Notes to the summary consolidated
financial statements

1. Basis of preparation
  The summary consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for summary reports and the requirements of the Companies Act applicable to summary financial statements. The Listings Requirements are for the summary consolidated financial statements to be prepared in accordance with the conceptual framework and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and also, as a minimum, to contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the consolidated financial statements from which the summary financial statements were derived are in terms of International Financial Reporting Standards and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements, with the exception of the adoption of IFRS 11 Joint Arrangements, IFRS 13 Fair Value Measurement, the amendments relating to IAS 19 (revised) Employee Benefits and IAS 1 Presentation of Financial Statements. The adoption of the revised IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of Interest in Other Entities has had no impact on the consolidated financial statements.
            Restated
    Audited Audited
    2014 2013
    Rm Rm
2. Net financing costs    
  Interest paid 353.5  322.0 
  Less: capitalised to property, plant and equipment (20.8) (21.7)
    332.7  300.3
  Interest received (8.3) (17.6)
  Foreign exchange losses 12.0  12.7 
    336.4  295.4 
       
3. Material items    
  Profit on disposal of property 1.3  1.5 
  Profit on disposal of previously impaired assets 0.1  3.1 
  Disposal and deregistration of businesses 1.8  – 
  Gain on bargain purchase 2.2  – 
  Proceeds received from insurance claim 19.1  – 
  Material profit before taxation 24.5  4.6 
  Taxation (1.4) – 
  Non-controlling interest (0.4) – 
  Material profit attributable to shareholders of Illovo Sugar Limited 22.7  4.6 
       
    Gross Net
    Rm Rm
4. Determination of headline earnings  
  2014    
  Profit attributable to shareholders of Illovo Sugar Limited   916.3 
  Adjusted for:    
  Profit on disposal of property (1.3) (0.8)
  Profit on disposal of previously impaired assets (0.1) (0.1)
  Disposal and deregistration of businesses (1.8) (1.3)
  Gain on bargain purchase (2.2) (2.2)
  Proceeds received from insurance claim (19.1) (18.3)
  Headline earnings   893.6
  2013 (Restated)    
  Profit attributable to shareholders of Illovo Sugar Limited   859.9
  Adjusted for:    
  Profit on disposal of property (1.5) (0.9)
  Profit on disposal of previously impaired assets (3.1) (3.1)
  Headline earnings   855.9
      
  Restated
    2014 2013
  Number of shares in issue (millions) 460.6  460.4 
  Weighted average number of shares on which headline earnings per share are based (millions) 460.5  460.2 
  Headline earnings per share (cents) 194.0  186.0 
               
              Restated
            Audited Audited
            2014 2013
            Rm Rm
5. Distributions paid    
  Distribution number 41 of 43.0 cents per share (final 2012) – paid 9 July 2012   197.9 
  Distribution number 42 of 34.0 cents per share (interim 2013) – paid 7 January 2013   156.5 
  Distribution number 43 of 61.0 cents per share (final 2013) – paid 8 July 2013 280.9   
  Distribution number 44 of 37.0 cents per share (interim 2014) – paid 13 January 2014 170.4   
            451.3  354.4 
  In respect of the year under review, the directors declared a final capital distribution of 60.0 cents per share which will be paid to shareholders on 7 July 2014. The distribution will be regarded as a return of capital and shareholders will be liable for any potential capital gains tax consequences. No liability has been raised for this distribution in these financial statements.
 
