INTERNATIONAL LAUNCH OF SIBAYA MEGA PROPERTY

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014

• Revenue of R8,073 billion (2013: R7,854 billion) +2,8%
• Operating profit of R1,510 billion (2013: R1,381 billion) +9,3%
• Operating cash flow of R2,413 billion (2013: R2,402 billion) +0,5%
• Headline earnings of R773 million (2013: R663 million) +16,6%
• Interim dividend of 170 cents per share (2013: 150 cents per share) +13,3%

Commentary by Peter Staude, CEO of Tongaat Hulett:

The encouraging results for the half-year ended 30 September 2014 were achieved with various improvements in the sugar operations at a time when revenue is being negatively affected by lower international sugar prices. The starch operations delivered a strong performance. Land conversion and development activities continue to unlock substantial value, albeit with operating profit recognised in this half-year being below that reported in the same period last year. Overall, revenue increased by 3% to more than R8 billion and operating profit reflected a 9% increase to exceed R1,5 billion.

The starch operation increased operating profit to R264 million (2013: R232 million). Domestic sales volumes grew 5%, with increases in the coffee/creamer, confectionary and paper making sectors. Starch and glucose processing margins were in line with the prior year as the operation continued to benefit from competitive local maize costs and good co-product recoveries. Improved operational efficiencies and a focus on costs have remained key drivers.

Operating profit from the various sugar operations totalled R864 million (2013: R684 million). As expected, there has been less of an impact of lower cane valuations at this half-year compared to last year. Operating profit before cane valuations was at a similar level to that of the same period last year. Total sugar revenue increased by 3%, while sugar production is below last year – a year in which there was a substantial increase. Sugar producers worldwide that are exposed to the current low world price are under pressure when one considers the substantial input cost increases over the past decade. The various protection measures implemented in each country of operation to improve local market sales volumes are starting to produce some benefits. The business experienced the impact on revenue of lower international prices, particularly for exports into the European Union (EU). At the same time, there has been a continued drive to reduce the costs of sugar production across all the operations, retaining the substantial reductions achieved in the 2013/14 year, including off-crop expenditure, while having to absorb input price increases.

The South African sugar operations, including the agriculture, milling, refining and various downstream activities recorded operating profit of R259 million (2013: R248 million). These operations, which grew sugar production substantially last year to 634 000 tons, are expecting sugar production this season to be between 525 000 tons and 595 000 tons due to low rainfall in KwaZulu-Natal (KZN). Production for the season is still expected to be well above the level of two seasons prior. The impact of the dry conditions has been partially mitigated by 11 554 hectares of new cane developments that are being harvested for the first time this year. The overall increase in the reference price used in the import duty calculation, to protect the local market against unfair import competition, has had a limited impact over the last six months. Local market sales were depressed by an estimated 120 000 tons of sugar that were imported before the adjustment to the reference price in April 2014. The two week industry-wide strike impacted on export sales volumes in the first half of the year. All the available cane is expected to be milled by the end of the season.

The Zimbabwe sugar operations’ operating profit for the half-year amounted to R344 million (US$32 million) compared to the R232 million (US$23 million) in the same period last year. This period has seen higher sales volumes, mainly due to improved local market protection (tariffs and import licences) implemented in April 2014. Export prices into the EU are lower than those earned last year. The negative effect of cane valuations at the half-year was lower than that experienced last year. The movement in the Rand/US dollar exchange rate impacted positively on the conversion of US dollar profits into Rands on consolidation. The Zimbabwe sugar operations are expecting a decrease in sugar production to between 440 000 tons and 475 000 tons for the full year (prior year: 488 000 tons) mainly as a consequence of no cane being diverted from the independent ethanol plant at Chisumbanje (39 000 tons sugar equivalent in the prior year) and after experiencing the impact of low dam levels for irrigation at the end of 2013, which only recovered in early 2014.

The Mozambique sugar operations grew operating profit to R226 million (2013: R151 million). An increase in sugar production is expected for the full year to between 265 000 tons and 280 000 tons (prior year: 249 000 tons). In the half-year, sales volumes increased by 5% while average selling prices have remained constant year on year, with improved local market prices and reductions in export prices to the EU. The movement in the Rand/Metical exchange rate had a positive impact on the consolidation of the Mozambique profits into Rands. The negative effect of cane valuations at the half-year was lower than that experienced last year.

The Swaziland sugar operations reported operating profit of R35 million (2013: R53 million) as a result of the lower sucrose price as a consequence of a reduction in export prices into the EU.

Land conversion and development activities generated operating profit of R435 million (2013: R512 million) from the sale of 49 developable hectares. Sales came largely from Cornubia (industrial, business and retail) with an average profit of R9,0 million per developable hectare. Sales in Izinga/Kindlewood averaged profit of R6,7 million per developable hectare and Umhlanga Ridge Town Centre averaged R29,4 million per developable hectare.

The centrally accounted and consolidation items amounted to R42 million (2013: R37 million). Finance costs amounted to R297 million (2013: R298 million) and were commensurate with the lower borrowing levels and higher interest rates.

Operating cash flow generated was R2,4 billion for the six months. Cash flow from operations after working capital was R576 million, an improvement of some R250 million compared to the same period last year. The cash absorbed in working capital was some R1,8 billion (2013: R2,1 billion) at the half-year, being the middle of the sugar season when sugar stocks and debtor levels are usually higher than at the end of the year. Net debt at the end of September has reduced to R4,9 billion (2013: R5,4 billion).

Headline earnings for the half-year grew by 17% to R773 million (2013: R663 million). An interim dividend of 170 cents per share has been declared (2013: 150 cents per share).

OUTLOOK

The momentum in unlocking value from land conversion and development continues, with 8 150 developable hectares ultimately earmarked for development. Over the next 5 years, sales are expected to come primarily out of 3 661 developable hectares prioritised in key focus areas comprising the urban expansion north of Durban in the Umhlanga and Cornubia areas, coastal lifestyle areas of Zimbali and Sibaya, business and residential development around the airport, coastal development north of Ballito in Tinley Manor and in the Ntshongweni area west of Durban. An increasingly larger area is benefitting from planning activities and infrastructural investment at key points. Tongaat Hulett continues to work together with Government, related organisations and key stakeholders in the property industry to capture the synergy of each other’s unique capabilities and to maximise the value for all stakeholders that can be derived from the region. Global markets will be further assessed through the international launch of Sibaya during the second half of the 2014/15 year. The development of urban residential areas for lower income earners is being accelerated. The potential sale of 42 developable hectares of the prime land in Ridgeside is progressing well. Further sales in the second half of the 2014/15 year are likely to come from Cornubia, Izinga/Kindlewood, Umhlanga Ridge Town Centre and possibly from Sibaya, Compensation and land adjacent to the airport.

The starch operations are well positioned to continue to perform strongly, with sales volume growth underpinned by improved capacity utilisation, enhanced product mix and customer growth prospects into Africa. The business will benefit from the recent large maize crop harvested in South Africa.

