Notes to the Annual Financial Statements (21 - 36)


21. TAX (Rmillion) Consolidated Company
    2007 2006 2007 2006
    Restated    
  Earnings before exceptional items:        
  Current 96 44    
  Deferred 68 140 13 121
  Secondary tax on companies 127 63 127 63
  Prior years (3) (15) 2 (13)
    288 232 142 171
  Exceptional items:        
  Deferred   6   6
  Tax for the year 288 238 142 177
  Foreign tax included above 12 9    
       
       
    Consolidated Company
    2007 2006 2007 2006
    Restated    
  Tax charge at normal rate of South African tax 1 082 259 981 236
  Adjusted for:        
    Non-taxable income (65) (90) (100) (123)
    Fair value adjustment of investment in Hulamin (971)   (971)  
    Assessed losses of foreign subsidiaries (2) 4    
    Share of associate company's loss   1    
    Non-allowable expenditure 115 7 102 4
    Secondary tax on companies 127 63 127 63
    Capital gains 5 10 1 10
    Prior years (3) (16) 2 (13)
  Tax charge 288 238 142 177
  Normal rate of South African tax 29,0% 29,0% 29,0% 29,0%
  Adjusted for:        
    Non-taxable income (1,7) (9,9) (2,9) (15,1)
    Fair value adjustment of investment in Hulamin (26,0)   (28,7)  
    Assessed losses of foreign subsidiaries (0,1) 0,5    
    Non-allowable expenditure 3,1 0,6 3,0 0,5
    Secondary tax on companies 3,4 7,1 3,7 7,8
    Capital gains 0,1 1,1   1,2
    Prior years (0,1) (1,8) 0,1 (1,6)
  Effective rate of tax 7,7% 26,6% 4,2% 21,8%
  Normal tax losses of R37 million (2006 - R54 million) have been utilised to reduce deferred tax. No deferred tax asset has been raised in respect of the tax losses of foreign subsidiaries that may not be utilised in the short term or may expire in terms of applicable tax legislation.
     
     
22. HEADLINE EARNINGS (Rmillion) Consolidated
    2007 2006
  Profit attributable to shareholders 3 457 723
  Less after tax effect of surplus on sale of property (48) (20)
    Capital profit on sale of property (48) (26)
    Tax   6
  Reversal of fair value adjustment of Hulamin (3 348)  
  Headline earnings 61 703
  Headline earnings per share (cents)    
    Basic 58,1 666,4
    Diluted 56,8 649,4
   
   
23. EARNINGS PER SHARE
  Earnings per share are calculated using the weighted average number of relevant ordinary shares and qualifying preferred ordinary shares in issue during the year. In the case of basic earnings per share the weighted average number of shares in issue during the year is 104 986 732 (2006 - 105 496 879). In respect of diluted earnings per share the weighted average number of shares is 107 336 780 (2006 - 108 260 821).
       
       
24. DIVIDENDS (Rmillion) Consolidated Company
    2007 2006 2007 2006
  Paid:        
  Ordinary share capital        
    Final for previous year, paid 22 March 2007 - 350 cents (2006 - 280 cents) 373 212 373 212
    Interim for current year, paid 30 August 2007 - 150 cents (2006 - 200 cents) 155 294 155 294
  B ordinary share capital        
    Interim for current year, paid 30 August 2007 - 150 cents (2006 - nil) 15   15  
  A preferred ordinary share capital        
    Final for current year, paid 31 December 2007 - 203 cents (2006 - nil) 51   51  
    594 506 594 506
  Less dividends relating to BEE treasury shares (63)   (12)  
    531 506 582 506
  The final ordinary dividend for the year ended 31 December 2007 of 160 cents per share declared on 21 February 2008 and payable on 27 March 2008 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, with the exception of investments in Zimbabwean entities, are carried at fair value or amounts that approximate fair value.
  Categories of financial instruments Consolidated Company
    2007 2006 2007 2006
  Financial assets        
     At fair value through profit or loss - held for trading (Hulamin)   7    
     Derivative instruments in designated hedge
   accounting relationships
12 26 12 6
     Unlisted shares at cost 267 320 265 2
     Loans and receivables at amortised cost 2 404 2 591 1 039 781
    2 683 2 944 1 316 789
  Financial liabilities        
     At fair value through profit or loss - held for trading (Hulamin   9    
     Derivative instruments in designated hedge
   accounting relationships
2 7 2 5
     Financial liabilities at amortised cost 2 867 2 593 1 857 1 544
     Non-recourse equity-settled BEE borrowings 812      
    3 681 2 609 1 859 1 549
  Loans and receivables designated as at fair value through profit or loss        
     Carrying amount of these loans 887 485    
     Cumulative changes in fair value attributable to changes
   in credit risk
(12) (6)    
     Changes in fair value attributable to changes in credit
   risk recognised in period
6 4    
  Financial liabilities designated as at fair value through profit or loss        
     Financial liabilities at fair value 10 9    
     Amount payable at maturity 11 11    
     Difference between carrying amount and maturity amount 1 2    
  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 (FEC's) 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 2006.

Capital risk management
Tongaat Hulett's overall strategy around capital structure remains unchanged from 2006. 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, cash and cash equivalents and equity. It was reviewed in detail by the board in the corporate restructure process in 2007.

Credit risk
Financial instruments do not represent a concentration of credit risk. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are a variety of major banks with high credit ratings assigned by international credit-rating agencies. Accounts receivable and loans are spread among a number of major industries, customers and geographic areas. 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.

Past due trade receivables
Included in trade receivables are debtors which are past the original expected collection date (past due) at the reporting date, mainly due to delays in the property transfer process and no provision has been made as there has not been a significant change in credit quality and the amounts are still considered recoverable. A summarised age analysis of past due debtors is set out below.

    Consolidated Company
    2007 2006 2007 2006
     Less than 1 month 74 113 16 21
     Between 1 to 2 months 12 91 11 6
     Between 2 to 3 months 24 12 2 2
     Greater than 3 months 115 112 2 2
     Total past due 225 328 31 31
  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 11 13 6 7
     Amounts written off during the year (4) (2) (4)  
     Increase/(decrease) in allowance recognised in profit or loss 1   1 (1)
     Balance at end of year 8 11 3 6
  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 is used to minimise foreign currency exchange rate risk in terms of Tongaat Hulett's 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.

Forward exchange contracts that constitute designated hedges of currency risk at year end are summarised as follows:

         Consolidated Company
        2007 2006     2007 2006
    Average Commitment Fair value Fair value Average Commitment Fair value Fair value
    contract   of FEC of FEC contract   of FEC of FEC
    rate (Rmillion) (Rmillion) (Rmillion) rate (Rmillion) (Rmillion) (Rmillion)
  Imports                
  US dollars 6,95 14   (2) 6,95 14    
  Euro 9,71 2     9,71 2    
      16   (2)   16    
  Exports                
  US dollars 7,30 145 8 10 7,30 145 8 4
  Euro       1        
      145 8 11   145 8 4
  Net total   161 8 9   161 8 4
  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 balance sheet date.

Forward exchange contracts that do not constitute designated hedges of currency risk at year end are summarised as follows:

    Consolidated Company
        2007 2006     2007 2006
            Average Commitment Fair value Fair value Average Commitment Fair value Fair value
         contract   of FEC of FEC contract   of FEC of FEC
               rate (Rmillion) (Rmillion) (Rmillion) rate (Rmillion) (Rmillion) (Rmillion)
  Imports                
  US dollars 7,21 33 (1)   7,17 28 (1)  
  Euro 10,25 4     10,25 4    
      37 (1)     32 (1)  
  Exports                
  US dollars       6        
  Loan capital payments                
     and interest       1        
  US dollars                
  Net total   37 (1) 7   32 (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     Foreign    
      Amount 2007 2006 Amount 2007 2006
      (million) (Rmillion) (Rmillion) (million) (Rmillion) (Rmillion)
  US dollars   4 30 45 4 30 9
  UK pounds       6      
  Euro       5      
        30 56   30 9
  The impact of a 10% strengthening or weakening of the Rand on the uncovered US dollar receivable will have a R4 million impact on profit or loss and a R3 million impact on equity.

