1 RSSC Integrated Report 2019 CONTENTS

1. ABOUT THIS REPORT...... 4

2. HIGHLIGHTS...... 5 Message from the Chairman...... 6

3. WHO WE ARE...... 8 Our Vision and Structure...... 12

3. OUR STRATEGY...... 15 Message from the Managing Director...... 16 Integrated Growth Plan...... 20 RSSC five-year review...... 22 Managing risk...... 22 Load-shedding...... 23 Adequacy and effectiveness of the Risk management process...... 24

5. OUR BUSINESS...... 27 Our value-creating business model...... 28 Human Resources (HR)...... 30 Health and Wellness...... 34 Information Technology (IT)...... 38 Property Services...... 39 Public Affairs...... 42 Stakeholder Relations...... 44

6. OUR PERFORMANCE...... 49 Delivering Value...... 50 Our Crop...... 51 Our Water Resources...... 53 Our Factories...... 56 Ethanol...... 58 Ethanol Marketing...... 59 Procurement...... 61 IYSIS...... 62 Mananga Sugar Packers (MSP)...... 63 Outgrowers...... 63

7. OUR GOVERNANCE FRAMEWORK...... 65 Our Board of Directors...... 66 Governance Overview...... 68 Our Board Committees...... 69 Our Executive Management...... 71 Approach to Governance...... 72

8. ABBREVIATED FINANCIAL STATEMENTS...... 73

2 RSSC Integrated Report 2019 Our new business as usual

Given the nature of the global sugar markets and the volatile exchange rate environment, we have come to accept that there are external factors that affect our industry which we cannot control. It is therefore imperative that we do our best to influence our internal environment by increasing our production capacity, driving down our unit cost and keeping our efficiencies in top notch. This is the case for our Simama 20-20 and the IGP, to ensure sustainability, which in turn guarantees value-creation for all, now and in the future.

3 RSSC Integrated Report 2019 This is the eighth Integrated are necessary, not just for the Report of the Royal Swaziland completeness of reporting, but because this impact will be materially Sugar Corporation (RSSC), and The aim of the felt, not only in the short term, but it outlines the issues, activities, in the medium and long term as report is to provide relationships, interactions and well, with significant implications for a balanced and performance of RSSC, within strategy implementation and value- its operating and marketing creation. integrated insight For more on strategy and operations please refer to pages contexts during the period 16, 18, 20 and 50 into the ability of between 1 April 2018 and 31 RSSC to create March 2019. The aim of the Financial and non-financial report is to provide a balanced reporting value in the short, The report extends beyond financial medium and long and integrated insight into reporting and includes non-financial the ability of RSSC to create performance, opportunities, risks term. value in the short, medium and outcomes attributable to or and long term, which we associated with our stakeholders that have a significant influence on our define as one to two years, ability to create value. three to five years, and five to 10 years respectively, not only Directors’ Statement of to shareholders, but to other Responsibility stakeholders with an interest The responsibility of ensuring the integrity of this report lies with the in RSSC’s activities. Board of Directors. The Board has Reporting boundary applied its collective mind to the presentation and preparation of this While the scope and boundary of report. It is the Board’s belief that the report remain unchanged from this report is a fair representation of those of the prior year, the material the performance of the RSSC Group issues have been identified and and its material matters. Accordingly, reported upon with regard to, and the Board of Directors has approved in cognisance of, the six capitals – the 2019 Integrated Report on the Financial, Manufactured, Intellectual, recommendation of the Audit and Human, Social and Relationship, Risk Committees. The Group Financial and Natural – outlined in the Statements were audited by KPMG. International Integrated Reporting Council (IIRC) framework. The report Materiality and material was also prepared with regard to the matters principles described in the King IV The business’s material aspects that Code on Corporate Governance (King were previously identified have not IV). changed in any significant manner. Certain forward-looking statements Detail on further materiality issues are made in the report, particularly that form the basis of the scope and in relation to the impact on strategy, boundary for this report and which capital expenditure (Capex) and pertain to ongoing stakeholder operational processes in the context management is contained in our of global and regional markets and Stakeholder Relations section of this economic trends. These statements report on page 45.

4 4 RSSC Integrated Report 2019 HIGHLIGHTS

RSSC AT A GLANCE With a record year in both cane and sugar production we have been able to achieve good financial results under conditions of depressed sugar prices. This has been attained through the ongoing reduction in our unit cost.

