Tongaat Hulett in joint initiative to develop black maize farmers

(formerly The Tongaat-Hulett Group Limited)                                     
(Registration number 1892/000610/06)                                            
Share code: TON                                                                 
ISIN ZAE000096541                                               

TONGAAT HULETT: MEDIA RELEASE – TONGAAT HULETT IN JOINT INITIATIVE TO DEVELOP BLACK MAIZE FARMERS

Tongaat Hulett further enhanced its reputation in the area of Broad-Based Black Economic Empowerment with the launch today of the Ithuba Farming Project, an initiative in partnership with the Buhle Farmers’ Academy. The primary objective of the project is to increase the number of competent black commercial maize farmers in South Africa.      

CEO Peter Staude says, “As an agri-processing business we acknowledge that our organisation has a meaningful role to play in land reform and skills development in our areas of operation. Our medium scale farm program has to date, resulted in the transfer of 98 farms, comprising 11 871 hectares of land, to previously disadvantaged emerging farmers. Tongaat Hulett is one of the largest buyers of maize in South Africa and the Ithuba Farming Project presented us with an ideal opportunity to assist with the development of black maize farmers and thereby ensure that the pool of farmers supplying our mills increases.”      

Tongaat Hulett established a fully equipped farm at the Kliprivier Mill one of  its starch operating facilities. The company built residential accommodation and the Ithuba Farming Project commenced operations in late 2007. Ten trainee farmers have been involved in various aspects of commercial farming including the planning and budgeting phase, soil sampling, fertilizer recommendations,  soil preparation, planter and fertilizer calibration, spraying, weed control, mechanical operations, labour activities, record keeping, repairs and general management of the farm. The Ithuba student farmers were supervised on a weekly basis by Buhle staff and they were given the opportunity to practise their  newly acquired skills under careful supervision and mentoring in a trusted  environment.  

“The partnership between Tongaat Hulett and Buhle Farmers’ Academy is excellent because it links the skills of the new farmers provided by the Academy with commercial practise of these skills on Tongaat Hulett’s land. The students have now proved themselves capable of embarking on their own agricultural enterprises and they are ready to move onto land, negotiate production loans and farm competitively in their own right”, said Buhle Farmers’ Academy director Neil de Smidt.     

Peter Staude concludes, “Tongaat Hulett continues to engage with the Department of Land Affairs both regionally and nationally, seeking to build relationships as well as an understanding of the role that the company can play in assisting the land reform process. We are committed to the upliftment of skills in the areas in which we operate and we will continue to look for  opportunities to increase the contribution that we as an organisation are  making to the benefit of all South Africans.”    

About Tongaat Hulett  

Tongaat Hulett is an agri-processing business which includes the integrated components of land management, property development and agriculture. Through its sugar and starch operations in Southern Africa, Tongaat Hulett produces a range of refined carbohydrate products from sugar cane and maize. It has  considerable expertise in downstream agricultural products, bio-fuel production and electricity cogeneration. Competition for alternative land usages is increasing rapidly. Tongaat Hulett balances the operational  requirement for cane supplies to its sugar operations with the transition to  property development.      

The Financial Mail (FM) Top Empowerment Companies (2008) publication  acknowledged Tongaat Hulett as being one of only four companies, listed on the  main board of the Johannesburg Stock Exchange (JSE) that attained a Level  Three Contributor status. Tongaat Hulett was awarded the inaugural Alec Rogoff  Broad-Based Black Economic Empowerment Award, an initiative by the Durban  Chamber of Commerce and Industry, and National Empowerment Rating Agency KZN  (Pty) Ltd (NERA KZN) that seeks to recognize Broad Based Black Economic  Empowerment achievers in KwaZulu-Natal.  

Tongaat                                                                         
08 May 2008                                                                     

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INVESTEC BANK LIMITED                                                           

Date: 08/05/2008 13:45:02 Produced by the JSE SENS Department.                  

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Tongaat Hulett receives approval for its Umhlanga Ridgeside Development

Tongaat Hulett received confirmation that the eThekwini Municipality has approved the Development Framework Plan for Umhlanga Ridgeside. The 140 hectare development will be done in phases of innovatively combined commercial, residential and leisure developments.

CEO Peter Staude says, ” The approvals unlock significant opportunities to boost economic growth and job creation in the area. Umhlanga Ridgeside will facilitate development comprising 150 000 m² of commercial/mixed use space, 100 000 m² of offices and 3 000 residential units which is estimated to attract R8 to R10 billion in investment to the area, is expected to generate 65 000 construction-related jobs and 16 000 permanent jobs, as well as over R50 million per year in rates income.”

The eThekwini Municipality has proactively dealt with the overall Development and Infrastructure Framework Plan for the entire development, in order to ensure a fully sustainable development that does not overburden existing services and infrastructure.

“The Development Framework Plan for Ridgeside is a robust and sustainable framework that provides a basis for management of the entire site. It is a tool that ensures integration with the immediate surrounds as well as responds to the sub-regional context, commented Lekha Allopi, Manager: Land Use Management Systems, eThekwini Municipality.

“The location presents an opportunity that very few sites in the City do. From an economic perspective the mix of land uses will provide sustainable jobs and the site enjoys good linkage to the main transport routes. The site also reinforces the mixed and multi-use urban environment, at the same time still preserving residential amenity. The provision of public transport has been another significant turning point in this development and the principle of “new urbanism” will be further endorsed by the high level of pedestrianisation of the area,” she said.

Tongaat Hulett has a successful working relationship with the eThekwini Municipality and the two parties recently received the main Partnership award at the FNB KZN Top Business Portfolio Awards. The awards, which recognize organizations that ascribe to best practices and contribute to the province’s socio-economic growth, acknowledged the extremely successful Riverhorse Valley Business Estate, a joint venture between Tongaat Hulett and the eThekwini Municipality.

