FINANCIAL RESULTS for the twelve months ending 31 March 2015
AGENDA 1. Introduction 2. Financial Overview 3. Market overview 4. Strategic Response 5. Prospects 2
GROUP OVERVIEW Gavin Dalgleish, Managing Director
SALIENT FEATURES TWELVE MONTHS TO MARCH 2015 Financial Operating profit decreases by 12% due to tough market conditions combined with lower production and adverse exchange rate moves Headline earnings per share down 7.7% to 179 cents Robust balance sheet and strong cash generation Continuous improvement initiative delivers revenue enhancements & meaningful cost savings of R351m Downstream operating profit up by 51% to R268m Physicals Newly commissioned distillery in Tanzania operating consistently above design capacity Power exports to the Swaziland national grid up by 6% Overall, sugar production decreases 4% to 1 760kt, driven by drought & frost impact in South Africa Record sugar production in Zambia Markets Domestic sales volumes grow in Tanzania & Zambia Effective tariff reduces imports into South Africa 29% growth of sugar sales into regional markets Strong demand for potable alcohol in East Africa Downstream Pricing in EU, operating world & regional profit up markets R68m to decline R130m with difficult trading conditions expected to continue Growth Evaluation of further downstream investment opportunities to diversify revenue (Zambia distillery; furfural) Build on continuous improvement strategy to enhance returns from existing operations Review supply chain structures across the group to unlock further value Low-cost sugar imports continue to impact domestic market pricing in Tanzania and Mozambique Long-term African sugar prospects remain strong 4
SUGAR PRODUCTION Group sugar production decreased by 70 596 tons Excellent agricultural conditions and improved factory performance Drought and frost damage affect yields and cane quality tons 1 900 000 1 850 000 1 800 000 1 750 000 1 700 000 1 650 000 1 600 000 1 960 30 756 10 294 9 018 6 051 112,653 1 830 356 1 759 760 2013/14 Tanzania Malawi Zambia Mozambique Swaziland South Africa 2014/15 Variance + 9 018-6 051 + 30 756 + 10 294-1 960-112 653-70 596 Cane + 14 792 + 424 + 32 939 + 12 458 + 4 718-126 544-61 213 Sucrose - 6 498-1 361 + 1 050 + 307 + 78 + 16 031 + 9 607 Recoveries + 724-5 114-3 233-2 471-6 756-2 140-18 990 5
FINANCIAL OVERVIEW Mohammed Abdool-Samad, Group Finance Director
GROUP KEY FINANCIAL METRICS Operating Profit (R m) -12.3% 2,000 1,887 1,500 1,000 500 1,655 2013/14 2014/15 R million Revenue 13 190 13 267 Operating profit 1 887 1 655 Net financing costs 336 356 Profit before tax 1 605 1 332 250 200 150 100 50 0 0 2014 2015 Headline Earnings Per Share (cents) -7.7% 194.0 179.0 2014 2015 Headline earnings 894 825 Analysis 2013/14 2014/15 Operating margin (%) 14.3 12.5 Interest cover (times) 5.6 4.7 Effective tax rate (%) 31.3 29.8 EPS (cents) 199.0 179.4 HEPS (cents) 194.0 179.0 EBITDA (R m) 2 201 1 998 Debt : Equity 27.9 35.6 Gearing (%) 21.8 26.2 7