E3 047m E277m E283m Revenue Cane-growing Sugar-milling contribution contribution

E25m E282m E218m Ethanol Profit before Attributable to contribution tax shareholders

55 RSSC Integrated Report 2019 02 HIGHLIGHTS MESSAGE FROM THE CHAIRMAN

What confronted the Board and management during We are closely following any developments in the market and we the year under review was primarily the markets not are making sure that our industry being in our favour. We saw our markets dwindling has appropriate interactions with the because of lower prices, unfavourable foreign South African industry. Networking is exchange rates and the dumping of Brazilian sugar in critical in business, otherwise there is the risk of being overtaken by events. the region, with customers unavoidably seeking this lower-priced product. Consequently, despite a record Board committees year in terms of crop yield and productivity, we were not able to translate this into a record profit. The Board committees continued to work very well, and in particular the Risk Committee was engaged in Given the prevailing conditions, overseeing the concern of damage we were therefore compelled to to property as a result of hailstorms, deliberate on, and implement some which had the potential to jeopardise key decisions, including the review of the productivity and profitability of capital expenditure to ensure that the the business. It was gratifying to see adverse trading conditions could be the positive outcome of the ongoing accommodated. process of engagement with senior We had to make a point of working management in this regard. with management in reducing costs Despite the challenges that the and avoiding overspending. Another Corporation was facing, we remain material issue that occupied the profitable. Management performed minds of Board members was the extremely well in offsetting question of the ineffectiveness of these SACU challenges to deliver the SACU sugar tariff in protecting impressive production levels. The the local market. We are happy that dilution of profitability that we have the relevant bodies in the South seen has been as a result of factors African sugar industry lobbied the beyond management control. government of South Africa to update the tariffs, in order to bring back some control to the markets. Stakeholders Ultimately, we did see a positive The prevailing adverse economic move in that the tariff was reviewed. conditions affect all those with an interest in RSSC’s activities and achievements, as much as they do the Corporation. It is therefore in all our interests that open, transparent and material engagement continues to take place between us. It is important for the Government, labour organisations, growers and the industry to be aware of the ways in which these external conditions affect our performance, and that as a result, that performance may not be in line with certain expectations.

6 DRRSSC AT Integrated DLAMINI Report 2019 - Chairman affected by AIDS and other medical Acknowledgements We continue to be mindful of issues, poverty, water scarcity, as our political environment, and well as those in need of educational, I would like to thank my colleagues we welcome interactions with the skills and entrepreneurial support, on the Board for their commitment, Government, both in Eswatini and in continue to benefit from our diligence and the application of South Africa. We hope that positive interventions and projects. their skills towards the responsible decisions will be taken at this level, guidance of RSSC during the year. and that these will be of benefit Changes to the Board I would like to express my thanks to the sugar industries of both to our Managing Director, Mr Nick countries. I would like to welcome our two new Jackson, and his management team Board members, Her Royal Highness for their contribution in ensuring The new Government, headed by Princess Lomajuba and Mr Andrew that every internal factor that can the dynamic Prime Minister bodes Westermeyer, to the Board, and wish contribute to the sustainability and well for hopes of a positive business them well as they continue to make profitability of the Corporation environment, and improved support the kind of positive contribution that in the short, medium and long for the industry. we have already seen from them. To term is explored and optimised. our departing Board members, Her The exceptional crop yields and Regulation Royal Highness Princess Phumelele productivity levels that we have seen and Mr Derek van Niekerk, I would during the year is evidence of their The South African sugar tax has had like to express my thanks for the skill and diligence. a significant impact on RSSC, and outstanding contribution they have I would like to thank all our remains a threat to our profitability. made during their tenure with us, employees for their efforts during the No such legislation yet exists in and I would like to wish them well in year under review, as well as all our Eswatini. We anticipate that company their future endeavours. tax will be significantly reduced. stakeholders and the members of the If implemented, this will be a very communities in which we operate, positive development, as will be the Management initiatives and we look forward to continuing regulations that will allow the mixing The Board greatly appreciates the and strengthening our relationships of ethanol into fuel, which will also initiative of management in bringing with them. have a very positive impact on RSSC’s representatives of the South African business. Institute of Directors to address us and hold workshops to raise even Corporate Social further our governance capacity ______Investment (CSI) and awareness. RSSC is a leader in good corporate governance in Dr AT Dlamini I would like to congratulate the Eswatini, and these sessions will Chairman Corporation on a job well done in only add to our ability to add value providing assistance and facilitating in this vital aspect of our business. support for those in need in our I am particularly proud that RSSC communities, during the year under was a recipient of a merit award in review. Our ongoing efforts and the Chartered Secretaries Southern achievements in this important Africa/JSE Integrated Reporting arena continue to bring benefits Awards, and see this as evidence to the people among whom we of our commitment to open and operate. We have the ability to responsible governance and make very meaningful changes to reporting. We hope that this level of IGP tidbits improve the lives of our people, and achievement will be continued in the I am proud to be able to say that coming years. once again we have implemented some very important initiatives and undertakings in this regard. People

