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TON - Tongaat Hulett Limited - Audited Results for the year ended 31 March 2011

Release Date: 30/05/2011 07:05
Code(s): TON
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TON - Tongaat Hulett Limited - Audited Results for the year ended 31 March 2011 Tongaat Hulett Limited Registration No: 1892/000610/06 JSE share code: TON ISIN: ZAE000096541 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 COMMENTARY The past year continued to be characterised by counteractive factors. Progress towards fully utilising Tongaat Hulett`s installed sugar milling capacity of some 2 million tons per annum was hampered by the severe drought in the 2009/10 growing period in South Africa, coupled with poor growing conditions in Mozambique in the early part of 2010. The South African sugar production was the lowest in many decades for Tongaat Hulett. Exchange rates have been less favourable than in the prior year. Sugar realisations in the past year in the Mozambique local market and on exports from South Africa were constrained. Favourable prices were achieved on exports from Mozambique and Zimbabwe into the European Union and the United States. The 7 800 hectare increase in land under cane, with its corresponding root planting, as well as better expected future yields, crop positioning and improved sugar prices led to an increase in the value recorded for the sugar cane growing crop at the 31 March 2011 year end. The results of the starch operation improved substantially. The sale of development land remained depressed in the current economic climate. A defined benefit pension fund asset has been recognised in accordance with IFRS upon the splitting of the fund with Hulamin. Tongaat Hulett`s headline earnings were R806 million for the year ended 31 March 2011, compared to the R815 million earned in the previous comparative 12 months. Profit from the starch operations increased by 21% to R303 million from R251 million in the prior year. A margin increase was generated by improvements in manufacturing efficiencies, lower maize costs and higher international starch prices. This was partially offset by a firmer Rand and lower co-product prices. Higher international maize prices combined with favourable agricultural conditions resulted in a third consecutive annual South African maize surplus and local maize prices which traded close to or below international prices for most of the year. Starch and glucose volumes in the local market grew by 2,6 % following moderate growth in the food sectors and a recovery of demand in the paper making and paper converting sectors. The Zimbabwe sugar operations increased production by 29% to 333 000 tons from 258 000 tons in the prior year. Initiatives are underway with farmers to increase the hectares under cane, as well as to improve yields and optimise cane age on the company estates, in order to grow cane supply. The opportunity exists for a further 80% growth in sugar production up to the installed milling capacity of 600 000 tons per annum and a reduction in the unit cost of production. The extended mill refurbishment programme during the previous off- season resulted in a late start at Hippo Valley Estates, consequently not all the cane could be crushed by the end of the season. The quantum of the increase in the value of growing crops in 2010/11 was lower than that of 2009/10 due to the re-establishment of the sugar cane crop and a greater price recovery in 2009/10. The profit from the Zimbabwe sugar operations was R454 million (US$ 63 million) compared to R518 million (US$ 66 million) in the prior year. In Mozambique, sugar production increased by 24% to 166 000 tons, as the operations progress towards the recently expanded capacity of more than 300 000 tons per annum. Volumes were lower than expected as a result of crop positioning and weather conditions, which led to lower cane yields per hectare harvested and 18% less sugar extracted from the cane than expected, particularly in the latter part of the year. Consequently, some sugar cane originally targeted for milling in the 2010/11 season was carried over and will be milled early in the 2011/12 season. Following the rapid depreciation of the Metical during the year, domestic market prices lagged regional prices for a large portion of the year and had a negative impact