2018 INTEGRATED ANNUAL REPORT - tongaat.com

1 INTEGRATED ANNUAL REPORT 201801 2018 INTEGRATED ANNUAL REPORTVALUE CREATION FOR ALL STAKEHOLDERS THROUGH AN ALL-INCLUSIVE APPROACH TO GROWTH AND DEVELOPMENTTONGAAT HULETT02 CONTENTSINTRODUCTION At a glance 2 Salient financial features 3 Investment case 4 Business model 6 Geographic footprint 7 Tongaat Hulett Profile 8 CHAIRMAN S STATEMENT 12 CHIEF EXECUTIVE S REVIEW Strategic positioning and success drivers 14 Financial review 34 Acknowledgements and conclusion 37 SUSTAINABILITY ELEMENTS Human resources 38 Stakeholder relationships 46(including Safety, Health and Environment)Intellectual property 56 Environment 58 ABOUT THIS REPORTT ongaat Hulett endorses the principles of transparency and accountability, and particularly the concomitant commitment to REPORT on the company s performance, strategy and prospects in a manner that is meaningful to all stakeholders.

2 This INTEGRATED ANNUAL REPORT is Tongaat Hulett s primary communication to shareholders, investors and analysts, farmers, government authorities and regulators, local communities, employees, customers, suppliers and service providers. It provides an overview of Tongaat Hulett s financial and non-financial performance for the 12 months ended 31 March 2018, with comparative data for the prior period. The 2018 INTEGRATED ANNUAL REPORT covers relevant financial and non-financial aspects of all the operations of the company. There has been no change in the scope and boundary of this REPORT , relative to previous reports. There has also not been any significant change in the company s size, structure or ownership during the current reporting period, other than the details provided on pages 10 and 18 regarding the construction of a sugar refinery at the Xinavane Mill in Mozambique.

3 There has been no material restatement of information provided in earlier reports. MATERIALITY PROCESSThe content of the INTEGRATED ANNUAL REPORT was developed by considering regulatory requirements, guidelines, previous reports and a combination of feedback from internal subject matter experts, stakeholder expectations and analysis of the external environment, as well as a materiality determination process that initially included internal stakeholders. The principles embodied in the King IV REPORT on Corporate Governance for South Africa 2016 (King IV ), the International INTEGRATED Reporting Council s (IIRC) INTEGRATED Reporting (<IR>) Framework and the Global Reporting Initiative s (GRI) Standards contributed to the compilation of this REPORT .

4 Matters that have a high likelihood of impacting the company s ability to create value in the short, medium and long term were considered AND APPROVALT ongaat Hulett has adopted a combined assurance strategy and framework to provide assurance to the Board on the company s performance in the context of material matters in its operating environment. The Audit and Compliance, Risk, SHE and Social and Ethics Committees consider all material matters facing the company to ensure that these are adequately managed and that internal assurance activities are INTEGRATED and coordinated efficiently and proficiently. The following service providers provided external assurance of various elements of the INTEGRATED ANNUAL REPORT : ANNUAL financial statements - Deloitte & Touche Review of internal controls and risk review - KPMG Sustainability - Environmental Resources Management (ERM) B-BBEE contributor level - AQRate Verification Services Carbon emissions disclosure - Terra Firma Solutions Operational certifications - include NOSA, OHSAS 18001, ISO 14001, ISO 9001, FSSC 22000 and ISO 22000 This REPORT is the product of several iterative processes of approval and refinement, with oversight at executive level.

5 It was approved by the Board for release to shareholders on 24 May ANNUAL REPORT 201801 This icon indicates where more details can be accessed onlineThis icon indicates where more details can be accessed elsewhere in this reportREQUEST FOR FEEDBACKT ongaat Hulett would like to hear from all stakeholders on their views of the 2018 INTEGRATED ANNUAL REPORT , including the accessibility of the information provided and opportunities to expand and improve the company s future contact Corporate Communications, Tongaat Hulett, PO Box 3, Tongaat, 4400, South Africa (email: / telephone: +27 32 439 4365)CAPITALS OF VALUE CREATIONT ongaat Hulett s impact on and contributions to the six capitals of value creation described in the <IR> Framework are addressed in an INTEGRATED manner throughout this REPORT .

6 MANUFACTURED Tongaat Hulett profile Page 8 CAPITAL FINANCIAL CAPITAL Financial and Page 34 operations review HUMAN CAPITAL Human resources Page 38 Stakeholder relationships Page 46 SOCIAL AND Stakeholder relationships Page 46 RELATIONSHIP CAPITAL INTELLECTUAL Intellectual property Page 56 CAPITAL NATURAL CAPITAL Environment Page 58 DIRECTORATE 64 CORPORATE GOVERNANCE REPORT 66 Remuneration REPORT 76 FINANCIAL REPORTING 93 Segmental Analysis 94 ANNUAL Financial Statements 96 Five year review 140 SHAREHOLDER INFORMATIONN otice of ANNUAL General Meeting 144 Form of Proxy 147 Glossary of terms 149 SUITE OF REPORTS The INTEGRATED ANNUAL REPORT forms part of, and should be read in conjunction with a suite of reports available online on our website at Other reports available are.