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 Sugar secures the premium on refined sugar exports from fluctuating international prices by using commodity futures. Tongaat Hulett Starch has secured its maize requirements for the current maize season to 31 May 2008 and a significant portion of its requirements for the year ending 31 May 2009 by means of unpriced procurement contracts and futures. At the year end the commodity futures contracts were:

      Consolidated   Company
        2007 2006     2007 2006
    Tons Contract Fair Fair Tons Contract Fair Fair
      value value value   value value value
      (Rmillion) (Rmillion) (Rmillion)   (Rmillion) (Rmillion) (Rmillion)
  Futures - hedge accounted:                
  Raw sugar futures purchased 26 626 42 (3) 1 26 626 42 (3) 1
  Raw sugar futures sold 29 949 60 1 1 29 949 60 1 1
  Maize futures sold 85 800 137 5 (1) 85 800 137 5 (1)
  Maize futures purchased       (4)       (4)
  Aluminium futures purchased       13        
    3 10     3 (3)
  Futures - not hedge accounted:            
  Aluminium futures sold   (9)        
  Period when cash flow expected to occur 2008 2007     2008 2007
  When expected to effect profit 2008 2007     2008 2007
  Amount recognised in equity during the period 6 5     6 5
  Amount transferred from equity and recognised in profit or loss (3) (1)     (3) (1)
       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 R8 million effect on profit or loss and a R5 million impact on equity.

Liquidity risk
Tongaat Hulett manages its liquidity risk by monitoring forecast cash flows on a weekly basis. There are unutilised committed banking facilities of R2,2 billion (2006 - R1,0 billion).

Borrowings inclusive of interest projected at current interest rates:
 

  2007 Weighted average Due within       Interest  
  Consolidated effective interest rate   1 year 1 to 2 years 2 to 5 years After 5 years adjustment Total
  Bank loans 12,2   943 59 158 438 (361) 1 237
  Foreign loans 18,0   114 10 31   (26) 129
  Other borrowings 12,1   178       (8) 170
  Financial lease liability 12,5     1 1   (1) 1
  Other non-interest                
  bearing liabilities     1 330         1 330
  Net settled derivatives     2         2
  Total for Tongaat Hulett     2 567 70 190 438 (396) 2 869
  Non-recourse equity-settled                
  BEE borrowings     65 102 304 616 (275) 812
  Total including SPV debt     2 632 172 494 1 054 (671) 3 681
                 
  2006 Weighted average Due within       Interest  
  Consolidated effective interest rate   1 year 1 to 2 years 2 to 5 years After 5 years adjustment Total
  Bank loans 9,5   1 154       (107) 1 047
  Foreign loans Libor +0,6   96 39 17   (21) 131
  Other borrowings 9,5   188       (16) 172
  Financial lease liability 11,3   1 1 2   (1) 3
  Other non-interest                
  bearing liabilities     1 238         1 238
  Net settled derivatives     16         16
  Total     2 693 40 19   (145) 2 607
                   
26. PRINCIPAL SUBSIDIARY COMPANIES AND JOINT VENTURES (Rmillion)
      Interest of Holding Company
      Shares Indebtedness
      2007 2006 2007 2006
    Tongaat Hulett Starch (Pty) Limited 15 15 (2) (15)
  #  Hulett Aluminium (Pty) Limited (50%)   297   840
    Hulett Hydro Extrusions (Pty) Limited (35%)        
    Tongaat Hulett Developments (Pty) Limited     (248) (16)
    Tongaat Hulett Estates (Pty) Limited        
    Tongaat Hulett Sugar Limited 487 487 897 215
    Tambankulu Estates Limited (Swaziland)        
    Acucareira de Mocambique, SARL (Mozambique) (75%)        
    Acucareira de Xinavane, SARL (Mozambique) (88%)        
  +  Triangle Sugar Corporation Limited (Zimbabwe)        
  + Hippo Valley Estates Limited (Zimbabwe) (50,35%)        
    The Tongaat Group Limited 54 54 (65) (43)
      556 853 582 981
  # Joint venture, unbundled during the year        
  + Not consolidated        
    Except where otherwise indicated, effective participation is 100 percent.
A full list of all subsidiaries and joint ventures is available from the company secretary on request.
       
         
       
27. GUARANTEES AND CONTINGENT LIABILITIES (Rmillion) Consolidated Company
    2007 2006 2007 2006
  Guarantees in respect of obligations of Tongaat Hulett and third parties 9 57 21 21
  Contingent liabilities 26 22 24 4
    35 79 45 25
       
       
28. LEASES (Rmillion) Consolidated Company
    2007 2006 2007 2006
  Amounts payable under finance leases        
  Minimum lease payments due:        
  Not later than one year 1 1 1  
  Later than one year and not later than five years 1 2 1  
  Later than five years   1    
    2 4 2  
  Less: future finance charges (1) (1) (1)  
  Present value of lease obligations 1 3 1  
  Payable:        
  Not later than one year   1    
  Later than one year and not later than five years 1 2 1  
    1 3 1  
  Operating lease commitments, amounts due:        
  Not later than one year 9 13 8 8
  Later than one year and not later than five years 14 29 8 18
  Later than five years   3    
    23 45 16 26
  In respect of:        
  Property 12 28 5 16
  Plant and machinery 8 11 8 5
  Other 3 6 3 5
    23 45 16 26
           
       
29. CAPITAL EXPENDITURE COMMITMENTS (Rmillion) Consolidated Company
    2007 2006 2007 2006
  Contracted 539 169 44 77
  Approved but not contracted 796 640 239 125
    1 335 809 283 202
  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 are eliminated on consolidation.
    Consolidated Company
    2007 2006 2007 2006
  Goods and services:        
     Transacted between operating entities within the company     5  
     Between the company and its subsidiaries     11  
     Transacted between subsidiaries within Tongaat Hulett 93 10    
     Transacted with/between joint ventures within Tongaat Hulett   38   3
     Transacted with associate companies   79    
     Sales to external related parties 141 108 141 108
     Paid to the Tongaat-Hulett Pension Fund 26 31 24 23
     Transacted with directors of the company   7    
  Administration fees and other income:        
     Transacted between operating entities within the company     5 2
     Between the company and its subsidiaries     32 34
     Transacted between subsidiaries within Tongaat Hulett 42 22    
     Transacted with/between joint ventures within Tongaat Hulett 57 305   2
     Transacted with associate companies   20    
     Paid to external related parties 3 4    
  Interest paid:        
     Transacted between operating entities within the company     27 23
     Between the company and its subsidiaries     4 2
     Transacted with/between joint ventures within Tongaat Hulett 6 11    
  Interest received:        
     Transacted between operating entities within the company     189 112
     Between the company and its subsidiaries     18  
     Transacted between subsidiaries within Tongaat Hulett 26 22    
     Transacted with/between joint ventures within Tongaat Hulett 3 12   43
     Transacted with associate companies   1    
  Sales of fixed assets:        
     Between the company and its subsidiaries       314
     Transacted between subsidiaries within Tongaat Hulett   9    
  Loan balances:        
     Transacted between operating entities within the company     2 340 1 296
     Between the company and its subsidiaries     582 141
     Transacted with/between joint ventures within Tongaat Hulett   329   840
     With the holding company   12    
     External related parties 12 8 12 8
  Dividends received:        
     Between the company and its subsidiaries     300  
     Transacted between subsidiaries within Tongaat Hulett 64 61    
  Other related party information:
   Export partnership - refer to note 3
   Total dividends paid - refer to note 24
   Directors - refer to note 32
   Tongaat Hulett Developments is a guarantor on Tongaat Hulett Limited's South African long-term unsecured loan facility
 
   
31. RETIREMENT BENEFITS
  Pension and Provident Fund Schemes
Tongaat Hulett contributes towards retirement benefits for substantially all permanent employees who, depending on preference or local legislation, are required to be a member of either a Tongaat Hulett implemented scheme or of various designated industry or state schemes. The Tongaat Hulett schemes are governed by the relevant retirement fund legislation. Their assets consist primarily of listed shares, fixed income securities, property investments and money market instruments and are held separately from those of Tongaat Hulett. The scheme assets are administered by boards of trustees, each of which includes elected employee representatives.