GROUP EXCHANGE RATE PARAMETERS Weaker Zambia Kwacha was the main driver of the overall R36 million loss on translation Translation rates* (Average) 2013/14 2014/15 Change (%) Translation Profit Impact Zambia Kwacha / Rand 0.544 0.581 7% Malawi Kwacha / Rand 37.52 38.42 2% Tanzania Shilling / Rand 160.41 154.67 4% Mozambique Metical / Rand 3.01 2.89 4% Rand / US Dollar 10.12 11.06 9% * used to translate the Group s results 8
OPERATING PROFIT BY SEGMENT 2014 Business segment 9% 21% 70% Business segment 2013/14 R m 2014/15 R m Var R m Operating Profit 1 887 1 655 232 Sugar 1 320 1 180 140 Cane 389 207 182 Downstream & Co-gen 178 268 90 2015 Business segment 16% 13% 71% 2014 Geographic segment 30% 1% 14% 2% 14% 39% Geographic segment 2013/14 R m 2014/15 R m Var R m Operating Profit 1 887 1 655 232 Malawi 762 625 137 Mozambique 33 25 8 South Africa 266 215 51 Swaziland 257 69 188 Tanzania 11 145 134 Zambia 558 576 18 2015 Geographic segment 35% 9% 4% 13% 1% 38% 9
GROUP OPERATING PROFIT BRIDGE - Inflationary increases - Above inflation wage and electricity increases + Cost savings generated via Continuous Improvement initiative + Inflationary increases in domestic markets + Diversion of volumes from EU to the region - Low world & EU sugar prices - Weaker Euro - Production decrease of 70 596 tons + High underlying inflation (22%) - Domestic price increase below inflation due to weak consumer demand - Lower export realisations with declining EU price, weak Euro and the strong Kwacha - High underlying inflation (22%) - Increased off-crop maintenance 2 000 1 900 1 800 1 700 1 600 1 500 1 887 75 121 303 276 359 54 90 36 1 655 1 400 March 2014 Volume Price (excl. Malawi) Costs (excl Malawi) Malawi Price Malawi Costs Fair Value Movements Downstream & Co-generation Translation March 2015 R millions + Full season of Tanzanian Distillery operation + Rand weakness (export proceeds) + Additional power exports from Swaziland 10
NET DEBT RECONCILIATION R million 2014 2015 Opening net debt (1 873) (2 086) Operating cash flows 840 168 Cash operating profit 1 922 1 664 Working capital 105 (314) Inventory (41) (47) Receivables 119 (311) Payables 27 44 Net financing costs & dividend income (331) (353) Taxation paid (299) (253) Shareholder distributions (557) (576) Investment cash flows (705) (668) Expansion/opportunity capital (379) (333) Replacement capital (343) (366) Other movements 17 31 Other financing activities 1 184 Translation loss (349) (329) Closing net debt (2 086) (2 731) High sales in Zambia and Malawi in the last two weeks of the year Net Debt Balances (R million) (2 086) Gearing: 21.8% +31% (2 731) March 2014 March 2015 Packed sugar warehouse (Malawi) Nakambala refinery (Zambia) Sezela coal & energy (South Africa) Gearing: 26.2% Disposal of 5.1% interest in Zambia Sugar Plc 11
MARKET OVERVIEW & STRATEGIC RESPONSE Gavin Dalgleish Sources: The following market information has been compiled using data from the following sources: AB Sugar; Czarnikow; World Bank; LMC; FO Licht; Business Monitor International; GapMinder; World Bank; Index of African Governance; Food and Agricultural Organization of the United Nations; International Sugar Organisation; EU Commission; as well as internally generated information.
