This report covers the material socio-economic impacts of Illovo Sugar Limited and its subsidiaries and its assessment of the expectations and aspirations of its internal and external stakeholders, which are dealt with under the following headings in this report. These encompass the group’s significant positive influences at the macro socio-economic level in the countries in which we operate through to the direct impacts of our business activities in the communities which surround our operations.

We also identify the ways in which we have responded to issues of concern raised through engagement with our stakeholders and which influence their assessment of the company. These include initiatives, both within and outside the company, including the continuous review of our codes of conduct, policies and procedures, in relation to human rights issues, ethical supply chain relations, our contribution to the local economies and capacity development at community level.

As Africa’s largest sugar producer, with agricultural and manufacturing operations in six countries in Africa, certain of which rank amongst the world’s least developed countries, facing considerable challenges in the form of poverty, unemployment, inequality and disease, Illovo remains conscious of the social and economic obligations associated with an organisation of its size, particularly given the rural location of its operations and the challenges faced by communities in those areas.

The pillars of Illovo’s Strategic Intent and its sustainability model in relation to its socio-economic impact are its commitments:

to be welcomed in the communities in which it operates without whose co-operation we would not be able to sustain our business; and

to be cognisant of the rural locations of the group’s operations and the impact that it has on job creation and poverty alleviation in such areas.

We are mindful that the prosperity and sustainability of our business is intertwined with the well-being and advancement of the communities around our operations. In addition to creating valuable jobs and economic opportunities in these rural communities and helping to preserve the long-term sustainability and competitiveness of the sugar industry in the region, we also provide a range of essential health, welfare and other support services to the communities, over and above the usual costs of operation.

The group impacts a wide range of stakeholders in the countries in which it operates, both in the local communities and wider national economies, through three main channels, which also inform the process by which we identify and prioritise the stakeholders with whom we engage and our stakeholder engagement process:

Direct impacts, which include the wages, salaries and other employment benefits paid to our workers, health and educational benefits, as well as investments, tax payments, shareholder dividends and distributions. The provision of direct and indirect employment in areas where very few other opportunities exist increases the economic security of people in rural areas, helping to preserve rural communities in countries where rural to urban migration is often high;

Indirect impacts in our value chain in Africa by Illovo’s inclusive business model, through purchasing sugar cane from farmers, payments to suppliers and distributors, as well as impacts on those selling Illovo products or using them in their businesses. In addition to the positive contribution it makes through its local procurement practices, and in South Africa through preferential procurement (in accordance with the country’s broad based black economic empowerment (B-BBEE) codes), the re-spending of the money received from Illovo generates further economic activity and employment;

Induced impacts, through spending by the direct and indirect employment provided by Illovo’s operations, leading to increased consumption and employment elsewhere in the economy and by the “crowding-in” effect of businesses and development partners brought about by Illovo’s investments in rural areas.

SOCIO-ECONOMIC IMPACT REPORT 2014/15

Illovo’s economic impact in through these direct, indirect and induced impacts on GDP in the six countries in which we operate, is estimated at R18.5 billion per annum, as illustrated in this report.

Our Value-added Statement and our Five year Review of financial performance and statistics in our Integrated Annual Report (available at www.illovosugar.com), provide further information on the considerable positive economic impact that our operations have on the socio-economic development of the regions in which we operate and the wealth we create through manufacturing, trading and investment and its subsequent distributions to shareholders and reinvestment in the business.

SOCIO–ECONOMIC IMPACT ASSESSMENTS

As disclosed in our 2014 Integrated Annual Report, in 2013 we commissioned an independent socio-economic impact assessment of our operations to form a deeper understanding of the group’s impact in each of the countries in which it operates. The assessment, which was compiled by Corporate Citizenship, an international and independent company, provides a clearer picture of our impact on the economies, communities and individual livelihoods in Africa, and also highlights opportunities for Illovo to enhance its positive social, economic and environmental impact. Summarised here are the key impacts, by group and by country of operation. Fort the full Corporate Citizenship reports, please visit http://www.illovosugar.co.za/Socio-Economic-Impact:

2012/13 Contribution

to economy

Rm

Direct Employment

#

Livelihoods Supported

#

Taxes Paid

(Direct/ Indirect)

Rm

Employee remuneration and benefits

Rm

Cane Payment

to private

growers Rm

Benefits/CSI

spend

Rm Group 18 500 31 000 500 000 900 1 800 3 360 197

Malawi 3 000 11 552 >82 000 >254 251 159 24

Mozambique* 861 4 857 >35 000 45 127 83 25

South Africa 6 900 3 659 >195 000 132 580 1 900 33

Swaziland* 2 400 2 757 >68 000 >132 228 523 37

Tanzania* 1 200 2 545 >62 000 55 146 205 20

Zambia* 4 000 6 014 >54 000 91 462 488 58

* Recent significant investment projects undertaken in these countries

The Corporate Citizenship study revealed the significant quantum of the socio-economic benefits which Illovo’s activities bring to the countries and communities in which we operate. It has also provided us with a useful and practical tool to define our corporate responsibility objectives and to communicate more effectively with our key stakeholders. We therefore plan to update the study from time to time and will publish these results as and when we do so.

Illovo strives to make a positive impact and to eliminate, or at least minimise, negative impacts on the communities in which we operate. Recognising that failure to respect internationally recognised human rights principles presents a significant reputational risk, affecting the sustainability of a business, our risk identification processes identify stakeholders’ interests and expectations relative to human rights issues as priority areas. Risks associated with human rights are mitigated through interaction with stakeholders such as non-governmental organisations, governmental authorities, and local communities, as well as through responding to issues identified in reporting initiative frameworks such as CDP’s Climate Change and Water responses, the JSE SRI Index requirements, the GRI requirements, the UN Global Compact Principles and self-assessment toolkit, the UN Guiding Principles on Business and Human Rights, as well as legal and regulatory requirements. Mitigating measures include requiring adherence by our employees and suppliers to our Code of Conduct and Business Ethics (which may be found on our website at www.illovosugar.com) and the integration of our human rights policies in our businesses and the supply chain.