7 King IV Governance compliance register ( ) Sustainability REPORT ( ) Land development portfolio ( ) Tongaat Hulett s GRI index ( )FURTHER DETAILSTONGAAT HULETT02 TONGAAT HULETT CREATES VALUE FOR ALL STAKEHOLDERS THROUGH AN ALL-INCLUSIVE APPROACH TO GROWTH AND DEVELOPMENT, WHICH FOLLOWS THE INTERCONNECTED NATURE OF ITS ACTIVITIESCONSTRUCTIVE INTERFACE WITH GOVERNMENTS, SOCIETY AND OTHER KEY STAKEHOLDERSAT A GLANCEINTRODUCTIONA griculture and agri-processing is a fundamental element of socio-economic development in Africa - particularly in relation to rural communities, farming, food security and water management, housing and land conversion activities as urban areas expand. This is also linked to the socio-political dynamics of the Hulett is a proactive and resilient organisation working in collaboration with all its stakeholders in a focused, constructive, mutual value-adding and developmental manner.

8 It is well-positioned to benefit, and be a key development partner, as agriculture and agri-processing in Sub-Saharan Africa develops from a low base. 670 000 tons of maize converted to starch and glucose per annum available wet-milling capacity and enhanced product mix largest wet-miller of maize in Africa market development to increase the production of value-added modified starches sales into Sub-Saharan Africa and other regional markets accelerating from a low base 194 408 hectares (own and third party) of sugarcane supplying eight Tongaat Hulett sugar mills approximately 34 000 hectares of new cane land has been planted over the past six years low-cost incremental sugar production from existing (2 million tons)

9 Milling capacity 7 612 developable hectares identified for conversion out of sugarcane into urban land usage over time 3 566 developable hectares (47 percent of the portfolio) formally released from agriculture 1 485 developable hectares in the portfolio have EIA approval invested R979 million into land earmarked for future sales STARCH OPERATIONSSUGAR OPERATIONSLAND CONVERSION AND DEVELOPMENT ACTIVITIESAGRICULTURE AND AGRI-PROCESSING (SUGARCANE/ sugar AND MAIZE/STARCH) WITH LIVESTOCK NUTRITION, RENEWABLE ENERGY OPPORTUNITIES (ELECTRICITY GENERATION AND ETHANOL PRODUCTION)PORTFOLIO OF LAND FOR CONVERSION AND DEVELOPMENT (UNIQUE PORTFOLIO AND WELL-ESTABLISHED DEVELOPMENT PLATFORM IN KWAZULU-NATAL)OPERATIONS LOCATED IN SIX COUNTRIES IN SUB-SAHARAN AFRICALARGEST PRIVATE SECTOR EMPLOYER IN BOTH MOZAMBIQUE AND ZIMBABWEAPPROXIMATELY ONE MILLION PEOPLE IN SOUTH AFRICA ARE DIRECTLY IMPACTED BY THE SOUTH AFRICAN sugar INDUSTRYINTEGRATED ANNUAL REPORT 201803 THE RESULTS FOR THE YEAR ENDED MARCH 2018 REFLECTED.

10 sugar operations were adversely affected by the dynamics of imports into the South African market , low international sugar prices and the impact of stronger local currencies on export realisations starch and glucose operation improved operating profit in the second half of the year, benefitting from more competitive maize costs land conversion and development activities led to a number of sales in new markets and operating profit which was in line with the previous yearTongaat Hulett s operating cash flow (after working capital) was R2,275 billion (2017: R3,176 billion) Overall, the year reflected a net cash outflow after dividends of R1,324 billion (2017: R544 million inflow)OPERATING PROFITSALIENT FINANCIALFEATURES 2017/18 sugar OPERATIONSSTARCH OPER ATIONSLAND CONVERSION AND DEVELOPMENT ACTIVITIESREVENUE OPERATING PROFIT HEADLINE EARNINGS ANNUAL DIVIDEND - 5,2% (2017: R17,915 BILLION)- 16,1% (2017: R2,333 BILLION)- 3 7, 2 % (2017: R982 MILLION)(2017: 300 CENTS PER SHARE)R617 MILLIONR1,958 BILLIONR16,982 BILLION160 CENTS PER SHARE3231 1727265505001 0001 5002 0001 5351 8792 131*2 3742 0891 669*2 3331 95820042008200620052009/10^2010/112011/1 22012/132013/142014/152015/162016/172017 /182007#R MILLION8381 604 Operating profit of R837 million (2017: R1,271 billion) Total sugar production increased to 1 171 000 tons (2017.)