WORLD SUGAR MARKET World sugar prices have exhibited a significant decline over recent months Prices have been depressed by weak Brazilian Real, Indian subsidies, and low oil price High levels of global stocks will take some time to clear Economic fundamentals support an increase in the world price in the medium term Continued demand growth of 2% p.a. Various mill closures occurring and expected due to high debt levels Construction of new capacity is not viable at current price levels without significant subsidies 35 30 World sugar price (#11 c/b) Change in global sugar stocks (m tons) End Stocks (LHS) Production (RHS) Consumption (RHS) 85 180 80 170 25 75 160 20 15 70 65 60 150 140 130 10 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 55 120 13
EUROPEAN SUGAR MARKET EU prices have reached import parity, and in medium-term are expected to remain there European producers repositioning ahead of quota reform in September 2017 This will reduce the benefits that arise from the concessions made to least development countries in supplying the EU market 1.40 US$:Euro exchange rate /ton 800 700 European reported prices 1.30 600 500 1.20 400 300 1.10 1.00 200 100 0 14
STRATEGIC RESPONSE Development of key markets Reduce bulk exports to EU Wider region provides valuable alternatives Target higher margin segments Quality of product, packaging and supply differentiates us Cost reduction Continue to ensure global cost competitiveness Continuous Improvement programme a key enabler Increased downstream activities dilute fixed cost base Diversification through downstream expansion Introduction of non-crystal revenue improves robustness of returns and additional profit opportunities Meeting more of our customers needs via a wider product range Preparation for long-term expansion of sugar production Regional growth will continue ahead of global averages Experience as Africa s largest sugar producer, supported by strong balance sheet, makes us well positioned for brownfield and greenfield opportunities 15
REGIONAL MARKETS HAVE STRONG FUNDAMENTALS Historic and forecast sugar consumption in Africa GDP per capita growth (1.0% p.a.) Population growth (2.2% p.a.) 3.2% up to 2012 3.3% Market development Downstream expansion Cost reduction Long-term expansion Sugar surpluses and deficits across Africa 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Expenditure per Capita $100 $80 $60 $40 $20 Household expenditure in developing countries Sub-Saharan Africa 2013 average $1,150 Sub-Saharan Africa forecast for 2021 average $1,380 High-sugar processed foods * Sugar (direct consumption) $0 $0 $2 000 $4 000 $6 000 $8 000 $10 000 GDP per Capita * Combination of the following food categories: Confectionery, Chocolate & Ice Cream; Soft Drinks, Mineral Waters & Juices; and Other Bakery Products. 16
REGIONAL MARKETS ARE VALUABLE ALTERNATIVE TO EU Prices within regional markets expected to remain above world levels despite increasing levels of competition amongst regional producers High logistics costs across Africa provide ongoing advantage to local producers versus world supply Preferential access within Customs Areas and Trade Blocs of operation provide benefit where trade protection is effective Market development Downstream expansion Cost reduction Long-term expansion Regional Markets with Preferential Access Country with Illovo production Countries which share at least one Customs Area or Trade Bloc with Illovo s production countries Customs Area & Trade Blocs included: COMESA (Common Market for Eastern and Southern Africa) EAC (East African Community) SADC (Southern African Development Community) SACU (Southern African Customs Union) $800 $600 $400 $200 $0 Proportional Pricing of Markets Regional & Domestic EU bulk-ex mill March 2014 March 2015 17