IMPROVE MILL PERFORMANCE & SUFFICIENCY The key aim is to reduce cost of production and increase the rate of production by ensuring that our plant operates at excellent levels E3 047m all the time. That’s one of the main REVENUE elements of the IGP.

7 RSSC Integrated Report 2019 8 RSSC Integrated Report 2019 IGP tidbits

NEW VISION A renewed vision would place the industry in a stronger position. RSSC is lobbying for a new vision.

9 RSSC Integrated Report 2019 03 WHO WE ARE OUR STORY - SIX DECADES OF GROWTH

1955 Commonwealth 1973 1978 Development Tibiyo TakaNgwane, The Ingwenyama names Corporation (CDC) in conjunction with CDC, the third mill Simunye undertakes sugar cane carries out a pre- Sugar Estate investment study for trials at Mhlume; 1979 Mhlume (Swaziland) the expansion of sugar production The Royal Swaziland Sugar Company Limited, Sugar Corporation registered as a sugar 1975 Limited is created factory and cane estate Third mill is planned and as a Joint Venture developed by Tate and between the Swaziland 1957 Lyle Technical Services Government and Tibiyo Komati River Barrage, Limited Tate and Lyle TakaNgwane, with the with 88km gravity Technical Services agreement to subscribe canal, commissioned Limited enters into for E40.l million of equity to provide the required partnership with the share capital irrigation. Known as Swaziland Government Mhlume Water, this and Tibiyo TakaNgwane system is managed by Inyoni Yami Swaziland 1977 Irrigation Scheme (IYSIS) His Majesty King Sobhuza II, OBE, Ingwenyama 1958 of Swaziland, acquires Mhlume Sugar Estate 50% of share capital of incorporated Mhlume in trust for the Swazi nation

1960 1980 1950 1970

1960 1980 Mhlume Mill Simunye Sugar Mill, commissioned with capable of producing a production capacity 120 000 tonnes of 90 tonnes cane sugar per annum, is per hour (tc/hr) commissioned

1966 CDC assumes sole ownership of Mhlume (Swaziland) Sugar Company Limited

10 RSSC Integrated Report 2019 2011 2014 Installation of the 30 MW Integration of our turbo alternator at the information systems into Simunye mill, at a cost of SAP in line with global E120 million practice 2012 2017 RSSC acquires a 25% Phase 1 of the Integrated shareholding in Quality Growth Plan began Sugars (Pty) Limited 1992 2018 RSSC is listed on 2012 Mhlume factory the Swaziland stock Purchase of Swazican expansion Phase 1 was exchange Citrus lease at IYSIS and completed and Phase the conversion of 600ha 2 began, and the new 1995 from citrus to cane, equipment was already Distillery is thereby increasing cane in operation, and aligned commissioned and sugar production to crush the additional Outgrower cane.

2019 Phase 2 of the Integrated Growth Plan was completed during the 2000 off-crop (April) 1990 2010

2001 RSSC merges with Mhlume (Swaziland) Sugar Company Limited 2007 2002 Distillery expansion A new, enlarged is commissioned to RSSC is launched, utilise all Mhlume employing more than and Simunye 3 500 permanent molasses in order to staff and producing increase its notional two-thirds of the capacity to more country’s sugar than 32 million litres 2004 of ethanol per year Mananga Sugar 2009 Packers is established Purchase of 50% at Mhlume Mill shareholding in IYSIS as a joint venture by RSSC at a cost of between RSSC and E46 million Tsb Sugar

11 RSSC Integrated Report 2019 03 WHO WE ARE OUR VISION, MISSION AND STRUCTURE

OUR VISION OUR VALUES

To be the leading producer and Integrity marketer of sugar and renewable We conduct ourselves in an energy. honest, fair and open manner in all our dealings Our vision serves as the foundation for the way we do business and provides the basis for our strategy, methodology Delivery and capacity to create value for all our We meet our targets and stakeholders through continued growth deadlines over the short, medium and long term.