Sugar prices remain under pressure with the current low world price. In South Africa, Zimbabwe and Mozambique there is an increasing understanding, up to senior Government levels, of the importance to better protect local markets (especially to secure rural jobs) against imports from other surplus sugar producing countries, confirmed by the upcoming reforms to the EU sugar market. Better import protection would lead to lower exports.

The likely dynamics in the EU market beyond the October 2017 reforms remain uncertain. The average sugar prices earned by the business in 2014/15 for exports into the EU market are expected to be some Euro 25 per ton below those earned in 2013/14, during which year there was a reduction of Euro 155 per ton in the prices achieved.

Tongaat Hulett’s sugar production is targeted to grow by some 400 000 tons over the next 4 years. Agricultural improvement programs are now well entrenched and these programs, together with better weather conditions, should lead to higher cane yields and higher sucrose content in the cane, with the marginal cost of this sugar production being some 30% of the current low world sugar price. In South Africa, a 12 000 hectare project for cane development and job creation in rural KZN is an integral part of the growth and development of cane farming in Tongaat Hulett’s cane supply areas. The financing of this project includes a Jobs Fund grant for R150 million allocated over some three years, with the first R40 million already received.

Encouraging progress is being made towards establishing regulatory frameworks to turn a portion of South Africa’s export sugar into ethanol and to generate more electricity from the fibre component of sugar cane.

Further substantial reductions in the cost of sugar production are targeted for 2015/16, after the consolidation in the current season, which follows the reductions in cost per ton achieved in 2013/14 of 14% in Mozambique, 16% in South Africa and 23% in Zimbabwe.

Tongaat Hulett continues to focus on value creation for all stakeholders through an all-inclusive approach to growth and development. In KZN there are established collaborations with Provincial and Local authorities in the inextricably linked areas of sugar and cane activities (the planting of 24 979 hectares in the previous three years has created some 6 250 direct jobs in rural areas), the development of urban areas (including Cornubia) and maximising the future benefit of renewable energy. In Zimbabwe, Tongaat Hulett, the Government and Local communities are working together on socio-economic initiatives in the south-eastern Lowveld region of the country. One of the key focus areas remains the on-going orderly development of sustainable private sugar cane farmers and at the end of the 2013/14 season, some 813 active indigenous private farmers, farming some 14 000 hectares, employing more than 6 700 people, generated US$58 million in annual revenue. In Mozambique, an estimated 381 000 tons of cane will be delivered from 4 170 hectares in the 2014/15 season, supporting 1 898 indigenous private farmers.

The business is in a good position to benefit from multiple actions across all of its well-grounded strategic thrusts, with its footprint in six SADC countries, its ability to process both sugar cane and maize, electricity generation and ethanol opportunities and increased momentum in land conversion.

Profits and cash flows for the full year are expected to reflect further growth over the 2013/14 year.

Peter Staude
Chief Executive Officer

About Tongaat Hulett
Tongaat Hulett is an agriculture and agri-processing business, focusing on the complementary feedstocks of sugarcane and maize. Its ongoing activities in agriculture have resulted in the company having a substantial land portfolio. Tongaat Hulett’s unique skill and competence in the conversion of agricultural land to development, is a key driver of the fundamental shift in the pace and value unlock from the company’s land conversion activities and property portfolio. Through its sugar and starch operations, Tongaat Hulett produces a range of refined carbohydrate products from sugarcane and maize, with a number of products being interchangeable. Global sweetener markets continue to be dynamic and the business seeks to optimise its various market positions, leveraging off its current base to maximise revenue from these products. The business’s sugar operations are well placed to benefit from evolving dynamics of renewable electricity and ethanol in South Africa, and the Southern African Development Community (SADC) region.

Amanzimnyama
Tongaat, KwaZulu-Natal

10 November 2014

ENDS 

Issued by: Tongaat Hulett
Michelle Jean-Louis
IR and Communication Executive
Telephone: 083 386 3846

TONGAAT HULETT – SOUTH AFRICAN SUGAR OPERATIONS

Rainfallin the South African cane catchment areas has been well below the long-termmean and this topic has received substantial coverage over the past few months.

Giventhe lower rainfall during the season, it is projected that sugar production, bythe Tongaat Hulett South African sugar operations will be below that of the2013/14 year of 634 000 tons, which was a very good sugar production year. The latest estimate shows a drop in sugarproduction ranging between 5 and 17 percent compared to last year’s sugar production.Tongaat Hulett’s 4 South African sugar mills will commence the annual off-cropshut down at the end of the normal milling season.

Thepoor rainfall season, has been mitigated by an additional 11 554 hectaresof newly planted cane which has been harvested for the first time thisyear. While there is a drop in sugarproduction this is still well above the two seasons prior to 2013/14 when sugarproduction levels were 486 000tons.

Therainy season has commenced and good summer rains, accompanied by normalsunshine levels will contribute to yields returning to normal levels for the2015/16 season. The business will benefit from a further 4 738 hectares ofnewly planted cane which will be harvested for the first time.

TheSouth African Sugar industry’s 2014/15 season estimate (in August 2014) oftotal sugar production is 2,222 million tons compared to 2,344 million tons inthe 2013/14 season, a 5 percent drop off in production. Further updates will be madeby the industry in due course. The drop in production will result in reducedexposure of the industry to the World market.

Measuresto protect the local market against unfair import competition remain importantand the overall increase in the reference price used in the import dutycalculation over the last 6 months has been beneficial.

Thefocus in Tongaat Hulett on achieving substantial cost reductions has continued.

Amanzimnyama
Tongaat, KwaZulu-Natal

10 October 2014
ENDS

Issued by: Tongaat Hulett
Michelle Jean-Louis
Communications Executive
Telephone: 032 4394101

AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2014

• Revenue of R15,716 billion (2013: R14,373 billion) +9
• Operating profit of R2,374 billion (2013: R2,131 billion) +11
• Operating cash flow of R2,934 billion (2013: R2,182 billion) +34
• Headline earnings of R1,106 billion (2013: R1,067 billion) +4
• Headline earnings of R1,106 billion (2013: R1,067 billion) +4

Commentary by Peter Staude, CEO of Tongaat Hulett:

The results for the year ended 31 March 2014 were achieved with significantly increased momentum and value in land conversion and development activities, together with a strong performance from the starch operations, at the same time as the sugar operations’ profit being negatively affected by severe market dynamics impacting revenue and cane valuations, partially off-set by substantial cost reductions and volume growth.

The starch operation grew operating profit to R482 million (2013: R388 million). Starch and glucose processing margins benefitted from local maize that was competitive with international prices, favourable exchange rates and good co-product realisations. Total sales volumes grew by 4 , driven by increased exports and growth in the coffee/creamer sectors which offset declines in other local sectors.