DEVELOPMENT OF ACCESS TO REGIONAL MARKETS Illovo in strong position to supply the region Reliable quality and supply of sugar Effective distribution networks and relationships with major regional customers Actions taken to increase regional sales Restructured to reallocate resources in line with imperatives Brand and distribution network development Working with major customers in region to solidify position as strategic partner Advocacy to maintain preferential access Segment Mix Outlook Tons Market development Downstream expansion Mar-14 30% 58% 4% 8% Domestic sales Regional sales EU & USA specials and bagged EU/World Bulk raws bulk raws Mar-15 23% Cost reduction Long-term expansion 4% 2015 Sales Domestic Regional Specials EU/World Bulk 2021 Sales 10% 63% 18
FURTHER REDUCTIONS IN COST BASE ARE PLANNED Strong cost focus continues to ensure acceptable margins even during troughs of the sugar price cycle Our operations remain competitive on a global basis, although Brazil s competitiveness has improved due to weak Brazilian Real Our Continuous Improvement programme has been implemented across all operations, supporting specific projects such as Cost Deep Dive and Supply Chain Realignment Overall cost structure is regularly reviewed (e.g. decision to temporarily close Umzimkulu mill due to low cane volumes in South Africa) Market development Downstream expansion Cost reduction Long-term expansion Continuous Improvement Savings by Type 2015 2015 8% 14% Commercial and logistics 42% 23% 13% Sugar volumes Cane growing Operating costs Downstream Continuous Improvement Savings by Location 33% 6% 5% 10% 8% 3% 35% Malawi Mozambique South Africa Swaziland Tanzania Zambia Group Services 19
DOWNSTREAM OPERATIONS EXPECTED TO INCREASE Diversification of revenue stream continues across the group During the past year increases in downstream revenue achieved, in particular at Tanzanian distillery and Swaziland s co-generation Further opportunities being actively explored, including: Potable distillery in Zambia Furfural plant in Swaziland Market development Downstream expansion Cost reduction Long-term expansion Growth in Operating Profit from Downstream Downstream Operating Profit % of Total Operating Profit R m 16% 400 16% 300 11% 9% 9% 268 12% 200 178 147 5% 8% 100 93 99 4% 0 0% 2011 2012 2013 2014 2015 Performance of Tanzanian Distillery First full year of operation successfully completed Operating above original design capacity 12500 12000 11500 11000 10500 10000 2015 Business Case 20
RATIONALE FOR LONG-TERM EXPANSION REMAINS SOUND Long lead-time of expansion projects requires looking past short-term sugar market weakness Build on existing valuable operations to capture benefit from Africa s solid long-term fundamentals On-going effort to identify, evaluate and execute opportunities for greenfield development or acquisition of existing assets Countries of interest are evaluated on a range of criteria covering the political, legal, business, economic and sugar environments West Africa Attractive region for footprint expansion Market development Downstream expansion Sudan & Ethiopia Large production & project pipeline Cost reduction Long-term expansion East Africa Key deficit market battlegrounds 21
PROSPECTS Already challenging market conditions are expected to become more difficult in the year ahead Full year impact of Euro and Brazilian Real weakness on export proceeds still to be felt Lower production expected in South Africa from the continuing effect of drought and frost Progress on underlying strategic imperatives is expected to continue Further progress in shifting export sales away from the EU is expected Structural cost reduction programmes will continue to build on the good results achieved Zambian refinery expansion and product alignment project being implemented There is a reasonable degree of certainty that Headline Earnings per Share in 2016 will be between 25% to 45% below 2015 22
APPENDICES
GOVERNANCE Illovo is committed to achieving the highest standards of corporate governance and corporate citizenship by adhering to the codes of best practice and the principles of fairness, accountability, responsibility, transparency and integrity. Best Performer in High Environmental Impact category 2014 Sustainability Data Transparency Index 24
