The Union Sugar Estates Company Limited

THE UNION SUGAR ESTATES COMPANY LIMITED ANNUAL REPORT: 2009-12-31

Dear Shareholder,

The financial crisis which started during the second semester of year 2008 affected the world, leading the major economies of the United States of America and of Europe to a global economic recession.

The Mauritian economy, whilst not actually in recession until the end of 2009, has also been affected, though to a lesser extent as can be illustrated by its slower growth until the end of the year. Growth for 2009 was approximately 2.9% compared to the average rate of 5.2% recorded during the previous three years.

On the positive side, inflation dropped to around 3% from an average of 9.8% in 2008, and prime lending interest rates have also fallen to roughly 8.125% per annum.

Despite these difficult conditions, the Group’s earnings per share have progressed to Rs 2.25 compared to a loss per share of Rs 0.17 in 2008. This improvement in earnings per share is the result of an increase in the profit attributable to owners of the parent amounting to Rs 42.5m in 2009 compared to a loss attributable of Rs 3.2m in year 2008.

The group’s overall performance was satisfactory with profit before taxation amounting to Rs 13.3m compared to a slightly higher profit of Rs 16.3m in year 2008, while its finances remain extremely fragile given the financial burden in relation to its high level of indebtedness resulting in excessive annual interest payment for the serving of its long term debt.

A ‘Real Estate Development Committee’ has been set up by the board with the aim of developing and adding value to the ‘land bank’ of Union Sugar Estate. This will contribute in generating future cash flows necessary for the repayment of the debts and creation of wealth for the shareholders.

A Corporate Social Responsibility committee was set up to co ordinate the funding from companies of the group towards accredited projects approved by the authorities. The Board and its management will promote such initiatives that will further contribute to the development of the Mauritian society. The Board has taken drastic measures with its aim to renew with growth and increased profitability. With this challenge ahead of us, the Group’s global strategy is being reviewed and assessed to result in fundamental changes leading to the disposal of non strategic business units where necessary.

To conclude, on behalf of Raymond and on my own behalf, I would like to express my appreciation to the directors, the management team and to all the personnel for their dedication and hard work during 2009.

ACKNOWLEDGEMENT

Patrick G Ducray, who was the Group’s Chief Executive Officer until November 2008, resigned from the Board in May 2009. On behalf of the Board members, I would like to take this opportunity to thank Patrick for his hard work in what has been a challenging period for the Group.

I also wish to thank Alain Giblot Ducray who retired from the board in May 2009.

Raymond Lamusse who was chairman of the Group decided to retire at the end of 2009. On behalf of the members of the Board, I would like to thank Raymond for his contribution to the Group during the past years.

Francois Montocchio Chairman 29 March 2010