Land conversion activities generated operating profit of R1,080 billion from sales of 259 developable hectares, with a further 8 200 developable hectares still available and earmarked for development. In the past year, 63 developable hectares were sold at an average profit of some R7,6 million per developable hectare in the Umhlanga Ridgeside, Izinga/Kindlewood, Cornubia Industrial and Business areas, as well as a site for a major retail facility that links Cornubia to Umhlanga Ridge. The sale of an entire precinct of 6 developable hectares to a single developer in Umhlanga Ridge Town Centre was concluded that will yield some 1 500 affordable rental homes over time and represented profit of R24 million per developable hectare. Tongaat Hulett continues to work together with Government and related organisations to capture the synergy of each other’s unique capabilities and to maximise the value for all stakeholders that can be derived from the region between Durban and Ballito. The past year has seen two transactions for the sale of 190 developable hectares to Dube TradePort that, while not yet shovel ready, adjoins the international airport and is of strategic importance to the KZN Provincial Government’s medium term growth plans.

Operating profit from the various sugar operations totalled R908 million (2013: R1,4 billion). The world sugar price has been at its lowest level in many years. In the regional markets, substantial local market sales were lost to imports as a result of inadequate protection during this period of world surplus, leading to increased export volumes. Exports from Zimbabwe and Mozambique to the EU averaged some 8 US cents per pound lower than the levels in the last two years. Overall, revenue earned and cane valuations were negatively impacted by some R1,5 billion compared to last year, with the cane valuation charge in the income statement being a non-cash item. The sugar operations’ total operating profit before the impact of cane valuations was R1,061 billion compared to R962 million in the prior year, as the negative impact on revenue of pricing and the mix of local/export sales was more than offset by the benefit of volume growth and cost savings, together with favourable exchange rates.

Tongaat Hulett’s total sugar production grew by 170 000 tons to 1,424 million tons, compared to the low point of 1,006 million tons in 2010/11. South Africa produced 634 000 tons (2013: 486 000 tons), Mozambique 249 000 tons (2013: 235 000 tons), Swaziland 53 000 tons of raw sugar equivalent (2013: 58 000 tons) and Zimbabwe produced 488 000 tons of sugar (2013: 475 000 tons).

The past year has seen considerable increases in wage rates, particularly at the lower levels where the majority of man hours are worked, as well as price increases for bought-in goods and services. Notwithstanding this, significant success has been achieved to reduce the cost of sugar production in respect of goods, services, transport, marketing, salaries and wages. The unit cost of production in South Africa reflected the benefit of volume growth with limited cost increases.

In Zimbabwe, revenue in US dollars was 25 lower than the prior year, as a result of lower local market sales (mainly due to substantially increased imports in the market) with the resultant additional lower priced exports. Cane valuations were impacted by lower prices and the effect of curtailed root replanting as a consequence of the water dynamics during the year – reflecting a US$33 million negative change in the income statement compared to last year. The dams have now recovered, following good rains, to the extent that new root replanting has now resumed. The cost of bought-in goods and services, salaries and wages was US$40 million lower than the prior year. The operating profit from the Zimbabwe sugar operations amounted to US$33 million (R330 million) compared to the last year of US$74 million (R625 million).

Mozambique experienced the same dynamics, with an 11 reduction in Metical (Mt) revenue mainly as a result of lower export prices. There was also a negative cane valuation impact in the income statement – amounting to a change of Mt676 million (equivalent of R229 million) compared to last year. The cost of goods and services, salaries and wages was lower than the prior year by an amount of Mt267 million, which was the Rand equivalent of R91 million. Taking all these factors into account, operating profit from the Mozambique sugar operations reduced to R168 million (2013: R421 million).

The South African sugar operations, including the agriculture, milling, refining and various downstream activities recorded operating profit of R340 million (2013: R308 million). The benefit of substantial growth in sugar production was partially offset by the pressure on revenue of lower local market volumes and net prices as a result of import competition, lower export prices and the reduced benefit of cane valuations compared to the prior year. The 30 volume growth was achieved with the total increase in the cost of goods, services, transport, marketing, salaries and wages being limited to 10 .

The Swaziland sugar cane growing operations reported operating profit of R70 million (2013: R76 million).

The centrally accounted and consolidation items together with lower BEE IFRS 2 charges amounted to R97 million (2013: R53 million). A pension fund recognition benefit in the prior year was not repeated in the current year. Finance costs amounted to R609 million (2013: R560 million) and were commensurate with the borrowing levels earlier in the year.

Operating cash flow improved by R750 million to R2,93 billion (2013: R2,18 billion) before working capital. Operating cash flow exceeded operating profit as the latter includes the non-cash reduction in the fair value of sugar cane. The higher working capital cash absorption in the current period is particularly as a consequence of higher sugar stock levels at year-end in Zimbabwe and increased debtor levels in the South African developments operation following the higher level of land sales. Net cash flow for the year, after dividends, was a positive R300 million, a R480 million improvement over last year. Net debt at the end of the year was R4,32 billion which is lower than the last two years (2013: R4,64 billion and 2012: R4,40 billion).

Total net profit before the deduction of minority interests was R1,227 billion (2013: R1,179 billion) and headline earnings attributable to Tongaat Hulett shareholders amounted to R1,106 billion compared to R1,067 billion last year. A final dividend of 210 cents per share has been declared, bringing the annual dividend to 360 cents per share (2013: 340 cents per share).

OUTLOOK

Earnings are expected to increase in the full year ahead, driven by continuing growth in operating profit and cash flow.

Sugar prices are expected to stabilise, at least. Better import protection should lead to lower exports being necessary. The value of standing cane has undergone a write-down in the 2013/14 year, to reflect the current low sugar prices. As yields increase and the hectares under cane grow, a cane valuation gain would be expected.

The sustainable cost reductions of the past year provide a good base for the next steps in the ongoing cost reduction process and unit costs of sugar production will also continue to benefit from further growth in volumes and better yields, as milling costs and many of the agricultural costs per hectare are mostly fixed.

Tongaat Hulett is in the fortunate position of having more than 700 000 tons per annum of existing unutilised sugar milling capacity (a R13 billion replacement value) and increasingly good electricity and ethanol prospects. The incremental / marginal profit from each extra ton of sugar is attractive. Sugar production is expected to increase from 1,424 million tons in the past year to more than 1,800 million tons over the next four years, with the focus on increasing cane supplies continuing.

A period of unsustainably low international prices has been experienced following two seasons of exceptionally good weather conditions for sugar cane growing globally, high stock levels and low Government controlled ethanol prices in Brazil. The changes in the EU are ongoing, with some fundamentals remaining in place, including duty free access for Mozambique, Zimbabwe and Swaziland. At present, the EU market position seems to have stabilised at the current lower levels, in anticipation of reform in 2017.

Recently instituted measures in Zimbabwe to protect the local market against unfair import competition are expected to yield benefits. South Africa will benefit from the recently increased reference price used in the import duty calculation, particularly if the exchange rate remains at current levels.

The starch operations are well positioned to continue to perform strongly. The latest maize crop estimates are for a larger crop and competitive maize costs are expected.

The current momentum in unlocking value from land conversion and development is expected to continue. Over the next 5 years, sales will come from the urban expansion north of Durban in the Umhlanga and Cornubia areas, coastal lifestyle areas of Zimbali and Sibaya, business and residential development around the airport, coastal development north of Ballito in Tinley Manor and in the Ntshongweni area west of Durban. Sales of between 1 000 and 1 500 developable hectares are expected to be achieved over the 5 year period, based on current economic conditions. Good progress is being made with the targeted sale of 42 developable hectares of some of the remaining prime land in Umhlanga Ridgeside, the area where a net cash profit of R34 million per developable hectare has been achieved. The majority of the land conversion profits for 2014/15 are expected to be reported in the second half of the year while cash flow in the first half of the year will benefit from the land sales concluded towards the end of 2013/14.