ADVOCACY Active advocacy efforts across the region: Convey key messages proactively to appropriate audiences with quality information Address the complex issue of sugar consumption, nutrition & obesity Encourage balanced tariff structures that legitimise sugar markets and support long-term investment and domestic growth. Ensure duties and import controls remain effective and continue to protect domestic markets against dumping of world sugars 25
COUNTRY OPERATING PROFIT BRIDGES 1 000 800 600 400 200 762 March 2014 276 110 354 Malawi # Mozambique # 100 36 14 Weak domestic demand, poor factory performance, low EU prices, weak Euro Volume Price Cost Fair Value Trans. 596 March 2015 80 60 40 20 0 35 March 2014 45 39 Higher yields, low-cost imported sugar in the domestic market, low EU prices 35 11 Volume Price Cost Fair Value 4 1 22 Co-gen Trans. March 2015 300 200 100 0 313 March 2014 169 59 132 # # South Africa Swaziland 300 35 2 6 225 98 150 268 225 55 21 15 75 Drought and frost affect yields, effective import tariff Volume Price Cost Fair Value D/strm March 2015 0 March 2014 Volume Price Cost Fair Value Lower EU prices, weaker Euro Co-gen 74 March 2015 Tanzania # Zambia # 160 5 800 76 194 36 38 120 5 600 117 11 10 60 80 Record production volumes, Improved factory performance, 146 400 76 570 increased regional sales, lower export 567 40 domestic market recovery, 200 prices, weaker Kwacha 0 21 full-year impact of distillery 0 March Volume Price Cost Fair D/strm Trans. March March Volume Price Cost Fair Trans. March 2014 Value 2015 2014 Value 2015 # Excludes the allocation of Group operations 26
CASH GENERATION AND PROFITABILITY Sustaining the strong conversion of operating profit into cash remains a key focus of the group 2013/14 R m 2014/15 R m Operating profit 1 887 1 655 Material items 24 3 Operating income 1 911 1 658 Add back: Depreciation & amortisation 314 343 Change in fair value of cane roots (198) (209) Change in fair value of growing cane (68) (111) Gain on disposal of assets & investments (8) (7) Insurance claim (19) - Amortisation of deferred income (10) (10) Cash operating profit 1 922 1 664 Cash conversion ratio 102% 101% 27
FINANCE COST ANALYSIS - Interest rate increases - Slower domestic and regional sales - Lower realisations from EU exports + Full year benefit of refinancing Zambia s external borrowings with internal funding - Higher utilisation of short term facilities due to lower export realisations and below inflationary domestic pricing - High interest rate environment - Decreased production and sales - Increased interest rates + Weaker Zambian kwacha + Stronger US dollar 480 440 46 3 5 2 89 R millions 400 360 320 24 61 32 280 240 336 356 200 March 2014 South Africa Malawi Zambia Swaziland Tanzania Mozambique Group Translation March 2015 28
FAIR VALUE MOVEMENTS Benefit of domestic & regional market growth, weaker Zambian Kwacha & higher molasses prices Growing cane 2013/14 R m 2014/15 R m Change R m Malawi 77 101 24 Mozambique (15) (4) 11 South Africa 4 7 3 Swaziland (6) (45) (39) Tanzania (16) (11) 5 Zambia 24 63 39 Total 68 111 43 Growing cane represents the estimated sucrose content valued at the estimated sucrose price for the 2015/16 season, adjusted for the cost of harvesting and transporting the cane to the mill Cane roots 2013/14 R m 2014/15 R m Change R m Malawi 141 153 12 Mozambique 19 19 - South Africa 16 15 (1) Swaziland 9 27 18 Tanzania 12 (3) (15) Zambia 1 (2) (3) Total 198 209 11 Cane roots represents the cost of replanting the area under cane in each year, escalated for the impact of inflation & adjusted for the expected remaining life of the roots 29
CAPITAL CASH FLOWS Capital expenditure on fixed assets, intangible assets & cane developments totals R699 million 200 180 160 161 Nchalo sugar warehouse & irrigation upgrades 187 Sezela coal & energy, Eston packing station, Illovo academy & Noodsberg syrup clarifier Product alignment, refinery expansion & distillery (pre-spend) Furfural development R million 140 120 100 80 60 40 20 0 73 88 33 5 28 100 87 52 16 36 Irrigation conversion to pivots 24 1 23 133 65 68 109 73 36 Malawi Mozambique South Africa Swaziland Tanzania Zambia Group Expansion/opportunity Replacement 30