“We have worked closely with Tongaat Hulett over the past few years and this relationship has changed the landscape of many areas within our region for the better. We look forward to the development of Umhlanga Ridgeside that will bring with it a new quality environment for everyone to enjoy,” said City Manager Michael Sutcliffe.

“While sugarcane farming is an important agricultural sector, it seemed a pity that the most prized land in our city was used to grow sugarcane. We are grateful to Tongaat Hulett for their foresight in agreeing to develop this land for commercial and residential use, that can only lead to the betterment of our eThekwini region and its people.”

Location and Infrastructure
The development area has prime sea views and is bounded by the M41 highway, the M4 coastal provincial road, and Umhlanga Rocks Drive. “Tongaat Hulett’s comprehensive plans for infrastructure and access to Ridgeside, including road upgrades and the management of traffic and other bulk infrastructure impacts, were pivotal to the Record of Decision and subsequent rezoning,” said Staude.

“There are a number of milestones that we have committed to in order to commence work on each phase of the development. The initial development will be a mixed-use area adjacent to Umhlanga Rocks Drive and a commercial office area created alongside the M41.”

“The mixed-use area will encompass a 40 000m² Zenprop Design Quarter and a 10 000m² Mr Price concept store, as well as a number of new Hotel/Resort developments. R1.3 billion is being invested in an 80 000m² Resort, which will cater for thousands of visitors to the region each year. This is one of three hotels planned for the development, two of which are marked as five-star facilities, which would be an excellent opportunity for the upcoming 2010 Football World Cup. The commercial office area will feature a 100 000m² office park, which includes new regional head offices for several leading national companies.”

Peter Staude concludes, “Future phases comprise primarily residential units, and once complete will create a total of approximately 3 000 residential units throughout Ridgeside, ranging in price from R250 000 all the way to R4 million.

Infrastructure Upgrades and Environmental Aspects
Tongaat Hulett Development’s director, Michael Deighton, confirmed that “road upgrades will include the creation of new interchanges and access routes, as well as additional lanes, turning lanes and signalised intersections on existing roads, and these will be phased and managed so as to create a minimum of inconvenience to current road users. The first of these, scheduled for early 2008, will be an upgrade of a section of Umhlanga Rocks Drive, north of the Seaview Interchange (M41), and the construction of the new Ridgeside Drive. Water, electricity and sewerage infrastructure have similarly been planned and will be implemented, in conjunction with the Local Authority, on a phased basis”.

Ridgeside’s planning is closely aligned with a comprehensive environmental management programme. A 40-metre buffer zone has been set aside to protect the remaining coastal forest that borders the development area, and while there’s no question that this will be a bustling urban hub, designs also feature natural open spaces, parks, walking and cycling paths.

Living in Umhlanga Ridgeside
“In line with global best practices and the ‘New Urbanism’ principles which underpin Umhlanga Ridgeside’s design, the development will not only mix commercial and residential environments, it will also bring people together as part of a vibrant new community,” explains Deighton. “Umhlanga Ridgeside will be an energy-filled, cosmopolitan hub, with broad, tree-lined boulevards, well-maintained public spaces and natural conservation areas.”

A management association will be responsible for maintenance of public areas within the development, from parks to street furniture, and will also be responsible for security measures. Umhlanga Ridgeside is an open development and part of its attraction is that it is available to all, but that does not come at the expense of security, which is inherent in spatial planning. CCTV and security personnel will also monitor the entire area.

“Residential options will range from stand-alone units to four- to eight-storey apartment blocks, and from absolute luxury through to practical affordability, without compromising on quality,” Deighton concluded, “Just one more arena in which Ridgeside is creating significant opportunities for growth.”

About Tongaat Hulett
Tongaat Hulett is an agri-processing business which includes the integrated components of land management, property development and agriculture. Through its sugar and starch operations in Southern Africa, Tongaat Hulett produces a range of refined carbohydrate products from sugar cane and maize. It has considerable expertise in downstream agricultural products, bio-fuel production and electricity co-generation. Competition for alternative land usages is increasing rapidly. Tongaat Hulett balances the operational requirement for cane supplies to its sugar operations with the transition to property development. It is well positioned to benefit from the changing world of agriculture/agri-processing and the increasing demand for land.

Amanzimnyama, Tongaat
18 December 2007

Tongaat Hulett achieves high rating on broad based BEE scorecard

Tongaat Hulett confirmed its position as a top performer in the area of transformation when it was awarded a Level Three Contributor status in terms of the Broad-Based BEE Scorecard by an independent verification agency, National Empowerment Rating Agency KZN (NERA KZN). BEE partners and other invited guests were present at NERA’s official presentation of its certificate of recognition to Tongaat Hulett CEO Peter Staude.

The rating entitles Tongaat Hulett customers to recognise 110% of procurement spend through purchases made from the company. This award follows on the corporate restructuring transactions completed earlier in the year, which included the listing and unbundling of Hulett Aluminium (Hulamin) out of the Tongaat-Hulett Group, the creation of two separate, focussed listed entities – Tongaat Hulett and Hulamin and the introduction of 25% BEE equity participation in Tongaat Hulett.

CEO Peter Staude says, “Tongaat Hulett has always viewed Broad-Based BEE as an opportunity to make a positive contribution towards transformation in South Africa to the benefit of all our stakeholders. Confirmation of our status as a Level Three Contributor is a reflection of our progress in the areas of BEE equity participation, employment equity, preferential procurement, enterprise development, corporate social responsibility and training and development.”