Defined Contribution Pension and Provident Schemes
There are three defined contribution schemes, one of which is located in Swaziland. The latest audited financial statements of these schemes all reflect a satisfactory state of affairs. Contributions of R18 million were expensed during the year (2006 - R16 million).

Defined Benefit Pension Scheme
There is one defined benefit scheme, The Tongaat-Hulett Pension Fund (the Fund), for employees including those of the Hulett Aluminium Joint Venture. The Fund is actuarially valued at intervals of not more than three years using the projected unit credit method. In the statutory actuarial valuation of the scheme as at 31 December 2001 the Fund was certified by the reporting actuary to be in a sound financial position. With effect from 7 December 2001 the Pension Funds Second Amendment Act was promulgated. This Act required the Fund to submit a plan for the apportionment on a fair basis to the employer and past and current members of the Fund of the actuarial surplus as at 31 December 2001. The 2001 apportionment plan was approved by the Financial Services Board in May 2007. The manner in which the Fund proceeds following the unbundling of Hulamin from Tongaat Hulett and the split between the employers participating in the Fund of the share of the actuarial surplus attributed to the employer surplus account has yet to be finalised. Accordingly, due to the uncertainty regarding the apportionment, no surplus has been recognised on the balance sheet.

An actuarial valuation of liabilities, based on the existing benefits, carried out as at 31 December 2007 in accordance with IAS 19 showed the present value of obligations to be adequately covered by the fair value of the scheme assets.

    2007 2006
    Rmillion Rmillion
  Details of the valuation of the Fund (100%) are as follows:    
  Fair value of plan assets    
  Balance at beginning of year 5 945 4 554
  Expected return on scheme assets 460 348
  Employer contributions 45 39
  Members' contributions 36 31
  Benefits paid (457) (181)
  Net member transfers (15) (9)
  Actuarial gain 530 1 163
  Balance at end of year 6 544 5 945
       
  Present value of defined benefit obligation    
  Balance at beginning of year 4 202 3 465
  Current service cost 97 81
  Interest cost 322 265
  Members' contributions 36 31
  Benefits paid (457) (181)
  Net member transfers (15) (9)
  Actuarial loss 259 550
  Balance at end of year 4 444 4 202
  Fund assets less member liabilities, before reserves 2 100 1 743
       
  Asset information:    
  Equities 3 896 4 624
  Fixed interest bonds 647 804
  Property 151 8
  Cash 1 850 509
    6 544 5 945
  Included in the assets of the scheme are ordinary shares    
  held in Tongaat Hulett Limited, stated at fair value 136 212
  Actual return on scheme assets 990 1 511
       
  The principal actuarial assumptions are:    
  Discount rate 8,25% 8,00%
  Salary cost and pension increase 5,25% 4,75%
  Expected rate of return on assets 8,00% 8,00%
       
  Experience gains and (losses) on:    
  Plan liabilities (137) (429)
  Percentage of the present value of the plan liabilities 3,1% 10,2%
       
  Plan assets 530 1 163
  Percentage of plan assets 8,1% 19,6%
       
  Estimated contributions payable in the next financial year 48 43

  Basis used to determine the rate of return on assets
The expected rate of return on assets has been set equal to the discount rate used to value the liabilities of the Fund on the projected unit credit method. This is a reasonably conservative approach, adopted on the basis that the additional returns anticipated on certain other asset classes in which the Fund is invested (e.g. equities) can only be achieved with increased risk.

Post-Retirement Medical Aid Benefits
The obligation to pay medical aid contributions after retirement is no longer part of the conditions of employment for employees engaged after 30 June 1996. A number of pensioners and current employees, however, remain entitled to this benefit. The entitlement to this benefit for current employees is dependent upon the employee remaining in service until retirement and completing a minimum service period of ten years. The unfunded liability for post-retirement medical aid benefits is determined actuarially each year and comprises:

    Consolidated Company
    2007 2006 2007 2006
    (Rmillion) (Rmillion) (Rmillion) (Rmillion)
  Amounts recognised in the balance sheet:        
  Present value of unfunded obligations 246 277 246 230
  Unrecognised actuarial losses (37) (36) (37) (32)
  Net liability in balance sheet 209 241 209 198
  The liability is reconciled as follows:        
  Net liability at beginning of year 241 230 198 190
  Hulamin unbundling (43)      
  Net expense recognised in income statement 26 27 26 22
  Contributions (15) (16) (15) (14)
  Net liability at end of year 209 241 209 198
  Amounts recognised in the income statement:        
  Service costs 3 3 3 2
  Interest costs 18 19 18 16
  Net actuarial losses recognised 5 5 5 4
    26 27 26 22
  The principal actuarial assumptions applied are:        
  Discount rate 8,25% 8,00% 8,25% 8,00%
  Health care cost inflation rate 5,75% 5,25% 5,75% 5,25%
           
    Consolidated Company
    2007 2006 2007 2006
  Sensitivity of healthcare cost trend rates        
  1% increase in trend rate - effect on the aggregate of the service and        
  interest costs 3 4 3 3
  1% increase in trend rate - effect on the obligation 29 34 29 27
  1% decrease in trend rate - effect on the aggregate of the service and        
  interest costs 2 4 2 3
  1% decrease in trend rate - effect on the obligation 24 29 24 23
  Estimated contributions payable in the next financial year 16 17 16 15
  Experience losses:        
  On plan liabilities 11 22 11 18
  Percentage of the present value of the plan liabilities 4,47% 7,94% 4,47% 7,83%
  Retirement Gratuities        
  Tongaat Hulett has in the past made payments, on retirement, to eligible employees who have remained in service until retirement, and have completed a minimum service period of ten years. The unfunded liability for retirement gratuities which is determined actuarially each year comprises:
    Consolidated Company
    2007 2006 2007 2006
    (Rmillion) (Rmillion) (Rmillion) (Rmillion)
  Amounts recognised in the balance sheet:        
  Present value of unfunded obligations 56 59 56 51
  Unrecognised actuarial losses (5) (4) (5) (3)
  Net liability in balance sheet 51 55 51 48
  The liability is reconciled as follows:        
  Net liability at beginning of year 55 52 48 46
  Hulamin unbundling (7)      
  Net expense recognised in income statement 8 7 8 6
  Payments made (5) (4) (5) (4)
  Net liability at end of year 51 55 51 48
  Amounts recognised in the income statement:        
  Service costs 3 3 3 2
  Interest costs 4 4 4 4
  Net actuarial losses recognised 1   1  
    8 7 8 6
  The principal actuarial assumptions applied are:        
  Discount rate 8,25% 8,00% 8,25% 8,00%
  Salary inflation rate 5,75% 5,25% 5,75% 5,25%
  Estimated contributions payable in the next financial year 5 5 5 5
  Experience losses:        
  On plan liabilities 3 7 3 6
  Percentage of the present value of the plan liabilities 5,36% 11,86% 5,36% 11,76%
           
           
32. DIRECTORS' EMOLUMENTS AND INTERESTS        
  Directors' remuneration (R000)
The directors' remuneration for the year ended 31 December 2007 was as follows:
       
        Retirement  
    Cash   and medical  
  Name Package Bonus contributions Total
  Executive directors:        
  B G Dunlop 2 341 808 282 3 431
  A Fourie (to 29 June 2007) 1 113   126 1 239
  G R Hibbert (to 29 June 2007) 955   111 1 066
  G P N Kruger (to 29 June 2007) 1 070   136 1 206
  M H Munro 2 036 987 242 3 265
  S J Saunders (to 29 June 2007) 1 070   126 1 196
  M Serfontein (to 29 June 2007) 862   102 964
  P H Staude 4 053 2 553 434 7 040
    13 500 4 348 1 559 19 407
  Bonuses are reported to match the amount payable to the applicable financial year.      
  The directors' remuneration for the year ended 31 December 2006 was as follows:      
        Retirement  
    Cash   and medical  
  Name Package Bonus contributions Total
  Executive directors:        
  B G Dunlop 2 168 1 010 256 3 434
  A Fourie 2 043 882 234 3 159
  G R Hibbert 1 752 824 203 2 779
  G P N Kruger 2 009 629 252 2 890
  M H Munro 1 810 869 216 2 895
  S J Saunders 2 010 907 235 3 152
  M Serfontein 1 618 746 190 2 554
  P H Staude 3 718 1 785 397 5 900
    17 128 7 652 1 983 26 763
  Bonuses are reported to match the amount payable to the applicable financial year.