GROUP PROJECT PIPELINE Appraise Select Define Execute Operate Joint Venture Nchalo irrigation upgrade Furfural development Nakambala product alignment & refinery Asset realignment (Eston) Nakambala outbound logistics Nakambala distillery Sezela coal & energy Eston packing station Asset realignment (Noodsberg) Ubombo energy efficiency Ubombo cane development (St Philips) Nchalo warehouse project Maragra speciality sugar (phase 1) Illovo academy Nchalo packed sugar Asset realignment (Sezela) Maragra speciality sugar (phase 2) Dwangwa regional refined sugar Ubombo cane development (St Phillips) 31
MALAWI Record sugar production at Dwangwa offset by poor factory performance at Nchalo 2012/13 2013/14 2014/15 Own Cane (tons) 2 102 002 1 984 382 1 948 232 Yield Own Cane (tons/hectare) 104.2 101.4 102.7 Sucrose Content Own Cane (%) 14.2 14.2 14.2 Crush Rate (tons cane per hour) 502 485 495 Capacity Utilisation (%) 83.2 76.7 79.5 Sugar Production (tons) 299 494 289 013 282 962 32
MALAWI Sugar Production ( 000 tons) Sugar Sales ( 000 tons) 289 0 (1) By market 2014 By market 2015 (5) 283 31% 1% 10% 58% 32% 1% 5% 62% 13/14 Cane Sucrose Recovery 14/15 Local EU Regional USA Operating Profit # (MWK billions) Margin 51% 33% 25% 33 Cane 29 Sugar 23 19 12 8 14 17 15 2013 2014 2015 # Excludes the allocation of Group costs Overview Demand for sugar in the domestic market declined as the low economic growth, strong Kwacha and high interest rates impacted affordability High levels of cost inflation and price increases below inflation erode margin Export price realisations were negatively impacted by the low EU price, the weak Euro and the strong Kwacha Regional sales volumes impacted by lower production and difficulties in customers obtaining import permits 33
MOZAMBIQUE Record production as yields recover from flood damage in prior season 2012/13 2013/14 2014/15 Own Cane (tons) 532 561 462 671 514 704 Yield Own Cane (tons/hectare) 90.7 80.4 85.8 Sucrose Content Own Cane (%) 13.8 13.8 13.9 Crush Rate (tons cane per hour) 194 215 198 Capacity Utilisation (%) 64.4 77.7 75.6 Sugar Production (tons) 84 546 81 966 92 260 Co-generation Production GWHrs generated (external) n/a n/a 2.1 34
MOZAMBIQUE Sugar Production Bridge ( 000 tons) Sugar Sales ( 000 tons) 0 (2) 92 By market 2014 By market 2015 82 12 61% 39% 54% 37% 2% 7% 13/14 Cane Sucrose Recovery 14/15 Local EU Regional USA Operating Profit # (MZN millions) Margin 21% 6% 4% 386 Cane Sugar 208 Co-gen 106 178 21 62 85 53 11-2 2013 2014 2015 # Excludes the allocation of Group operations Overview Cane yields recover allowing a normalised season length which increased production and sales volumes Pressure from low-cost imported sugar in the domestic market and low EU prices reduced average sugar pricing Sales mix improves as alternate markets to the EU are sought Costs increased in line with higher production and inflation Power exports to the national grid commenced 35
SOUTH AFRICA Record alcohol production, but drought conditions and frost reduce sugar and furfural production 2012/13 2013/14 2014/15 Own Cane (tons) 311 108 371 230 287 290 Yield Own Cane (tons/hectare) 71.0 71.8 54.4 Sucrose Content Own Cane (%) 13.6 14.0 14.5 Crush Rate (tons cane per hour) 1 049 1 170 1 069 Capacity Utilisation (%) 65.8 74.5 72.2 Sugar Production (tons) 595 711 698 341 585 688 Downstream production Furfural (tons) 17 593 19 695 16 956 Furfuryl alcohol (tons) 10 100 9 338 8 182 Alcohol (kl) 1 56 875 57 815 58 037 1. Restated to include alcohol produced by Glendale Distilling Company, an associate entity 36