Highlights of the NERA accreditation included:

• Confirmation that Tongaat Hulett had achieved a score of 21.63 points (including 2 bonus points) out of 20 for the ownership element of the scorecard.

• A score of 5 points out of 5 for the area of corporate social responsibility re-enforced Tongaat Hulett’s continued commitment to building and enhancing the quality of life of people, with an emphasis on previously disadvantaged communities within which the company operates.

• The area of enterprise development yielded a score of 13.73 points out of a possible 15 and reflected the activities that Tongaat Hulett has undertaken in order to assist with the development of black owned medium sized businesses. Tongaat Hulett’s Medium Scale Farm Program resulted in the transfer of 98 farms, comprising 11 871 hectares of land, to previously disadvantaged emerging farmers.

Linda Ngcobo, CEO of NERA KZN says, “Very few large companies have done as well as Tongaat Hulett in these early stages of BEE rating. This is an exceptional achievement, based on a challenging scorecard.”

Peter Staude concludes, “We are delighted by our 2007 accreditation and see it as an excellent foundation upon which to build for the future. Going forward, we will particularly focus on making further improvements to our employment equity profile with increased resources being directed at skills development.”

About Tongaat Hulett

Tongaat Hulett is an agri-processing business which includes the integrated components of land management, property development and agriculture. Through its sugar and starch operations in Southern Africa, Tongaat Hulett produces a range of refined carbohydrate products from sugar cane and maize. It has considerable expertise in downstream agricultural products, bio-fuel production and electricity co-generation. Competition for alternative land usages is increasing rapidly. Tongaat Hulett balances the operational requirement for cane supplies to its sugar operations with the transition to property development. It is well positioned to benefit from the changing world of agriculture/agri-processing and the increasing demand for land.

About NERA

NERA is a national concern that has positioned itself as a service provider in BEE verification and related areas. The organisation, which evaluates companies against DTI codes, as well as various sector charters, includes Shell, IBM, Old Mutual, Sanlam, Holcim and Santam among its prestigious client base.

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Amanzimnyama, Tongaat

5 December 2007

Interim Results for half-year ended 30 June 2007

• Profit from Tongaat Hulett operations of R308 million (2006: R307 million)
• Once-off corporate structuring costs of R354 million, mainly related to BEE equity participation
• Total net profit of R3,209 billion – includes valuation of Hulamin prior to unbundling
• Headline loss of R155 million (2006: R297 million headline profit), which includes the once-off corporate structuring costs and excludes the Hulamin valuation
• Interim dividend of 150 cents per share
  

COMMENTARY

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CEO Peter Staude said “After last year’s record earnings, these results are another step along a journey. Tongaat Hulett possesses the advantage of owning an unmatched mix of agri-processing and land assets which together with the ability to make things happen enables us to exploit a rapidly changing global agriculture, land, energy and trade environment. The profit from operations in the first half of 2007 was achieved in difficult conditions. We expect to deliver real growth in profit from operations for the full 2007 year.

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The Tongaat-Hulett Group has unbundled its shareholding in Hulamin to its shareholders following the listing of Hulamin on the JSE. Two focussed, separately listed entities have been established in the form of Tongaat Hulett and Hulamin. Tongaat Hulett is an agri-processing business, which includes integrated components of land management, property development and agriculture. Hulamin is an independent niche producer of rolled, extruded and other semi-fabricated aluminium products.

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Pursuant to the listing and unbundling of Hulamin at the end of June 2007, Tongaat Hulett’s 50% share in Hulamin was valued through the income statement by R3,348 billion and thereafter unbundled as a distribution in specie. Hulamin’s net profit (which does not include the investment fair valuation) for the period up to the unbundling is reflected as a discontinued operation.

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The corporate transactions being undertaken by Tongaat Hulett include a 25% BEE equity participation and a return of capital to shareholders by way of a share buy-back. All the transactions were approved by shareholders with a 99% vote in favour at a general meeting held on 11 June 2007, where 84% of shareholders were represented. The 18% strategic partner, cane and infrastructure BEE equity participation cost was measured and recognised at the grant date in June 2007, resulting in a once-off IFRS2 cost of R320 million being charged to the income statement. Advisory and other transaction related costs of R34 million have also been brought to account. The share buy-back, totalling R506 million including STC and implemented in July 2007, will be accounted for in the second half of 2007. The IFRS2 costs relating to the 7% BEE employee transaction will be amortised over 5 years, commencing in the second half of 2007 with a cost of approximately R15 million in that period.

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Net finance costs increased to R37 million (2006: R15 million income) as a result of higher interest rates and the non-recurrence of financial instrument income received in 2006 on the Hulamin finance structure.

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Profit from Tongaat Hulett operations in the first six months of the year was R308 million (2006: R307 million).

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Tongaat Hulett’s total net profit for the six months to 30 June 2007 is R3,209 billion (2006: R320 million). Headline earnings, which exclude the Hulamin fair valuation and include the transaction costs and BEE IFRS2 costs, reflect a headline loss of R155 million (2006: R297 million headline profit) for the half-year.

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Profit from sugar operations was R167 million (2006: R159 million excluding dividends from Triangle in Zimbabwe). The 2006 crop in South Africa was the second lowest in the past 10 years, with the resultant increased cost per ton of sugar and the lower export stocks carried forward into the first half of 2007. Raw sugar export volumes from South Africa reduced to 84 079 tons (2006: 162 301 tons) and were sold at an effective world sugar price of 14,4 US c/lb (2006: 11,1 US c/lb). South African domestic sales were 209 765 tons (2006: 209 311 tons). Improved contributions were achieved from non-South African operations including the consolidation of Xinavane in Mozambique. No dividends from Triangle in Zimbabwe were brought to account in the first half of 2007 (2006: R8 million). A dividend equivalent to 8 million US dollars has been declared by Triangle and approved by the Zimbabwe Reserve Bank, which is expected to be brought to account in the second half of 2007.