In relation to both our existing business operations and proposed new projects and business activities, a robust “stage and gate process” includes the identification of both positive and negative impacts on local communities.

Our Social and Ethics Committee work plans include human rights monitoring processes to track performance against our human rights objectives.

DISCLOSURE OF MANAGEMENT APPROACH

Our overall management approach to expenditure ensures that all transactions are captured at source, consolidated and cleared by local management at each cost centre and then submitted for consolidation and consideration at the group level. High-level summaries of the group’s expenditure are reviewed by the Illovo board and its relevant sub-committees. The internal audit function exercises a continuing review of the recording and collating of expenditure-related information. Consolidated group reports are subject to a half-yearly review and an annual audit by independent external auditors.

PROCUREMENT

Illovo supports the long term growth and stability of the communities in which it operates by sourcing correct quality at an acceptable premium, notwithstanding that economic advantages might otherwise be gained by sourcing bulk supplies and technologies, through the central group procurement function, elsewhere. A further benefit for the local communities is the indirect employment creation by suppliers providing sugar cane and other goods and services to Illovo.

During the year under review, Illovo procured 81% of its supply requirements from local suppliers in the countries in which it operates, to the value of approximately R7 428 million. Furthermore, in the year under review the company procured 8.79 million tons of sugar cane from 12 478 local growers, earning these growers R3 879 million in revenue. Of this cane 3.7 million tons were from black growers earning these farmers R1 252 million in revenue. Given that outgrowers employ 34 544 people and based on the estimated household sizes of between five and seven members through this an estimated 172 720 to 241 808 people were supported by the outgrowers, excluding the outgrowers themselves and their families.

In South Africa, the company complies with the preferential procurement requirements in terms of which broad based black economic empowerment (B-BBEE) points are earned for procurement from black-owned businesses, thus elevating the company as a preferred supplier in the local South African market in terms of the country’s B-BBEE coding system. To this end, R1 740 million, out of a total of R2 081 million, in procurement expenditure in 2014/15 qualified as black economic empowerment expenditure in terms of the B-BBEE codes. During 2014/15, the company’s expenditure of R16.6 million dedicated to grower development in South Africa was instrumental in the company’s achievement of maximum points under the B-BBEE category of Enterprise Development.

HUMAN RIGHTS IN THE SUPPLY CHAIN

In addition to our commitment to upholding the human rights of our employees, we are committed to developing a broader culture of human rights in the communities around our operations and among those with whom we conduct business.

Further to the direct economic benefits which it brings to its supply chain, Illovo contributes to supply chain integrity through the promotion of globally accepted human rights practices by requiring its suppliers, contractors, service providers and representatives to comply with and to seek to develop similar relationships with their own supply chains, in compliance with all the applicable local laws and codes of best practice and consistent with the UN Global Compact Principles. These requirements are embodied in the company’s Code of Conduct and Business Ethics (available on the company’s website at www.illovosugar.com and are incorporated into our supplier contracts. These require our employees and suppliers:

to avoid any complicity in human rights abuses and to adopt practices to protect against abuses of human rights in their activities and in their business relationships with others;

to conduct business in compliance with all applicable legal requirements and in a manner that respects the rights and dignity of all their employees and the local communities in which they operate, including legitimate tenure rights and freedom of association;

to adhere to the principle of free, prior and informed consent in all dealings with the indigenous communities in the areas in which our businesses operate;

to procure that any adverse impacts resulting from their activities are minimised and justly and fairly compensated; and

to encourage all persons contracting with Illovo and its suppliers to adhere to the same principles.

We are committed to developing a broader culture of human rights in the communities around our operations and among those with whom we conduct business.

Our employees, suppliers, contractors, service providers and representatives are also required to uphold the protection of internationally proclaimed human rights, including freedom of association and effective recognition of the right to collective bargaining; elimination of all forms of forced and compulsory labour; abolition of child labour; elimination of discrimination in respect of employment and occupation; promoting environmental responsibility, working against corruption in all its forms, and providing a safe working environment for employees.

In response to growing international focus on combating forced labour and child labour, Illovo published its guidelines on Child labour and Forced Labour (available on our website at www.illovosugar.com). In these guidelines, Illovo recognises the distinction drawn by the International Labour Organisation between child labour and child work. It is aware that the social and economic circumstances in some countries are such that the economic unit is the family as a whole and that circumstances dictate that everyone in the household makes some contribution to the economic activity. Therefore, in relation to family and smallholder farms, it is acknowledged that light work may be carried out by children under the age of 15 years, but Illovo accepts this situation only on condition that they do not handle hazardous tools and/or chemicals or perform physically dangerous tasks and that such work does not interfere with their education or physical, emotional or psychological wellbeing. In its own factory and agricultural operations, Illovo does not allow the employment of children under the age of 18.

As part of our long term commitment to embedding respect for human rights, ethical conduct and sustainable development in our supply chain, during the year, we commenced a phased process to collect information from Illovo’s top ten non-cane suppliers, by procurement value, relative to their adherence to the principles contained in our Code of Conduct and Business Ethics.

All businesses providing goods and services to the group are required to conduct periodic assessments to monitor environmental, social and human rights risks and impacts in relation to their own operations, as well as those of their own suppliers. In particular, these assessments must be carried out prior to embarking on any new business or expansion projects.

Illovo reserves the right to verify supplier compliance with its Code of Conduct and Business Ethics. Where a review or audit demonstrates any shortcomings, or if Illovo becomes aware of any act or omission in breach of our Code of Conduct and Business Ethics, we reserve the right either to request that corrective actions be taken or to terminate the agreement with the supplier concerned.