on operating profit of some R120 million. In addition, the fixed cost nature of the business resulted in high costs per ton of sugar produced, with the cane expansion still being in the ramp-up phase. Profit from operations was R135 million (Metical 628 million) compared to R141 million (Metical 521 million) in the prior year. The South African sugar milling, refining and agriculture operations made a loss of R7 million for the year compared to a profit in the prior year of R136 million. The extreme drought conditions in KwaZulu-Natal in the past season led to a reduction in the sugar crop and higher costs per ton of sugar produced. Sugar production reduced to 445 000 tons (prior year: 564 000 tons). Domestic sales volumes grew by 3,2%. In terms of the South African sugar industry legislated regulations, 83% of the sales in the 2010/11 season were deemed to be local and 17% were recognised and valued as exports. The export realisations did not fully reflect the higher world prices and were limited by the reduction in production. The average realisation for these raw sugar exports was R3 272 per ton (prior season: R3 070 per ton), including a world sugar price of 18,5 US c/lb at an average exchange rate of R7,62/US$. The downstream sugar value added activities contributed R241 million to profit (prior year: R200 million). This includes Voermol animal feeds, South African refined exports, regional marketing, sales, packing and distribution activities. In Swaziland, the Tambankulu sugar estate produced a raw sugar equivalent of 54 000 tons (prior year: 54 000 tons). The Swaziland sugar industry`s EU export realisations were lower than last year. The increase recorded in the value of the sugar cane in 2010/11 was below the increase of 2009/10. Operating profit reduced to R17 million (prior year: R51 million). Tongaat Hulett owns 13 654 gross hectares for development in South Africa. Land and property development activity continues to focus primarily on the areas north and west of Durban in anticipation of demand in the near term from urban growth. Good progress is being made, working with all spheres of government, on adding value for all stakeholders through processes of preparing for the conversion of agricultural land to optimal land usage and accelerated socio economic development at the appropriate time. In the present economic conditions the sale of development land across most sectors remains depressed and few hectares are being converted to development. Revenue in the past year was generated mainly from sales in the Cornubia, Umhlanga Ridgeside and Izinga areas, together with a benefit and associated land sale for the golf course at Zimbali Lakes, which is currently being constructed by Tongaat Hulett`s joint venture partner. During this period, 144 developable hectares (209 gross hectares) were sold. Operating profit from land conversion and development amounted to R166 million (prior year: R194 million) with a further R23 million in capital profits (prior year: R52 million) being realised. The centrally accounted and consolidation items, in profit from operations, included a gain of R130 million (prior year: R82 million) on the recognition of an unconditional entitlement to an employer surplus account allocation, which is funding an employer contribution holiday in the Tongaat Hulett pension fund. Overall, profit from operations was R1,338 billion compared to the R1,500 billion earned in the previous comparative 12 months. Tongaat Hulett`s operating profit has increased to R1,606 billion from R1,535 billion in the prior year. It includes an amount of R288 million, relating to the recognition of an accounting surplus in the South African defined benefit pension fund, as required by international financial reporting standards (IFRS), following the formal splitting of the fund between Tongaat Hulett and Hulamin. Finance costs for the year increased to R472 million from R365 million in the prior year. The capitalisation of interest on the Mozambique expansion project ended in the prior year, with the commissioning having been completed. Cash inflow from operations, before a working capital absorption and tax payments, was R1,005 billion for the year. The last three years have seen significant capital expenditure on the Mozambique expansion and cash being absorbed in the establishment of the expanded