To this end, we depend on the ongoing Respect realisation of our values and the We respect, value and care for expression of these in the way we work. people

INVESTMENT PORTFOLIO

12 RSSC Integrated Report 2019 OUR OPERATING ENVIRONMENT

Global trends The world sugar surplus continued FIGURE 1 - World Market Prices (per MT) with associated depressed prices at around 12(US)cents a pound, in comparison with around 20(US)cents a pound about two to three years ago. The year under review began with no tariff in place, and significant amounts of sugar being brought into the Southern African Customs Union (SACU) market from Brazil and to some extent, India. Brazil is reported to be joining Australia in the lodging of a formal complaint against India at the World Trade Organisation (WTO), claiming that subsidies paid to farmers in India have led to a sugar glut and depressed global prices. It has been reported that in 2018, subsidies of about US$1 billion were paid to FIGURE 2 - EU market price and world market prices Indian sugar cane farmers. London 5 and NY 11 - first future - $/t Prices in Europe continued on a downward trend, and with substantial additional product available in that market, despite a significant drop in beet sugar supply, the average ex-works price for sugar within the EU fell further to the lowest recorded level at EUR314 (about E5 000) per ton. This was against the expectations that there would be an increase in the price in the months leading to the end of the year, given the reduction in production and the pressure from beet growers for the domestic price to increase. The currency exchange rate also has a bearing on our profitability, and from a high of over E17 to the Euro, and just on E14 to the FIGURE 3- - World Market Prices (per MT) US$ in September 2018, it fell to E15.66 and E13.80 respectively in February 2019. This trend appears set to continue, but with uncertainty arising from trade tariff disputes between the US and China, and the outcome of events such as the Brexit process, there remains a degree of uncertainty, which will affect our revenues, as well as the regional economies into which we export our product.

13 RSSC Integrated Report 2019 03 WHO WE ARE OUR OPERATING ENVIRONMENT - continued

South Africa and the region industrial off-take to about new Prime Minister, and many of the 250 000 tons per annum and Cabinet ministers being business- In South Africa, the industry is economic conditions have also taken oriented. There have already been suffering from a depressed economic their toll. Overall, the SACU market is proposals to lower the corporate tax environment as a result of a variety of estimated at around 1.9 million tons, rate significantly, and we anticipate factors. Ours is to closely monitor the significantly below its previous level that this will happen in a sustained situation so that we can make any of 2.1 million tons. manner which will bring benefits to adjustments in a timely manner. We RSSC in the medium to long term. remain cognisant of the challenges Eswatini posed by low prices and would like to see a reasonable sugar price Within Eswatini there has been maintained in the region through the a change in the makeup of the appropriate management of imports. Government, with a young, dynamic Owing to the challenging, import- affected SACU market over the past two years, industry sales into SACU were relatively low in 2018/19. 1.9m tons The recently introduced Health estimated SACU market significantly Promotion Levy on Sugary Beverages below its previous level of 2.1m tons in South Africa has also dampened

14 RSSC Integrated Report 2019 15 RSSC Integrated Report 2019 04 OUR STRATEGY MESSAGE FROM THE MANAGING DIRECTOR

The year under review began within a somewhat In addition to that negative outlook, adverse industry environment. There was no SACU we were only too aware of the tariff in place, and significant amounts of sugar coming price collapse in Europe to its lowest recorded level of EUR314 into the SACU market from Brazil and India. While it per ton, as a result of the additional was our belief that there would be a review of the tariff, production – a factor that continued we considered it to be likely only in the latter part of to contribute to the general global 2018, and possibly as late as January or February of surplus. We understood that the 2019. markets that we traditionally looked to were not going to be easy to penetrate at a level that would create value for RSSC.

Nonetheless, in August 2018, the South African industry campaigned, with the vocal support of a new breakaway group called the South African Farmers Development Association (SAFDA), who are politically well-connected. Through their efforts, which included a march to the Union Buildings in Pretoria, a review of the tariff was forced and put in place. This meant a sudden increase of 19% for producers, which helped set us on the path towards our achieving a profit after tax (PAT) of E218 million.

