NOTES (21-30) TO THE
FINANCIAL STATEMENTS

21.  TAX (Rmillion)    Consolidated  Company 
         2018  2017  2018  2017 
                    
   Tax on earnings before capital profits:                
   Current     222  542  26  17 
   Deferred     94  (128) (128) (47)
   Prior years - current and deferred     3  1       
         319  415  (102) (30)
                    
   Tax on capital profits:                
   Deferred     (14) 13  (19) 13 
   Prior years - deferred     (56)         
         (70) 13  (19) 13 
                    
   Tax charge/(relief) for the year     249  428  (121) (17)
   Foreign tax included above     261  277  26  17 
                    
   Reconciliation of statutory rate to effective rate:                
   Tax charge at normal rate of South African tax     302  426  52  283 
   Adjusted for:                
   Non-taxable capital surplus on disposal of property, plant and equipment  (31) (38) (5) (41)
   Other non-taxable amounts     (18) (39) (4) (13)
   Dividends received from subsidiaries           (198) (287)
   Assessed losses of foreign subsidiaries     4  11       
   Non-deductible funding costs of BEE SPVs and related expenses  16  16      
   Other non-deductible expenditure     12  17  10  12 
   Foreign tax rate variations     (14) (12)      
   Foreign withholding tax     22  11  20  9 
   Capital gains tax     9  35  4  20 
   Prior years     (53) 1       
   Tax charge/(relief)    249  428  (121) (17)
                    
   Normal rate of South African tax     28,0%  28,0%  28,0%  28,0% 
   Adjusted for:                
   Non-taxable capital surplus on disposal of property, plant and equipment  (2,9) (2,5) (2,7) (4,0)
   Other non-taxable amounts     (1,6) (2,6) (2,2) (1,3)
   Dividends received from subsidiaries           (106,6) (28,4)
   Assessed losses of foreign subsidiaries     0,4  0,7       
   Non-deductible funding costs of BEE SPVs and related expenses  1,5  1,1      
   Other non-deductible expenditure     1,1  1,1  5,4  1,2 
   Foreign tax rate variations     (1,3) (0,8)      
   Foreign withholding tax     2,0  0,7  10,8  0,9 
   Capital gains tax     0,8  2,3  2,2  1,9 
   Prior years     (4,9) 0,1       
   Effective rate of tax     23,1%  28,1%  (65,1%) (1,7%)
                    
   Normal tax losses of R4 189 million (2017: R3 151 million) have been utilised to reduce deferred tax. Management considers that there will be sufficient future profits to utilise these tax losses. No deferred tax asset has been raised in respect of tax losses of foreign subsidiaries of R88 million (2017: R110 million) that may not be utilised in the short term or may expire in terms of applicable tax legislation. 
                    
22.  HEADLINE EARNINGS (Rmillion)   Consolidated 
        2018  2017 
             
   Profit attributable to shareholders    713  983 
             
   Less after tax effect of:    (96) (1)
   Capital profit on disposal of land, cane roots and buildings    (27) (12)
   Loss/(surplus) on disposal of property, plant and equipment    3  (4)
        (24) (16)
   Minority (non-controlling) interest    (1) 1 
   Tax on capital profit on sale of land, cane roots and buildings  (70) 13 
   Tax on disposal of other fixed assets    (1) 1 
             
   Headline earnings    617  982 
             
   Headline earnings per share (cents)        
   Basic    534,8  852,7 
   Diluted    534,8  852,7 
             
                    
23.  EARNINGS PER SHARE                
                    
   Earnings and headline earnings per share are calculated using the weighted average number of relevant ordinary shares in issue during the year. The weighted average number of shares in issue during the year for both basic earnings per share and diluted earnings per share was 115 371 597 (2017: 115 158 241). 
  
                    
                    
24.  DIVIDENDS (Rmillion)    Consolidated  Company 
         2018  2017  2018  2017 
                    
   Ordinary share capital                
   Final for previous year, paid 29 June 2017: 200 cents
(2017: 60 cents)		    270  81  270  81 
   Interim for current year, paid 8 February 2018: 100 cents (2017: 100 cents)    135  135  135  135 
                    
         405  216  405  216 
   Less dividends relating to BEE SPV consolidation shares     (75) (40)      
         330  176  405  216 
                    
   The final ordinary dividend for the year ended 31 March 2018 of 60 cents per share declared on 24 May 2018 and payable on 28 June 2018 has not been accrued. 
                    
