ALTEO LIMITED AND ITS SUBSIDIARIES FOR THE QUARTER ENDED SEPTEMBER 30, 2022
Alteo delivered strong growth with consolidated* headline revenue increasing by 26% compared to the prior year in Q1, to reach Rs 3.6bn from both Mauritian and East African operations. This translated into an equivalent normalised EBITDA of Rs 1.6bn, representing a 30% improvement over the prior corresponding period. The consolidated profit after tax for the Group reached Rs 975m, a 42% increase over last year.
Collectively, these results have benefitted from better sugar prices, boosting the results of the Agro-business and East African sugar operations, and the delivery of the final plots of the Mont Piton 2 residential development project. Operating expenditure remained tightly controlled across all operations but continued to be impacted by the high costs of inputs and freight. Overall, these results showcase the Group’s ability to deliver robust improvements in performance despite ongoing market and consumer demand uncertainty.
*see group restructuring notes and updates
MAURITIUS – AGRO-BUSINESS
Sugar prices boost results across our agricultural and milling operations As part of Alteo’s rebranding exercise, the Mauritian sugar cluster has been renamed as Agro-business and now encompasses our sugar, agricultural diversification and milling operations. The cluster posted strong revenue growth to reach over Rs 1bn, compared to Rs 792m in September 2021, benefitting from a Rs 6k price increase per tonne of sugar. PAT saw an 18% increase to Rs 309m.
EAST AFRICA – SUGAR
Enhanced productivity and sugar prices drive up the bottom line across East African operations Tanzanian operations at TPC Ltd saw record output in cane tonnage crushed. Revenue edged slightly lower due to less imported sugar sold. The equivalent drop in cost of sales compensated for increased operating costs resulting in higher normalised EBITDA (up 15%) and profitability (up 13%) to Rs 764m and Rs 446m respectively. Kenyan operations crushed less cane due to workers being off during elections in July.
However, with higher prices achieved, revenue increased by 9% versus Q1 last year with normalised EBITDA of Rs 281m (a 79% increase) and profitability of Rs 99m compared to a small loss last year. These results demonstrate the sound progress to date and the future potential going forward.
Energy production remains steady with 44 GWh exported to the grid Energy export to the grid remained on par with last year with profitability marginally higher at Rs 30m versus Rs 28m.
Residential sales and recovering resort and golf operations improve performance The Property cluster saw a significant revenue increase to Rs 433m, up Rs 341m from the prior year, driven in large part by the delivery of the final plots from the Mont Piton 2 residential development project. Anahita Estates also saw higher sales of villas and land, resulting in an improved gross margin. The resumption of tourism activity drove up resort occupancy and golf rounds. As a result, the cluster saw profitability rise to Rs 92m including the flow-through impact of enhanced revenue from operations and Rs 20m of gains on disposal of bulk land sales.
The Group’s performance strongly validates the timing of its decision to restructure as it seeks to pivot and grow its local property and regional sugar businesses respectively. The concurrent highly successful delivery of 2 residential development projects over FY22 and Q1 of FY23 has proven the ability of the Group to successfully satisfy the demand for its value offerings across various consumer segments and price points. The upcoming Anahita Beau Champ smart city project to be launched towards the beginning of the next calendar year stands as a beacon for Alteo’s ambition to be the champion of sustainable and green development in the East.
A fresh brand and a focus on responsible development were recently unveiled and this will infuse renewed dynamism across all of Alteo’s clusters including the strengthening and further expansion of our Agro-business operations. In line with this target, successful negotiations were concluded in October with trade unions, securing stability for the coming years. In addition, the Group has held positive talks with the Central Electricity Board with a view to finalising its power purchase agreement over the next few weeks. For the remainder of the financial year, the pipeline of reservations for Anahita remains strong although there will be no further contribution from other residential sales as both Mont Piton 2 and Balnea 2 are now fully delivered. Within Agro-business, total cane harvest is expected to be lower this year. Progress in quarter 2 for the cluster is likely to be less impactful as the first quarter.
Our East African operations are expected to be listed separately towards the end of November as ‘Miwa Sugar’ on the Development and Enterprise Market (DEM). As a USD-denominated listing, Miwa Sugar will offer investors a strong exposure to emerging businesses in East Africa as it seeks to diversify its revenue streams and look for opportunities for inorganic growth across a region that is largely deficient in sugar.
GROUP RESTRUCTURING NOTES AND UPDATES
Financials: All East African operations that will be transferred to Miwa Sugar Limited (“Miwa Sugar”) and eventually spun off from Alteo Group have been classified as ‘discontinued operations’. Where headline figures include the combined results from both Mauritian and East African operations, they have been termed as ‘consolidated’ within these comments.
Progress updates: On 29th October 2021, the Board of Alteo Limited announced its decision to restructure Alteo Group into two distinct listed groups with the ambition to create an agile structure to further develop its regional cane footprint through Miwa Suga Ltd, whilst increasing the market visibility and value contribution of Alteo’s property development activities in Mauritius. A Court sanction has been sought and obtained on 17th October 2022. A timeline for completion of the restructuring was shared with the market and it is now expected that both groups will trade separately on the SEM around the end of November 2022. Further communiques will be issued to the market as the exercise progresses.
By Order of the Board
November 11, 2022
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