              Restated
            Audited Audited
            2014 2013
            Rm Rm
6. Other salient features    
  Capital commitments 1 042.2  1 013.6 
  – Contracted 255.1  152.7 
  – Approved but not contracted 787.1  860.9 
  Contingent liabilities 116.5  119.9 
               
7. Segmental analysis
  The following is an analysis of the group's revenue and results by reportable segment.
            Operating Capital
          Revenue profit expenditure
  Business segments       Rm Rm Rm
  Year to 31 March 2014      
  Sugar production 9 355.7  1 320.3  480.8
  Cane growing 2 856.2  388.8  161.8 
  Downstream and co-generation 978.2  177.8  79.4
    13 190.1  1 886.9  722.0
  Year to 31 March 2013 (Restated)      
  Sugar production 7 610.8  1 035.0  496.6 
  Cane growing 2 565.5  760.5  289.3 
  Downstream and co-generation 804.4  91.5  184.8 
          10 980.7  1 887.0  970.7 
               
          Operating Total Capital
        Revenue profit assets expenditure
  Geographical segments Rm Rm Rm Rm
  Year to 31 March 2014        
  Malawi 2 341.5  762.0  2 052.8  190.9 
  Zambia 3 265.9  558.1  3 793.4  101.1 
  South Africa 4 504.1  265.8  2 658.7  217.3 
  Swaziland 1 601.1  257.5  2 046.0  36.0 
  Mozambique 552.8  32.5  918.9  31.4 
  Tanzania 924.7  11.0  1 690.3  145.3 
    13 190.1  1 886.9  13 160.1  722.0 
  Year to 31 March 2013 (Restated)        
  Malawi 1 829.8  899.3  1 560.1  172.4 
  Zambia 2 519.8  478.8  3 777.5  153.8 
  South Africa 4 081.3  150.3  2 422.7  227.9 
  Swaziland 1 314.9  155.8  2 068.5  84.6 
  Mozambique 536.4  109.1  809.1  47.1 
  Tanzania 698.5  93.7  1 376.0  284.9 
        10 980.7  1 887.0  12 013.9  970.7 
  Note:Total assets exclude cash and cash equivalents, deferred tax and derivative financial instruments.
   
8. Changes in accounting policies and disclosures
  The group has restated certain transactions and balances presented in the financial statements to reflect the effect of new and revised International Financial Reporting Standards.

IFRS 11 Joint Arrangements
As a result of the adoption of IFRS 11, the group has changed its accounting policy with respect to its interest in joint arrangements. IFRS 11 requires equity accounting for joint ventures and eliminates the proportionate consolidation method of accounting. Previously the group proportionately consolidated all joint ventures by including its share of the assets, liabilities, income and expenses of jointly controlled entities on a line-by-line basis.

Under the equity method, the investments in joint ventures are initially recognised at cost and the carrying amounts are increased or decreased to recognise the group's share of profit or loss and movements in other comprehensive income of joint ventures after the date of acquisition. The group's share of the profit or loss of joint ventures is recognised as a single line item in profit or loss under the equity method.

The change from proportionate consolidation to equity accounting resulted in a change in individual asset, liability, income, expense and cash flow items with no material impact on equity or profit attributable to equity holders.

IAS 19 (Revised) Employee Benefits
IAS 19 (Revised) impacted the measurement of the various components representing movements in the defined benefit pension obligation and associated disclosures. As the group has always recognised actuarial gains and losses immediately outside profit and loss, the group's total obligation was unchanged.

The impact of the application of the above revised standards on the group's financial results and financial position is disclosed below.
   
        For the year ended 31 March 2013
  Summary consolidated income statement Notes Previously
reported
Rm		 Restatement
effect of
IFRS 11
Rm		 Restatement
effect of
IAS 19
Rm		 Restated
Rm
  Revenue   11 128.9  (148.2) –  10 980.7
  Cost of sales   6 603.5  (139.1) –  6 464.4
  Gross profit   4 525.4  (9.1) –  4 516.3
  Distribution expenses   844.6  (1.0) –  843.6
  Administrative expenses   1 268.4  (10.7) –  1 257.7
  Other operating expenses   511.4  10.0  6.6  528.0
  Operating profit   1 901.0  (7.4) (6.6) 1 887.0
  Dividend income   2.3  –  –  2.3
  Net financing costs/(income) 2 279.6  (0.7) 16.5  295.4
  Interest paid   303.1  – (2.8) 300.3
  Interest received   (36.2) (0.7) 19.3  (17.6)
  Foreign exchange losses   12.7  – –  12.7
  Profit before taxation and non-trading items   1 623.7  (6.7) (23.1) 1 593.9
  Share of profit from joint ventures   –  5.0  –  5.0
  Share of profit from associates   0.7  –  –  0.7
  Material items 3 4.6  –  –  4.6
  Profit before taxation   1 629.0  (1.7) (23.1) 1 604.2
  Taxation   513.9  (1.7) (6.5) 505.7
  Profit for the year   1 115.1  –  (16.6) 1 098.5
  Attributable to:          
  Shareholders of Illovo Sugar Limited   876.5  –  (16.6) 859.9
  Non-controlling interest   238.6  –  –  238.6
      1 115.1  –  (16.6) 1 098.5
             