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Total sugar production in 2007 is forecast at 1,327 million tons, an increase of 24% compared to the 1,067 million tons produced in 2006. Production in South Africa is estimated at 704 000 tons (2006: 666 000 tons). In Swaziland, Tambankulu Estates is expected to produce the raw sugar equivalent of 54 000 tons (2006: 55 000 tons). In Zimbabwe, sugar production is expected to increase to 442 000 tons (including 201 000 tons at Hippo Valley) from the 240 000 tons produced by Triangle in 2006. In Mozambique, sugar production at Xinavane is expected to increase to 77 000 tons (2006: 65 000 tons) with Mafambisse increasing to 50 000 tons (2006: 41 000 tons). New cane expansion and procurement initiatives continue across all the regions. The Mozambique expansion projects at Xinavane and Mafambisse are progressing well.

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Profit from starch operations reduced to R37 million (2006: R43 million) as margins remained under pressure from high domestic maize prices. Poor weather conditions during the South African summer rainfall period resulted in local maize prices increasing to import parity levels. Improved local co-product selling prices partially reduced the impact of the increase in maize prices. Domestic sales volumes of starch based products grew by 6,7% with strong demand seen in the alcoholic beverages and confectionery sectors. Local maize prices are expected to remain at import parity levels for the remainder of 2007 given the current supply and demand balance. International maize prices have increased by 70% since the fourth quarter of 2006, driven by increased demand for biofuels. They are likely to remain at relatively high levels, supporting an increase in planting in South Africa for the 2007/2008 season. This should result in domestic maize prices moving below import parity levels. International starch margins have started to improve after coming under pressure during the latter part of 2006 and early 2007 as a result of the sharp increases in the international maize price.

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Profit from land and property developments of R127 million (2006: R117 million) was achieved from restricted levels of zoned stock. Progress is being made on securing development approvals at Umhlanga Ridgeside, Sibaya Resort at Umdloti, Zimbali Lakes, Assagay Valley residential area at Shongweni, further phases of Izinga and Umhlanga Ridge Town Centre residential precincts at Umhlanga Ridge. Significant contributions in the first half of 2007 came from RiverHorse Valley Business Estate, Bridge City, Umhlanga Ridge Town Centre, Zimbali Coastal Resort, Izinga Ridge and Kindlewood. Demand across all portfolios remains strong and the shortage of stock of zoned and serviced sites throughout the region, as a result of ongoing delays in obtaining development approvals, is contributing to higher prices.

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The Board has declared an interim dividend for the half-year of 150 cents per share (2006: 200 cents per share – which included Hulamin).

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OUTLOOK

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Headline earnings for 2007 will include the significant effects of the once-off costs of the corporate transactions, as reported for the half-year to 30 June 2007 and as indicated in the circular to shareholders dated 18 May 2007.

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Profit from Tongaat Hulett operations in the second half of the year is expected to exceed that achieved in the first half of 2007. Real growth in profit from operations is expected for the full 2007 year.”

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Peter Staude

Chief Executive Officer

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Amanzimnyama, Tongaat

30 July 2007

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Editors note

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The broad based BEE transactions involve the collective 25% equity participation in Tongaat Hulett by:

• Ayavuna Women’s Investments, as an anchor partner, combining with the Mphakathi Trust, which benefits the communities surrounding the Tongaat Hulett property developments;
• Sangena Investments, as an anchor partner, combining with the Masithuthukisane Trust, which benefits the small scale cane grower communities surrounding Tongaat Hulett’s four South African sugar mills; and
• All South African senior black management and all South African employees up to middle management.

Peter Staude said, “We are delighted to have concluded these BEE equity participation agreements and have already commenced a process to ensure their successful implementation.”

Launch of new name and single entity brand and BEE equity partnership records high rating on scorecard

The Tongaat-Hulett Group’s transformation from a conglomerate to an integrated agri-processing company culminated today with Tongaat Hulett launching its new logo and name. The launch coincided with a dinner to celebrate Tongaat Hulett’s partnership with Ayavuna Investments and Sangena Holdings, its broad based BEE anchor partners.

The Tongaat-Hulett Group is completing a corporate restructuring and is to be known as Tongaat Hulett as it moves forward. Tongaat Hulett is positioned as an agri-processing business which includes the integrated components of land management, property development and agriculture. Hulamin (Hulett Aluminium) is being listed on the JSE and unbundled from The Tongaat-Hulett Group. Two focussed, separately listed entities are thus being created. The corporate transactions include the simultaneous introduction of broad based BEE equity participation in both Hulamin and Tongaat Hulett.

CEO Peter Staude says, “Tongaat Hulett is now positioned to move forward as one company with one entity brand. This will result in a number of changes throughout Southern Africa. This includes African Products being renamed Tongaat Hulett Starch and Moreland Developments becoming known as Tongaat Hulett Developments.”

Tongaat Hulett, through its sugar and starch operations in Southern Africa, produces a range of refined carbohydrate products from sugar cane and maize. It has considerable expertise in downstream agricultural products, bio-fuel production and electricity co-generation. Tongaat Hulett is increasing its involvement in agriculture, in a world where agriculture in Africa will grow as a result of more equitable trade regimes and the emerging renewable energy landscape. Once the current expansion of its Mozambique operations is completed 21 411 hectares of cane will be farmed by Tongaat Hulett in that country alone. The new logo reflects an organisation that is dynamic, growing, results orientated, indigenous, innovative and sustainable and captures the essence of Tongaat Hulett going forward while still acknowledging the heritage of more than 150 years. This is illustrated by the retention of the name Tongaat Hulett and the colour green, which represents growth, innovation and change. The introduction of three new colours indicates a belief in the future of the organisation – red which reflects energy, passion, strength and dynamism, orange which embodies success, enthusiasm and prosperity and brown which symbolises stability, purpose and security.