In the future, we intend to extend this process to our providers of sugar cane and to introduce independent verification of supplier practices by external practitioners.

During the reporting period, following extensive collaboration with external stakeholders, particularly non-governmental organisations, we released our Group Guidelines on Land and Land Rights (available on our website at www.illovosugar.com), for our operations and our supply chain. In these guidelines, we espouse a zero tolerance to land grabs and set out our position on land, land rights, land acquisitions and sustainable farming practices.

Our position on land acquisition is that, in relation to any green-field or other project which might involve land acquisitions, we will conduct detailed environmental and social impact assessments, engage with all affected stakeholders, and as a first priority, avoid the displacement of any persons from the land, or where displacement cannot be avoided, ensure that the free, prior and informed consent of all the affected persons is obtained and that the appropriate and agreed compensation is paid. Illovo is committed to the implementation of the principles contained in these guidelines through various initiatives which will be implemented in a phased approach. Using the benefit of our long-term experience as a major land user on the African continent, and with the assistance of other key stakeholders, including representatives of the local communities in which we operate, local government and non-governmental organisations, we have embarked upon the development of a detailed ‘Road map to Zero tolerance’ using support from independent expertise. We have identified the following key projects, which we will implement over the next year:-

In Mozambique, we have introduced an initiative to examine land rights and land registration in the area surrounding our Maragra operation comprehensively. This initiative forms part of a larger process to develop a detailed set of development guidelines and principles which will be implemented in relation to this and other new smallholder land development, and includes:

o the use of technology to measure, register and verify ownership of every plot of land, regardless of size; and

o focus on civic education, social mobilisation and capacity building initiatives to assist community members to make informed decisions about their land, livelihoods and future.

The project is being piloted through a multi-stakeholder forum which includes representatives of all key stakeholders and development partners.

In Malawi, to further our commitment to introduce measures that will assist in the resolution of disputes involving competing land rights claims, we have initiated a multi-stakeholder engagement process to resolve the current on-going land conflicts amongst outgrowers and community members in the Dwangwa area, which includes primarily representatives of the local communities, outgrower organisations, and the government, together with land experts, development partners and international NGOs to assist the communities in reaching a fair and equitable solution for all parties.

In addition to the stakeholder engagement process, the initiative includes independent land surveys and processes to support income generating opportunities, social development and food security to address some of the root causes of land conflict. No displacements occurred during the year under review.

STAKEHOLDER ENGAGEMENT

As indicated in the Stakeholder Engagement section of our 2015 Integrated Annual Report, our corporate reputation is affected by the extent to which we meet the legitimate interests and expectations of our stakeholders. Illovo’s stakeholder mapping process involves the identification and ranking of all potential stakeholders who are impacted by the group’s operational activities and/or those who may have an influence over the group, using the following process of determination: Persons with a direct or indirect interest in the group

Eg, employees, shareholders and other persons who are impacted positively or negatively by Illovo’s businesses.

Persons with legitimate social, economic or environmental rights or concerns

This includes third parties who have legitimate expectations or rights in terms of applicable laws, regulations, internationally recognised human rights and other protocols, and best practice guidelines.

Persons with legal ownership rights

This includes shareholders and third parties who have ownership rights in relation to eg, movable or immovable assets, intellectual property, landlords of leased property or assets, etc.

Persons with knowledge

People with specialist intelligence about our industry, or skills essential to our business or matters affecting it, including specialist third party service providers, rating agencies, non-governmental organisations.

Persons who impact / influence our business

Eg, employees, customers, shareholders, sponsors, media, governmental and local authorities, public, rating agencies, non-governmental organisations.

Persons who make a contribution to our business

Eg, employees, suppliers of resources, such as outgrowers and providers of material, funding, and advocates for objectives or activity success.

Our stakeholder mapping process is further defined by prioritising the themes and issues that pre-occupy the identified stakeholders, including:- how they are important to the group;

determining their attitudes towards the group;

establishing their expectations of the group;

identifying key individuals of influence within the identified stakeholder organisations;

determining areas of shared interest and common platforms; and

mapping the occupational influencers of key stakeholders, determining their primary drivers and the decision making process within their own organisations.

Our stakeholder engagement process involves the identification, prioritisation and monitoring of stakeholder concerns, thereby ensuring that our business remains focused on ways in which to provide the greatest benefit to stakeholders and, in return, to the Illovo group. This allows us to mitigate risks, identify new business opportunities, deliver on our commitment to address the concerns and aspirations of the communities in which we operate and improve Illovo’s operational and financial performance.

KEY STAKEHOLDER

TYPE OF INTERACTION

EMPLOYEES Internal communication channels are used to share information and engage with employees across the group, communicating company news and developments, business strategy together with training and personal development initiatives. Common internal communication channels are used including a twice-yearly magazine, group-wide intranet service, regular information sharing for a and an annual management conference.

TRADE UNIONS In 2014/15, 85% of all Illovo employees were unionised and to ensure continuing collaborative relationships, the group engages across a range of labour forums, eg, regular union meetings, collective bargaining forums and others to promote sound employee interaction and compliance with internationally recognised labour practices. Subject matter typically includes conditions of employment, remuneration, safety initiatives and other issues of mutual concern.

RAW MATERIAL SUPPLIERS: PROVIDERS OF SUGAR CANE

Continuing communication at both industry and local level with grower associations and member groups; operational discussions of mutual concern; contact through industry structures, eg, SASA, SA Cane Growers’ Association, Swaziland Sugar Association, Sugar Producers’ Association of Zambia, Maragra Outgrowers’ Association, Tanzania Sugar Producers’ Association, etc.

