Appendix 1

SALIENT DETAILS OF FORFEITABLE SHARE PLAN

1. Introduction
  1.1 Illovo Sugar Limited ("the Company") intends to introduce a Forfeitable Share Plan ("FSP"), which will be operated in conjunction with the existing Phantom Share Scheme ("PSS").
     
  1.2 The PSS is a cash-settled option scheme which provides participants with the benefit of the increase in the share price between grant and exercise, subject to performance conditions being met. However, due to the relative stability of the Illovo share price, the PSS does not provide an adequate incentive mechanism to enable the Company to attract and retain its executives and other key management whose skills are necessary for the Company to fulfil its long-term goals.
     
  1.3 Accordingly, in line with local and global best practice, the Company intends to implement an FSP for executives and other key employees ("Participants") of the Company and its subsidiaries ("Employer Companies").
     
  1.4 The FSP is primarily a performance-driven plan in terms of which a certain number of the Company's ordinary shares ("Shares") will be awarded to selected Participants. Ownership of the awarded Shares will vest immediately following an award , allowing Participants to receive the benefits of ownership (ie dividends and voting rights) of the Shares awarded to them (subject to forfeiture under certain conditions), and therefore provides a direct alignment between the participants and shareholders.
     
  1.5 Shares constituting an award under the FSP will be purchased on the market and does not entail the issue of any equity securities (including options). Therefore the FSP does not result in a dilution of the shareholdings of its equity securities holders.
     
  1.6 The FSP is therefore not a share incentive scheme as contemplated in Schedule 14 of the JSE Listings Requirements and does not require shareholder approval.
     
  1.7 The PSS will continue to operate but the annual awards made thereunder to a Participant of the FSP will be reduced having regard to the quantum of the Shares awarded to him in terms of the FSP.
     
  1.8 The salient features of the FSP are set out below.
     
2. Awards of Shares
  2.1 In terms of the FSP Rules, the Company's Remuneration Committee ("Committee") has the final authority to grant awards of Shares to Participants and to set the conditions attaching to each such award.
     
  2.2 In terms of the FSP Rules, awards of Shares may comprise "Performance Shares" or "Restricted Shares".
     
  2.3 Performance Shares may be awarded by the Committee on an annual basis as soon as practicable after the publication of the Company's annual or interim results for any period. Performance Shares are subject to the fulfilment of specified performance conditions ("Performance Conditions") measured over a specified period which is aligned with the financial years of the Company ("Performance Period") determined by the Committee, as well as the condition that the Participant remains employed with the Illovo group for a specified period determined by the Committee ("Employment Condition").
     
  2.4 Restricted Shares will only be awarded in exceptional circumstances in order to retain or attract a key executive. Restricted Shares will also be conditional upon the Participant remaining in the employ of the Illovo group for a specified period determined by the Committee.
     
3. Participants
  3.1 The Participants of the FSP will be directors (excluding non-executive directors) and key senior permanent employees of the Employer Companies, selected by the Committee based on the recommendations of the Employer Companies.
     
  3.2 The FSP is aimed at approximately 30 executives and senior managers of the Illovo group. The Committee may, however, in its discretion, include any other permanent employee of any company in the Illovo group for participation in the FSP in exceptional circumstances.
     
4. Basis of awards and conditions
  4.1 In line with the requirements of King III and best practice requirements, regular annual awards of Performance Shares and awards under the existing PSS, may be made to Participants.
     
  4.2 Award levels will be determined by the Committee having regard to a Participant's salary, grade, performance, retention requirements and market practice, as well as other relevant circumstances at that time. Annual awards will be made having regard to a market-related level of remuneration as well as the overall affordability to the Employer Company.
     
  4.3 Indicative fair value of allocations under the FSP and the PSS will in the aggregate remain similar before and after the introduction of the FSP.
     
