Backdrop Broad Framework Strategic Objective Challenges - Money Challenges - Manpower Challenges - Material Sugarcane Significant reduction in Crop Size Reduction in both Quality and Yield Sugarcane Farmers Reduction in Revenue Increasing Costs Shortage of manpower Harvest and Transportation Fundamental change in Harvesting Groups Reduction in Rail Transport Reliability Poor Cane Access Roads Vintage Cane Trucks Long “Cut to Crush” Period
Sugarcane Processing Unreliable Machineries Technology Revenue Stream Single revenue source (Raw Sugar) Supplementary revenue from Molasses, Seasonal Electricity Uncertainty of preferential access to EU Markets “External” fund source to continue in Business
Sugarcane Industry as against Sugar Industry Non-isolation of Industry components 3-prong approach to strategic Good Quality Cane Yield Efficient and Effective Processing Maximum Revenue through Multiple Products and Multiple Customers Commercial Viability – Reduced reliance on Government Funding. C A B Revenue from Increase in good Highly efficient multiple quality cane yield cane processing products/multiple buyers Become a $1 billion Industry by 2020 Gross Balance Sheet in excess of $750 million (Excluding Plantation) Debt / Equity ratio of 70 / 30 Annual Dividend of $80 to$100 million Strategic Investments Improvement to Raw Sugar Manufacture Refined Sugar and Specialized Sweeteners Cogeneration for electricity Ethanol from Molasses
Cash Strapped Organisation Difficulties in meeting Cash Outflows from Income Exposed to Foreign Currency Risks Very Highly leveraged Value-Driven Expenditure Processes Over-emphasis on cost and cost reduction Expenditure follows a Process and Not Expected Output. Insufficient Funds Reliance on “Top-up” Funding Consolidating our Debts 5 Year Bonds Fiji Government Loans Utilisation of EXIM Bank Drawing down Remaining Facility Possibility of Re-Draw down Potential for Further Borrowings Re-engineer Financials Foreign Exchange Management Natural Hedges Currency Hedging Payment Currencies Sugar Swaps Arbitrage through Selling High and Buying Low Increase Stockfeed Approach is “Your Difficulties are Our Difficulties” Quality Payment System Seed Cane Nurseries Enhanced Extension Services Increase Revenue Potential Refinery – New or Toll ($40 to $110m) Ethanol from Molasses ($25 to $50m) Electricity – Cogeneration ($50 to $90m) Technical Competency Ageing Experienced Staff Ageing Industry People Multiple Structures External Influences Technical Competency Up-skilling Extensive Industry-related Training Knowledge transfer – Tate and Lyle & Indian Coy VSI Training USP Management Training Replacement of Retirees Re-started Apprenticeship Training Encouraging Private Further Studies Lower Level Responsibilities and Accountabilities Reduce External Influence More direct Communication Channels
Hybrid Arrangement Old Inefficient Plant Mainly Imported Component High Value Stock Items Standardizing Processes (Benchmarking) Improvements in Interfacing 10-Year Asset Management Plan Staged replacement of Inefficient Plant Allocation of Investment Company-wide Partnership with Equipment Suppliers Suppliers to Hold Stock Frequent Stock Reviews
The Industry and in particular FSC unable to meet its debt commitments Strategic Objective based on Volume and Quality Cane Supply, Efficient and Effective Processing, Revenue Maximisation. Re-structure Company Financials so that FSC is able to meet its debt servicing and reduce Reliance on Government Funding Improve the skill base of our People through Industry related “Classroom” and “On the Job” based Training Staged Refurbishment as per the 10-Year Asset Management Plan
and Thank You