SHAREHOLDERS; INVESTORS; INVESTMENT ANALYSTS

At both group and country-level where Illovo is listed on country stock-exchanges, we undertake annual investor and analyst road shows to present interim and final results, one-on-one meetings, an annual site visits to view company developments of interest, regular operational and financial communications and host annual shareholder general meetings. These activities are undertaken to communicate the physical and financial performance of the group, focused on the continued value-creation capacity of the group, and to receive feedback relating to concerns and criticisms the market may have in relation to our existing business model.

REGULATORS: JSE; LSE; MSE AND OTHER REGULATORS

The company and its subsidiaries comply with the various regulatory requirements in the countries in which we operate, and includes consistent contact and interaction with these regulators and relevant government departments to remain abreast of listings requirements, compliance matters and regulatory issues.

CUSTOMERS Trade market: Continued interaction with retailers and wholesalers; promotion of sugar distribution and depot systems among existing/potential entrepreneurs; direct consumer stakeholder contact; involvement in community-based initiatives; support of annually-sponsored sporting events. Consumer services are administered across all countries of operation. Industrial market: Customer interaction in respect of both sugar and downstream products; focus on specific product and service-related technical, logistical and operational requirements of the customers with continued liaison through various channels.

MEDIA Regular interaction with all forms of media to communicate developments, successes, strategy, financial results and to deal with issues which are reported in the public domain. Interaction includes one-on-one interviews, site visits, media statements, SENS announcements, the group website and general contact to promote understanding.

SUPPLIERS AND SERVICE PROVIDERS

Support of local industry suppliers; development programmes to identify and maintain strategic group suppliers; annual recognition of top-performing suppliers via awards programmes; business and operational update meetings; negotiation of service level agreements.

GOVERNMENTS Regular discussion at industry and company level with government departments and industry bodies relating to sugar cane growing and milling across the group together with, for example, departments dealing specifically with land reform and rural development in South Africa, etc; regular contact to update government representatives on the state of on-going business, strategy, capacity expansions, etc; and continuing interactions/communications with development initiatives and agencies such as the New Partnership for African Development (NEPAD), together with African trading blocs such as the SACU, SADC, Common Market for East and Southern Africa (COMESA) and Eastern African Community Customs Union (EACU).

NON-GOVERNMENT ORGANISATION, ESG RATINGS AGENCIES

As a major agri-business operating in Africa, Illovo recognises the growing initiatives by NGOs and other stakeholders for public companies to assist them in promoting their human rights and other agendas by helping to increase public awareness (eg, through Integrated Reporting and other publications), supply chain auditing and government/stakeholder engagement. For these and other reasons, we regularly communicate with national and international NGO’s, external ratings agencies and other agencies on social/human rights and environmental issues of mutual concern.

COMMUNITIES; TRADITIONAL AND CIVIL SOCIETY

Strong identification and communication with communities surrounding operations relating to cane development, community/company projects of mutual interest; support of community-based social investment requirements; provision of community infrastructure and advocacy of community issues. This communication is undertaken through various community-based charity and outgrower organisations, land reform forums and other community-based structures.

Stakeholders (including employees, shareholders and other third parties) may bring matters of concern to the attention of the Illovo management and board through various processes, including the Illovo Tip-Offs Anonymous and Crime-line reporting processes, reports to the group internal audit function, group company secretary, group compliance manager, executive committee, individual functional directors or line managers, or directly to the board through its chairman. Environmental concerns are recorded in a complaints register at each entity and are monitored by senior management. These reports may be made anonymously. Our key stakeholders and the matters in relation to which they are engaged, on an on-going basis, are listed below:

We also participate in public policy development, such as through the land reform forums in South Africa, and participation in water catchment agencies as part of our water risk management. We are also a member of, and participate in, the activities of the National Business Initiatives (NBI), which is the local South African partner of the CPD, UN Global Compact and the World Business Council for Sustainable Development.

Stakeholder concerns and issues are monitored by our Social and Ethics Committee, the statutory committee established in terms of the Companies Act, which reports to the Illovo board and to shareholders at the company’s annual general meeting. Key stakeholder topics and concerns addressed during the year are dealt with more fully elsewhere in this report and in our 2015 Integrated Annual Report, and included, in particular, focus on the elimination of forced and child labour, living wages and land rights (see further under the heading of “Human Rights in the supply chain” above).

Our engagement with local communities and other vulnerable stakeholders is guided by the principle of free, prior and informed consent (FPIC) in relation to all matters where our new projects or operations may impact on them. Our procedures involve environmental and social impact assessments, on-going stakeholder engagement and risk and impact monitoring, while on-going consultation processes involve mechanisms to address grievances. In relation to matters which do not involve the company directly, and in relation to which the company does not have direct interaction with affected stakeholders, we are nevertheless committed to ascertaining that the third parties involved (including governments) conduct themselves in line with human rights principles and internationally acceptable best practice standards.

Illovo’s operations are surrounded by cane supply areas incorporating agricultural operations owned and operated by both the company on its own cane fields and private growers. Given the inextricable links between growers themselves, and between growers and our own agricultural and factory operations, together with the surrounding communities, formal and informal representative structures exist at various levels across the spectrum, supporting continuous and healthy stakeholder engagements on common and extraordinary matters of mutual concern, including grievances. When dealing with community stakeholders and projects that require decisions and ownership by the communities, Illovo prefers to go beyond FPIC and refer to ‘Free Prior and Informed Decision Making’.

Project assessments

As indicated above and in our Social and Ethics Committee report, all proposed projects undergo a stringent stage and gate process. This includes:

legal investigation of land tenure rights;

working with local legislative frameworks and land reform programmes;

consultation with local communities and public authorities; and

ensuring mutually agreed compensation where local communities are affected by our operations.