Tongaat Hulett’s positive socio-economic profile in the southern African region continues to grow. In KwaZulu-Natal there are established collaborations with Provincial and Local authorities in the inextricably linked areas of sugar and cane activities (the planting of 24 979 hectares in the last three years has created some 6 250 direct jobs in rural areas), the development of urban areas (including Cornubia) and maximising the future benefit of renewable energy. The situation in Zimbabwe is in a constructive phase, with Tongaat Hulett, the Government and local communities working together on socio-economic initiatives in the south-eastern Lowveld region of the country. This was again demonstrated by the proactive response of the authorities to the recent illegal attempt at land invasion. One of the key focus areas remains the orderly development of sustainable private sugar cane farmers. At the end of the 2013/14 season, some 813 active indigenous private farmers, farming on some 14 000 hectares and employing more than 6 700 people, supplied 1 017 000 tons of cane at a cane yield of 74 tons cane per hectare harvested, generating US$58 million in annual revenue. Current initiatives will increase this, by the 2017/18 season, to some 1 022 private farmers supplying more than 1 800 000 tons of cane at a cane yield above 100 tons cane per hectare harvested from 18 880 farmed hectares.

The business is in a good position to benefit from multiple actions taken across a wide front, with its footprint in six SADC countries, its ability to process both sugar cane and maize, renewable energy opportunities and increased momentum in land conversion.

Peter Staude
Chief Executive Officer

About Tongaat Hulett

Tongaat Hulett is an agricultural and agri-processing business which includes integrated components of land management and property development. Through its sugar and starch operations, Tongaat Hulett produces a range of refined carbohydrate products from sugarcane and maize. Renewable energy, in the form of biofuel production and electricity generation, is of increasing importance to the business. The water-food-energy nexus is an evolving dynamic as the world contends with the growing impact of climate change. Tongaat Hulett balances the operational requirement for sugarcane supplies to its cane processing operations with other priority uses of agricultural land and its transition to higher value uses at the appropriate times. The current focus prioritises the business leveraging its asset base in six Southern African Development Community (SADC) countries.

Amanzimnyama
Tongaat, KwaZulu-Natal

26 May 2014

ENDS

Issued by: Tongaat Hulett
Michelle Jean-Louis
Communications Executive
Telephone: 083 386 3846

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013

• Revenue of R7,854 billion (2012: R7,398 billion) +6,2
• Operating profit of R1,381 billion (2012: R1,290 billion) +7,1
• Headline earnings of R663 million (2012: R655 million) +1,2
• Interim dividend of 150 cents per share (2012: 150 cents per share)

GOOD HOUSEKEEPING MAGAZINE CELEBRITY BAKE STARS EVENT

Huletts was proud to be a sponsor of the Good Housekeeping Celebrity Bake Star reader event held in Cape Town on the 20th of August. Guests enjoyed a morning of great company and a selection of both local and international celebrities’’ favourite baked recipes.

Two well known local celebrity chefs delighted guests with hands on demonstrations. Jenny Morris baked her old time favourite carrot cake and also shared baking tips while making her recipe. Roxanne Floquet shared her tips and tricks on how to decorate cakes and biscuits using Huletts Icing Sugar.

During the event, Huletts demonstrated its extensive product offering by showcasing delectable high tea cakes and treats, and a beautiful three-tier cake, for all the guests to enjoy.

AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2013

• Revenue of R14,373 billion (2012: R12,081 billion) +19,0
• Profit from operations of R2,145 billion (2012: R1,921 billion) +11,7
• Cash flow from operations of R2,126 billion (2012: R1,363 billion) +56,0
• Headline earnings of R1,058 billion (2012: R891 million) +18,7
• Annual dividend of 340 cents per share (2012: 290 cents per share) +17,2

Commentary by Peter Staude, CEO of Tongaat Hulett:

Tongaat Hulett’s revenue grew by 19 to R14,373 billion for the 2012/13 year and headline earnings increased by 18,7 to R1,058 billion. Total sugar production increased by 104 000 tons (9 ) to 1,254 million tons, after increasing by 14 in the prior year. The cane supplied to all the sugar mills grew to 10,3 million tons, with various on-going cane supply initiatives. The advantage of higher overall sugar production volumes with the related benefits in the unit costs of production were offset partially by continued general margin pressure in the relationship of selling price movements versus higher input costs. The starch operations benefitted from higher co-product realisations and world competitive maize costs, particularly with the new season maize in the second half of the year. An increasing number of hectares of land are moving towards becoming active developments in the land conversion activities. Overall, Tongaat Hulett’s profit from operations increased by 11,7 to R2,145 billion (2012: R1,921 billion).

Operating profit from land conversion and development grew to R350 million (2012: R215 million) with a further R16 million in capital profits (2012: R3 million) being realised. In the past year, 65 developable hectares were sold. Revenue was generated from sales in the Cornubia Industrial, Umhlanga Ridge Town Centre, Ridgeside, La Lucia Ridge Office Estate, Izinga, Kindlewood, Mount Moriah and Zimbali areas.

Operating profit from the South African sugar operations including the downstream sugar value added activities amounted to R308 million (2012: R354 million). The agriculture, sugar milling and refining operations recorded operating profit of R52 million (2012: R93 million) and the various downstream sugar value added activities contributed R256 million (2012: R261 million). The season concluded with sugar production of 486 000 tons which was unchanged from the prior year. Local market sales were 3 below last year and consequently lower value export sales increased accordingly. With increased cost pressures, margins were under pressure. Production was impacted by the national transport strike in South Africa followed by unusually heavy rains in the last three months of the crushing season. There has been an increased level of carry-over cane from the current season into the next season. As expected, the unusually large gap between hectares under cane and hectares milled continued to feature. This is as a result of accelerated root replanting (with the time required from planting to first harvesting) to improve cane age / crop positioning for optimal harvesting, generate better yields and increase the crop’s ability to withstand variable weather conditions. These actions are all aimed at increasing future cane supplies. New cane plantings driven by Tongaat Hulett in its cane catchment areas totalled 11 554 hectares, following the 8 687 hectares planted in the previous year and the 9 696 hectares before that.

In Swaziland, the Tambankulu sugar estate’s operating profit increased to R76 million (2012: R51 million). Higher sucrose prices arose from a recovery in European Union realisations received by the Swaziland sugar industry. A raw sugar production equivalent of 58 000 tons was achieved for the year (2012: 59 000 tons).

The two Zimbabwean sugar operations generated operating profit of R630 million (US$74 million) compared to R621 million (US$84 million) last year. Sugar production increased by 28 to 475 000 tons (2012: 372 000 tons) as cane deliveries from private and third party farmers grew substantially. A cost increase of some 10 was experienced in the milling operations and in the own estate agricultural activities. In addition, the quantum of increase in cane values reported in 2011/12 was not repeated in 2012/13. Planting activities were curtailed in the latter part of the season due to dry weather conditions culminating in fewer hectares under cane at the end of the year. The weaker Euro/US$ exchange rate impacted negatively on export proceeds while the weaker average Rand/US$ impacted positively on the conversion of US$ profits into Rands.