Share incentive gains
Following the approval by shareholders of the split of the Tongaat-Hulett Group into two separate listed entities, Tongaat Hulett and Hulamin and with the circular to shareholders relating to the corporate transactions including detail on the approach to the share incentive schemes, certain share incentive scheme transactions, prior to the corporate restructuring, were concluded. These transactions are included in the share incentive gains set out below and were settled by the delivery of shares, some of which were sold, inter alia to meet tax payments, with the remainder being held in shares in Tongaat Hulett.

    2007 2006
  Executive directors:    
  B G Dunlop 5 641 7 506
  A Fourie (to 29 June 2007) 5 425 2 408
  G R Hibbert (to 29 June 2007) 7 577 2 957
  G P N Kruger (to 29 June 2007) 9 264 4 380
  M H Munro 8 212 820
  S J Saunders (to 29 June 2007) 3 276  
  M Serfontein (to 29 June 2007) 8 487 2 486
  P H Staude 17 861 6 257
    65 743 26 814
       Tongaat-Hulett Group Limited incentive bonus on Hulamin unbundling and introduction of BEE
In June 2006 the Tongaat-Hulett Group board introduced an incentive plan whereby the executive directors and the chief executive officer could earn a maximum potential payment ranging from 30% to 55% of cash package for the successful implementation of the Hulamin unbundling and the introduction of BEE equity participation in both Tongaat Hulett and Hulamin. Following the successful implementation of these transactions, the board approved the payment of the bonus, as set out below.
            2007 2006
  Executive directors:            
  B G Dunlop         650  
  A Fourie (to 29 June 2007)         1 021  
  G R Hibbert (to 29 June 2007)         526  
  G P N Kruger (to 29 June 2007)         603  
  M H Munro         905  
  S J Saunders (to 29 June 2007)         603  
  M Serfontein (to 29 June 2007)         486  
  P H Staude         2 045  
            6 839 -
  Non-executive directors' emoluments    
    2007 2006
  Name Fees Other Total Fees Other Total
  Non-executive directors:            
  D D Barber (to 29 June 2007) 75   75 135   135
  P M Baum 150 60 210 135 125 260
  I Botha (to 9 October 2007) 116 58 174 135 142 277
  L Boyd (to 25 April 2007) 50 40 90 135 178 313
  E le R Bradley 150 210 360 135 233 368
  B E Davison (to 29 June 2007) 75   75 135   135
  J John (from 29 June 2007) 75 38 113      
  M W King (to 25 April 2007) 50 25 75 135 142 277
  J B Magwaza 150 80 230 135 140 275
  M Mia 150 195 345 135 123 258
  T H Nyasulu 150   150 135 32 167
  C M L Savage 535 100 635 500 267 767
  C B Sibisi (from 29 June 2007) 75   75      
  R H J Stevens 150 80 230 135 110 245
  A M Thompson (to 29 June 2007) 75   75 135 72 207
  J G Williams (from 10 October 2007) 34   34      
    2 060 886 2 946 2 120 1 564 3 684
  Declaration of full disclosure            
  Other than that disclosed above, no consideration was paid to, or by any third party, or by the company itself, in respect of services of the company's directors, as directors of the company, during the year ended 31 December 2007.

Interest of directors of the company in share capital
The aggregate holdings as at 31 December 2007 of those directors of the company holding issued ordinary shares of the company are detailed below. Holdings are beneficial except where indicated otherwise. The comparative figures have been adjusted for the shareholding of those directors who retired during the year and for those directors who came off the board following the corporate restructuring and the unbundling of Hulamin.

    2007 2006
    Direct Indirect Direct Indirect
  Name shares shares shares shares
  Executive directors:        
  B G Dunlop 14 654   7 394  
  M H Munro 12 171   6 263  
  P H Staude 55 868   40 085  
  Other directors at 31 December 2006 *     46 299 1 257 008
    82 693   100 041 1 257 008
  Non-executive directors:        
  E le R Bradley   94 847   99 316
  E le R Bradley (non-beneficial)   24 647   25 809
  J B Magwaza 5 501   5 760  
  C M L Savage 22 923 69 930 24 003 73 225
  R H J Stevens 590   618  
  Other directors at 31 December 2006     500  
    29 014 189 424 30 881 198 350
 
*
  
These are directors who came off the Board following the corporate restructuring transactions in 2007 and the change in the composition of the Board with effect from 29 June 2007.
   
33. EMPLOYEE SHARE INCENTIVE SCHEMES
  The adoption of IFRS 2 Share-based Payment (IFRS 2) in 2005 required that all awards made after 7 November 2002 be accounted for in the financial statements of the company. IFRS 2 has therefore been applied to The Tongaat-Hulett Group Limited 2001 Share Option Scheme in respect of the awards made on 14 April 2003, 1 October 2003 and 21 April 2004 and to the new share incentive scheme comprising the Share Appreciation Right Scheme 2005 (SARS), the Long Term Incentive Plan 2005 (LTIP) and the Deferred Bonus Plan 2005 (DBP).

Details of awards in terms of the company's share incentive schemes are as follows:
As a result of the unbundling of Hulamin, participants in these share schemes who had not exercised their rights at the unbundling date converted their existing Tongaat-Hulett Group Limited instruments into two components, a Tongaat Hulett Limited component and a Hulamin Limited component. The obligation to settle these share schemes is in accordance with the following principles, which are in accordance with the Unbundling Agreement. Tongaat Hulett is obliged to settle all benefits under these share schemes for its own employees only, using Tongaat Hulett shares. It will settle the outstanding share scheme instruments that arise after the award adjustments for its own employees, by purchasing Tongaat Hulett shares in the market, or issuing Tongaat Hulett shares. The benefit for the Hulamin component will be determined with reference to the Hulamin share price, and the Tongaat Hulett component with respect to the Tongaat Hulett share price, however, benefits arising from the Hulamin component will be settled using Tongaat Hulett shares.

The Tongaat-Hulett Employees Share Incentive Scheme and The Tongaat-Hulett Group Limited 2001 Share Option Scheme (the Original Share Option Schemes)
Under the original share option schemes, participating employees were awarded share options in the company. On vesting, the employee is entitled to purchase shares in the company and immediately sell the shares at the market price, thereby benefiting from the appreciation in the share price. The original strike price of each Tongaat-Hulett Group Limited option was apportioned between the Tongaat Hulett and Hulamin components with reference to the volume weighted average prices of both companies for the first 22 trading days after the unbundling. The VWAP was R93,89 and R29,04 respectively, with the expiry date being the same as that of the original options.