This process also includes the provision of technical and financial support to local community farmers supplying sugar cane to our operations and working with reputable development organisations to ensure projects are in line with accepted international standards.

Although Illovo is seldom involved in land acquisitions relative to its agricultural operations, our procedures, in line with our Group Guidelines on Land and Land Rights, reflect our zero tolerance to land-grabbing. They prescribe that any proposed land acquisition (whether buying, renting, acquiring or otherwise accessing land or property) must involve consultation with all affected owners and users of the land or property.

This is to ensure that:

they are adequately consulted, involved in decision making and compensated;

past users and owners have not been wrongfully removed;

minorities and other vulnerable groups (including indigenous peoples) have been consulted to endeavour to procure “free, prior and informed consent” in relation to any matter affecting them;

the project does not result in scarcity of residential property or food commodities;

affected owners and users of the land or property are adequately compensated to help them restore their standards of living or livelihoods to the same or higher than before; and

the compensation standards are transparent and applied consistently to all communities and persons affected.

In South Africa, Illovo has sold and transferred 52% of its agricultural land holdings to historically disadvantaged communities, both prior to and after the introduction of the Restitution of Land Rights Act. We work proactively with black farmers, managing and holding training programmes that provide technical and financial assistance to new emerging cane growers ensuring the long-term commercial sustainability of their farms. We are proud of our endeavours in this regard, which have been recognised through our broad based black economic empowerment (B-BBEE) achievement of the full points as well as all the bonus points for our land ownership element, which recognises the transfer of land to black people, in the process earning a Level 2 BEE status in terms of the B-BBEE AgriBEE sector Code. The B-BBEE certificate and report is posted to our website at www.illovosugar.com.

A farmer for the past 18 years, Thulas Ngidi is living his late father’s dream having acquired his first farm from Illovo on the KwaZulu-Natal South Coast, and later going on to purchase two further adjacent

farms. Now collectively called Phathokwakhe Sugar Estate, Thulas went through some tough times but his own spirit of survival carried him through and in addition to his own success, now finds himself, in addition to other leadership positions, Chairperson of Sezela Cane Growers Association and a Board member of Illovo SA. Thulas says: “There are so many opportunities to explore. Being involved in the

structures has opened my mind and has enabled me to play a meaningful and constructive role in bridging the gap between commercial and land reform growers.”

CORPORATE SOCIAL INVESTMENT

As embodied in our Strategic Intent, we endeavour in various ways to ensure the wellbeing and advancement of our employees as well as the local communities and society in which we operate (as also reported in the Human Capital Report on our website at www.illovosugar.com).

Our initiatives include:

providing access to potable water, which is a particular priority;

providing medical facilities to some communities and funding local government hospitals;

in Malawi and Zambia, supporting government strategies to tackle micronutrient deficiencies by fortifying our sugar produced for direct consumption with Vitamin A, thereby contributing to improving public health;

funding maintenance and equipment for local schools or community organisations, and supporting government and corporate education related campaigns, including national literacy programmes and teacher support;

enterprise development, and

contributing to local sports, arts and culture.

In addition to the significant economic benefits that accrue to the governments of the countries in which we have operations through direct and indirect taxes, which are dealt with in the financial sections of the 2015 Integrated Annual Report (which is available on our website on www.illovosugar.com), we contribute to our local communities through various corporate social investment initiatives, often providing essential community support and, where local authorities are unable to do so, filling gaps in local infrastructure, either alone, or in collaboration with international donors and funders, governments and non-governmental bodies, as demonstrated by the projects detailed further on.

Illovo provides access to health care to all its employees and local communities where no medical facilities exist through a network of group-run primary health care clinics and hospitals. In 2014/15, we spent R94 million on providing primary and secondary health care and providing occupational health, HIV and AIDs, malaria and TB programmes, working closely with national

health initiatives in our countries of operation.

The aim of Illovo’s social investment activities is to contribute to the development of thriving and vibrant societies against the background of our stated intent to be welcomed in the communities in which we operate. We are ever mindful of the rural and relatively underdeveloped nature of these locations, characterised by limited infrastructure and significant development needs and have developed a number of partnerships with development partners to further improve our outreach and positive impact.

As a long-term investor in the Southern African region, the group has developed a social compact with its local communities, and today administers wide-ranging social investment programmes aimed at infrastructural development, job creation, health and wellbeing, education, the provision of potable water and sanitary services, involvement in community projects and promoting culture and sports development.

In line with the pillars of our Strategic Intent, our CSI strategy is to support communities which are located in and around our operations, from which we draw the majority of our employees. Our long term strategic focus is on education, health, environmental development, capacity building, infrastructure support, enterprise development (excluding sugar cane grower and supplier development which we consider to be normal supply chain development), and other areas, typically sports, arts and culture which are important particularly for youth development. Community projects motivated by its members and designated company representatives are subject to a thorough assessment to ensure they meet the prescribed long-term criteria of being meaningful, sustainable and have sufficient community reach and participation. Initiatives are managed either at a group or business unit level, depending on circumstance.

Depending on the nature and scope of these projects, we require that beneficiaries of our CSI programme report on the impact and benefits of our monetary contributions and/or provision of resources and whether the assistance provided, achieved the desired objectives. This is a critical process in evaluating the effectiveness and continuation of support for community CSI projects. A case in point is our support of the local KwaZulu-Natal branch of PROTEC in South Africa which provides study assistance to mathematics and science pupils in the last three years of schooling. Continued evaluation of PROTEC’s work has resulted in annual extensions of our existing support, with the majority of students achieving results well above the matriculation pass rate and serving as the entry point for technical qualifications at universities or colleges.

While a common trend in corporate social investment presently leads companies to focus on limited flagship projects with maximum impact, our locally driven approach of supporting community projects across the range of scale remains valid, relevant and in line with our Strategic Intent.

