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Strong Zimbabwe operations bolster Tongaat earnings

22 Jul, 2021 - 00:07 0 Views
Strong Zimbabwe operations bolster Tongaat earnings

The Chronicle

Business Reporter
JOHANNESBURG Stock Exchange-listed, Tongaat Hulett, is looking forward to more dividend payments from its Zimbabwe-based operations, which have posted strong performance when compared to sister units in the region.

Chief executive officer, Mr Gavin Hudson, said this while presenting the company’s results for full-year to March 31, 2021.
During the just-ended financial year, the Zimbabwe-based operations, comprised Zimbabwe Stock Exchange listed entity Hippo Valley and unlisted Triangle Limited, were the only ones to declare a dividend.

Tongaat’s other operations are in South Africa, Mozambique and smaller ones in Namibia, Eswatini and Botswana.

“Pleasing progress has been made in securing dividends from Zimbabwe, with dividends of R323 million having been received in South Africa during the 2021 financial year,” Mr Hudson said.

In addition to the dividend, Tongaat got R45 million in form of a recently introduced Corporate Office support fee.

“Our Zimbabwean operations are significant and continue performing well despite ongoing hyperinflation effects.”

The Zimbabwean operations were a significant contributor to revenue accounting for 41 percent of the total R14,9 billion up one percentage point from 40 percent last year. The South African operations, however, contributed a slightly higher percentage of 42 percent.

In terms of profitability, the Zimbabwe operations were strong contributing 85 percent of the adjusted EBITDA of R2,5 billion.
Prior year comparative contribution was 76 percent.

The Zimbabwe operations were the biggest contributor to profit at 87 percent of R1,5 billion of the total R1,8 billion.
Sugar export volumes grew by 29 percent to 115 000 tonnes (2020: 89 000 tonnes), representing 26 percent of total sales volumes and supported by higher opening sugar stocks.

Though ethanol sales were down by five percent, ethanol production increased by 10 percent to 31 million litres, benefiting from increased molasses throughput imported from Mozambique and Zambia to maximise available capacity.

Other positives for the business pointed out by the parent company during the period under review, include “foreign currency reforms and the return to the multi-currency system in the local market have improved the operation’s ability to generate free funds to meet offshore obligations”.

The company got milling licences to 2040 for both sugar mills.

On the question of land ownership, good progress was made to secure 99-year leases for agricultural land, and the company was issued offer letters in line with the required legal and administrative processes, pending issuance of a 99-year lease for the properties.

“These positive actions from the Government provide further confidence and stability to the operations,” Tongaat said.

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