Staude stated, “Tongaat Hulett has always viewed broad based BEE as essential and as an opportunity to become more closely aligned with the communities in which it operates. We are pleased with our progress in the areas of employment equity, preferential procurement, enterprise development, corporate social responsibility and training and development. The achievement of a 25% BEE equity participation fulfils an essential component of the BEE Codes of Good Practice and complements the existing components of the scorecard already achieved by Tongaat Hulett. The National Empowerment Rating Agency (NERA) has indicated that Tongaat Hulett will achieve a score of 22 points (including 2 bonus points) out of 20 for the ownership element of the scorecard.”

The broad based BEE transactions involve the collective 25% equity participation in Tongaat Hulett by:

• Ayavuna Women’s Investments, as an anchor partner, combining with the Mphakathi Trust, which benefits the communities surrounding the Tongaat Hulett property developments;
• Sangena Investments, as an anchor partner, combining with the Masithuthukisane Trust, which benefits the small scale cane grower communities surrounding Tongaat Hulett’s four South African sugar mills; and
• All South African senior black management and all South African employees up to middle management.

Staude says, “We are delighted to have concluded these BEE equity participation agreements and have already commenced a process to ensure their successful implementation.”

Bahle Sibisi, head of Sangena, says “This transaction represents a significant milestone for Sangena and its partners. For Sangena as an investment company, Tongaat Hulett represents an excellent investment proposition, offering great prospects for Sangena and its partners in the cane growing communities. It also provides Sangena and the cane growing communities with an opportunity to be involved in enhancing value in the sugar milling operations, and will contribute towards the development of the affected communities in the region.”

Hixonia Nyasulu, head of Ayavuna, says, “This deal speaks to Ayavuna’s passion for and vast experience in community development, tourism and infrastructure development. We are delighted to be in partnership with a company that shares that passion.”

Peter Staude concludes, “We know that we have broad based BEE partners who understand and fit well into our business. Our BEE partners are extremely relevant to the operations and their future success. The Tongaat Hulett board together with its BEE partners is of the view that its current investments in operations combined with the positive global environment will deliver attractive earnings growth. Through its current and future investments, the company is well positioned to capitalise on opportunities within agri-processing, agriculture, integrated land management and property development.”

Amanzimnyama, Tongaat

20 June 2007

Tongaat-Hulett group: Highlights, Salient Features and Results

HIGHLIGHTS, SALIENT FEATURES AND RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006;

• Headline earnings increased by 51% to R703 million (2005: R466 million)
• Operating profit increased by 40% to R1,02 billion (2005: R730 million)
• Annual dividend up 38% to 550 cents per share (2005: 400 cents per share)
• Unbundling and listing of Hulett Aluminium
• BEE equity participation in Tongaat-Hulett and Hulett Aluminium

Tongaat-Hulett Group CEO Peter Staude said “I am pleased to report another successful year, with an increase of 51% in headline earnings. The fundamental profit drivers for our operations remain soundly in place. We are pleased with the progress made in the unbundling and listing of Hulett Aluminium (Hulamin) and the introduction of broad based Black Economic Empowerment partners in both Tongaat-Hulett and Hulamin.”

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Fundamentals in place

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Staude says that the Tongaat-Hulett Group continues to follow a focused investment approach that has resulted in the implementation of projects that have provided attractive returns and generated earnings growth. The Group, as demonstrated in the rolled products expansion at Hulett Aluminium, has developed the competence and expertise to implement projects of a critical scale. The past investments in its operations have established a solid asset and business base, ensuring it is well placed to take advantage of an improving global environment.

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Tongaat-Hulett is well positioned to take advantage of being a low cost sugar producer with preferential market access and to benefit from the global drive to renewable energy through bio-fuels and electricity cogeneration. The imminent R1,3 billion expansion of the Mozambique operations and the recent completion of the Muda dam near Mafambisse are indicative of Tongaat-Hulett being poised to capitalise on growth opportunities. The recent acquisition of 50,35% of Hippo Valley Estates increases the ability to capitalise on the synergies with Triangle Sugar, particularly when the socio-economic environment in Zimbabwe improves.

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As an agri-processor in Southern Africa, the significance to Tongaat-Hulett of agriculture and land is increasing rapidly. Land management strategies have been implemented to ensure that land values and the synergies between sugar and maize processing operations and property development are optimised. Tongaat-Hulett has the expertise and competence to manage the dynamics of optimising cane supplies, while conditions favour sugar production, and to unlock substantial value from its land holdings when circumstances support property development. In line with a global escalation in coastal land values and the continued growth of the economy in the Durban to Richards Bay development corridor, there is ongoing demand and development pressure on Tongaat-Hulett’s land. The prime quality, location and value of Tongaat-Hulett’s land are widely acknowledged and Moreland has continued to capitalise on the strength of the property market and its development expertise in unlocking this value at an escalating pace.

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Alan Fourie, MD of Hulett Aluminium said “Hulamin continues to experience strong demand, particularly in the high value niche markets that it is targeting. It expects to continue growing its volumes which, coupled with further improvements in its product mix and operating costs, will enable it to continue the growth momentum in operating earnings.”

