TON 201905310053A
Update on strategic and financial review and Renewal of cautionary announcement

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

UPDATE ON STRATEGIC AND FINANCIAL REVIEW AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT

Introduction

Shareholders are referred to the announcements of 8 March and 24 April 2019 in which they were
advised that the Company's strategic and financial review had revealed certain practices which might
lead to the restatement of prior financial information.

The Company is aware that our stakeholders are seeking transparency and is committed to informing
stakeholders of any material developments arising out of the review as soon as the Company is in a
position to do so. This update is based on information currently available.

Update on financial review and impact on financial statements

While the primary focus areas of the financial review remain unchanged, the review has revealed certain
past practices which are of significant concern to the Board and the Company's auditors. These past
practices appear to have resulted in financial statements that did not reflect Tongaat Hulett's underlying
business performance accurately. The review is ongoing and incorporates an independent forensic
investigation to establish any evidence of whether any of these past practices were deliberate.

Shareholders are notified that:
-   the Company's audited consolidated financial statements for the year ended 31 March 2018 ("2018
    Financial Statements") will need to be restated;
-   the impact of the past practices on the numbers reflected in the 2018 Financial Statements is in the
    process of being determined. The estimated reduction in the amount reflected in the 2018 Financial
    Statements as the Company's equity as at 1 April 2018 is anticipated to be between R3.5 and
    R4.5 billion. The adjustments are of a non-cash nature and relate to the reassessment of land sales
    against the revenue recognition criteria defined by International Financial Reporting Standards and
    the associated profit margins, a revision to growing cane valuations, and a reversal of costs
    capitalised to, inter alia, projects, cane roots, maintenance and inventory, on a cumulative basis;
-   the Board, with support from the Company's auditors, has concluded that reliance on the 2018
    Financial Statements is no longer appropriate. The financial information therein should not be relied
    upon;
-   while all involved are working as diligently and efficiently as possible, the significance of the past
    practices identified in the review and the materiality involved means that the Company's audited
    consolidated financial statements for the year ended 31 March 2019 will not be finalised by 30 June
    2019;
-   once the forensic investigation and report findings are complete and the final accounting treatments
    are resolved by the Company, the auditors will then complete the outstanding audit processes; and
-   the Board is committed to finalising the financial statements as soon as reasonably possible. Current
    timelines indicate that the Company's audited consolidated financial statements for the year ended
    31 March 2019, which will include the restated prior financial information, should be released by
    October 2019.

The Board regrets this delay and is affording this matter its urgent attention and is engaging with all
relevant regulatory bodies, including the JSE Limited.

Strategic review

The Board is encouraged by the good progress being made with its comprehensive turnaround strategy
and will provide further details as appropriate.

Tongaat Hulett holds a substantial asset base including controlling interests in sugar operations in South
Africa, Swaziland, Botswana, Namibia, Mozambique and Zimbabwe, an extensive property portfolio,
and starch operations. The Company is committed to selling certain assets and is making progress in
reducing debt, strengthening the balance sheet and improving its liquidity position. The Company has
obtained independent valuations of its various businesses as well as its land portfolio, which is currently
reflected in the financial statements at historical cost.

The Board and management have taken a number of immediate and remedial decisions to improve cash
generation by significantly reducing costs, right-sizing operations and improving operating
performance. Significant changes to management and reporting structures have been and continue to be
implemented, and these changes are already showing benefits.

Local sugar markets and trading conditions have deteriorated, resulting in lower than anticipated cash
flows in the Company's business and the sugar sector as a whole. While the current economic climate
is not conducive for land sales, the Company has negotiated two sale agreements and is taking steps to
obtain the necessary planning approvals to conclude these transactions. Management is focused on
collecting the proceeds from previously concluded land transactions. These challenges are in part
balanced by the performance of the starch business which remains strong.

To strengthen governance, a restructuring sub-committee of the Board has been established to oversee
the turnaround process and support executive management.

                                                     
Negotiations on standstill arrangement

Shareholders are referred to the announcements of 24 April and 16 May 2019 in which the Board
advised that the Company had concluded a waiver and undertaking agreement with its debt providers
("Lenders") in relation to existing South African short and long-term facilities ("Facilities") provided
by the Lenders to the Company and certain of its directly and indirectly wholly-owned subsidiaries. In
the waiver agreement, the Lenders have, amongst other things, agreed to waive their rights arising from
any breach of financial covenants contained in the Facilities agreements for the measurement date
falling on 31 March 2019.

The Company continues to engage positively in a collaborative process with its debt providers to ensure
the Company's long-term sustainability by reducing the levels of debt to an appropriate level over a
period of time. Negotiations, which are at an advanced stage, are continuing between the Company and
its South African lenders in relation to a standstill agreement which will regulate, amongst other things,
a moratorium for the repayment of amounts (other than interest) due and payable under South African
short and long-term facilities. The parties intend to conclude the standstill agreement as soon as is
reasonably possible.

Renewal of cautionary

Shareholders are advised to continue to exercise caution when dealing in the Company's securities.


Tongaat


31 May 2019


Legal advisors
Bowman Gilfillan Inc.


Sponsor
Investec Bank Limited




                                                   

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