SOUTH AFRICA Sugar Production ( 000 tons) Sugar Sales ( 000 tons) 698 By market 2014 By market 2015 (127) 16 (2) 586 30% 2% 1% 21% 1% 67% 78% 13/14 Cane Sucrose Recovery 14/15 Local World Regional USA Margin Cane Sugar Downstream Operating Profit # (R millions) 5% 7% 5% 313 19 222 225 35 147 5 67 113 74 2013 # Excludes the allocation of Group costs 147 2014 153 2015 Overview Drought and frost damage reduced production and sales volumes Effective tariff reduced world market imports, resulting in a recovery of the domestic market Cost saving initiatives by management lessen the impact of the drought Downstream profits supported by improved alcohol pricing and the benefit of weaker Rand on export earnings 37
SWAZILAND Adverse climatic conditions reduce both yields and cane quality 2012/13 2013/14 2014/15 Own Cane (tons) 861 307 780 115 755 567 Yield Own Cane (tons/hectare) 103.9 95.9 92.5 Sucrose Content Own Cane (%) 13.3 13.5 13.6 Crush Rate (tons cane per hour) 434 467 464 Capacity Utilisation (%) 68.5 78.5 76.7 Sugar Production (tons) 232 723 251 273 249 313 Co-generation Production GWHrs generated (external) 40.5 48.4 51.6 38
SWAZILAND Sugar Production Bridge ( 000 tons) Sugar Sales ( 000 tons) 0 By market 2014 By market 2015 251 5 (7) 249 48% 52% 38% 53% 5% 4% 13/14 Cane Sucrose Recovery 14/15 Local EU Regional USA Margin Operating Profit # (SZL millions) 13% 17% 5% 177 77 78 22 268 60 181 27 2013 2014 # Excludes the allocation of Group operations 74 96 42-64 2015 Cane Sugar Co-gen Overview Impact of poor cane quality on factory recoveries as well as lower yields reduced production and sales volumes Lower export price realisations following a decline in EU prices and weaker Euro Industry begins to diversify sales volumes away from EU markets Strong performance from co-generation resulted in record power exports to the national grid and fuel savings 39
TANZANIA Distillery operates for its first full season and improved sugar factory performance 2012/13 2013/14 2014/15 Own Cane (tons) 725 671 677 023 794 397 Yield Own Cane (tons/hectare) 78.3 83.7 87.9 Sucrose Content Own Cane (%) 12.2 12.1 11.5 Crush Rate (tons cane per hour) 253 255 249 Capacity Utilisation (%) 85.7 77.2 80.6 Sugar Production (tons) 129 737 116 495 125 513 Downstream Production Alcohol (kl) n/a 5 400 12 251 40
TANZANIA Sugar Production Bridge ( 000 tons) Sugar Sales ( 000 tons) By market 2014 By market 2015 15 (6) 1 126 13% 1% 116 86% 100 % 13/14 Cane Sucrose Recovery 14/15 Local EU Regional Margin Operating Profit # (TZS billions) 15% 2% 12% 20 25-5 19-17 2013 2014 # Excludes the allocation of Group operations 3 1 23 23 11-11 2015 Overview Improved factory performance and higher yields (better Cane climatic conditions) increased sugar production Sugar Advocacy initiatives resulted in government improving the Downstream control of illegal imports, increasing domestic sales volumes Increased pre-pack sales contributed to an improved margin Cost reduction initiatives by management offset majority of the inflationary increases Distillery exceeds first full-year investment case assumptions 41
ZAMBIA Record production as yields recover from turbo-alternator failure and flood damage in prior seasons 2012/13 2013/14 2014/15 Own Cane (tons) 1 942 435 1 863 300 1 964 633 Yield Own Cane (tons/hectare) 122.0 111.2 118.3 Sucrose Content Own Cane (%) 14.7 14.6 14.6 Crush Rate (tons cane per hour) 646 628 628 Capacity Utilisation (%) 85.1 87.7 87.1 Sugar Production (tons) 403 867 393 268 424 024 42
ZAMBIA Sugar Production ( 000 tons) Sugar Sales ( 000 tons) 1 (3) 424 By market 2014 By market 2015 393 33 34% 41% 22% 41% 25% 37% 13/14 Cane Sucrose Recovery 14/15 Local EU Regional Operating Profit # (ZMW millions) Margin 20% 17% 18% 309 310 330 Cane 78 69 74 Sugar 231 241 256 2013 2014 2015 # Excludes the allocation of Group operations Overview Record sugar production driven by the recovery in cane yields and favourable weather conditions. Favourable economic fundamentals in Zambia continue to drive growth in demand for sugar, increasing domestic market sales The business benefitted from improvements to the sales mix with sugar being redirected from EU into regional markets. The benefit of the weaker Kwacha improved export price realisations and standing cane valuation 43