                    
25.  FINANCIAL RISK MANAGEMENT (Rmillion)              
                    
   Financial instruments consist primarily of cash deposits with banks, unlisted investments, derivatives, accounts receivable and payable, and loans to and from associates and others. Financial instruments are carried at fair value, amortised cost or amounts that approximate fair value. 
                    
   Categories of financial instruments     Consolidated Company
         2018  2017  2018  2017 
                    
   Financial assets                
   Derivative instruments in designated hedge accounting relationships  7     7    
   Unlisted shares     25  28       
   Trade and long-term receivables at amortised cost  5 230  4 689  1 611  1 532 
   Cash and cash equivalents     2 662  2 741  64  58 
         7 924  7 458  1 682  1 590 
                    
   Financial liabilities                
   Derivative instruments in designated hedge accounting relationships    8  9  8  9 
   Financial liabilities at amortised cost (trade payables and long and short-term borrowings)   13 282  11 075  11 244  9 317 
   Non-recourse equity-settled BEE borrowings     603  623       
         13 893  11 707  11 252  9 326 
                    
   Risk management is recognised as being dynamic, evolving and integrated into the core of running the business. The approach to risk management in Tongaat Hulett includes being able to identify and describe / analyse risks at all levels throughout the organisation, with mitigating actions being implemented at the appropriate point of activity. The very significant, high impact risk areas and the related mitigating action plans are monitored at a Tongaat Hulett risk committee level. Risks and mitigating actions are given relevant visibility at various appropriate forums throughout the organisation. 

In the normal course of its operations, Tongaat Hulett is inter alia exposed to capital, credit, foreign currency, interest, liquidity and commodity price risks. In order to manage these risks, Tongaat Hulett may enter into transactions, which make use of derivatives. They include forward exchange contracts (FECs) and options, interest rate swaps and commodity futures and options. Separate committees are used to manage risks and hedging activities. Tongaat Hulett does not speculate in or engage in the trading of derivative instruments. Since derivative instruments are utilised for risk management, market risk relating to derivative instruments will be offset by changes in the valuation of the underlying assets, liabilities or transactions being hedged. The overall risk strategy remains unchanged from previous years.

Capital risk management 
Tongaat Hulett's overall strategy around capital structure remains unchanged from previous years and is continually reviewed in budgeting and business planning processes. Tongaat Hulett manages its capital to ensure that its operations are able to continue as a going concern while maximising the return to stakeholders through an appropriate debt and equity balance. The capital structure of Tongaat Hulett consists of debt, which includes borrowings (long-term and short-term bank debt and bonds issued in the debt capital market), cash and cash equivalents and equity. 

Credit risk 
Financial instruments do not represent a concentration of credit risk because Tongaat Hulett deals with a variety of major banks, and its accounts receivable and loans are spread among a number of major industries, customers and geographic areas. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. In addition, appropriate credit committees review significant credit transactions before consummation. Where considered appropriate, use is made of credit guarantee insurance. A suitable provision is made for doubtful debts. Financial guarantee contracts are accounted for as insurance arrangements. The gross carrying amounts of financial assets best represent the maximum exposure to credit risk. 
                    
   Past due trade receivables                
   Included in trade receivables are debtors which are past the expected collection date (past due) at the reporting date and no provision has been made as there has not been a significant change in credit quality and the amounts are still considered recoverable. No collateral is held over these balances other than in respect of the land conversion activities where legal ownership of the underlying land asset is usually only transferred to the purchaser on receipt of the full proceeds. A summarised age analysis of past due debtors is set out below. 
                    