    For the year ended 31 March 2013
  Statement of other
comprehensive income		 Previously
reported
Rm		 Restatement
effect of
IFRS 11
Rm		 Restatement
effect of
IAS 19
Rm		 Restated
Rm
  Items that will not be reclassified subsequently to profit or loss        
  Movement in defined benefit pension plans (22.5) –  23.1  0.6
  Tax effect of movement in defined benefit pension plans 3.4  –  (6.5) (3.1)
  Actuarial losses on post-retirement obligations (17.9) – –  (17.9)
  Tax effect of actuarial losses on post-retirement obligations 5.0  –  –  5.0
  Items that may be reclassified subsequently to profit or loss        
  Adjustments in respect of cash flow hedges 0.8  –  –  0.8
  Tax effect of cash flow hedges 1.3  –  –  1.3
  Hedge of net investment in foreign subsidiaries (64.8) –  –  (64.8)
  Tax effect of hedge of net investment in foreign subsidiaries 14.5  –  –  14.5
  Foreign currency translation differences (231.2) –  –  (231.2)
  Total comprehensive income for the year 803.7  –  –  803.7
  Attributable to:        
  Shareholders of Illovo Sugar Limited 638.3  –  –  638.3
  Non-controlling interest 165.4  –  –  165.4
    803.7  –  –  803.7
   
    As at 31 March 2013 As at 31 March 2012
  Summary consolidated
statement of financial position		 Previously
reported
Rm		 Re-
statement
effect of
IFRS 11
Rm		 Restated
Rm		 Previously
reported
Rm		 Re-
statement
effect of
IFRS 11
Rm		 Restated
Rm
  ASSETS            
  Non-current assets 7 938.5  56.6  7 995.1 6 900.4  52.5  6 952.9
  Property, plant and equipment 6 223.4  (13.9) 6 209.5 5 328.0  (15.5) 5 312.5
  Cane roots 1 260.0  – 1 260.0 1 216.3  – 1 216.3
  Intangible assets 266.1  – 266.1 218.1  – 218.1
  Investment in joint ventures – 30.6  30.6 – 27.9  27.9
  Investment in associates 43.1  – 43.1 41.9  – 41.9
  Investments 17.3  – 17.3 11.8  – 11.8
  Loans 71.2  39.9  111.1 52.6  40.1  92.7
  Deferred taxation asset 57.4  – 57.4 31.7  – 31.7
  Current assets 4 635.3  (88.7) 4 546.6 4 510.5  (61.3) 4 449.2
  Inventories 944.4  (35.4) 909.0 618.6  (33.1) 585.5
  Growing cane 1 520.4  – 1 520.4 1 346.7  – 1 346.7
  Trade and other receivables 1 370.1  (32.6) 1 337.5 877.8  (19.8) 858.0
  Factory overhaul costs 309.3  – 309.3 263.3  – 263.3
  Derivative financial instruments 16.9  – 16.9 14.0  – 14.0
  Cash and cash equivalents 474.2  (20.7) 453.5 1 390.1  (8.4) 1 381.7
               