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Outlook – Creating shareholder value and introducing broad based Black Economic Empowerment

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Peter Staude explained that the Group, like many South African entities, was a diversified industrial business with interests in aluminium, building materials, consumer foods, cotton, edible oils, industrial and commercial catering, mushrooms, sugar and agricultural land development, starch and glucose, textiles and transport. Since the early nineties the Group has systematically divested from a number of these businesses and refocused its operations, leveraging the synergies that exist between its agri-processing operations and prime agricultural land holdings. Capitalising on the investments in its operations and a solid platform of earnings growth, a strategic review of the Group’s operations saw the announcement in 2006 of the proposed unbundling and listing of Hulett Aluminium to create two separately listed, focused entities.

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A detailed cautionary announcement was made on 14 December 2006, which provided the proposed transaction framework to further enhance shareholder value, leading towards the creation in 2007 of two separately listed, focused companies:

• Tongaat-Hulett, an agri-processing business which includes integrated components of land management, property development and agriculture; and
• Hulett Aluminium (Hulamin), an independent niche producer of aluminium rolled, extruded and other semi-fabricated and finished products.
  

This will be achieved by the listing of Hulamin on the JSE followed immediately by the unbundling of Hulamin by Tongaat-Hulett to its shareholders. It will be accompanied by the simultaneous introduction of broad based Black Economic Empowerment (BEE) equity participation in both Tongaat-Hulett and Hulamin. The capital structures of both businesses will be optimised, including facilitating the BEE equity participation, a R500 million share buy-back and retaining the balance sheet capacity to take advantage of growth opportunities.

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The unbundling and listing of Hulett Aluminium has created the opportunity for the introduction into Tongaat-Hulett of BEE equity partners representing disadvantaged communities surrounding its property developments and the small scale cane grower communities supplying the four South African sugar mills. Similarly, the BEE partners in Hulamin include broad based groupings, mainly representing the communities in Pietermaritzburg.

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These transactions will have a considerable impact on the headline earnings to be reported in 2007. Once the requisite agreements have been signed, the financial effects have been finalised and the date of unbundling and listing Hulamin established, a final announcement will be made and the circular and pre-listing documents posted to shareholders, which is anticipated to be in May 2007.

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The fundamental profit drivers remain in place in both Tongaat-Hulett and Hulamin. Profit from operations of both these entities is expected to grow in the year ahead.

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COMMENTARY ON 2006 ANNUAL RESULTS

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Headline earnings increased by 51% to R703 million in 2006, compared to R466 million in 2005. This increase was due to a 40% growth in operating profit to R1,02 billion (2005: R730 million), a reduction in finance costs and an improvement in the result from the Xinavane mill, in Mozambique, which is equity accounted as an associate.

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Sugar

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Tongaat-Hulett Sugar’s operating profit increased by 42% to R356 million (2005: R251 million), including dividends from Triangle Sugar in Zimbabwe. An increase in domestic and export realisations more than offset lower sales volumes. In South Africa, domestic sales were 469 264 tons (2005: 474 387 tons) with raw sugar export volumes at 316 104 tons (2005: 386 876 tons) as a consequence of lower production. The 2006 South African crop was the second lowest in 10 years, mainly due to adverse growing conditions impacting on cane yields and quality. This resulted in utilisation of only 72% of installed cane crushing capacity. The 2006 results include an effective world sugar price for exports of 12,8 US cents per pound at an average R6,56/US dollar (2005: 9,0 US cents per pound at R6,58/US dollar). The drive to reduce manufacturing and overhead costs is ongoing, as are additional cane procurement initiatives. Dividends of R61 million (2005: R19 million) were received from Triangle Sugar in Zimbabwe.

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Total sugar production in 2006 was 1,067 million tons, which was 8% below the 1,160 million tons produced in 2005. Production in South Africa was 666 000 tons (2005: 753 000 tons). In Swaziland, Tambankulu Estates produced the raw sugar equivalent of 55 000 tons (2005: 56 000 tons). Triangle’s sugar production increased 1,7% to 240 000 tons despite the difficulties of operating in Zimbabwe. In Mozambique sugar production at Xinavane increased to 65 000 tons (2005: 61 000 tons) while Mafambisse decreased to 41 000 tons (2005: 54 000 tons) due to extreme drought conditions placing pressure on irrigation.

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Property

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Moreland achieved operating profit of R325 million (2005: R231 million) which was an increase of 41%. Tongaat-Hulett’s prime land, the well-established property development platform and continuing solid market demand are being capitalised upon. Significant contributions were achieved from the commercial, industrial and resorts portfolios, including RiverHorse Valley Business Estate, Umhlanga Ridge Town Centre, the Marriott International 5-star Hotel site in the Umhlanga Triangle and Zimbali Coastal Resort. Development approvals have been secured for Izinga and Kindlewood residential developments. Other new phases and developments likely to be launched in 2007 include Zimbali Lakes, Sibaya at Umdloti, Umhlanga Triangle Ridgeside commercial precincts, Umhlanga Ridge Town Centre residential precincts, Bridge City, Kindlewood at Mt Edgecombe South and Shongweni.

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Starch and glucose

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African Products’ operating profit reduced to R96 million in 2006 (2005: R112 million) under difficult trading conditions. Starch and glucose selling prices were under pressure from imports and maize input costs were higher, resulting in depressed trading margins. Maize costs rose towards import parity levels as a result of the smaller 2005/6 crop. Sales volumes in the domestic market increased by 3,7% with growth in excess of 13,5% being achieved in value added spray dried glucose. Overhead cost increases were contained to levels below inflation for the third consecutive year, as the benefits of the organisational restructuring process were achieved. World starch and glucose markets saw significant changes in the last quarter of 2006 with international prices increasing by over 30% in certain instances driven by a 60% increase in world corn prices. The effect of these changes combined with a move in the South African 2006/7 season maize price towards export parity levels should benefit African Products during the second half of 2007. African Products has priced 35% of its maize requirements for 2007, following its back-to-back pricing model.