         Consolidated  Company 
         2018  2017  2018  2017 
                    
   Less than 1 month     323  366  94  63 
   Between 1 to 2 months     55  36  8  10 
   Between 2 to 3 months     4  17  1  1 
   Greater than 3 months     352  98  4  6 
   Total past due     734  517  107  80 
                    
   Provision for doubtful debts                
   Set out below is a summary of the movement in the provision
for doubtful debts for the year: 		            
              
   Balance at beginning of year     46  36  8  4 
   Currency alignment     (4) (4)      
   Amounts written-off     (2) (3) (1) (2)
   Amounts recovered     (2)    (2)   
   Increase in allowance recognised in profit or loss     5  17  5  6 
   Balance at end of year     43  46  10  8 
                    
   Foreign currency risk                
   In the normal course of business, Tongaat Hulett enters into transactions denominated in foreign currencies. As a result, Tongaat Hulett is subject to transaction and translation exposure from fluctuations in foreign currency exchange rates. A variety of instruments are used to minimise foreign currency exchange rate risk in terms of the risk management policy. In principle it is the policy to cover foreign currency exposure in respect of liabilities and purchase commitments and an appropriate portion of foreign currency exposure on receivables. There were no speculative positions in foreign currencies at year end. All foreign exchange contracts are supported by underlying transactions. Tongaat Hulett is not reliant on imported raw materials to any significant extent. The fair values of the forward exchange contracts were established by reference to quoted prices and are categorised as Level 1 under the fair value hierarchy and are accounted for as cash flow hedges. 

Forward exchange contracts that constitute designated hedges of currency risk at year end are summarised as follows:
    
    Consolidated    Company
           2018  2017        2018 2017
     Average
contract
rate 		 Commitment
Rmillion 		 Fair value
of FEC
Rmillion 		 Fair value
of FEC
Rmillion 		   Average
contract
rate 		 Commitment
Rmillion 		 Fair value
of FEC
Rmillion 		 Fair value
of FEC
Rmillion 
    
    
                          
  Imports                       
  US Dollar  11,79  3          11,79  3       
  UK Pound  17,49  6          17,49  6       
  Euro  14,63  1          14,63  1       
                              
  Exports                           
  US Dollar  11,79  1  1       11,79  1  1    
                              
  Net total        1            1   
   
   The hedges in respect of imports and exports are expected to mature within approximately one year 
   The fair value is the estimated amount that would be paid or received to terminate the forward exchange contracts in arm's length transactions at the date of the statement of financial position. 
   Forward exchange contracts that do not constitute designated hedges of currency risk at year end are summarised as follows: 
     
    Consolidated   Company
           2018  2017        2018  2017 
     Average
contract
rate 		 Commitment
Rmillion 		 Fair value
of FEC
Rmillion 		 Fair value
of FEC
Rmillion 		   Average
contract
rate 		 Commitment
Rmillion 		 Fair value
of FEC
Rmillion 		 Fair value
of FEC
Rmillion 
    
    
                          
  Imports                       
  US Dollar  11,79  3          11,79  3       
  UK Pound  17,49  6          17,49  6       
  Euro  14,63  1          14,63  1       
                              
  Exports                           
  US Dollar  11,79  1  1       11,79  1  1    
                              
  Net total        1            1   
   
  Although not designated as a hedge for accounting purposes, these forward exchange contracts represent cover of existing foreign currency exposure. 
Tongaat Hulett has the following uncovered foreign receivables: 
         
    Consolidated     Company
     Foreign
amount
million 		 2018
Rmillion 		 2017
Rmillion 		     Foreign
amount
million 		 2018 
Rmillion 		 2017 
Rmillion 
    
    
                       
  Australian Dollar  5  49  82      5  49  77 
  US Dollar  3  30  3      2  30  3 
  New Zealand Dollar     4                 
        83  85         79  80 
                       
   
  The impact of a 10% strengthening or weakening of the Rand on the uncovered Australian dollar receivable will have a
R5 million (2017: R8 million) impact on profit before tax and a R4 million (2017: R6 million) impact on equity. The impact of a 10% strengthening or weakening of the Rand on the uncovered US dollar receivable will have a R3 million (2017: R0,3 million) impact on profit before tax and a R2 million (2017: R0,2 million) impact on equity. The impact of a 10% strengthening or weakening of the Rand on the uncovered New Zealand dollar receivable will have a R0,4 million (2017: nil) impact on profit before tax and a R0,3 million (2017: nil) impact on equity. This sensitivity is based on the exchange rates at the financial year end and the foreign values of the abovementioned receivables. 