  Total assets 12 573.8  (32.1) 12 541.7 11 410.9  (8.8) 11 402.1
  EQUITY AND LIABILITIES            
  Equity attributable to shareholders of Illovo Sugar Limited 5 968.5  – 5 968.5 5 562.6  – 5 562.6
  Share capital and premium 2 055.4  – 2 055.4 2 489.8  – 2 489.8
  Share-based payment reserve 13.1  – 13.1 13.1  – 13.1
  Non-distributable reserves 42.3  – 42.3 155.8  – 155.8
  Distribution reserve 280.9  – 280.9 197.8  – 197.8
  Retained earnings 3 576.8  – 3 576.8 2 706.1  – 2 706.1
  Non-controlling interest 1 006.2  – 1 006.2 902.7  – 902.7
  Total equity 6 974.7  – 6 974.7 6 465.3  – 6 465.3
  Non-current liabilities 2 413.0  (2.4) 2 410.6 2 741.7  (0.5) 2 741.2
  Long-term borrowings 1 166.4  (2.4) 1 164.0 1 545.4  – 1 545.4
  Deferred taxation liability 930.1  – 930.1 854.0  (0.5) 853.5
  Deferred income 121.7  – 121.7 130.7  – 130.7
  Provisions 194.8  – 194.8 211.6  – 211.6
  Current liabilities 3 186.1  (29.7) 3 156.4 2 203.9  (8.3) 2 195.6
  Short-term borrowings 979.3  (12.0) 967.3 383.5  – 383.5
  Trade and other payables 1 821.6  (14.3) 1 807.3 1 453.6  (5.2) 1 448.4
  Bank overdraft 195.1  – 195.1 184.9  – 184.9
  Taxation 132.5  (3.4) 129.1 141.5  (3.1) 138.4
  Provisions 47.3  – 47.3 34.0  – 34.0
  Derivative financial instruments 10.3  – 10.3 6.4  – 6.4
               
  Total liabilities 5 599.1  (32.1) 5 567.0 4 945.6  (8.8) 4 936.8
  Total equity and liabilities 12 573.8  (32.1) 12 541.7 11 410.9  (8.8) 11 402.1
     
    As at 31 March 2013
  Summary consolidated statement of cash flows Previously
reported
Rm		 Effect of
restatements
Rm		 Restated
Rm
  Cash flows from operating activities      
  Operating profit before working capital movements 1 567.9  (16.0) 1 551.9
  Working capital movements (506.4) (10.1) (516.5)
  Cash generated from operations 1 061.5  (26.1) 1 035.4
  Net financing costs (279.6) (15.8) (295.4)
  Taxation paid (196.1) 2.6  (193.5)
  Dividend income 2.3  –  2.3
  Distributions/dividends paid (458.0) –  (458.0)
  Net cash inflows from operating activities 130.1  (39.3) 90.8
  Cash flows from investing activities      
  Replacement of property, plant and equipment (291.4) 0.4  (291.0)
  Expansion capital expenditure (640.8) – (640.8)
  Net expansion of area under cane (28.4) – (28.4)
  Capitalisation of product registrations (10.5) – (10.5)
  Proceeds on disposal of plant and equipment 5.1  – 5.1
  Proceeds on disposal of property 1.7  – 1.7
  Funding from non-controlling interest 41.7  – 41.7
  Net movement on investments and loans (25.1) 27.6  2.5
  Net cash outflows from investing activities (947.7) 28.0  (919.7)
  Net cash outflows before financing activities (817.6) (11.3) (828.9)
  Cash flows from financing activities      
  Long-term borrowings repaid (245.7) – (245.7)
  Short-term borrowings raised 215.6  – 215.6
  Issue of share capital net of associated costs 3.1  – 3.1
  Net cash outflows from financing activities (27.0) – (27.0)
  Net decrease in cash and cash equivalents (844.6) (11.3) (855.9)
  Cash and cash equivalents at beginning of year 1 318.8  (9.4) 1 309.4
  Cash and cash equivalents at end of year 474.2  (20.7) 453.5

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