E218m PROFIT attributable income

16 NICK JACKSON - Managing Director RSSC Integrated Report 2019 FIGURE 4 - ISO world sugar balance (per MT)

E5 000 PER TON the average ex-works EU sugar price, which is a record low

Record crop, production and sales FIGURE 5 - World Market Prices for Raw and White Sugar The basis for our financial performance was the record crop that we were able to harvest. This was a result of a combination of external factors such as sufficient water, good radiation and internal factors which included our ongoing commitment to our Simama 20-20 objective of reducing our unit costs, and maximising efficiencies. Our other strategic thrust – the Integrated Growth Plan (IGP) also contributed, both in additional land under cane, and the Phase 1 and Phase 2 expansion that had taken place at Mhlume. Having worked on our cane yields, Sales Performance to end of January 2019 in building on our achievements in metric tons – SACU keeping our cane alive through Allocated Sold Variance the drought years, we were able to deliver a record crop of just under Refined 179 871 161 582 (18 289) 113 tons per hectare (tch). In all, we VHP 174 230 156 419 (17 811) crushed 3.7 million tons of cane at Total 354 101 318 001 (36 100) the factories, and with the unit costs brought down by these record levels, our profitability under the depressed Sales Performance to end of January 2019 in sugar price regime was enhanced. metric tons – Region With sales having begun poorly at the start of the year, the unexpected Allocated Sold Variance tariff increase made all the difference Refined 4 320 4 170 (150) and by year’s end we achieved a VHP 39 779 20 762 (19 017) result of E218 million against last year’s E301 million. Total 44 099 24 932 (19 167)

Sales Performance to end of January 2019 in metric tons – EU and US

Allocated Sold Variance Bulk 187 126 187 127 1 Refined 87 86 (1) VHP 10 270 10 120 (151) Total 197 483 197 332 (151)

17 RSSC Integrated Report 2019 04 OUR STRATEGY MESSAGE FROM THE MANAGING DIRECTOR - continued Cane variety with a modernised system that will replace the current one that dates Another factor that is beginning back to 1968. to work for us is the improvement we have been making in our cane It is our belief that continuing with varieties. We have dispensed with the status quo will lead to a palpable our non-performing varieties and risk of our becoming redundant. brought in higher producing ones. We see this as a major threat, as it impacts on our long-term IGP benefits sustainability. The completion of Phase 1 of the IGP For more on risk, see page 22, 23 and 24. at Mhlume, included the replacement of evaporators that had been in place Change management since the Corporation’s inception in The training we undertook during the the 1950s. The modern equipment year under review through our Vuka has enabled us to clean the 1 and Vuka 2 change management evaporators on the run, resulting in initiatives is part of a broader project an additional week of factory activity to better understand and optimise per season, which otherwise wouldn’t our culture, and this process will have been there. continue in the short and medium term. EU Grower Projects Stakeholders These two initiatives, Mnyangombili and Mbombowendlovu farms, We understand that our stakeholders, funded by the EU, came on stream as the key element in our social and in the year under review, although relationship capital, have an effect the benefit to RSSC was interrupted on our ability to create value, and by the fact that as a result of rain we continued during the year to and other reasons, our harvesting pay careful attention to the issues of this new grower cane occurred that affect that relationship. An very late in the season, causing us issue that raised its head was that to run the factory far longer than of the Vuvulane Irrigated Farmers, we do normally. The result was that a grouping originating in a well- our final crushing took place on 4 intentioned project set up in the January 2019, which added to the 1960s by the Commonwealth unit cost. Nonetheless, the cane Development Corporation (CDC). The was successfully harvested and the project settled farmers on land with growers benefitted from the payment the intention that over an extended for their crop. period they would be trained in farming techniques, and would then Outgrowers move on to make way for others. Our relationship with the growers Unfortunately, most did not move who supply cane to the Corporation on, and when attempts have been remained under pressure. During made to precipitate such a move, the year under review there was claims of unlawful and unjust eviction a disagreement concerning the were made by the grouping. After beneficial use of bagasse. This a process of court appeals, and reached deadlock at Council, the involvement of international something which has not happened NGOs, the grouping then initiated in 10 years. No way forward has been a campaign with our customers in found yet. We believe that we are in South Africa, based on claims of a position to make some concessions human rights abuses. This proved to new evaporators have available to the growers, but this be a real threat, and we approached would first require a resolution it as an industry issue, whose given us additional of the beneficial use of bagasse. outcome would affect not just the We continue in our wish to see a Corporation but the entire industry restructuring of the Eswatini industry, and all its beneficiaries. While we 18hrs of production a week

