ILLOVO SUGAR LIMITED

UPDATE ON PROSPECTS

IN RECENT MONTHS THE WORLD SUGAR PRICE HAS MOVED PROGRESSIVELY UPWARDS FROM ITS
14-YEAR LOW TO AROUND ITS PRESENT LEVEL OF OVER $200 PER TON.  UNFORTUNATELY
THE SOUTH AFRICAN SUGAR INDUSTRY HAS HEDGED A SIGNIFICANT PORTION OF THIS
SEASON'S PRODUCTION AT BELOW PRESENT LEVELS AND THEREFORE THE BENEFIT OF THE
IMPROVED PRICES WILL ONLY BE SEEN BY THE COMPANY IN THE NEXT FINANCIAL YEAR.
THE WORLD PRICES OF DOWNSTREAM PRODUCTS HAVE CONTINUED AT THEIR LOW LEVELS
ALTHOUGH THERE ARE INDICATIONS OF PRICE RECOVERIES AS A RESULT OF IMPROVED
PRODUCTION AND CONSUMPTION BALANCES.

A MATERIAL INCREASE IN THE GROUP'S OWN CANE PRODUCTION (500 000 TONS) AND TOTAL
SUGAR OUTPUT (150 000 TONS) IS EXPECTED IN THE CURRENT SEASON AS A RESULT OF
THE RECENT CAPITAL EXPENDITURES AND ACQUISITIONS MADE BY THE COMPANY.  HOWEVER
THE WEAKNESS OF THE EURO IS IMPACTING NEGATIVELY ON SUGAR REVENUES FROM
PREFERENTIAL MARKETS IN EUROPE SUPPLIED BY OUR OPERATIONS IN MAURITIUS,
SWAZILAND AND MALAWI.  IN THE UNITED STATES DOMESTIC SUGAR PRICES ARE TRADING
AT A 20-YEAR LOW AND THIS TOGETHER WITH THE SIGNIFICANT INCREASES IN FUEL
PRICES WILL MATERIALLY AFFECT PROFITS FROM THIS REGION.

THE DIFFICULT MARKET CONDITIONS, TOGETHER WITH INCREASED FINANCE CHARGES ARE
EXPECTED TO REDUCE EARNINGS IN THE CURRENT YEAR BY APPROXIMATELY 25% COMPARED
TO THOSE ACHIEVED IN THE YEAR TO 31 MARCH 2000.  THE EXPANDED ASSET BASE AND
ANTICIPATED IMPROVEMENTS IN THE MARKET PLACE WILL HOWEVER IMPACT FAVOURABLY ON
FUTURE EARNINGS.
DON MACLEOD
MANAGING DIRECTOR