TONGAAT HULETT LIMITED - Trading Update and Trading Statement for the twelve months ending 31 March 2019
22 February 2019 15:00
TON 201902220051A
Trading Update and Trading Statement for the twelve months ending 31 March 2019

Tongaat Hulett Limited
Registration number 1892/000610/06
Share code: TON
ISIN: ZAE000096541
("Tongaat Hulett" or "the Company")

31 MARCH 2019


Gavin Hudson commenced his duties on 1 February 2019 as the new Chief Executive
Officer of Tongaat Hulett with a mandate to expedite an immediate and comprehensive
strategic and financial review with the view to stabilising the business, address the debt
levels and set the path towards acceptable returns for shareholders. To this end, a
permanent Chief Financial Officer has been appointed and the review has commenced.
Priority areas for intervention have been identified and include streamlining operations,
rationalising where appropriate, and improving business performance and accountability.

During the course of the strategic and financial review, it has become clear that that the
business is facing more challenges and operational performance has continued to decline.
As a result, Tongaat Hulett considers it important to provide both a trading update and
trading statement to the market.

Further details of the company's strategic review and its turnaround strategy will be
presented to shareholders in full, with the release of the final results. These matters are
receiving the Board's urgent attention.

Sugar business

South Africa
While sugar production for the season increased, local market sales across the industry
remain under considerable pressure due to the overhang of excess sugar bought in prior
to the price increase, and a greater than expected impact of the sugar tax on local demand,
in particular with the reformulation of products in the beverage industry. Cane valuations
have thus been rebased for the lower local market realisations.

Local market sales have been impacted by high volumes of imported sugar in the local
market. This has resulted in additional sales of sugar into export markets at low world
prices which has affected margins. Cane valuations have therefore been rebased for the
lower local market realisations. The performance of Mafambisse mill was disappointing
and impacted profits, while commissioning delays will see the full onstreaming of the
refinery in the new financial year.

The company has kept its pricing in line with inflationary increases in the economy and
demand for local market sugar remains strong. The operation earns sufficient export
proceeds to cover its foreign input costs, and sugar as a commodity is able to maintain its
value in US$ terms. The Zimbabwe operation can thus be ring-fenced with no requirement
to draw funds from elsewhere in the group. The anticipated negative impact of translation
at a weaker exchange rate (following the announcement of a free float of the currency)
has been offset by a corresponding uplift in cane valuations. No further dividends have
been received since the interim reporting period.

Land Conversion and Development
While negotiations continue, no further land sales have been concluded since
30 September 2018. In addition, land sales where debtors have not performed have been
terminated, allowing the company to pursue alternative customers and replacement sales.
A thorough review of the land portfolio is underway.

Starch and glucose business
The starch and glucose business is expected to deliver growth in operating earnings over
the prior financial period, supported by some recovery in volumes during the second half
of the year, and with margins benefitting from competitive maize prices and improved co-
product realisations.


Tongaat Hulett, in terms of the JSE Limited Listings Requirements, is required to publish a
trading statement as soon as there is a reasonable degree of certainty that the financial
results for the current reporting period will be at least 20% different from those of the
previous corresponding period. The following trading statement is issued for the twelve
months ending 31 March 2019.

Shareholders are advised that a reasonable degree of certainty exists that Tongaat Hulett's
headline earnings are expected to reflect a decrease of at least 250% compared to the
R617 million earned in the twelve months ended 31 March 2018 ("the comparative
period"). Consequently, headline earnings per share ("HEPS") and earnings per share
("EPS") are both expected to reflect a loss in excess of 803 cents and 927 cents respectively,
and a reduction of at least 250% when compared to HEPS of 535 cents and EPS of 618
cents for the comparative period.

With Tongaat Hulett's high debt levels and interest cost, any reduction in operating profit
has a larger impact on earnings. The company has appointed advisors and will enter into
discussions with lenders this coming week.

As the company prepares for the end of its financial year, management is assessing various
assets including cane assets and project costs for impairment risk, reviewing the
accounting implications of the currency dynamics in Zimbabwe, and finalising the impact
of IFRS 15 Revenue from Contracts with Customers on its financial statements.

Further information to this effect will be released as and when appropriate, before the
release of the audited results for the year ending 31 March 2019 scheduled for May 2019.
This trading statement is issued in accordance with paragraph 3.4(b) of the JSE Limited
Listings Requirements. The financial information contained in this trading statement has
not been reviewed or reported on by Tongaat Hulett's auditors.

Shareholders are further advised that Tongaat Hulett is aware of discussions between its
B-BBEE shareholders, their advisors and their preference share funders and that a formal
unwind of the 2007 B-BBEE transaction funding structure is likely. The funding is non-
recourse to Tongaat Hulett.

22 February 2019

Investec Bank Limited

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