      Number of THG options THG options   Number of
  Expiring Original option THG options at exercised to forfeited to Unbundling THG options at
  ten years from price (Rand) 31 Dec 2006 30 June 2007 30 June 2007 of Hulamin 30 June 2007
               
               
               
  4 November 1998 33,25 22 000 8 000   4 000 10 000
  5 March 1999 32,90 244 000 84 900   19 000 140 100
  7 May 1999 40,10 168 860 65 220   11 600 92 040
  19 May 2000 30,00 33 800 15 800   900 17 100
  26 July 2000 29,40 1 500 1 500      
  12 January 2001 39,85 36 700 16 400     20 300
  16 May 2001 40,00 307 900 135 800   35 400 136 700
  15 August 2001 42,00 3 500       3 500
  13 May 2002 49,60 491 350 213 700 900 71 800 204 950
  14 April 2003 31,90 654 500 388 000 1 600 59 500 205 400
  1 October 2003 34,50 34 500     4 500 30 000
  21 April 2004 47,00 943 200 268 600 11 500 151 900 511 200
      2 941 810 1 197 920 14 000 358 600 1 371 290
 
The option price and number of unexercised options after the unbundling of Hulamin at the end of 30 June 2007 were apportioned into a Tongaat Hulett component (Tongaat Hulett) and a Hulamin component (Hulamin) as follows:
 
  Option price Number       Number of Options time
   (Rand)  following Options exercised Options forfeited  options at constrained at
  Apportioned unbundling 1 July to 31 Dec 2007 1 July to 31 Dec 2007 31 December 2007 31 December 2007
Expiring Tongaat Hulamin Tongaat Hulamin Tongaat Hulamin Tongaat Hulamin Tongaat Hulamin Tongaat Hulamin
ten years from Hulett   Hulett   Hulett   Hulett   Hulett   Hulett  
4 November 1998 25,40 7,85 10 000 10 000 2 000 2 000     8 000 8 000    
5 March 1999 25,13 7,77 140 100 140 100 11 800 10 800     128 300 129 300    
7 May 1999 30,63 9,47 92 040 92 040 2 240 2 240     89 800 89 800    
19 May 2000 22,91 7,09 17 100 17 100         17 100 17 100    
12 January 2001 30,44 9,41 20 300 20 300         20 300 20 300    
16 May 2001 30,55 9,45 136 700 136 700 2 700       134 000 136 700    
15 August 2001 32,08 9,92 3 500 3 500         3 500 3 500    
13 May 2002 37,88 11,72 204 950 204 950 7 750 4 250     197 200 200 700    
14 April 2003 24,37 7,53 205 400 205 400 10 150 8 550     195 250 196 850    
1 October 2003 26,35 8,15 30 000 30 000         30 000 30 000    
21 April 2004 35,90 11,10 511 200 511 200 18 400 7 600 1 100 1 100 491 700 502 500 255 810 255 810
      1 371 290 1 371 290 55 040 35 440 1 100 1 100 1 315 150 1 334 750 255 810 255 810
       The weighted average fair value costing of the combined Tongaat Hulett and Hulamin components of the outstanding share options granted in 2003 and 2004, determined using the binomial tree valuation model, was R11,14 per share and R16,08 per share respectively (2006 - R11,12 and R15,28). No awards were made in 2007 (2006 - nil) under the original share option schemes.

The significant inputs into the model for the 2003/4 awards of the original share option schemes were:  

  Share price at grant date The share option price at grant date is the share price at the date on which the share option is issued, as noted above.
  Exercise price The exercise price is the share price at grant date, as noted above.
  Expected option life 114 months (assume contractual plus a leaving percentage of 5%).
  Risk-free interest rate 9,84%
  Expected volatility Expected volatility of 35% is based on historical volatility determined by the statistical analysis of daily share price movements over the past three years.
  Expected dividends The measurement of the fair value of the share option did not take into account dividends, as no dividend payment was expected. A continuous dividend yield of 3,9% was used.
  Weighted average share price Tongaat Hulett component: R31,98 and Hulamin component R9,90 (2006 - R41,23).
  Expected early exercise Early exercise is taken into account on an expectation basis.
  Performance (vesting) conditions There are no performance (vesting) conditions other than the passage of time.
  Non-market performance conditions No non-market conditions.
  Market performance conditions No market conditions.
  Weighted average remaining life:  
  - Expected 55 months (2006 - 67 months)
  - Contractual 120 months
  Share Appreciation Right Scheme 2005

Under the share appreciation right scheme, participating employees are awarded the right to receive shares equal to the difference between the exercise price and the grant price, less income tax payable on such difference. The employee therefore participates in the after tax share price appreciation in the company. The vesting of the right is conditional on the achievement of Tongaat Hulett performance levels over a performance period.

In advance of the unbundling of Hulamin, partial accelerated vesting was permitted on the early vesting date based on full attainment of the performance conditions. The headline earnings per share (HEPS) performance to date relative to the HEPS performance condition applicable to the 2005 and 2006 award was tested on the early test date and this performance condition was fully met in respect of both the 2005 and 2006 awards. Vesting of the SARs was pro-rated with reference to the proportion of the performance period that had been served by participants up to the unbundling date. This pro-rata portion of the SARs was allowed to be exercised from the early vesting date up to the day before the unbundling date.

Following on the unbundling of Hulamin, participants in the share appreciation right scheme who had not exercised their rights at the unbundling date or whose rights had not vested, converted their existing Tongaat-Hulett Group Limited rights into two components, a Tongaat Hulett Limited component and a Hulamin Limited component with adjusted strike prices. The original strike price of each Tongaat-Hulett Group Limited right was apportioned between the Tongaat Hulett and Hulamin components with reference to the volume weighted average prices of both companies for the first 22 trading days after the unbundling. The VWAP was R93,89 and R29,04 respectively. Replacement SARs will not be subject to any performance conditions other than the passage of time. The vesting and lapse dates of both new SARs will be the same as that of the original SARs.

 
        Number of THG rights THG rights     Number of Refer below for
Expiring   Original grant THG rights at exercised to forfeited to Unbundling THG rights at the continuation
seven years from price (Rand) 31 Dec 2006 30 June 2007 30 June 2007 of Hulamin 30 June 2007 of this table
                    after the
10 May 2005     57,58 1 342 868 373 395 18 837   205 716 744 920 unbundling
25 April 2006     96,09 1 311 726 191 121 13 542   269 589 837 474 of Hulamin
        2 654 594 564 516 32 379   475 305 1 582 394  
The grant price and number of unexercised rights after the unbundling of Hulamin at the end of June 2007 were apportioned into a Tongaat Hulett component
(Tongaat Hulett) and a Hulamin component (Hulamin) as follows:
      Rights      
  Grant price (Rand) Number following  granted in Rights exercised Rights forfeited Number of rights at
Expiring Apportioned unbundling 2007 1 July to 31 Dec 2007 1 July to 31 Dec 2007 31 December 2007
seven years Tongaat Hulamin Tongaat Hulamin Tongaat Tongaat Hulamin Tongaat Hulamin Tongaat Hulamin
 from Hulett   Hulett   Hulett Hulett   Hulett Hulett  
10 May 2005 43,98 13,60 744 920 744 920   31 256 15 136 1 146 1 146 712 518 728 638
25 April 2006 73,39 22,70 837 474 837 474   5 838   1 964 1 964 829 672 835 510
20 August 2007 88,84       1 189 012     3 162 1 185 850  
      1 582 394 1 582 394 1 189 012 37 094 15 136 6 272 3 110 2 728 040 1 564 148
       The estimated fair value costing of these outstanding share appreciation rights was determined using the binomial tree valuation model and non-market performance conditions, based on the following significant inputs: Share price at grant date The grant price at which the share appreciation right is issued, as noted above.
  Exercise price The share price at grant date, as noted above in respect of the 2007 award and apportioned for the Tongaat Hulett and Hulamin components for the 2006 and 2005 awards.
  Expected option life 80 months (assume contractual plus a leaving percentage of 5%).
  Risk-free interest rate 2007 award : 8,11% (2006 award : 7,22% and 2005 award : 8,09%).
  Expected volatility Expected volatility of 27% ( 2006 and 2005 : 35%) is based on historical volatility determined by the statistical analysis of daily share price movements over the past three years.
  Expected dividends The measurement of the fair value of the share appreciation rights did not take into account dividends, as no dividend payment was expected. A continuous dividend yield of 3,44% was used for the 2007 award (2006 award : 4,0% and 2005 award : 3,9%).
  Weighted average share price As above.
  Expected early exercise Early exercise is taken into account on an expectation basis.
  Time constraints Three years from grant date.
  Performance (vesting) conditions An increase in headline earnings per ordinary share as determined by the Remuneration Committee. Retesting of the performance condition is allowed.
  Non-market performance conditions Growth in headline earnings per share.
  Market performance  
  conditions No market conditions.
  Estimated fair value per right at grant date 2007 award: R15,97 (the combined Tongaat Hulett and Hulamin components: 2006 award : R18,11 and 2005 award: R13,88).
  Weighted average remaining life:  
  - Expected 2007 award : 80 months (2006 award : 64 months and 2005 award : 52 months)
  - Contractual 84 months
        Long Term Incentive Plan 2005

Under the long term incentive plan, participating employees are granted conditional awards. These awards are converted into shares on the achievement of performance conditions over a performance period.