cane crops, the replanting of sugar cane and mill refurbishment in Zimbabwe. Tongaat Hulett`s net debt at the end of the year was R3,925 billion (prior year: R3,040 billion). The Board has declared a final dividend of 140 cents per share, which brings the total annual dividend to 250 cents per share, compared to 275 cents per share in the fifteen month prior period. Outlook The large South African maize harvest in 2010 and the high maize stock levels from the previous two seasons should maintain local maize prices close to world prices and contribute to the competitiveness of the starch operation. Higher international starch prices are countering the impact of the exchange rate. Tongaat Hulett expects to make further progress in growing sugar production towards the target of doubling the 2010/11 production, utilising the available milling capacity, with a simultaneous reduction in unit costs. Production in Mozambique is expected to increase by more than 50% in the 2011/12 season to between 250 000 and 270 000 tons of sugar, with an increase in hectares harvested, higher cane yields and improved sugar extraction from cane anticipated. Zimbabwe sugar production in the 2011/12 season is expected to increase to between 360 000 and 380 000 tons of sugar, with better cane age and yields on a similar number of hectares being harvested. In South Africa, sugar production is expected to increase in the 2011/12 season, notwithstanding the variable growing conditions at the beginning of the year, as the cane recovers from the drought of 2010. The strategy to increase cane supply in South Africa is focused on increasing Tongaat Hulett`s influence in cane development through leasing land and collaborating with government to rehabilitate cane supply on its land and land reform farms that have gone out of cane. Tongaat Hulett expects to have new sugar cane planted on more than 8 000 hectares in South Africa in 2011/12, following the additional 9 696 hectares planted over the past two years. Pricing of raw sugar into the European Union is reflective of demand exceeding supply. Regional sugar prices at the start of the new season are above those of last year, in line with current global sugar dynamics. Considerable growth in profit from operations is expected in the year ahead. Tongaat Hulett`s financial results remain sensitive to movements in the Rand, US dollar, Euro and Mozambique Metical. These impact on the revenue streams, costs incurred and the conversion of profits into Rands. Agricultural land conversion and development activity is currently focused on development, partnership and bulk sale opportunities in the north and west of Durban, including industrial and business park land adjacent to the new international airport and at Cornubia. Industrial land in Durban/eThekwini remains in short supply. Tongaat Hulett has 13 654 gross hectares available for conversion to development over time in South Africa. Renewable energy, both electricity generation and ethanol production from sugar cane, provides substantial future opportunities. For and on behalf of the Board J B Magwaza Peter Staude Chairman Chief Executive Officer Amanzimnyama Tongaat, KwaZulu-Natal 26 May 2011 DIVIDEND DECLARATION Notice is hereby given that the Board has declared a final dividend (number 167) of 140 cents per share for the year ended 31 March 2011 to shareholders recorded in the register at the close of business on Friday 15 July 2011. The salient dates of the declaration and payment of this final dividend are as follows: Last date to trade ordinary shares "CUM" dividend Friday 8 July 2011 Ordinary shares trade "EX" dividend Monday 11 July 2011 Record date Friday 15 July 2011 Payment date Thursday 21 July 2011 Share certificates may not be dematerialised or re-materialised, nor may transfers between registers take place between Monday 11 July 2011 and Friday 15 July 2011, both days inclusive. The dividend is declared in the currency of the Republic of South Africa. Dividends paid by the United Kingdom transfer secretaries will be paid in British currency at the rate of exchange ruling at the close of business on Friday 8 July 2011. For and on behalf of the Board M A C Mahlari Company Secretary Amanzimnyama Tongaat, KwaZulu-Natal 26 May 2011 INCOME STATEMENT Condensed consolidated Audited Pro forma Audited 12 months to 12 months to 