18 RSSC Integrated Report 2019 3.7m TONS OF CANE CRUSHED This record production enhanced our profitability in the price-depressed environment.

mounted an effective counter- To our stakeholders – I would like campaign using social media and to express my appreciation for their other engagement efforts to dispel ongoing contribution to our very false accusations and the potency of important relationships, without the threat, the land issue still requires which our mutual interests would not resolution at Government level. be as well-served as they are.

For more on our stakeholder management, see page 45. Finally, I would like to thank all our employees. It is through the Outlook application, commitment, teamwork and hard work of every single A large storm at the end of February individual that we have built on affected 11 000ha of cane, a the achievements of FY2018, to see phenomenon known as lodging. This ourselves attain the outstanding lodged cane will cause problems in results that we have, at the end of harvesting and our yield to be low on this financial year. Siyabonga. the FY2020 achievement. With the current low sugar price of 12cents a pound, we anticipate that the market will continue to be tough, and the global sugar surplus ______will continue until the cycle of NM Jackson consumption brings about a deficit, Managing Director when prices will rise once more. Our IGP continues to show very good profit and cash generation, which we anticipate will lead to improved dividends in the future, and ensure the sustainability of RSSC in the long term. IGP tidbits

Acknowledgements With the year’s achievements evident in our record cane and sugar production numbers, I would like to thank the Chairman, Dr AT Dlamini and the Board for their unstinting BUSINESS GROWTH and skilled support and guidance. Our IGP continues to show very I am grateful too to the efforts and good profit and cash generation, commitment of my management which we anticipate will lead to team, whose dedication, skills and improved dividends in the future, expertise have greatly contributed to and ensure the sustainability of the value we have created during the RSSC in the long term. year under review.

19 RSSC Integrated Report 2019 04 OUR STRATEGY OUR STRATEGY

OUR INTEGRATED GROWTH PLAN (IGP)

Integrated Growth Programme (IGP) significantly and the IGP can be Strategic progress accelerated. Progress made under the Simama The IGP is divided into 7 phases, 20-20 strategy can be directly tracked commencing with Phase 1 in The IGP plays to the current themes, to financials for some initiatives 2017/18 and ending with Phase 7 drivers and dynamics of the global while other efficiency improvements in 2023/24. The major part of the sugar industry, both internationally are realised indirectly. The gradual capital expenditure will take place and on the African continent. It will advances in achievement of Simama over Phases 1 to 4. The factory place RSSC in a stronger position 20-20 initiatives favourably set-up project expenditure will be complete going forward, thereby enabling RSSC for the long-term strategy by the end of Phase 4 while on the the company to competitively take with a more enabled human capital agricultural side the last portion of advantage of future opportunities as utilising appropriate information the land development (on IYSIS) they arise as well as to remain robust systems and equipped appropriately will be completed in 2023/24, and sustainable in difficult times. with key organisational capabilities to unless market conditions improve address continued external changes.

20 RSSC Integrated Report 2019 Our Thembelisha Preparatory School is a strategic unit which helps to attract and retain talent and also provide flagship education in the region.

21 RSSC Integrated Report 2019 04 OUR STRATEGY RSSC FIVE-YEAR REVIEW

March March March March March 2015 2016 2017 2018 2019 Production Sugar (96º tons) 471 208 485 529 400 102 435 763 505 575 Ethanol (‘000 Litres) 31 344 35 316 33 218 25 468 29 844 Financial Results (E M’s) Revenue (RSSC) 2 636 2 865 2 958 2 962 3 047 Profit attributable to shareholders 234 273 393 301 218 Balance sheet & cash flow (E M’s) Total assets 2 537 2 646 2 940 2 939 3 130 Shareholders’ funds 1 677 1 755 1 893 1 982 2 053 Net borrowings 52 - - - 145 239 Net cash from operating activities 414 426 572 391 75 Financial ratios Operating Margin % 10.7 12.5 18.2 11.1 8.0 Return on Net Assets (%) 15.5 17.7 24.1 16.7 11.6 Return on shareholders equity (%) 14.0 15.6 20.8 15.2 10.6 Interest cover (times) 37.6 48.2 78.0 173.5 21.1

MANAGING RISK Risk management is a fundamental aspect of our financial and intellectual capitals, and we recognise that the requirements of open, transparent and effective governance and ultimately the sustainability of the company demand the meticulous identification, prioritising and mitigation of risks that have an impact on RSSC’s ability to create value. During the year under review, RSSC attained ISO certification on 9001:2015 (quality management systems), 14001:2015 (environmental management systems), and 45001:2018 (occupational health and Triple certification paves the road to sustainability safety management systems).