Operating profit in Mozambique was R421 million compared to R402 million in 2012. Sugar production in Mozambique consolidated in the year under review, following the record 42 increase in the prior year, and amounted to 235 000 tons (2012: 233 000 tons). Rainfall conditions in the irrigation catchment area at Mafambisse led to a reduction in that harvest. The relative strength of the Metical impacted negatively on Euro export realisations while it had a favourable effect on converting Metical earnings into Rands.

Profit from the starch operations increased to R388 million for the year (2012: R363 million). Starch and glucose processing margins were favourably influenced by higher co-product realisations and local maize costs that were close to international prices, over the course of the full year. Domestic market volumes reflected depressed consumer demand and were similar to the prior year. Manufacturing plant performance has continued to improve.

The centrally accounted and consolidation items component of the income statement includes a gain of R68 million in respect of a pension fund employer surplus account allocation in the conversion from a defined benefit to a defined contribution arrangement in South Africa.

Finance costs increased to R560 million from R507 million in the 2011/12 year and are commensurate with the level of borrowings.

Cash flow from operations, before tax, increased to R2,1 billion (2012: R1,4 billion) which is in line with the growth in operating profit. The increase in operating cash flow follows the absorption of cash totalling more than R6 billion in the numerous expansion and new sugar cane establishment programs over the past 6 years. Tongaat Hulett’s net debt at the end of March 2013 was R4,6 billion. The replacement of significant portions of short term debt with appropriately structured long term debt has been successfully concluded.

Total net profit before the deduction of minority interests was R1,170 billion (2012: R1,021 billion). Headline earnings attributable to Tongaat Hulett shareholders amounted to R1,058 billion compared to R891 million in 2012.

A final dividend of 190 cents per share has been declared, bringing the annual dividend to 340 cents per share (2012: 290 cents per share), a 17,2 increase.

OUTLOOK

Focus Areas
In the year ahead, Tongaat Hulett expects to make substantial progress in the multiple focus areas that will further enhance its strategic position.

Tongaat Hulett is in the fortunate position, in a world of sugar consumption growth of 2 per annum, new sugar milling capacity being costly, with good electricity and ethanol prospects, to still have more than 850 000 tons per annum of unutilised sugar milling capacity, after the growth of sugar production of 14 and 9 in the past two years respectively. A major focus remains on how to rapidly increase cane supplies to utilise the available milling capacity.

The on-going strategy to increase cane supply in South Africa is focused on commercial farmers, small-scale farmers and increasing Tongaat Hulett’s influence in cane development through leasing additional land and collaborating with Government to rehabilitate cane supply on land reform farms that have gone out of cane. Of significance, is the co-operation agreement recently concluded with the Ingonyama Trust, which controls some 2,7 million hectares of land in KwaZulu-Natal.

Tongaat Hulett’s two operations in Zimbabwe will continue to develop their positive socio-economic impact on the country. These operations employ 18 000 people and are in an important recovery, growth and expansion phase, which should create sustainable value for all stakeholders. A central part of this recovery is the substantial development of indigenous private cane farmers. As at the end of the 2012/13 season, at least 670 active indigenous private farmers, farming some 11 200 hectares and employing more than 5 600 people, supply 850 000 tons of cane which generates US$56 million in annual revenue for them. Zimbabwe, with Tongaat Hulett as a partner, has the potential to further develop indigenous private cane farmers substantially. This potential is linked to how much annual production can be achieved from the existing sugar mills. Based on Tongaat Hulett’s view of its existing mills, a further 600 farmers on 12 700 hectares could supply an additional 1,4 million tons of cane per annum. In total, all these indigenous private cane farmer developments could earn more than US$140 million gross revenue per annum and employ more than 12 000 people.

A fundamental review has been launched to re-examine all bought-in goods and services, which currently total more than R4 billion per annum for Tongaat Hulett excluding cane and maize purchases. The review is, inter alia, examining the quantum, “value add”, “in house or outsource” and possible longer term procurement arrangements. Unit costs of sugar production will continue to benefit from higher volumes and yields, as milling costs and many of the agricultural costs per hectare are mostly fixed.

The drive to optimise revenue earned from sugar cane is one of the most important strategic positioning issues. The coming year should see the compilation of a bid for the first 80MW power station following the Ministerial Determination for 800MW issued in December 2012. Planning for the project, including the environmental impact assessments and plant construction contracting processes, is well advanced. The diversion of world market export sugar to a regional ethanol regime remains a key focus area with serious interest from the oil industry to use bio ethanol as part of their options for Clean Fuels 2.

In South Africa, Tongaat Hulett is building on its good progress to date to accelerate land conversion. It has targeted some 8 500 developable hectares (13 500 gross hectares) for development. There are on-going processes on most of the targeted land to enhance its usage and value to all stakeholders. The extent and pace of planning, in collaboration with Government, has increased substantially. At present, some 1 900 developable hectares are the subject of well advanced environmental and planning processes.

Financial Results – The Year Ahead

Tongaat Hulett’s financial results remain sensitive to movements in exchange rates, which impact particularly on export realisations and the conversion of profits from Zimbabwe and Mozambique into Rands.

The results will benefit from the projected growth in sugar production. The early season forecast is for total sugar production to grow by approximately 110 000 tons, with the increase coming from South Africa in this year. With the low dam levels in Zimbabwe, irrigation levels have been reduced and cane expansion and root replanting for both private growers and own estates have been curtailed, to be resumed once the dam levels recover.

The increased current focus and progress to date on reducing input costs should, to some extent, counter cost pressures. Wage increase agreements have been concluded at reasonable levels in both Mozambique and Zimbabwe.

Current dynamics point towards pressure on sugar prices in general. World prices are currently at their lowest point in 3 years. Sugar prices that will be achieved by Least Developed / African Caribbean Pacific Countries (LDC/ACPs) into the European Union for the coming year are uncertain. The market is currently over-supplied. The white sugar price is well above the world price. Sugar is being released into the market from out of quota EU beet sugar at reduced levies and from world market sugar at reduced duties. For the first time since the introduction of the current duty and quota free regime in 2009 for LDC/ACPs, the benefits of selling into the EU are being eroded. In the regional markets, a period of pressure on selling prices and pressure from imports could prevail if the world price remains low and pricing into Europe remains under pressure.

The starch operations remain well positioned. The current South African maize crop outlook is in line with the previous crop of 11,8 million tons. Maize continues to be priced at levels close to international prices. Starch and glucose volumes are expected to show modest growth with depressed local market demand being offset by a growth in export volumes, with continued improvements in manufacturing performance.