In advance of the unbundling of Hulamin, partial accelerated vesting was permitted based on the attainment of the performance conditions. In respect of both the 2005 and the 2006 awards, 50% of the award is subject to the TSR condition and 50% is subject to the ROCE condition. Both the TSR and ROCE performance to date relative to the TSR and ROCE performance condition applicable to the 2005 and 2006 awards were tested on the early test date. Both these performance conditions had been fully met in respect of both the 2005 and 2006 awards. Vesting of the conditional awards was pro-rated with reference to the proportion of the performance period that had been served by participants up to the unbundling date. This pro-rata portion of the conditional awards vested on the early vesting date and was settled with shares in The Tongaat-Hulett Group Limited.

Following upon the unbundling of Hulamin, that portion of The Tongaat-Hulett Group Limited conditional awards that did not vest early were converted into two components, a Tongaat Hulett Limited component and a Hulamin Limited component with adjusted strike prices. The original strike price of each Tongaat-Hulett Group Limited conditional awards was apportioned between the Tongaat Hulett and Hulamin components with reference to the volume weighted average prices of both companies for the first 22 trading days after the unbundling. The VWAP was R93,89 and R29,04 respectively. The replacement conditional awards will not be subject to new performance conditions and will be subject to the original vesting dates.

 
    Number of THG conditional THG conditional   Number of Refer below for
    THG conditional awards awards   THG conditional the continuation
Expiring Original issue awards at settled to forfeited to Unbundling awards at of this table
three years from price (Rand) 31 Dec 2006 30 June 2007 30 June 2007 of Hulamin 30 June 2007 after the
10 May 2005 57,58 336 725 230 849 4 995 24 488 76 393 unbundling
25 April 2006 96,09 182 300 67 951 3 014 28 009 83 326 of Hulamin
    519 025 298 800 8 009 52 497 159 719  
Refer below for the continuation of this table after the unbundling of Hulamin

The issue price and number of unexercised conditional awards after the unbundling of Hulamin at the end of June 2007 were apportioned into a Tongaat Hulett component (Tongaat Hulett) and a Hulamin component (Hulamin) as follows:

  Issue price (Rand) Number following Conditional awards granted No. of conditional awards
  Apportioned unbundling 1 July to 31 Dec at 31 Dec 2007
Expiring Tongaat Hulamin Tongaat Hulamin Tongaat Tongaat Hulamin
three years from Hulett   Hulett   Hulett Hulett  
10 May 2005 43,98 13,60 76 393 76 393   76 393 76 393
25 April 2006 73,39 22,70 83 326 83 326   83 326 83 326
20 August 2007 88,84       136 467 136 467  
      159 719 159 719 136 467 296 186 159 719
       The estimated fair value costing of these outstanding conditional share awards was determined using the Monte Carlo Simulation model and non-market performance conditions, based on the following significant inputs:
  Share price at grant date The grant price at which the conditional share award is issued, as noted above.
  Exercise price The share price at grant date, as noted above in respect of the 2007 award and apportioned for the Tongaat Hulett and Hulamin components for the 2006 and 2005 awards.
  Expected option life 34 months (assume contractual plus a leaving percentage of 5%).
  Risk-free interest rate 2007 award : 8,8% (2006 award : 7,01% and 2005 award : 7,44%).
  Expected volatility Expected volatility of 23,98% for the 2007 award (2006 award : 25,60% and 2005 award : 27,02%) is based on historical volatility determined by the statistical analysis of daily share price movements over the past three years.
  Expected dividends The measurement of the fair value of the conditional share awards did not take into account dividends, as no dividend payment was expected. A continuous dividend yield of 3,6% was used for the 2007 award (2006 award : 3,8% and 2005 award : 3,9%).
  Weighted average share price As above.
  Expected early exercise Early exercise is taken into account on an expectation basis.
  Time constraints Three years from grant date.
  Performance (vesting) conditions 50% of the LTIP award will be subject to the TSR condition and 50% will be subject to the ROCE condition. No retesting of the performance condition is allowed.
  Non-market performance conditions Return on capital employed (ROCE).
  Market performance conditions Total shareholder return (TSR).
  Estimated fair value per conditional award at grant date 2007 award: R46,28 (the combined Tongaat Hulett and Hulamin components: 2006 award: R39,78 and 2005 award: R24,96)
  Weighted average remaining life:  
  - Expected 2007 award : 32 months (2006 award : 16 months and 2005 award : 4 months)
  - Contractual 36 months
       Deferred Bonus Plan 2005

Under the deferred bonus plan, participating employees purchase shares in the company with a portion of their after tax bonus. These pledged shares are held in trust by a third party administrator for a qualifying period, after which the company awards the employee a number of shares in the company which matches those pledged shares released from the trust.

The full matching award based on the number of shares pledged in 2005 and 2006, and retained until the early vesting date, vested on the early vesting date and an appropriate number of Tongaat-Hulett Group Limited shares were delivered to each of the participants prior to the unbundling date.

      Number of Conditional Conditional Number of
      conditional awards awards conditional
  Expiring Issue price awards at granted in settled in awards at
  three years from Rand 31 Dec 2006 2007 2007 31 Dec 2007
  4 May 2005 57,76 35 094   35 094  
  3 March 2006 91,86 25 831   25 831  
  27 July 2007 90,27   24 274   24 274
      60 925 24 274 60 925 24 274
   
  The estimated fair value costing of the outstanding deferred bonus share awards was based on the following significant inputs:       
  Share price at grant date The price at which the deferred bonus share is issued, as noted above.
  Exercise price The grant share price at grant date, as noted above.
  Expected option life 34 months (assume contractual plus a leaving percentage of 5%).
  Risk-free interest rate Not applicable.
  Expected volatility Not applicable.
  Expected dividends The measurement of the fair value of the deferred bonus shares did not take into account dividends, as no dividend payment was expected.
       Weighted average share price 2007 award : R90,27
  Expected early exercise Early exercise is taken into account on an expectation basis.
  Time constraints Three years from grant date.
  Performance (vesting) conditions There are no performance (vesting) conditions other than the passage of time.
  Non-market performance conditions No non-market conditions.
  Market performance conditions No market conditions.
  Estimated fair value per deferred  
     bonus share at grant date 2007 award : R67,53
  Weighted average remaining life:  
  - Expected 2007 award : 31 months (2006 and 2005 awards : nil)
  - Contractual 36 months
  The deferred bonus shares were purchased by the participating employees on 3 August 2007 in respect of the 2007 award. (2006 award : purchased on 2 March 2006 and 2005 award : purchased over the period from 4 May 2005 to 10 May 2005).