15 months to 31 March 31 March 31 March Rmillion 2011 2010 2010 Revenue 9 681 8 789 11 136 Profit from operations 1 338 1 500 1 691 Bulk sales/capital profit on land 23 52 52 Capital profit on other items 4 13 13 BEE IFRS 2 charge and transaction costs (46) (26) (35) Defined benefit pension fund asset recognition 288 Valuation adjustments (1) (4) (3) Zimbabwe consolidation take-on gain 1 969 Operating profit 1 606 1 535 3 687 Share of associate company`s (loss) / profit (2) 1 Net financing costs (note 1) (472) (365) (452) Profit before tax 1 132 1 170 3 236 Tax (note 2) (261) (158) (208) Net profit for the year 871 1 012 3 028 Profit attributable to: Shareholders of Tongaat Hulett 833 885 2 898 Minority (non-controlling) interest 38 127 130 871 1 012 3 028 Headline earnings attributable to Tongaat Hulett shareholders (note 3) 806 815 858 Earnings per share (cents) Net profit per share Basic 786,0 856,2 2 791,6 Diluted 764,3 839,1 2 736,0 Headline earnings per share Basic 760,5 788,5 826,5 Diluted 739,6 772,7 810,0 Dividend per share (cents) 250,0 275,0 275,0 Currency conversion Rand/US dollar closing 6,80 7,39 7,39 Rand/US dollar average 7,19 7,81 8,23 Rand/Metical average 0,21 0,27 0,29 Rand/Euro average 9,49 11,03 11,40 SEGMENTAL ANALYSIS Condensed consolidated Audited Pro forma Audited 12 months to 12 months to 15 months to 31 March 31 March 31 March Rmillion 2011 2010 2010 REVENUE Starch operations 2 357 2 243 2 778 Land Conversion and Developments 207 260 274 Sugar Zimbabwe operations 1 646 1 325 1 636 Swaziland operations 126 133 134 Mozambique operations 715 447 463 SA agriculture, milling and refining 2 991 3 148 4 285 Downstream value added activities 1 639 1 233 1 566 Consolidated total 9 681 8 789 11 136 PROFIT FROM OPERATIONS Starch operations 303 251 301 Land Conversion and Developments 166 194 187 Sugar Zimbabwe operations 454 518 576 Swaziland operations 17 51 63 Mozambique operations 135 141 192 SA agriculture, milling and refining (7) 136 158 Downstream value added activities 241 200 226 Centrally accounted and consolidation items 29 9 (12) Consolidated total 1 338 1 500 1 691 STATEMENT OF FINANCIAL POSITION Condensed consolidated Audited Audited 31 March 31 March Rmillion 2011 2010 ASSETS Non-current assets Property, plant and equipment 7 665 7 710 Growing crops 2 608 2 041 Defined benefit pension fund asset 294 Long-term receivable 135 Goodwill 230 240 Intangible assets 32 9 Investments 7 10 10 971 10 010 Current assets 3 520 3 358 Inventories 1 365 1 373 Trade and other receivables 1 457 1 580 Major plant overhaul costs 331 256 Derivative instruments 11 9 Tax 6 Cash and cash equivalents 350 140 TOTAL ASSETS 14 491 13 368 EQUITY AND LIABILITIES Capital and reserves Share capital 140 139 Share premium 1 524 1 519 BEE held consolidation shares (868) (935) Retained income 5 305 4 691 Other reserves (1 301) (841) Shareholders` interest 4 800 4 573 Minority interest in subsidiaries 840 870 Equity 5 640 5 443 Non-current liabilities 3 981 3 708 Deferred tax 1 365 1 272 Long-term borrowings 1 345 1 103 Non-recourse equity-settled BEE borrowings 761 787 Provisions 510 546 Current liabilities 4 870 4 217 Trade and other payables (note 4) 1 938 2 131 Short-term borrowings 2 930 2 077 Derivative instruments 2 3 Tax 6 TOTAL EQUITY AND LIABILITIES 14 491 13 368 Number of shares (000) - in issue 105 014 103 677 - weighted average (basic) 105 986 103 811 - weighted average (diluted) 108 984 105 922 STATEMENT OF CASH FLOWS Condensed consolidated Audited Audited 12 months to 15 months to 31 March 31 March Rmillion 2011 2010 Operating profit 1 606 3 687 Profit on disposal of property, plant and equipment (35) (87) Depreciation 344 521 Defined benefit pension fund asset recognition (288) Growing crops and other non-cash items (622) (729) Zimbabwe consolidation take-on gain (1 969) Tax payments (111) (257) Change in working capital (212) 789 Cash flow from operations 682 1 955 Net financing costs (472) (452) Cash flow from operating activities 210 1 503 Expenditure on property, plant and equipment: New (396) (1 416) Replacement (323) (280) Major plant overhaul costs (87) (291) Expenditure on intangible assets (26) (7) Capital expenditure on growing crops (43) (76) Proceeds on disposal of property, plant and equipment 41 110 Investments (5) 8 Net cash flow before dividends and financing activities (629) (449) Dividends paid (198) (283) Net cash flow before financing activities (827) (732) Borrowings raised 1 103 652 Non-recourse equity-settled BEE borrowings (26) (4) Shares issued 6 14 Settlement of share-based payment awards (27) (22) Net increase/(decrease) in cash and cash equivalents 229 (92) Balance at beginning of year 140 229 Foreign exchange adjustment (18) (61) Exchange rate translation loss (1) (5) Subsidiaries consolidated 69 Cash and cash equivalents at end of year 350 140 STATEMENT OF CHANGES IN EQUITY Condensed consolidated Audited Audited 12 months to 15 months to 31 March 31 March Rmillion 2011 2010 Balance at beginning of year 4 573 3 059 Total comprehensive income for the year 358 1 689 Retained earnings 833 2 898 Movement in hedge reserve (3) 17 Foreign currency translation (472) (1 226) Dividends paid (191) (264) Share capital issued - ordinary 6 14 BEE held consolidation shares 42 29 Share-based payment charge 42 39 Settlement of share-based payment awards (27) (22) Reallocation (3) 29 Shareholders` interest 4 800 4 573 Minority interest in subsidiaries 840 870 Balance at beginning of year 870 276 Total comprehensive income for the year (29) (106) Retained earnings 38 130 Foreign currency translation (67) (236) Dividends paid to minorities (7) (19) Change of interest in subsidiary (7) Loan account movement 2 Reallocation 3 (29) Consolidation of subsidiaries 1 755 Equity 5 640 5 443 STATEMENT OF OTHER COMPREHENSIVE INCOME Condensed consolidated Audited Audited 12 months to 15 months to 31 March 31 March Rmillion 2011 2010 Profit for the year 871 3 028 Other comprehensive income (542) (1 445) Movement in non-distributable reserves: Foreign currency translation (539) (1 462) Hedge reserve (4) 23 Tax on movement in hedge reserve 1 (6) Total comprehensive income for the year 329 1 583 Total comprehensive income attributable to: Shareholders of Tongaat Hulett 358 1 689 Minority (non-controlling) interest (29) (106) 329 1 583 NOTES Condensed consolidated Audited Audited 12 months to 15 months to 31 March 31 March Rmillion 2011 2010 1. Net financing costs Interest paid (491) (577) Interest capitalized 7 88 Interest received 12 37 (472) (452) 2. Tax Normal (72) (309) Deferred (160) (14) Rate change adjustment (deferred) 154 Secondary tax on companies (29) (39) (261) (208) 3. Headline earnings Profit attributable to shareholders 833 2 898 Less Zimbabwe consolidation take-on gain (1 969) Less after tax effect of: Capital profit on disposal of land (23) (52) Capital profit on other items (4) (11) Fixed assets and other disposals (8) 806 858 4. Trade and other payables Included in trade and other payables is the maize obligation (interest bearing) of R173 million (2010: R381 million). 5. Capital expenditure commitments Contracted 134 234 Approved 51 118 185 352 6. Operating lease commitments 42 31 7. Guarantees and contingent liabilities 35 148 8. Basis of preparation The audited results for the year ended 31 March 2011, from which these condensed consolidated financial statements were derived, have been presented in accordance with International Accounting Standard 34 Interim Financial Reporting, the AC 500 standards as issued by the Accounting Practices Board and the JSE Limited Listings Requirements. The accounting policies are consistent with those used for the audited 2010 annual financial statements which fully comply with International Financial Reporting Standards. 9. Audited results The consolidated financial statements for the year ended 31 March 2011 have been audited by Deloitte & Touche. Their unmodified audit opinion is available for inspection at the registered office of the company. 10. Pro forma income statement and segmental analysis for the 12 months ended 31 March 2010 The pro forma income statement and segmental results for the prior period are presented for comparative purposes and comprise the audited results for the 15 months to 31 March 2010 minus the unaudited results for the 3 months to 31 March 2009. The pro forma detail and the requisite reporting accountants` report form part of this announcement and will be included in the Annual Report. CORPORATE INFORMATION Directorate: J B Magwaza (Chairman), P H Staude (Chief Executive Officer)*, B G Dunlop*, F Jakoet, J John, R P Kupara, A A Maleiane+, T N Mgoduso, M Mia, N Mjoli-Mncube, M H Munro*, C B Sibisi, R H J Stevens. * Executive directors Zimbabwean +Mozambican Company Secretary: M A C Mahlari Registered office: Amanzimnyama Hill Road, Tongaat, KwaZulu-Natal P O Box 3, Tongaat 4400 Telephone: +27 32 439 4019, Facsimile: +27 32 945 3333 Transfer secretaries: Computershare Investor Services (Pty) Limited Telephone: +27 11 370 7700 Sponsor: Investec Bank Limited Telephone: +27 11 286 7000 www.tongaat.co.za e-mail: info@tongaat.co.za PRO FORMA INCOME STATEMENT AND SEGMENTAL RESULTS for the 12 months ended 31 March 2010 (ANNEXURE 1) (1) (2) (3)