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Aluminium

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Hulett Aluminium grew its operating profit by 32% to R422 million (2005: R319 million), with the Group’s share being 50% thereof. Sales revenue exceeded R5 billion for the first time. Sales volume growth continued and record annual rolled products sales of 183 000 tons (2005: 173 000 tons) were achieved. Local market sales of both extrusions and rolled products grew firmly, with increases of 15% and 11% respectively. Strong sales into the distributor, automotive and transport sectors were achieved. The higher LME price of aluminium continued throughout 2006, resulting in reductions in rolling margins while benefits accrued from the metal price lag effect on cost of sales. Manufacturing costs increased due to sharp rises in metal and energy costs, and from spot purchases of LP Gas during the SAPREF supply disruptions, which also had a significant negative impact on volumes in 2006. Benefits are expected in 2007 from further volume growth, improved product mix and cost controlling actions. In October 2006, a R950 million rolled products expansion project was approved, to grow annual capacity to 250 000 tons and increase output of high margin products, including light gauge foil and heat-treated plate. Project contracts totalling R63 million have been concluded.

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Peter Staude

Chief Executive Officer

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Amanzimnyama, Tongaat

19 February 2007

Tongaat-Hulett Group to expand sugar production in Mozambique for the EU market

The Tongaat-Hulett Group (THG) has approved a R1,3 billion expansion of its sugar milling and cane growing activities at its Xinavane and Mafambisse sugar mills in Mozambique. This follows the announcement of a R950 million rolled aluminium products expansion in October 2006, the acquisition of a 50,35% stake in Hippo Valley Estates in Zimbabwe and THG’s announcement on 14 December 2006 providing details of its plans to unbundle and list Hulett Aluminium (Hulamin), the simultaneous introduction of broad based Black Economic Empowerment (BEE) equity participation in both Hulamin and TH and a return of capital of R500 million to THG shareholders by way of a share buy-back.

THG will change its name to Tongaat-Hulett (TH) and will be repositioned as a focussed agri-processing business, which includes the integrated components of land management, agriculture and property development activities.

Tongaat-Hulett CEO Peter Staude said, “The expansion of Xinavane and Mafambisse is directly aligned to a key element of TH’s strategy, namely of growing earnings through expansion of sugar production in low cost regions that have superior market realizations. A solid platform has been established in Mozambique over the past six years. We will use this base to expand low cost sugar production at our two factories from 115 000 tons in 2005 to over 270 000 tons at the time when the EU markets open up to LDC sugar producers. The EU delivered price will remain fixed from 2009 until 2015 at the equivalent of 19.6 US c/lb. Our targeted cash cost for producing sugar in Mozambique of some 8.5 US c/lb compares favourably with Brazil.”

“The R1,163 billion Xinavane expansion will see sugar production increasing from 61 000 tons in 2005 to 180 000 by the 2009 season. The mill infrastructure will be refurbished and/or upgraded, with new equipment being installed to increase the design crush rate from 150 to 380 tons cane per hour, achieving globally competitive economies of scale. Commissioning of the expanded factory will take place in April 2009. Cane growing activities will be expanded by the planting up in 2007 and 2008 of an additional 6 500 hectares under irrigated cane taking the annual cane crush from 509 000 tons in 2005 to 1,5 million tons. The additional sugar production of 119 000 tons will be sold partially in the domestic Mozambican market with the balance being exported into the European Union (EU) in terms of Mozambique’s duty and quota free access from 2009 under the Everything-But-Arms (EBA) initiative for Least Developed Countries (LDC) countries”, said Staude

“ The expansion will be funded by a combination of equity and debt financing from within Xinavane. Agreement has been reached with the Government of Mozambique in terms of which TH’s stake in Xinavane’s milling activities will rise from 49% to 88%. The expanded agricultural operations will remain 100% owned by TH”, he confirmed.

Staude indicated that “the Mafambisse expansion entails the planting of a further 2 100 hectares under cane. This cane will be irrigated from the recently constructed Muda dam near Mafambisse and will increase production at the mill to 82 000 tons per annum over the next two years.”

The two expansions will have a positive socio-economic impact on the region with the creation of 6 638 and 2 145 new jobs in Xinavane and Mafambisse respectively.

Plans are well advanced for a further 34 000 tons expansion at Mafambisse, which will result in total production rising to 116 000 tons per annum.

Total sugar production capacity across all of TH’s regional sugar businesses is expected to rise to some 1,9 million tons by 2009. TH’s total sugar production was 1,160 million tons in 2005.

The Xinavane project is subject to:

• A favourable outcome to the EIA process currently underway,
• South African Reserve Bank Approval.

25 January 2007;
Tongaat

Sponsor:;
Investec Bank Limited

Announcement regarding the proposed unbundling and listing on the JSE

Print or download the final terms of the proposed listing on the JSE Limited of Hulamin Limited (“Hulamin”) and unbundling of THG’s 50% interest in Hulamin.

• In A4 paper size ;;[14 pages – 113KB]

Tongaat-Hulett acquires Hippo Valley Estates

Tongaat-Hulett to extract the synergistic benefits available from the operations of two large world-class sugar enterprises in Zimbabwe

Tongaat-Hulett announced today that Triangle Sugar Corporation Limited (Triangle) had acquired Anglo American’s 50,35% stake in the Zimbabwe Stock Exchange listed Hippo Valley Estates Limited for US$ 36 million.