       Interest of directors of the company in share-based instruments

The interest of the directors in share options of the company are shown in the table below:

The Original Share Option Schemes
        Number of Options Number of Refer to the
    Expiring Option price options at exercised to options at next page for
  Name ten years from Rand 31 Dec 2006 30 June 2007 30 June 2007 the continuation
              of this table after
  Executive director:         the unbundling
  B G Dunlop 13 May 2002 49,60 7 000 7 000   of Hulamin
    14 April 2003 31,90 9 400 9 400    
    21 April 2004 47,00 3 600 2 500 1 100  
        20 000 18 900 1 100  
  M H Munro            
    4 November 1998 33,25 4 000 4 000    
    7 May 1999 40,10 5 800 5 800    
    19 May 2000 30,00 3 800 3 800    
    12 January 2001 39,85 2 400 2 400    
    16 May 2001 40,00 9 000 9 000    
    13 May 2002 49,60 11 500 11 500    
    14 April 2003 31,90 12 400 7 500 4 900  
    1 October 2003 34,50 30 000   30 000  
    21 April 2004 47,00 32 000   32 000  
        110 900 44 000 66 900  
  P H Staude 16 May 2001 40,00 10 000 10 000    
    13 May 2002 49,60 65 000 48 000 17 000  
    14 April 2003 31,90 30 000 30 000    
    21 April 2004 47,00 28 000   28 000  
        133 000 88 000 45 000  
  Non-executive director:*          
  J B Magwaza 19 May 2000 30,00 2 000   2 000  
    12 January 2001 39,85 1 600   1 600  
    16 May 2001 40,00 6 000   6 000  
    13 May 2002 49,60 6 000   6 000  
        15 600   15 600  
               
  C M L Savage 5 March 1999 32,90 60 000   60 000  
    7 May 1999 40,10 50 000   50 000  
    12 January 2001 39,85 8 000   8 000  
    16 May 2001 40,00 22 000   22 000  
        140 000   140 000  
  Total     419 500 150 900 268 600  
  The interest of the directors in share options of the company are shown in the table below:

The option price and number of unexercised options after the unbundling of Hulamin at the end of June 2007 were apportioned into a Tongaat Hulett component (Tongaat Hulett) and a Hulamin component (Hulamin) as follows:

         Option price (Rand) Number following unbundling Options time constrained
      Apportioned No. of options at 31 Dec 2007 at 31 December 2007
    Expiring Tongaat Hulamin Tongaat Hulamin Tongaat Hulamin
  Name ten years from Hulett   Hulett   Hulett  
  Executive director:            
  B G Dunlop 21 April 2004 35,90 11,10 1 100 1 100 1 080 1 080
  M H Munro 14 April 2003 24,37 7,53 4 900 4 900    
    1 October 2003 26,35 8,15 30 000 30 000    
    21 April 2004 35,90 11,10 32 000 32 000 9 600 9 600
          66 900 66 900 9 600 9 600
  P H Staude 3 May 2002 37,88 11,72 17 000 17 000    
    21 April 2004 35,90 11,10 28 000 28 000 8 400 8 400
          45 000 45 000 8 400 8 400
  Non-executive director:*            
  J B Magwaza 19 May 2000 22,91 7,09 2 000 2 000    
    12 January 2001 30,44 9,41 1 600 1 600    
    16 May 2001 30,55 9,45 6 000 6 000    
    13 May 2002 37,88 11,72 6 000 6 000    
          15 600 15 600    
  C M L Savage 5 March 1999 25,13 7,77 60 000 60 000    
    7 May 1999 30,63 9,47 50 000 50 000    
    12 January 2001 30,44 9,41 8 000 8 000    
    16 May 2001 30,55 9,45 22 000 22 000    
          140 000 140 000    
  Total       268 600 268 600 19 080 19 080
  * The non-executive directors' share options were awarded when they were executive directors.

463 600 options relating to directors who resigned during the year are excluded from the opening balance.

The interest of the directors in other share-based instruments of the company are shown in the table below:

       Share Appreciation Right Scheme 2005          
        Number of Rights Number of   Refer below for the
  Name of Expiring Original Grant rights at exercised to rights at   continuation of this table after the
  executive director seven years from price (Rand) 31 Dec 2006 30 June 2007 30 June 2007   unbundling of Hulamin
  B G Dunlop 10 May 2005 57,58 40 597   40 597    
    25 April 2006 96,09 23 737   23 737    
        64 334   64 334    
  M H Munro 10 May 2005 57,58 32 185 11 000 21 185    
    25 April 2006 96,09 20 472   20 472    
        52 657 11 000 41 657    
  P H Staude 10 May 2005 57,58 92 810   92 810    
    25 April 2006 96,09 62 082   62 082    
        154 892   154 892    
  The grant price and number of unexercised rights after the unbundlingof Hulamin at the end of June 2007 were apportioned into a Tongaat Hulett component (Tongaat Hulett) and a Hulamin component (Hulamin) as follows:
          Grant price (Rand) Number following Rights Number of rights Rights time
      Apportioned unbundling granted in 2007 at 31 December 2007 constrained
  Name of Expiring Tongaat Hulamin Tongaat Hulamin Tongaat Tongaat Hulamin Tongaat Hulamin
  executive director seven years from Hulett   Hulett   Hulett Hulett   Hulett  
  B G Dunlop 10 May 2005 43,98 13,60 40 597 40 597   40 597 40 597 12 346 12 346
    25 April 2006 73,39 22,70 23 737 23 737   23 737 23 737 14 741 14 741
    20 August 2007 88,84       25 382 25 382   25 382  
          64 334 64 334 25 382 89 716 64 334 52 469 27 087
  M H Munro 10 May 2005 43,98 13,60 21 185 21 185   21 185 21 185 9 787 9 787
    25 April 2006 73,39 22,70 20 472 20 472   20 472 20 472 12 713 12 713
    20 August 2007 88,84       23 830 23 830   23 830  
          41 657 41 657 23 830 65 487 41 657 46 330 22 500
  P H Staude 10 May 2005 43,98 13,60 92 810 92 810   92 810 92 810 28 224 28 224
    25 April 2006 73,39 22,70 62 082 62 082   62 082 62 082 38 553 38 553
    20 August 2007 88,84       71 073 71 073   71 073  
          154 892 154 892 71 073 225 965 154 892 137 850 66 777
      The interest of the directors in other share-based instruments of the company are shown in the table below:

Long Term Incentive Plan

 
        Number of Conditional Number of    
        Conditional Awards Conditional   Refer below for the
  Name of Expiring Original Issue awards at settled to awards at   continuation of this table after the
  executive director three years from price (Rand) 31 Dec 2006 30 June 2007 30 June 2007   unbundling of Hulamin
  B G Dunlop 10 May 2005 57,58 20 126 14 006 6 120    
    25 April 2006 96,09 10 117 3 834 6 283    
        30 243 17 840 12 403    
  M H Munro 10 May 2005 57,58 15 955 11 104 4 851    
    25 April 2006 96,09 8 725 3 306 5 419    
        24 680 14 410 10 10 270    
  P H Staude 10 May 2005 57,58 50 720 35 296 15 424    
    25 April 2006 96,09 26 459 10 028 16 431    
       77 179 45 324 31 855    
       The issue price and number of unexercised conditional awards after the unbundling of Hulamin at the end of June 2007 were apportioned into a Tongaat Hulett component (Tongaat Hulett) and a Hulamin component (Hulamin) as follows:
      Issue price (Rand) Number following Conditional awards No. of conditional awards Conditional awards
      Apportioned unbundling granted in 2007 at 31 December 2007 time constrained
  Name of Expiring Tongaat Hulamin Tongaat Hulamin Tongaat Tongaat Hulamin Tongaat Hulamin
  executive director three years from Hulett   Hulett   Hulett Hulett   Hulett  
  B G Dunlop 10 May 2005 43,98 13,60 6 120 6 120   6 120 6 120 6 120 6 120
    25 April 2006 73,39 22,70 6 283 6 283   6 283 6 283 6 283 6 283
    20 August 2007 88,84       8 503 8 503   8 503  
          12 403 12 403 8 503 20 906 12 403 20 906 12 403
  M H Munro 10 May 2005 43,98 13,60 4 851 4 851   4 851 4 851 4 851 4 851
    25 April 2006 73,39 22,70 5 419 5 419   5 419 5 419 5 419 5 419
    20 August 2007 88,84       7 991 7 991   7 991  
          10 270 10 270 7 991 18 261 10 270 18 261 10 270
  P H Staude 10 May 2005 43,98 13,60 15 424 15 424   15 424 15 424 15 424 15 424
    25 April 2006 73,39 22,70 16 431 16 431   16 431 16 431 16 431 16 431
    20 August 2007 88,84       23 834 23 834   23 834  
          31 855 31 855 23 834 55 689 31 855 55 689 31 855
  The interest of the directors in other share-based instruments of the company are shown in the table below:
Deferred Bonus Plan 2005
        Number Conditional Conditional Number Conditional
        of conditional awards awards of conditional awards
  Name of Expiring Original Issue awards at settled in granted in awards at time
  executive director three years from price (Rand) 31 Dec 2006 2007 2007 31 Dec 2007 constrained
  B G Dunlop 4 May 2005 57,76 4 210 4 210      
    3 March 2006 91,86 3 184 3 184      
    3 August 2007 90,27     3 357 3 357 3 357
        7 394 7 394 3 357 3 357 3 357
  M H Munro 4 May 2005 57,76 3 204 3 204      
    3 March 2006 91,86 2 559 2 559      
    3 August 2007 90,27     2 887 2 887 2 887
        5 763 5 763 2 887 2 887 2 887
  P H Staude 4 May 2005 57,76 10 081 10 081      
    3 March 2006 91,86 7 155 7 155      
    3 August 2007 90,27     7 711 7 711 7 711
        17 236 17 236 7 711 7 711 7 711
  The deferred bonus shares were purchased by the participating employees on 3 August 2007 in respect of the 2007 award (2006 award : purchased on 2 March 2006 and 2005 award : purchased over the period from 4 May 2005 to 10 May 2005). The share awards were made and exercised at various times and the average share price was R128,64 for Tongaat-Hulett Group Limited up to June 2007 and R93,39 for Tongaat Hulett for the remainder of the year.