(1)-(2) Unadjusted Actual Pro forma Audited 3 months 12 months 15 months to 1 January to
31 March 2009 to 31 March 2010 31 March 2010 Rmillion 2009 Revenue 11 136 2 347 8 789 Profit from operations 1 691 191 1 500 Capital profit on land 52 52 Capital profit on insurance claim 13 13 BEE IFRS 2 charge and transaction costs (35) (9) (26) Zimbabwe consolidation take-on gain 1 969 1 969 Valuation adjustments (3) 1 (4) Operating profit 3 687 2 152 1 535 Share of associate company`s profit 1 1 Net financing costs (452) (87) (365) Profit before tax 3 236 2 066 1 170 Tax (208) (50) (158) Net profit for the period 3 028 2 016 1 012 Profit attributable to: Shareholders of Tongaat Hulett 2 898 2 013 885 Minority (non-controlling) interest 130 3 127 3 028 2 016 1 012
Headline earnings attributable to Tongaat Hulett shareholders 858 43 815 Earnings per share (cents) Net profit per share Basic 2 791,6 1 952,4 856,2 Diluted 2 736,0 1 912,4 839,1 Headline earnings per share Basic 826,5 41,7 788,5 Diluted 810,0 40,9 772,7 Dividend per share (cents) 275,0 - 275,0 SEGMENTAL ANALYSIS (1) (2) (3)
(1)-(2) Unadjusted Actual Pro forma Audited 3 months 12 months 15 months to 1 January to
31 March 2009 to 31 March 2010 31 March 2010 Rmillion 2009 REVENUE Starch operations 2 778 535 2 243 Land Conversion and Developments 274 14 260 Sugar Zimbabwe operations 1 636 311 1 325 Swaziland operations 134 1 133 Mozambique operations 463 16 447 SA agriculture, milling and refining 4 285 1 137 3 148 Downstream value added activities 1 566 333 1 233 Consolidated total 11 136 2 347 8 789 PROFIT FROM OPERATIONS Starch operations 301 50 251 Land Conversion and Developments 187 (7) 194 Sugar Zimbabwe operations 576 58 518 Swaziland operations 63 12 51 Mozambique operations 192 51 141 SA agriculture, milling and refining 158 22 136 Downstream value added activities 226 26 200 Centrally accounted and consolidation items (12) (21) 9 Consolidated total 1 691 191 1 500 NOTES (1) Unadjusted audited results for the 15 months ended 31 March 2010. (2) Unaudited results for the 3 months from 1 January 2009 to 31 March 2009 based on complete management account information for the 3 months ended 31 March 2009 prepared in terms of IFRS. (3) Pro forma results for the 12 months to 31 March 2010, being column 1 minus column 2, which represents the unaudited pro forma comparative income statement for the 12 months to 31 March 2010. (4) This pro forma income statement is the responsibility of the Tongaat Hulett directors, who are satisfied with its quality, and has been prepared for comparative purposes only arising from the change in the company`s previous financial year end. As per the JSE Limited Listings Requirements, para 8.18 : this information is prepared for illustrative purposes and because of its nature, it may not fairly present the financial results of the company for the pro forma reporting period. (5) The reporting accountant`s report from Deloite & Touche on the pro forma financial information is set out in the annual financial statements and forms part of the SENS announcement of results. INDEPENDENT REPORTING ACCOUNTANTS` ASSURANCE REPORT 20 May 2011 The Directors Tongaat Hulett Limited P O Box 3 TONGAAT 4400 Dear Sirs Independent Reporting Accountants` Assurance Report on the Pro Forma Financial Information of Tongaat Hulett Limited We have performed our limited assurance engagement in respect of the unaudited 12 month period ended 31 March 2010 comparative pro forma income statement and segmental result information which is to be included in Tongaat Hulett Limited`s SENS announcement of results and as an annexure to the company`s 31 March 2011 annual financial statements. The pro forma financial information as set out in the enclosed Annexure 1 has been prepared in accordance with the requirements of the JSE