A number of new land developments are likely to become active and “shovel ready” before the year end. These new developments, together with existing active developments, are attracting increasing market interest. Various sales strategies (bulk sale, partnership or own development) continue to be reviewed for each land holding and implemented as appropriate. The number of hectares converted to development in a specific time period remains variable. The next period looks promising for own development sales. There are good prospects for substantial bulk sales, with an increase in both land available and interest by prospective purchasers. Significant bulk and semi-bulk land sale offers received in the last two years have been turned down on the grounds that they did not represent optimal value.

Peter Staude
Chief Executive Officer

About Tongaat Hulett

Tongaat Hulett is an agricultural and agri-processing business which includes integrated components of land management and property development. Through its sugar and starch operations, Tongaat Hulett produces a range of refined carbohydrate products from sugarcane and maize. Renewable energy, in the form of biofuel production and electricity generation, is of increasing importance to the business. The water-food-energy nexus is an evolving dynamic as the world contents with the growing impact of climate change. Tongaat Hulett balances the operational requirement for sugarcane supplies to its cane processing operations with other priority uses of agricultural land and its transition to higher value uses at the appropriate times. The current focus prioritises the business leveraging its asset base in six SADC countries. Tongaat Hulett is well placed to capitalise on the company’s unconstrained access to sugar markets and its independent position and established business platform and size.

Amanzimnyama
Tongaat, KwaZulu-Natal

AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2012

• Revenue of R12,081 billion (2011: R9,681 billion) +24,8%
• Sugar production of 1,150 million tons (2011: 1,006 million tons) +14,3%
• Profit from operations of R1,921 billion (2011: R1,338 billion) +43,6%
• Headline earnings of R891 million (2011: R806 million) +10,5%
• Annual dividend of 290 cents per share (2011: 250 cents per share) +16,0%

Commentary by Peter Staude, CEO of Tongaat Hulett:

Tongaat Hulett’s total sugar production for the 2011/12 year grew by 14% to 1,150 million tons. This included increases of 42% in Mozambique, 12% in Zimbabwe and 7% in South Africa. The cane supplied to all the sugar mills grew to 9,6 million tons, with significant momentum building in the various on-going cane supply initiatives. The starch operations benefitted from world competitive maize costs and improved co-product recoveries. An increasing number of hectares of land are moving towards becoming active developments, with the first sales of industrial land in Cornubia having been concluded in March 2012.

Revenue for the year of R12,081 billion was 24,8% above the prior year, mainly as a result of increased sugar production together with improved realisations in the regional and European Union sugar markets. The total profit from the various operating areas grew by 53% and exceeded R2 billion for the first time. Headline earnings grew to R891 million (2011: R806 million).

Good progress is being made across all the sugar operations to drive growth in future cane supply (including hectares under cane, cane yields and cane quality) in order to fully utilise the existing sugar milling capacity and reduce unit costs as volumes increase. New plantings in the past year increased the area under cane by some 13 520 hectares and the replanting of existing roots is being accelerated for the benefit of future milling seasons. The many initiatives underway to improve root age, farming practices and crop positioning are aimed at improving cane yields and sucrose content.

Profit from the Mozambique sugar operations grew by 198% to R402 million (2011: R135 million), with sugar production having grown by 42% to 233 000 tons (2011: 164 000 tons). Following the previous expenditure on establishing the cane, it is now being harvested and the sugar produced and sold, with the operating cash flow in Mozambique having increased by more than R400 million over the previous year. Both the Mozambique and Zimbabwe operations benefitted from higher export realisations and domestic prices in line with regional pricing levels. The Zimbabwe sugar operations generated profit of R621 million (US$84 million) compared to the previous year of R454 million (US$63 million). Sugar production in Zimbabwe increased by 12% to 372 000 tons (2011: 333 000 tons), with the majority of the increase coming from Hippo Valley.

Operating profit from the South African sugar operations including the downstream sugar value added activities increased by 51% to R354 million (2011: R234 million). Raw sugar production increased by 7% to 486 000 tons (2011: 455 000 tons). The gap between the hectares under cane and the hectares milled was unusually large as a result of the substantial cane root planting following the drought in the previous two years and the approximate 15 month lead time required from planting to first harvesting. New cane planting driven by Tongaat Hulett in the last year totalled 8 687 hectares, following the 9 696 hectares planted in the previous two years. Sales by Tongaat Hulett into the local market increased by 10%. Tongaat Hulett’s share of industry production increased from 23% to 26%. Operating profit in the South African agriculture, sugar milling and refining operations started recovering and improved to R93 million (2011: loss of R7 million). The various downstream sugar value added activities recorded profit of R261 million (2011: R241 million). The Voermol animal feeds operation experienced pressure on sales volumes and margins.

In Swaziland, the Tambankulu sugar estate’s operating profit recovered to R51 million (2011: R17 million), returning to 2009/10 levels. The raw sugar equivalent production increased to 59 000 tons (2011: 54 000 tons), with higher cane yields and sucrose content being achieved. Export pricing levels improved, as did exchange rates.

In the land conversion and development activities, various sales strategies (bulk sale, partnership or own development) are constantly reviewed for each land holding and implemented as appropriate. Offers for bulk and semi-bulk land sales received over the past two years that did not represent optimal value were turned down. Revenue was generated from 22 developable hectares sold in Cornubia and a further 20 developable hectares that were sold primarily in the Umhlanga Ridge, Zimbali, Bridge City and Izinga areas. Operating profit grew by 30% to R215 million (2011: R166 million) with a further R3 million in capital profits (2011: R23 million) being realised.

Profit from the starch operations increased by 20% to R363 million, compared to R303 million last year. Improved co-product revenues and local maize costs that were previously contracted below Chicago (CBOT) prices resulted in an improvement in starch and glucose processing margins. Manufacturing plant performance has continued to improve and sales volumes in the local market were 1,4% above last year.

The “centrally accounted and consolidation items” component of the income statement reflects the effect of the pension fund employer surplus account allocation of 2010/11 not being repeated in 2011/12. Profit from operations, after centrally accounted items, grew by 43,6% to R1,921 billion.

Finance costs increased to R507 million from R472 million in the 2011/12 year and are commensurate with the level of borrowings.

Operating cash flow, before working capital, improved by R863 million to R1,757 billion for the year. This follows the previous absorption of cash in the various expansion and on-going sugar cane establishment programs. The net cash outflow, after dividends, of R293 million reflected an improvement of R534 million over the prior year. Tongaat Hulett’s net debt at 31 March 2012 was R4,404 billion. A first long-term bond issuance of R750 million was successfully concluded.

Total net profit was R1,021 billion (2011: R871 million). The gain in respect of the pension fund accounting of R288 million and the R129 million employer surplus account allocation in the prior year did not arise again in the current year. The minority shareholders’ interests increased to R132 million (2011: R38 million) as a result of higher profits at the sugar milling operations in Mozambique and at Hippo Valley in Zimbabwe. Headline earnings were R891 million, compared to the R806 million earned in the prior year.

The Board has declared a final dividend of 170 cents per share, bringing the annual dividend to 290 cents per share (2011: 250 cents per share).