The gains made by directors are reflected in note 32 under Directors' Emoluments and Interests. The interests of those directors who resigned during the year have been excluded from the opening balances of directors interests.

   
   
34. BEE EMPLOYEE SHARE OWNERSHIP PLANS
  The 7% BEE employee transaction comprises the Employee Share Ownership Plan (ESOP) and the Management Share Ownership Plan (MSOP).

The ESOP scheme consists of a share appreciation right scheme and participants share in 50% of the dividend payable to ordinary shareholders. The MSOP scheme consists of two components namely a share appreciation right scheme and a share grant scheme.

The ESOP Trust and MSOP Trust were established to acquire and hold Tongaat Hulett Limited shares for the benefit of designated employees. Tongaat Hulett Limited and its subsidiaries have made contributions to the MSOP Trust and the ESOP Trust (refer note 3). Due to these shares having specific repurchase rights at maturity (five years from grant), they are a separate class of restricted shares which, other than for the repurchase terms, rank paripassu with ordinary shares and become ordinary shares on repurchase.

The number of shares repurchased at maturity is calculated such that the market value of the repurchased shares will be equal to : - The grant price of the shares allocated, plus the value of cash dividends paid to ESOP participants - 80% of the market value (at the outset) of the shares issued in terms of the share appreciation right component of the MSOP - Rnil in respect of the share grant component of the MSOP; and - The Trusts will distribute the remaining Tongaat Hulett shares to the beneficiaries.

Under the share appreciation right scheme, participating employees are awarded the right to receive shares equal in value to the difference between the exercise price which will be equal to the grant price plus the aggregate of all cash dividends received (in the instance of the ESOP) and the market value at maturity of the scheme. The employee therefore participates in the share price appreciation in Tongaat Hulett. Under the share grant scheme, participating employees were granted the right to obtain ordinary shares in Tongaat Hulett on vesting.The value of both the MSOP share appreciation scheme and the MSOP share grant scheme are capped at a level of 10% compounded growth per year.

Description of award   Share price Number of Number of
  Grant date at grant date shares issued rights allocated
    Rand in 2007 in 2007
Employee Share Ownership Plan - Share appreciation right scheme 1 August 2007 92,90 5 422 829 4 408 235
Management Share Ownership Plan - Share appreciation right scheme 1 August 2007 92,90 3 296 657 1 546 630
Management Share Ownership Plan - Share grant scheme 1 August 2007 92,90 1 021 422 478 870
      9 740 908 6 433 735
The estimated fair value costing of these share appreciation rights and share grant rights was determined using option pricing methodology, based on the following significant inputs:
Expected option life 57 months (assume contractual plus a leaving percentage of 5%).
Risk-free interest rate 8,45%
Expected volatility Expected volatility of 27% is based on historical volatility determined by the statistical analysis of daily share price movements over the past three years.
Expected early exercise n/a
Time constraints Five years from grant date.
Performance (vesting) conditions There are no performance (vesting) conditions other than the passage of time.
Non-market performance conditions No non-market conditions.
Market performance conditions No market conditions.
In addition, the following data is specific to each of the above schemes:  
Employee Share Ownership Plan - Share appreciation right scheme  
Exercise price R92,90 plus cash dividends to be received over the life of the scheme.
Expected dividends A dividend yield of 4,6% was used.
Estimated fair value per right R28,90
Management Share Ownership Plan - Share appreciation right scheme  
Exercise price R74,32
Expected dividends Nil
Estimated fair value per right R19,80
Management Share Ownership Plan - Share grant scheme  
Exercise price Nil
Expected dividends Nil
Estimated fair value per right R64,00
   
   
35. DISCONTINUED OPERATION (Rmillion)
  The discontinued operation relates to Hulett Aluminium (Pty) Limited which was listed on the JSE on 25 June 2007 as Hulamin Limited. Tongaat Hulett unbundled its 50% share holding in Hulamin as a distribution in specie at the end of June 2007.

The results of Hulamin up to the end of June 2007 and for the twelve months ended 31 December 2006 are as follows:

    6 months to 12 months to
    30 June 31 December
    2007 2006
       
  Income statement    
  Revenue 1 648 2 738
  Operating profit 83 211
  Net financing costs ( 23) (111)
  Profit before tax 60 100
  Tax (18) (31)
  Net profit after tax 42 69
  Minority interest   (4)
  Net profit 42 65
       
  Cash flow statement    
  Cash flows from operating activities 53 56
  Net cash used in investing activities (90) 170
  Net movement in cash resources (37) 226
       
  Balance sheet    
  Property, plant and equipment 2 013 1 970
  Intangible assets 11 12
  Investments 1 1
  Current assets 1 093 1 397
  Current liabilities (450) (474)
  Provisions (52) (50)
  Borrowings (456) (724)
  Deferred tax (443) (450)
  Minority interest (19) (19)
  Post acquisition reserves (1 204) (1 169)
  Investment before revaluation 494 494
  Revaluation upon unbundling 3 348  
  Investment in Hulamin 3 842 494
     
     
36. SUBSIDIARIES DECONSOLIDATED/CONSOLIDATED (Rmillion)  
  Details of subsidiaries deconsolidated and consolidated and their cash flow effects are summarised below.  
    2007
  Subsidiaries deconsolidated*  
  Property, plant, equipment and investments 1 983
  Inventories 494
  Trade and other receivables 556
  Trade and other payables (474)
  Provisions (50)
  Deferred tax (450)
  Borrowings net of cash and cash equivalents (377)
  Minority interest (19)
  Post acquisition reserves (1 169)
  Investment before revaluation 494
  Revaluation upon unbundling 3 348
  Investment in Hulamin (note 35) 3 842
  Less dividend in specie (3 842)
  Proceeds on unbundling -
  *Values are as at 31 December 2006.  
     
  Subsidiaries consolidated  
  Property, plant, equipment and investments 317
  Growing crops 70
  Inventories 19
  Trade and other receivables 117
  Trade and other payables (97)
  Deferred tax (4)
  Borrowings net of cash and cash equivalents (250)
  Minority interest (129)
  Net assets consolidated 43
  Goodwill arising on consolidation 20
    63
  Less loans capitalised and investments consolidated (61)
  Investment in subsidiaries 2