The scope of Illovo’s corporate social investment involvement includes the following:

Education – In terms of community outreach, Illovo has been involved in a number of educational upliftment projects, including upgrades and administration assistance at more than 20 schools in the countries where we have operations; support for government and corporate education-related campaigns such as national literacy projects and teacher support programmes, and the provision of necessary educational equipment.

Health and Medical – In areas where no public medical facilities exist, Illovo provides access to health care through the network of group-run primary health care clinics and hospitals to the local communities at nominal cost. We also provide programmes focusing on primary and secondary health care, occupational health, HIV and AIDS, malaria and TB, working closely with national programmes in our countries of operation. Control programmes for non-communicable diseases such as obesity, high blood pressure and diabetes exist at all our operations, and continues to provide services in respect of maternal and child health, reproductive health and neglected tropical diseases (eg, bilharzia).

Environmental – This refers to contributions towards efforts to preserve and manage natural surrounding areas, particularly those of a high conservation value. More is reported on this in the section on Biodiversity in our Climate Change report.

Capacity Building – Illovo supports community-based welfare organisations involving self-help programmes and other related and similar initiatives and partners with a variety of development organisations to provide capacity building along the value chain and within the communities surrounding our businesses.

Infrastructure Support – This involves rehabilitating and upgrading public facilities and providing water and sanitation. In some areas we are involved in Public Private Partnerships (PPPs) to improve the standards of water being provided to communities.

Enterprise Development (excluding supplier development) – The company has also contributed to fund-raising organisations and self-help developmental programmes.

Other (including recreation, arts, culture, etc.) – This includes investment in a variety of focus areas including community involvement, supporting community centres, estate community policing, estate football leagues and day-care centres, all which help in developing and maintaining stable and thriving communities.

During the year under review, we contributed R26 million towards the following social investment projects, mostly for the benefit of the communities within the immediate vicinity of our operations:

Categories Rm

Rm

2014/15 2013/14 2012/13

Healthcare 3.9 2.1 1.0Education 6.7 7.3 3.9Environmental 1.1 Capacity Building 0.3 Infrastructure Support 2.4 Enterprise Development 2.6 Other/ Sports, Arts and Culture 9.0 13.3 9.3Total 26.0 22.7 14.2Note: The elements of Illovo’s Corporate Social Investment expenditure has been expanded to present a more detailed analysis thereof.

R8.4 million was spent on sports, arts and culture. In addition, in the year under review, more than R27 million was spent on supporting and developing outgrowers across the group.

Expenditure under corporate social investments is an area of constant review and is subject to regular assessment across standard CSI measurement parameters.

Our corporate social investment budgets are based typically on historical expenditure. However, there are instances where additional resources over and above annual budgets are directed towards the achievement of specific social investment objectives; a typical example follows below.

During the first quarter of 2015, Illovo Sugar Malawi rallied to the defence of tens of thousands of people affected by extreme flooding in the southern region of the country where Illovo’s Nchalo factory and agricultural operations are situated.

Clean water for drinking and cooking is was provided by Illovo Sugar (Malawi) Limited to some 3 000 residents of the relief camps on company land, via mobile water tanks

The lower Shire Valley area was the most affected by regional cyclonic activity which commenced in mid-January and brought with it heavy rains to the area amounting to around 550 mm, representing almost three times the long term mean for the month. More than 250 people lost their lives and in excess of 250 000 people were displaced in what was described as the worst floods since 1967.

While relief assistance was provided by the government supported by a range of NGOs, including Medicins Sans Frontiers (MSF), the Red Cross, UNICEF and others, the staff and family members of Illovo Sugar (Malawi) Limited (“Illovo Malawi”) also worked closely with the Malawi government in their relief operations and offered various types of assistance which included:

Providing company-owned land at Nchalo for three relief camps housing around 3 000 displaced people;

Supplying clean water to the camp inhabitants (at Sekeni in the Lower Shire region) as well as medical services where these are required;

Making donations of tarpaulins (used for making shelters), sugar, five tons of maize and sizeable cash contributions for relief efforts, and also providing electricity to the various camps via standby generators;

Providing access to the company’s air strip for the Malawi Defence Force as a base for rescue operations and for their accommodation needs.

Aside from other substantial relief efforts, Illovo Malawi contributed to relief funds in order to assist flood victims.

In South Africa, Illovo’s continued support of smaller but meaningful corporate social investment projects is illustrated by the continuing positive impact our interventions are having on the local community at Sobantu, a small urban settlement adjacent to our sugar warehouse and distribution centre at Pietermaritzburg. From the time of construction commencement:

Illovo has upgraded and supported the local crèche which had not been maintained due to the lack of funds. Vital services were reinstated, the building was refurbished and during the 2014/15 season, the upgrade was completed with the provision of teaching aides, tables and chairs, and other classroom equipment, together with fridges and freezers to cater for the 100 children housed at the crèche;

Typical of such support, Illovo’s own employees have involved themselves in the welfare of the crèche and children by participating in the maintenance projects, contributing toys and clothes and raising funds and organising special events for the children such as the Christmas party held in December 2014. A computer and printer has provided the staff of the crèche to capture vital administrative information;

Illovo, together with its logistic partners, Barloworld, has, in a joint venture with the Pietermaritzburg municipality, also commenced a project to upgrade the local soccer stadium and sports field to provide a safe and healthy venue at which to support healthy exercise and competition; and

From an employment perspective, 15 people from the Sobantu village have been appointed into permanent positions, while 10 people have been given temporary work.

During the year under review, the group spent approximately R289 million on the provision of social benefits to our employees, such as accommodation and amenities, health care, educational assistance and community projects, as reported in the Human Capital report which is on our website (www.illovosugar.com). Given challenges of poverty, lack of infrastructural development, non-delivery of basic services including health and education, and the rural location of our operations, there is significant ‘below-the-line’ transfer of employee benefits to local communities across the regional footprint of the countries in which we operate.