Limited ("JSE") Listings Requirements, for illustrative purposes only, to provide certain comparative financial information as a consequence of the change in Tongaat Hulett Limited`s prior year reporting period from December, to a 15 month period ended 31 March 2010. Directors` responsibility The directors are responsible for the compilation, contents and presentation of the pro forma financial information to be contained in the company`s SENS announcement of results and annual financial statements and the financial information from which it has been prepared. Their responsibility includes determining that: the pro forma financial information has been properly compiled on the basis stated; the basis is consistent with the accounting policies of Tongaat Hulett Limited; and the pro forma adjustments are appropriate for the purposes of the pro forma financial information disclosed in terms of the JSE Listings Requirements. Reporting accountants` responsibility Our responsibility is to express our limited assurance conclusion on the comparative pro forma financial information included in the SENS announcement of results and as an annexure to the company`s 31 March 2011 annual financial statements. We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements applicable to Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and the Guide on Pro Forma Financial Information issued by SAICA. This standard requires us to obtain sufficient appropriate evidence on which to base our conclusion. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue. Sources of information and work performed Our procedures consisted primarily of comparing the unadjusted financial information with the source documents, considering the pro forma adjustments in light of the accounting policies of Tongaat Hulett Limited, considering the evidence supporting the pro forma adjustments and discussing the adjusted pro forma financial information with the directors of the company. In arriving at our conclusion, we have relied upon financial information prepared by the directors of Tongaat Hulett Limited and other information from various public, financial and industry sources. While our work performed has involved an analysis of the historical published audited financial information and other information provided to us, our assurance engagement does not constitute an audit or review of any of the underlying financial information conducted in accordance with International Standards on Auditing or International Standards on Review Engagements and accordingly, we do not express an audit or review opinion. In a limited assurance engagement, the evidence-gathering procedures are more limited than for a reasonable assurance engagement and therefore less assurance is obtained than in a reasonable assurance engagement. We believe our evidence obtained is sufficient and appropriate to provide a basis for our conclusion. Conclusion Based on our examination of the evidence obtained, nothing has come to our attention, which causes us to believe that, in terms of the section 8.17 and 8.30 of the JSE Listings Requirements: - the pro forma financial information has not been properly compiled on the basis stated, - such basis is inconsistent with the accounting policies of the issuer, and - the adjustments are not appropriate for the purposes of the pro forma financial information as disclosed. Consent We consent to the inclusion of this report, which will form part of the SENS announcement of results, to be issued on or about 30 May 2011, and as an Annexure to the company`s 31 March 2011 annual financial statements, in the form and context in which it will appear. Deloitte & Touche Registered Auditors Per JAR Welch Partner Deloitte Place 2 Pencarrow Crescent La Lucia Ridge Office Estate Durban South Africa National Executive: GG Gelink Chief Executive AE Swiegers Chief Operating Officer GM Pinnock Audit DL Kennedy Risk Advisory NB Kader Tax and Legal Services L Geeringh Consulting L Bam Corporate Finance JK Mazzacco Human Resources CR Beukman Finance TJ Brown Clients NT Mtoba Chairman of the Board MJ Comber Deputy Chairman of the Board. Regional Leader: GC Brazier A full list of partners and directors is available on request. Date: 30/05/2011 07:05:21 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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