Outlook

Tongaat Hulett’s drive to increase the cane available for its mills is continuing to build momentum (including hectares under cane, yields and cane quality), towards fully utilising its existing milling capacity of more than 2 million tons of sugar. At full capacity utilisation, sugar production would increase by more than 75% over the 1,150 million tons of the 2011/12 season. Unit costs will benefit substantially from increasing volumes and yields, as milling costs are mostly fixed and many of the agricultural costs are fixed per hectare, countering the effect of current cost pressures including wage increases.

The strategy to increase cane supply in South Africa is focused on commercial farmers, small scale farmers and increasing Tongaat Hulett’s influence in cane development through leasing additional land and collaborating with Government to rehabilitate cane supply on land reform farms that have gone out of cane. The gap between hectares under cane and hectares milled will remain a feature of the next three years as a result of accelerated root replanting to improve cane age, generate better yields and increase the crop’s ability to withstand variable weather conditions. Hectares available for milling in 2012/13 will increase as a result of the 9 696 hectares which were planted in the 2009/10 and 2010/11 years. The additional 8 687 hectares that were planted in the 2011/12 season in the catchment areas of Tongaat Hulett’s South African mills will largely be harvested for the first time in the 2013/14 season.

Co-operation between the Zimbabwe Government, the eastern lowveld communities and Tongaat Hulett is focused on the “Successful Rural Sugar Cane Farming Community” project. Some 15 900 hectares have been allocated to approximately 870 indigenous farmers. In this past season, these farmers delivered 532 000 tons of cane (equivalent to 65 000 tons of sugar) from some 9 000 hectares. The target is to uplift this to over 1,4 million tons of cane (equivalent to 180 000 tons of sugar) from the available hectares, with the pace of planting new roots being targeted to average some 4 000 hectares per annum. It is thus pleasing that some 6 000 hectares were planted in the 2011/12 year. This, together with Tongaat Hulett’s improvement of its own agricultural yields, is key to achieving the target of increasing sugar production in Zimbabwe to full milling capacity of some 640 000 tons per annum.

Sugar production in Mozambique is expected to grow by a further 30% over the next three years to above 310 000 tons per annum together with a reduction in unit costs.

High levels of South African maize exports in the past season and dry weather conditions during the current maize season have resulted in local maize prices rising to levels slightly above international maize prices and this is expected to place some pressure on starch margins. Exposure to future movements of the maize price in the forthcoming year has been reduced with 59% of maize requirements having been priced with customers or hedged below the international maize price.

Tongaat Hulett has targeted some 8 600 developable hectares (13 607 gross hectares) for development in South Africa. There are on-going processes on most of the developable land to enhance its usage and value to all stakeholders. The extent and pace of planning, in collaboration with Government, has increased substantially. Cornubia industrial (80 hectares still to be sold) and Sibaya node 1 (49 hectares) have recently become available for sale. Tongaat Hulett continues to explore bulk land sale opportunities within its land holdings. The exact timing of land sales, including bulk sales, remains variable in the current economic climate.

Overall, as one of the main drivers of revenue and earnings, sugar production is expected to increase by between 12% and 25% in the 2012/13 season. It is anticipated that regional sugar prices will be stable and export realisations into the European Union should remain attractive, with the business’s direct exposure to the more volatile world sugar market being of the order of 10%. Tongaat Hulett’s financial results remain sensitive to movements in exchange rates, which impact particularly on export realisations and the conversion of profits from Zimbabwe and Mozambique into Rands.

The future revenue stream would benefit significantly from electricity and ethanol developments. Tongaat Hulett continues to interface with Government towards establishing an appropriate regulatory framework for both electricity generation and ethanol production from sugar cane.

Peter Staude
Chief Executive Officer

About Tongaat Hulett

Tongaat Hulett is an agricultural and agri-processing business which includes integrated components of land management and property development. Through its sugar and starch operations, Tongaat Hulett produces a range of refined carbohydrate products from sugarcane and maize. Renewable energy, in the form of biofuel production and electricity generation, is of increasing importance to the business. The energy-food-water nexus is an evolving dynamic. Tongaat Hulett balances the operational requirement for sugarcane supplies to its cane processing operations with the transition of agricultural land to other uses at the appropriate times. The business is well placed to capitalise on emerging opportunities for expansion and growth in Africa, with unconstrained access to sugar markets, its independent position, established business platform and size.

Amanzimnyama
Tongaat, KwaZulu-Natal

28 May 2012

INTERIM RESULTS FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2011

• Revenue of R6,027 billion (2010: R4,724 billion) +27,6%
• Profit from operations of R1,047 billion (2010: R963 million) +8,7%
• Total net profit of R597 million (2010: R552 million) +8,2%
• Headline earnings of R501 million (2010: R507 million) -1,2%
• Interim dividend of 120 cents per share (2010: 110 cps) +9,1%

Commentary by Peter Staude, CEO of Tongaat Hulett:

Tongaat Hulett’s total sugar production for the 2011/12 year is expected to increase by some 14% to 1,150 million tons. More than 80% of the season’s cane had been milled by the end of October 2011. Sugar production for the year in Mozambique is expected to be approximately 45% above last year, production in Zimbabwe should rise by 10% and in South Africa it should increase by some 8% over that of last year. Good progress is being made in these countries related to increasing cane supply, with the area under cane increasing and the positioning of the crop improving. In the present economic conditions few hectares are generally being sold for land and property development. The starch business has benefitted from improved co-product recoveries and world competitive maize costs.

Revenue for the six months to 30 September 2011 of R6,027 billion was 27,6% above the R4,724 billion for the corresponding period in 2010. Profit from operations grew to R1,047 billion (2010: R963 million). Excluding the R130 million gain in the prior period in respect of the pension fund employer surplus account allocation, the increase in profit from operations is 25,7%.

Profit from the Mozambique sugar operations grew to R267 million for the half-year (2010: R163 million), with substantially increased sugar production and sales at higher domestic and export prices. The cane and its increased value reported at the end of the 2010/11 year is now being converted to sugar and sold, with the operating cash flow having increased by R427 million over the previous half-year. Crop positioning for optimal harvesting is improving, with increasing yields and sucrose content. Sugar production in Mozambique for the year is expected to increase to approximately 240 000 tons, an increase of some 45% over last year.

The Zimbabwe sugar operations generated profit of R364 million (US$52 million) compared to the previous half-year of R303 million (US$41 million). Sugar production and sales, particularly in the export market, increased in the first half of the year. The positioning of the crop is improving. Given the extent of the harvesting and production to date, there is less of a standing cane value than last year and there has been an improvement in operating cash flow of R224 million. Totalsugar production in Zimbabwe for the year is expected to be approximately 365 000 tons, an increase of 10% over last year, with the increase coming from Hippo Valley.

Operating profit in the South African agriculture, sugar milling and refining operations for the half-year was R54 million (2010: R47 million). The gap between the hectares under cane and the hectares milled is unusually large as a result of the substantial cane root planting following last year’s drought and the approximate 15 months required to first harvest. The lower tonnage being available for export from the industry has meant that revenue was driven mainly from the local market where price increases were in line with cost increases. Tongaat Hulett’s share of industry production this year is expected to increase from 23% to approximately 26%. Annual raw sugar production is projected to increase by about 8% to approximately 490 000 tons in the current season.