OUTGROWER DEVELOPMENT

We work closely with local indigenous farmers through our established cane grower development programmes, to improve their participation in the respective country’s mainstream economies and to benefit both the farmers and the company by improving cane yields and quality, enabling the growers to boost their income while ensuring sustainable cane supply to the mills. In total, more than R27 million was spent on supporting and developing outgrowers across the group.

The types of support provided to the sugar cane growers include the following:

Type of outgrower support DescriptionSeed cane incentives Funds for planting on new, uncultivated land and seed for replanting.

Transport subsidies Supplementary payments to outgrowers located more than 50-60 km from Illovo’s mills.

Small-scale grower development costs

Supplementary payments to small growers for purchasing fuel and other inputs that compensate for lack of bargaining power.

Other supplementary payment Amounts paid to outgrowers to guarantee a steady supply of cane to Illovo’s mills.

Cane ripener subsidies Subsidies for chemical ripeners which accelerate cane maturity and increase sucrose content.

Training schemes Extension service, training and mentorship schemes for outgrowers, including technical assistance and business management support. . Illovo has also appointed established commercial growers as mentors to help/guide/teach emergent growers in various aspects of sugarcane farming. The role of mentors also includes succession planning and training of potential, mostly family, candidates. Illovo, along with development partners and experts provides comprehensive civic education, agricultural and business capacity building to its outgrowers in addition to a wide range of extension services provided across the group.

Guaranteed purchases Illovo signs cane supply agreements with outgrower associations and smallholder schemes, through which it guarantees the price and quantity of sugar cane which it buys.

Access to inputs Illovo provides seed, fertilisers and other inputs to smallholders to allow them to benefit from bulk discounts.

Access to finance Illovo helps smallholders gain access to finance, including coordinating with local banks and in some cases providing loans directly to farmers. It has assisted with identifying and supporting donor funding opportunities. Illovo has achieved considerable success as a conduit for development by obtaining grant funding on behalf of outgrowers to develop new and/or improve existing smallholder schemes.

Access to infrastructure Outgrowers often benefit from infrastructure funded by Illovo, including roads and irrigation. They may also have access to schools and hospitals opened by Illovo, usually for free.

Support small scale outgrowers with their own food security

Outgrowers grow food crops on farms adjacent to cane and access water for irrigation. In some cases the growing of maize by Illovo also complements governments’ food security initiatives. In most of the new outgrower schemes being developed by Illovo, food crops are an integral component of the farm with some schemes diversifying beyond solely food security.

DEVELOPMENT PROJECTS

Due primarily to our successful track record in designing and delivering community development projects, particularly in relation to our on-going capacity building of local community farmers, a number of development partners and financing organisations are keen to engage with our operations when providing funding for community projects. Our technical and project management skills are able to assist these organisations and governments to deliver their development objectives in an efficient and sustainable fashion. Highlighted below are a number of the projects being carried out across our countries of operation.

Funding of €14.1 million out of a total cost of €18 million was secured for the projects by Ubombo Sugar from the EU-supported Ubombo Integrated Smallholder Development Projects (UISDP),

specifically set up to support smallholder sugar cane development in the country. The projects are being implemented with two partner organisations; the Swaziland Water and Agriculture

Development Enterprise (SWADE), a quasi-government agency responsible for the development of LUSIP; and Technoserve Swaziland Limited, a development NGO with experience in entrepreneurial

and youth development.

Malawi

In 2009 a Community Development Trust and farm was established at Kaombe, south of Illovo’s Nchalo sugar operations using $1.5 million support from the UK Government’s Department for International Development (DFID) funded Africa Enterprise Challenge Fund (AECF) and with matching funds from commercial finance sources. The farm consists of 330 hectares of irrigated cane approximately 50km from the Nchalo mill. It was established with the primary aim of providing a sustainable source of funds for community development. The farm became profitable in 2013 and since then has supported a range of interventions in the communities surrounding the farm through the Area Development Committee which include the development of market structures, access to potable water and more recently emergency assistance in response to the floods. Potential future projects include the re-location and re-building of the flood affected villages, further access to potable water supply, support to education facilities and small-scale irrigation and food security.

Illovo Malawi and The Malawi German Health Programme, through the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) are collaborating on a three-year Integrated Public-Private Partnership (iPPP) to improve access to water, sanitation and health services amongst the communities serving the sugar industry in Chikwawa District, adjacent to our Nchalo sugar operations. The overall objective of the iPPP, together with Malawi’s Southern Regional Water Board (SRWB), is to improve the health status of people in these communities, in particular reducing the incidence of diseases related to waterborne infections and poor sanitation. During the course of the intervention, two new approaches have been identified and added to the scope of the overall project:

o firstly, provide direct support to priority areas/villages through the optimum route of water supply, most likely the sinking of boreholes due to the remote locations;

o secondly, focus attention on increasing water supply to the Nchalo township and Thomu village in partnership with SRWB.

Directly concerned with outgrower development, the Phata Sugarcane Outgrowers Cooperative, in partnership with Agricane Malawi Limited as the management company, established 300 hectares of irrigated sugarcane in 2013 using a €2.4million grant from the EU, supplemented by

finance from AgDevCo. The cooperative, consisting of 375 households, has partnered with the Scottish Government to diversify away from the sole production of sugarcane to also develop fish farms, produce food crops, bean seed and rice for local companies and orchards and woodlots. The development process has included a comprehensive civic education and capacity building component which has resulted in a strong sustainable cooperative, which has successfully repaid all debts and currently operates using operating capital alone and has developed a revolving fund for members to access funds for other business innovations.