Commodity price risk 
Commodity price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the prices of commodities. To hedge prices for Tongaat Hulett's substantial commodity requirements, commodity futures and options are used, including fixed and spot-defined forward sales contracts and call and put options. 

Tongaat Hulett Starch has secured its maize requirements for the current maize season to 31 May 2018 and a significant portion of its requirements for the period to 31 May 2019 by using a combination of unpriced procurement contracts and purchases and sales of maize futures. 

The fair value of the commodity futures contracts, which are set out below, were established by reference to quoted prices and are categorised as Level 1 under the fair value hierarchy. 
         
    Consolidated   Company
           2018  2017        2018  2017 
     Tons  Contract 
value 
Rmillion 		 Fair 
value 
Rmillion 		 Fair 
value 
Rmillion 		   Tons  Contract 
value 
Rmillion 		 Fair 
value 
Rmillion 		 Fair 
value 
Rmillion 
    
    
  Futures - hedge accounted:                       
  Maize futures sold  27 700  54  (2) (10)   27 700  54  (2) (10)
  Maize futures purchased  5 200  10  (6) 1    5 200  10  (6) 1 
           (8) (9)         (8) (9)
                     
  Period when cash flow is expected to occur  2018/19  2017/18        2018/19  2017/18 
  When expected to affect profit or loss  2018/19  2017/18        2018/19  2017/18 
  Gain transferred from equity and recognised in profit or loss         5             5 
   
  Growing crops fair value measurement 
  Growing crops, comprising standing cane, is measured at fair value which is determined using unobservable inputs and is categorised as Level 3 under the fair value hierarchy. The fair value of standing cane is determined by estimating the growth of the cane, an estimate of the yield of the standing cane, sucrose content, selling prices, less costs to harvest and transport, over-the-weighbridge costs and costs into the market as at 31 March 2018. Changes in the fair value are included in profit or loss, with a benefit of R370 million (2017: R143 million) being recognised in profit or loss in the current year. The key unobservable inputs used in determining fair value and a reconciliation of the change in fair value for the year is included in note 8. 
   
  The effect of an increase in yield or in selling prices will result in an increase in the fair value of the standing cane. The key unobservable inputs, used in determining fair value and which are not interrelated, are yield of the standing cane and prices. The consolidated yield is 81 tons per hectare (2017: 76 tons per hectare) and for the company it is 60 tons per hectare
(2017: 60 tons per hectare). For commercial reasons, selling prices cannot be disclosed. A change in yield of one ton per hectare would result in a R34 million (2017: R35 million) change in fair value for the consolidated results and R13 million
(2017: R12 million) for the company. A change of one percent in the cane price would result in a R28 million (2017: R32 million) change in fair value for the consolidated results and R8 million (2017: R9,7 million) for the company. 
   
  Interest rate risk 
  Tongaat Hulett is exposed to interest rate risk on its fixed rate loan liabilities and accounts receivable and payable, which can impact on the fair value of these instruments. Tongaat Hulett is also exposed to interest rate cash flow risk in respect of its variable rate loans and short-term cash investments, which can impact on the cash flows of these instruments. The exposure to interest rate risk is managed through the cash management system, which enables Tongaat Hulett to maximise returns while minimising risks. The impact of a 50 basis point move in interest rates will have a R34 million (2017: R26 million) effect on profit before tax and a R25 million (2017: R19 million) impact on equity. 
   
  Liquidity risk 
  Tongaat Hulett manages its liquidity risk by monitoring forecast cash flows on a weekly basis. There are unutilised established banking facilities of R2,87 billion (2017: R3,06 billion). Tongaat Hulett continues to meet the covenants associated with its long-term unsecured South African debt facilities. 
   
