Annual Report Harel Frère Ltd 2006 - Investing In Africa

25
managing director’s
review of operations (cont'd)
The group's sugar interests
In Mauritius, Harel Frères and its subsidiaries own some
3,809 ha of cane land in the factory area of Belle Vue,
situated in the North of the island. The harvested area in
2006 represented 3,284 ha, of which about 67% is fully
mechanized and 56% is under irrigation. The balance of
the harvested area consists of 6,655 ha belonging to some
4,322 independent planters, virtually all of whom cultivate
plots of less than 10 ha in size. The estimated insurable
sugar of the factory area amounts to 91,032 tonnes of
sugar, of which roughly 50% normally accrues to the group.
The group also holds an effective 63% stake in Belle Vue
Milling Co Ltd, which owns one of the largest and most
modern sugar mills in the country. The mill is presently the
largest producer of specialty sugars in Mauritius and imports
its energy needs from the adjacent power plant of Compagnie
Thermique de Belle Vue (CTBV), its sister company.
In Côte d'Ivoire, the Harel Frères group, through its wholly
owned offshore subsidiary, Ivoirel Ltée, owns 25.5% of
Sucrivoire S.A., which is one of the two sugar groups
operating in Côte d'Ivoire. The other shareholders are SIFCA,
an Ivorian group (29.5%) and the State of Côte d'Ivoire
(45%). The company is managed jointly by SIFCA and Harel
Frères Limited.
Owing to the pervasive political instability prevailing in
this country in 2004 and the resulting poor performance
of Sucrivoire, the directors deemed it prudent at that time
to fully provide against this investment. However, as more
amply described below, the company's financial situation
has significantly improved since. Consequently, the directors
have decided to conservatively value this investment at
MUR 6.9 M, which is equivalent to our share of the 2006
operational profits.
The 2006 crop
The 2006 crop was an above average one for the Belle
Vue factory area, with a sugar production representing a
9.6% increase on the previous year. Climatic conditions
were generally favourable for our region, abundant rainfall
being recorded during the vegetative period. This, combined
with high temperatures and the absence of cyclonic winds,
favoured cane growth which, at the start of the crop, was
longer than the normal mean height. Conditions were
however unfavourable for sucrose accumulation and
resulted in extraction rates which were lower initially, but
which fortunately improved subsequently.
The good crop was also a consequence of a further 1,000
hectares of cane land in our factory area being put under
irrigation as a result of the coming into operation of the
Midlands Dam, which provided enough water even during
the dry season.
On the negative side, we had to deplore an increase in
criminal fires of cane fields. It is estimated that in 2006,
some 25% of the factory area was burnt compared to
an average of 10%. This had a negative effect on the
processing of the juice by the mill and also slowed down
ratoon growth in non irrigated fields. It is also of concern
to note that the area harvested in 2006 decreased by some
207 hectares on the previous year.
Overall, group companies harvested some 273,690 tonnes
of cane, representing an 11% increase on last year. Mean
yields recorded were 83.3 tonnes cane per hectare and
9.28 tonnes sugar per hectare, compared to 74.0 and 8.07
respectively last year.
Transport efficiency was greatly improved in 2006 with
the use of larger capacity, self unloading trailers, and new
tractors and lorries. Our four harvesters performed well,
harvesting some 228,000 tonnes of cane, representing
69% of the total cane production managed by Harel Frères
Limited. A marked reduction in cane loss during mechanical
harvesting was noted and is attributable to closer
monitoring of the harvesters' performance.
As for the mill, it crushed 771,281 tonnes of canes without
any major problem. The crushing rate, at 309 TCH, was
slightly lower than that of last year, and the crop period
extended over 122 days.
Extraction rate was slightly higher than last year, reaching
10.83 for a sugar production of 83,505 tonnes @ 98.5 Pol,
which was the highest recorded on the island for the third
year in a row. Reduced Mill Extraction and Reduced Overall
Recovery were both better than last year, with 98.0 and
86.77% respectively. Fibre % Cane was 17.7, slightly higher
than last year.
Harel Frères Limited Annual Report ‘06