Mozambique

As referred to previously, Illovo’s Mozambique subsidiary, Maragra Açúcar, has been awarded a grant of €2.4m (total value €5.7m) under the EU Sugar Accompanying Measures Fund towards the development of the Maragra Smallholder Sugarcane Development Project (MSSDP). The project supports the protection and water management of over 3 000 hectares of land around the estate, of which 1 540 hectares will be developed to rain fed sugarcane and a further 460 hectares developed to food crops in partnership with an estimated 3 000 farming households. The initial social mobilisation and civic education programme has been implemented with considerable success resulting in increased demand from the communities. A comprehensive land registration and mapping process is underway which will also collect baseline information to feed into the monitoring and evaluation system. An experienced project manager and accountant have been employed and capacity building of the beneficiaries has commenced through a tendered contract with RMI Services Ltd. A formal launch/ground breaking ceremony is anticipated in May 2015;

The company was also awarded a grant of €220 000 by the Fund for the Maragra Sugarcane Outgrower Capacity Building Project (MSOCBP). This is a project targeting the existing farmers and associations to build and develop their technical, business and organisational capacity. The project staff is shared with MSSDP and a private contractor was awarded the tender for capacity building support;

In a further development, Maragra has partnered with the Climate Resilience Infrastructure Development Facility (CRIDF), a UKAID funded programme to assist the company in understanding and managing the flood situation within the Incomati flood basin. A multi-stakeholder project has been designed and is to be led by AraSul, the Mozambique government water management department, and incorporating Xinevane, owned by Tongaat Hulett as an additional private sector water user and stakeholder. Water and infrastructure mapping and modelling has commenced and the overview of the social economic component has commenced.

South Africa

Illovo Sugar is the Strategic Partner chosen by Government to implement the RECAP development that has been allocated to Small-Scale Growers (SSG). To date, R26 million has been received by Illovo from the government to fund Recap projects across all our mill areas, R13 million of which has already been disbursed among more than 300 small-scale farmers to develop almost 600 hectares of land under cane in the Sezela cane supply region on the south coast of KwaZulu-Natal. The initiative in this region alone has highlighted the critical role of good stakeholder engagement, involving communication with land users and their families, their local communities and leaders, representative cane growing associations and the SA Cane Growers’ Association, together with the broader South African sugar industry and provincial government. Mentorship of emerging growers has also played a key role in the growing success of this initiative which will ultimately result in significantly increased cane production capacity among this important sector of the industry

Swaziland

Project implementation has commenced in Swaziland on four smallholder growth initiatives which will ultimately see the development of over 1 400 hectares of land developed to irrigated sugarcane on and around the existing LUSIP scheme, and a comprehensive replanting programme to assist a current cane supply deficit at the mill. Funding of €14.1 million out of a total cost of €18 million was secured for the projects by Ubombo Sugar from the EU-supported Ubombo Integrated Smallholder Development Projects (UISDP), specifically set up to support smallholder sugar cane development in the country. The projects are being implemented with two partner organisations; the Swaziland Water and Agriculture Development Enterprise

(SWADE), a quasi-government agency responsible for the development of LUSIP; and Technoserve Swaziland Limited, a development NGO with experience in entrepreneurial and youth development. The projects also include capacity building, support to youth education and the development local educational establishments.

Ubombo was also recently awarded €400 000 to implement a replant and capacity building programme among its existing small and medium-sized growers through the Solidaridad Farmer Support Programme. The project has been built around the establishment of a revolving loan fund for replanting that provides low-cost finance for various components of the process, in order to encourage vulnerable farmers to replant their fields and reduce the debt burden. It has also been agreed that this project will be incorporated into the EU funded projects as part of the own contribution.

Tanzania The Kilombero Charitable Community Trust (KCCT) continues to operate as a medium for funds

for social development in the Kilombero area some 12 years after conception. Originally funded through a Trust farm, which now has been incorporated into the estate, the KCCT now relies on donations from Kilombero Sugar Company (KSC) and donor funding. Due to the market constraints during recent years, funding from KSC has been difficult and the Trust has had to focus efforts considerably on external funding sources.

In 2013 the Trust was also awarded €400 000 from the Solidaridad Farmer Support Programme to implement a capacity building project for the existing outgrowers linked to the proposed EU irrigation pilot scheme. The capacity programme focuses on civic education of the farmers related to irrigation development and on technical agricultural, sustainable management systems, business and organisational management skills. The capacity building component being implemented by the Trust is progressing well using a range of external experts who are training and developing the extension officers and the leadership of cane growing associations.

Zambia

Zambia Sugar’s recently announced expansion project, which includes the construction of a new white sugar refinery, has provided continued impetus for the smallholder cane sector at Mazabuka. The increased cane supply required for the factory is to come primarily from area expansions of which the smallholder development at Manyonyo, involving some 145 individual growers, is a major part. This scheme is a community development project incorporating all existing land users/owners within its boundaries, with all members benefiting equally from cane proceeds. It is the third smallholder sugar cane outgrower scheme at Nakambala. Initiated by the government of Zambia with financial support from the African Development Bank and the Finnish Government, the Manyonyo scheme has 595 hectares of land under cane. The development of commercially sustainable smallholder outgrowers is a key objective of Zambia Sugar which continues to facilitate the financial empowerment of these growers.

FINANCIAL ASSISTANCE RECEIVED FROM GOVERNMENT In general, Illovo receives limited financial assistance from governments, as noted above in South Africa and Zambia, and in our other countries of operation in the form of tax relief/credits, subsidies, investment grants, research and development grants, awards and financial assistance from export credit agencies or financial incentives. ASSURANCE The contents of this report have been externally assured by an independent external assurer, Integrated Reporting and Assurance Services (IRAS), whose assurance statement appears on our website at www.illovosugar.com.