  Maturity profile of borrowings inclusive of interest projected at current interest rates: 
   
   Consolidated  Weighted average 
effective interest rate % 		 Due 
within 1 year 		 1 to 2 
years 		 2 to 5 
years 		 After 
5 years 		 Interest
adjustment 		 Total 
                          
   2018                      
   Bank loans  9,0  4 813*  2 075  3 300  687  (1 879) 8 996 
   Foreign loans  9,2  81  54        (8) 127 
   Other borrowings  8,3  506           (20) 486 
   Financial lease liability  11,5  2  1        (1) 2 
   Other non-interest bearing liabilities  3 540              3 540 
   Net settled derivatives     8              8 
   Total for Tongaat Hulett  8 950  2 130  3 300  687  (1 908) 13 159 
                          
   Non-recourse equity-settled BEE borrowings  631           (28) 603 
   Total including SPV debt     9 581  2 130  3 300  687  (1 936) 13 762 
                          
   2017                      
   Bank loans  9,4  3 165*  1 984  3 110  775  (1 606) 7 428 
   Foreign loans  10,5     46  57     (12) 91 
   Other borrowings  8,8  531           (22) 509 
   Financial lease liability  11,5  1  1  1     (1) 2 
   Other non-interest bearing liabilities  3 045              3 045 
   Net settled derivatives     9              9 
   Total for Tongaat Hulett     6 751  2 031  3 168  775  (1 641) 11 084 
                          
   Non-recourse equity-settled BEE borrowings  642           (19) 623 
   Total including SPV debt  7 393  2 031  3 168  775  (1 660) 11 707 
                          
   * Comprises mainly ongoing short-term loans subject to 365-day notice, which has not been served and therefore unlikely to become due in the next year. 
  
26.  PRINCIPAL SUBSIDIARY COMPANIES AND JOINT OPERATIONS (Rmillion)
          
         Interest of holding company 
   Name  Principal activity  Equity  Indebtedness 
         2018  2017  2018  2017 
   Tongaat Hulett Starch (Pty) Ltd  Wet maize milling, starch & glucose manufacturing operation  15  15  45  59 
   Tongaat Hulett Developments (Pty) Ltd  Land & property development activities  6  6  291  (231)
   Tongaat Hulett Estates (Pty) Ltd                
   Tongaat Hulett Sugar SA Limited     5 396  5 396  286  (90)
   Tambankulu Estates Limited (Swaziland)               
   Tongaat Hulett Acucareira de Mocambique, SA (Mozambique) (85%) Agriculture, raw sugar production, refining, packaging and production of liquid and dry speciality sugars             
           
   Tongaat Hulett Acucareira de Xinavane, SA (Mozambique) (88%)            
             
   Tongaat Hulett Acucar Limitada (Mozambique)            
   Triangle Sugar Corporation Limited (Zimbabwe)            
  Triangle Limited (Zimbabwe)          
   Hippo Valley Estates Limited (Zimbabwe) (50,3%)               
   Tongaat Hulett (Botswana) (Pty) Limited (Botswana) (50,1%)               
   Tongaat Hulett (Namibia) (Pty) Limited (Namibia) (51%)               
   The Tongaat Group Limited     54  54  (58) (59)
         5 471  5 471  564  (321)
                    
   Except where otherwise indicated, principal country of business is South Africa and effective participation is 100 percent. 
   A full list of all subsidiaries and joint operations is available from the company secretary on request.       
   Loans between companies within the group are unsecured with no fixed date for repayment.       
   Tongaat Hulett's proportionate share of the assets, liabilities and post-acquisition reserves of its joint operation, Effingham Development (33%) is included in the consolidated financial statements. The proportionate share of profit after tax for the year was R1 million (2017: R9 million). This joint operation is a property development partnership which operates in KwaZulu-Natal, South Africa. 
                    
   Non-wholly owned subsidiary with material non-controlling interests: Hippo Valley Estates Limited (Zimbabwe)
  
   Hippo Valley Estates Limited is listed on the Zimbabwe Stock Exchange. Its financial year end is 31 March. It is engaged in the growing and milling of sugarcane and other farming operations. 
  