  4.4 On the instructions of the Company, an Escrow Agent appointed by the Company will purchase the Shares awarded to a Participant and will hold the Shares on behalf of the Participant until all conditions relating to the award have been met. Accordingly, unconditional ownership of Shares awarded will only vest following fulfilment of the conditions.
     
  4.5 The Employer Company of a Participant is liable to pay the Escrow Agent the amounts required to purchase the relevant Shares. However, if the Company makes payment of any such amount on behalf of an Employer Company, the Company is entitled to recover such amount from the Employer Company. Since the provision of this funding by the Company may be regarded as "financial assistance" as contemplated in sections 44 and 45 of the Companies Act, shareholders will be requested to pass resolutions in terms of those sections for a period of two years.
     
  4.6 In line with good corporate governance principles, Performance Conditions will not be retested if they are not met at the end of the Performance Period.
     
  4.7 To the extent that the Employment Condition or Performance Condition(s) (as the case may be) are not met, the relevant Performance Shares or Restricted Shares (as the case may be) in relation to which the conditions are not met will be forfeited.
     
  4.8 Employees terminating employment due to resignation or dismissal on grounds of misconduct, proven poor performance or proven dishonest or fraudulent conduct will forfeit all unvested awards.
     
  4.9 Forfeited shares will be sold on the market by the Escrow Agent on the instructions of the Company and will not be repurchased by the Company.
     
5. Overall and individual limits and adjustments
  5.1 The maximum aggregate number of Shares which may at any one time be allocated under the FSP shall not exceed  4 600 000 Shares ("Overall Limit") (which is approximately 1% of issued share capital of the Company), which may be adjusted to take account of a sub-division or a consolidation of the Shares. Shares awarded but subsequently forfeited, will be excluded in calculating the Overall Limit.
     
  5.2 The maximum number of shares which may be allocated to a single Employee in respect of awards which have not Vested under the FSP may not exceed 460 000 Shares (which is approximately 0.1% of the issued share capital of the Company) ("Individual Limit"). The Committee may adjust the Individual Limit to take account of a capitalisation issue, special dividend, rights issue or reduction in the share capital of the Company.
     
6 Amendments
  6.1 The Committee may, at any time, alter, vary or add to the rules of the FSP as it deems fit. Amendments to rules may only affect awards to Participants that have already been made if they are to the advantage of Participants.
     
  6.2 In circumstances where a Participant is resident in a jurisdiction where exchange control laws preclude the effective operation of the FSP in respect of that Participant, the Committee may amend the FSP Rules to provide for awards to these Participants to be settled in cash.
     
  6.3 The Committee may terminate the FSP at any time, provided that the Rules will continue to operate in respect of any awards made before such termination.
     
7. First Award Criteria
  In anticipation of the introduction of the FSP, the Committee has determined the following criteria for the first awards of Performance Shares:
     
  7.1 The Performance Period commences on the date of the award and terminates at the end of the third financial year following the date of the award (ie 31 March 2017);
     
  7.2 The Employment Condition is that the Participant remains in the employ of the Employer Company as at the completion of the aforesaid Performance Period;
     
  7.3 The Performance Condition for the unconditional vesting of the first tranche of Performance Shares is that the Company's headline earnings per share ("HEPS") for the financial year ended 31 March 2014 (being the year immediately preceding date of the award of the first tranche) must have increased by at least CPI plus 0.5% per annum compounded ("Minimum Target") by the end of the Performance Period, failing which all the Shares comprising the first award will be forfeited.
     
  7.4 Provided that the Minimum Target is achieved within the Performance Period, the first award of Shares will vest incrementally, pro rata to the increase in HEPS, with 25% of the award vesting unconditionally when the Minimum Target is reached, and the remaining Shares vesting pro rata to the increase in HEPS between the Minimum Target and an increase of CPI plus 3.0% per annum compounded, when 100% of the Shares will vest unconditionally.
     
8. The conditions of the FSP will continue to be reviewed in line with best practice.

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