>