    Consolidated    
  Summarised financial information as consolidated in
Tongaat Hulett’s financial statements: 		 2018  2017     
           
  Non-current assets  2 688  2 915     
  Current assets  1 487  1 466     
  Non-current liabilities  (1 113) (1 195)    
  Current liabilities  (344) (261)    
  Equity attributable to Tongaat Hulett  (1 368) (1 472)    
  Non-controlling interests  1 350  1 453     
              
  Revenue  1 781  2 092     
              
  Profit attributable to Tongaat Hulett  67  48     
  Profit attributable to non-controlling interests  65  47     
  Profit for the year  132  95     
           
   Other comprehensive (loss)/income attributable to Tongaat Hulett  (171) (158)      
   Other comprehensive (loss)/income attributable to non-controlling interests  (168) (156)      
   Other comprehensive (loss)/income for the year  (339) (314)      
                
   Total comprehensive (loss)/income attributable to Tongaat Hulett  (104) (110)      
   Total comprehensive (loss)/income attributable to non-controlling interests  (103) (109)      
   Total comprehensive (loss)/income for the year  (207) (219)      
                
   Net cash flow from operating activities  332  427       
   Net cash outflow from investing activities  (329) (33)      
   Net cash flow from financing activities  (29) (368)      
   Net cash (outflow)/inflow for the year  (26) 26       
           
              
27.  GUARANTEES AND CONTINGENT LIABILITIES (Rmillion)    Consolidated  Company 
   2018  2017  2018  2017 
              
   Guarantees in respect of obligations of Tongaat Hulett and third parties  91  96  3  3 
              
              
28.  LEASES (Rmillion)    Consolidated  Company 
         2018  2017  2018  2017 
                    
   Amounts payable under finance leases                
   Minimum lease payments due:                
   Not later than one year     2  1  2  1 
   Later than one year and not later than five years  1  2  1  2 
         3  3  3  3 
   Less future finance charges     (1) (1) (1) (1)
   Present value of lease obligations     2  2  2  2 
                    
   Payable:                
   Not later than one year     1  1  1  1 
   Later than one year and not later than five years  1  1  1  1 
         2  2  2  2 
                    
   Operating lease commitments, amounts due:             
   Not later than one year     43  38  36  33 
   Later than one year and not later than five years  16  22  11  18 
   Later than five years  1     1    
         60  60  48  51 
   In respect of:                
   Property     38  35  28  26 
   Vehicles and office equipment     22  25  20  25 
         60  60  48  51 
        
   The operating leases relating to property are mainly in respect of sugar storage warehouses in South Africa with lease periods of up to one year. 
   The operating leases relating mainly to vehicles and office equipment are in respect of lease periods up to five years. 
        
29.  CAPITAL EXPENDITURE COMMITMENTS (Rmillion) Consolidated  Company 
        2018  2017  2018  2017 
                    
   Contracted     398  104  67  38 
   Approved but not contracted     240  250  101  201 
         638  354  168  239 
                    
   These commitments relate to expenditure on property, plant, equipment and intangible assets. Funds to meet future capital expenditure will be provided from retained net cash flows and debt financing. 
  
                    
  
30.  RELATED PARTY TRANSACTIONS (Rmillion)
                    
   During the year Tongaat Hulett, in the ordinary course of business, entered into various related party sales, purchases and investment transactions. These transactions occurred under terms that are no less favourable than those arranged with third parties. Intra-group transactions with subsidiaries as set out in note 26<, are eliminated on consolidation. 
        
         Consolidated  Company 
         2018  2017  2018  2017 
                    
   Goods and services:                
   Between the company and its subsidiaries           609  874 
                    
   Administration fees and other income:                
   Between the company and its subsidiaries           138  109 
   Transacted with/between joint operations within Tongaat Hulett  1  8       
   Paid to insurance broker     5  6       
                    
   Interest received/paid:                
   Paid by the company to its subsidiaries           66  60 
   Transacted with/between joint operations within Tongaat Hulett     2       
                    
   Sale/transfer of fixed assets and intangibles:                
   Between the company and its subsidiaries           180  149 
                    
   Loan balances:                
   Between the company and its subsidiaries (note 26)          564  321 
   Pension Fund loan payable     102  93  102  93 
                    
   Dividends:                
   Between the company and its subsidiaries           707  1 024 
                    
   Other related party information:                
   Total dividends paid - refer to note 24       
   Executive directors/key management personnel - refer here,and here of the Remuneration Report 
   Non-executive directors - refer here of the Remuneration Report 
   Tongaat Hulett Developments is a guarantor on Tongaat Hulett Limited's South African long-term unsecured loan facility - refer to note 14. 
  
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