Peter Staude, the CEO of Tongaat-Hulett said, “We are delighted to have acquired a majority shareholding in Hippo Valley. It adds a new dimension to our asset base and strengthens our position as a leading sugar producer in SADC. Together with our expansion plans in Mozambique, Tongaat-Hulett is set for exciting times capitalising on our strong regional competitive positioning in the emerging world sugar dynamics. It is part of the strategy of investing in the business to create further value.”

“Tongaat-Hulett’s existing sugar business in Zimbabwe, Triangle, is capable of producing in excess of 300 000 tons of sugar per annum. The acquisition of Hippo Valley will almost double Tongaat-Hulett’s production in Zimbabwe and will lift Tongaat-Hulett’s overall regional sugar capacities by a further 300 000 tons to 1,5 million tons per annum. This acquisition provides the opportunity to extract the synergistic benefits available from the operations of these two large world-class sugar enterprises with the two sugar factories being only 30 kms apart and the cane estates practically side-by-side” Staude said. “The lowveld in Zimbabwe was recognised as the lowest cost producer in the region if not the world with the potential to move from its current annual sugar production capacity to one million tons. This acquisition takes us a step closer to realising this potential ” Staude indicated.

“World sugar markets are presenting exciting growth opportunities for Tongaat-Hulett. The already announced EU Sugar reforms, in particular the WTO ruling with regard to EU exports that will result in EU exports reducing from 5-7 million tons to a maximum of 1,4 million tons as from next year, the increasing use of sugar cane for ethanol production and the fact that the world sugar consumption growth rate is 2% per annum are all contributing factors” Staude said. “The next few years would offer major opportunities for further expansion of the company’s low cost production. We are already benefiting from the changing global sugar fundamentals,” he commented.

“The Zimbabwe lowveld has ideal sugar cane growing conditions, with excellent topography, climate and established water storage and conveyance infrastructures for irrigation. This results in some of the best sugar cane yields worldwide”, said Staude.

As a consequence of Tongaat-Hulett’s Zimbabwe operations not being consolidated into its financial results, the transaction will at this stage not have a significant impact on Tongaat-Hulett’s earnings.

As a reorganisation of Anglo American’s sugar interests in Zimbabwe, the acquisition will not trigger an offer to Hippo Valley’s minorities.

Issued by: Tongaat-Hulett
07 December 2006

NOTE TO EDITORS

The Tongaat-Hulett Group (“THG”) is separating into Tongaat-Hulett (“TH”) and Hulamin during the 2nd quarter of 2007. This follows the previous disposals of non-core businesses, investment in core businesses and actions to enhance earnings. The transactions will result in the unbundling by THG of its 50% interest in Hulett Aluminium to its shareholders and the listing of Hulamin on the JSE Limited (”JSE”) by its shareholders with Sustainable Black Economic Empowerment (“BEE”) equity transactions at both Hulamin and Tongaat-Hulett. As a consequence two separately listed and focused companies will emerge:

• Tongaat-Hulett will be an agri-processing business with significant integrated land management, agriculture and property development activities.
• Hulamin an independent aluminium rolled products and extrusion business;

Tongaat-Hulett has been adding value in refined carbohydrates and through agricultural raw materials for more than a century. Tongaat-Hulett produces almost half of the refined carbohydrates manufactured in South Africa. It has established considerable expertise in adding value to agricultural products, an area that requires specific knowledge and skills. Listed on the JSE with a market capitalisation of some R11 billion it employs 27 000 people.

Hulett-Aluminium to expand capacity for high value products

Tongaat-Hulett, Anglo American and the Industrial Development Corporation have given approval to proceed with a R950 million expansion project at Hulett Aluminium. This follows Tongaat-Hulett’s announcement earlier this year of its plans to unbundle and list Hulett Aluminium on the Johannesburg Stock Exchange, thereby establishing two attractive, focused investment vehicles and creating the opportunity for BEE shareholding in both entities. BEE shareholding is expected to be introduced at the level of 25% in Tongaat-Hulett and 15% in Hulett Aluminium when the unbundling and listing takes place in 2007.

Tongaat-Hulett CEO Peter Staude said, “The expansion of Hulett Aluminium reflects the confidence of its shareholders that further value can be unlocked from the current base. This investment follows the R2,4 billion (US dollar 550 million) Rolled Products Expansion Project that came on stream in November 2000. This enabled Hulett Aluminium to grow its Rolled Products annual sales volumes from a position of some 50 000 tons, exporting less than 10% of its capacity to 3 countries to one where in the month of August its annualised sales exceeded 200 000 tons. Hulett Aluminium now exports in excess of 70% of its output to more than 50 countries. The company has achieved recognition in establishing itself as a leading global producer of high margin, technologically demanding products, inter alia winning the overall State President’s Award for Export Achievement and the MTN/Business Day Technology Top 100 Award.”

“This project is another major milestone in the growth of our business,” says Alan Fourie, Managing Director of Hulett Aluminium. “The expansion of the Pietermaritzburg facility will increase rolled products capacity by 20% to 250 000 tons per annum. The project entails the installation of additional state of the art foil rolling and plate equipment, continuous casters and upgrades to existing rolling mills. The project focuses on further enhancing the product mix, where 58% of the capital will be spent. This will result in increased sales of high margin products, especially light gauge foil and heat treated plate. Hulett Aluminium expects to maintain its profitable growth from existing operations over the next two years, followed by the benefits of the project coming on stream in 2009. This will enable Hulett Aluminium to continue unlocking value by further enhancing sales mix, growing volumes and reducing unit costs.”

Issued by: Tongaat-Hulett
12 October 2006