The various downstream sugar value added activities recorded profit of R142 million (2010: R136 million). The Voermol animal feeds operation experienced lower sales volumes and pressure on margins as a result of raw material availability constraints, high winter rainfall leading to a reduced requirement by farmers for feed and reduced on-farm feeding with higher maize prices.

In Swaziland, the Tambankulu sugar estate produced operating profit of R30 million (2010: R19 million), with improved pricing and higher cane yields being achieved.

In the land conversion and development activities, the appropriate sales strategies (bulk sale, partnership or own development) are constantly reviewed for each land holding and implemented as appropriate. Opportunistic offers for some semi-bulk land sales were received and turned down as they did not meet Tongaat Hulett’s value criteria. Revenue for the six months to September 2011 was generated mainly from 13 developable hectares (15 gross hectares) that were sold in the Umhlanga Ridge Town Centre, Zimbali and Izinga areas. Operating profit amounted to R62 million (2010: R97 million) with a further R3 million in capital profits (2010: R4 million) being realised.

Profit from the starch operations increased to R167 million, compared to R125 million in the same period last year. Improved co-product recoveries and local maize costs that were contracted below Chicago (CBOT) prices resulted in an improvement in starch and glucose processing margins. Sales volumes in the local market were 0,5% above last year.

Finance costs increased to R249 million from R231 million in the first half of the 2010/11 year and are commensurate with the level of borrowings.

Operating cash flow, before working capital, improved by R626 million to R1,555 billion for the half-year, mainly as a result of the higher sugar production and sales in the half-year to September 2011. This follows the previous absorption of cash in the various expansion and sugar cane establishment programs. The September half-year coincides with a high working capital absorption point in the year, particularly in the South African sugar industry, with large cane payments having been made and sugar stock levels having increased. There was a net cash outflow for the period, after dividends, of R253 million. Tongaat Hulett’s net debt at the end of September 2011 was R4,278 billion. A process to replace a portion of the short-term debt with long-term debt is close to being concluded.

Total net profit was R597 million (2010: R552 million). Headline earnings were R501 million for the half-year ended 30 September 2011, compared to the R507 million earned in the six months to 30 September 2010, after taking into account the minority shareholders’ interests in respect of increased profits at the sugar milling operations in Mozambique and at Hippo Valley in Zimbabwe.

The Board has declared an interim dividend of 120 cents per share (2010: 110 cents per share).

OUTLOOK

One of Tongaat Hulett’s key objectives is to facilitate increased cane supply (including hectares under cane, yields and cane quality) to its mills so as to fully utilise its existing installed milling capacity of some 2 million tons of sugar with a simultaneous reduction in unit costs. This would lead to a 75% increase in sugar production over the 1,150 million tons expected in the 2011/12 season.

Sugar production in Mozambique is expected to grow by a further 30% over the next three years to above 310 000 tons per annum together with a reduction in unit costs.

In Zimbabwe, co-operation between Government, the eastern lowveld communities and Tongaat Hulett is focused on the “Successful Rural Sugar Cane Farming Community” project. Some 15 900 hectares have been allocated to approximately 870 indigenous farmers. In this season, these farmers are expected to deliver approximately 488 000 tons of cane (equivalent to 61 000 tons of sugar) from some 9 100 hectares. The target is to uplift this to over 1,4 million tons of cane (equivalent to 180 000 tons of sugar) from the available hectares. The pace of planting new roots is targeted at some 4 000 hectares per annum, with 3 176 hectares having been planted by the end of October 2011. This, together with Tongaat Hulett’s improvement of its own agricultural yields, is key to achieving the target of increasing sugar production in Zimbabwe to full milling capacity of 600 000 tons per annum.

 The strategy to increase cane supply in South Africa is focused on commercial farmers, small scale farmers and increasing Tongaat Hulett’s influence in cane development through leasing additional land and collaborating with Government to rehabilitate cane supply on its land and land reform farms that have gone out of cane. It is expected that the hectares available for milling in 2012/13 will increase by some 12 000 hectares as a result of the 9 696 hectares planted over the previous two years and a reduction in the gap between hectares under cane and hectares milled. An additional 8 000 hectares are targeted for planting this season in the catchment areas of Tongaat Hulett’s South African mills. Simultaneously, accelerated root replanting is underway and is expected to span some three years, with its seed cane requirement and the new cane not being harvested for an initial season. This will improve root age and generate better yields. The gap between hectares under cane and hectares milled will remain a feature of this period, albeit reducing.

 The future revenue stream would benefit significantly from electricity and ethanol developments. Tongaat Hulett continues to interface with Government towards establishing an appropriate regulatory framework for both electricity generation and ethanol production from sugar cane.

 Tongaat Hulett owns a total of some 8 600 developable hectares (13 639 gross hectares) for development in South Africa. A net cash inflow in excess of some R2,2 billion is expected to come in due course from the 348 developable hectares available for sale from eight active land developments, from which some 360 hectares have previously been sold. There are on-going processes on all of the developable land to enhance its usage and value to stakeholders. Industrial land in Durban/eThekwini remains in short supply and competition is intense for the industrial, retail and business park land that will become available in the Cornubia South development. Tongaat Hulett continues to explore a number of significant bulk land sale opportunities within its land holdings.

 The outlook for the 2011/12 year remains in line with that previously communicated. Tongaat Hulett’s financial results remain sensitive to movements in exchange rates, which impact particularly on export realisations and the conversion of profits from Zimbabwe and Mozambiqueinto Rands. Both regional sugar prices and export prices into the European Union have remained firm despite the recent reduction in the world sugar price. It has become evident, with all the planting of new roots and in order to improve cane positioning for the future, that more hectares than originally anticipated will not be harvested this season in South Africa. The exact timing of land sales, including bulk sales, remains variable in the current economic climate. Local sales volumes of starch and glucose are expected to reflect little growth over the prior year. The R288 million defined benefit pension fund asset that was recognised in the second half of last year, with its impact on headline earnings, will not arise again this year. The minorities’ share of profits is expected to remain considerably above that of last year.

 Peter Staude

Chief Executive Officer

 About Tongaat Hulett

Tongaat Hulett is an independent agricultural and agri-processing business which includes integrated components of land management and property development. Through its sugar and starch operations, Tongaat Hulett produces a range of refined carbohydrate products from sugar cane and maize. The business has considerable expertise in downstream agricultural products, biofuel production and electricity generation. Tongaat Hulett balances the operational requirement for cane supplies to its sugar cane processing operations with the transition of agricultural land to other uses at the appropriate times. The energy-food-water nexus is an evolving dynamic, presenting opportunities. Tongaat Hulett is well placed to capitalise on emerging opportunities for expansion and growth in Africa, with unconstrained access to sugar markets, its independent position, established business platform and size.

Amanzimnyama

Tongaat, KwaZulu-Natal

14 November 2011

ENDS              

Audited Results for the Year ended 31 March 2011

• Revenue of R9,681 billion (2010: R8,789 billion)
• Profit from operations of R1,338 billion (2010: R1,500 billion)
• Headline earnings of R806 million (2010: R815 million)
• Annual dividend of 250 cents per share