MD Nick Jackson receives one of the 3 certificates Minister of Commerce Manqoba Khumalo

22 RSSC Integrated Report 2019 LOAD-SHEDDING The South African power utility Eskom, being the major supplier of electricity to Eswatini, is undergoing challenges. The ongoing outages emanating from South Africa within the framework of the load- shedding programme imposed by Eskom constitute a tangible risk to our ability to operate optimally. Load shedding thus poses a direct threat to our ability to deliver against our strategic and financial targets. 35 000 South Africa requires approximately 30 000 –35 000 MW to power MEGA WATTS businesses and households, from to power South an installed generation capacity of +/-47 000 MW. Generating capacity Africa’s businesses and often drops well below the installed capacity, the ultimate cause of the households, and SA often need for load shedding. can’t meet this target

In recognition of this risk, late in 2018 RSSC commissioned Bosch Projects to carry out a study on how to become self-sufficient in terms of power.

The amount of load that Eskom sheds at each stage

Stage Load-shedding - MW 1 1 000 MW 2 2 000 MW 3 3 000 MW 4 4 000 MW 5 5 000 MW 6 6 000 MW 7 7 000 MW 8 8 000 MW

The Eswatini Electricity Company (EEC) affirms that when Eskom faces supply constraints, the EEC will commence reducing load from the Eskom network, to help prevent the collapse of the power system. Our assessment indicates that: Risk of reaching Stage 5 is low The EEC prioritises businesses over domestic users when The expansion of Mhlume Factory has already begun to yield positive results reducing loads The EEC increases domestic generation during shedding The EEC buys power from the “day ahead market” In the short term it was agreed and accepted that the main risks emanating from load shedding have been addressed.

23 RSSC Integrated Report 2019 04 OUR STRATEGY ADEQUACY AND EFFECTIVENESS OF THE RISK MANAGEMENT PROCESS

Given the current risk profile and the respective changes made in response to it, management is of the view that the risk management process adhered to by RSSC in addressing risks is sufficient and effective.

Current mitigation control(s) Loss/ Risk Risk Issue Causes Consequences or optimisation/leverage/ harm Rank replication capability category 1 Sugar • Significant price decreases in • Decreased profitability • Currency hedging markets SACU • Negative impact on • Forward contracts • Import tariff protection not sustainability • Lobbying and influencing triggered by ITAC • Threat of imports into SACU • Currency strengthening significantly, reducing export returns • Significant reduction in EU sugar prices • Sustainability of SACU if Namibia and Botswana exit the SACU arrangement for sugar 2 Labour • Trade union activities • Negative impact • Effective /regular unrest • Tough economic environment on productivity and engagements with staff • Increases in taxation profitability if strikes • Effective engagements with occur Trade Unions • Strained employer / • Ongoing and effective employee relationship engagement with surrounding communities • Training of staff reps • Training of line managers • Team/relationship building • MD Roadshows 3 Lack of • Lengthy (RSA) government • Increased sugar imports • Lobbying via the ESA for Sugar Tariff implementation processes • Slow sugar sales in the effective tariff implementation protection market • Explore other sugar markets • Reduced sugar prices • Sugar storage challenges • Increased costs for storage 4 Disposal of • Non-availability of sites for • Environmental breaches - • Housekeeping practices hazardous disposal of waste damage to human beings • Proper storage, pending waste and environment securing of alternative • Heavy fines disposal site • Fire, explosion, health hazards, chemical reactions 5 Effluent • Discharges from the factory and • Discharge into a • Use water for irrigation quality distillery watercourse • Implementation of • Damage to aquatic life recommendations from Wastewater Treatment Master Plan 6 Air quality • Emissions from the factory • Environmental damage - • Implement pollution mitigation Air pollution measures and install • Environmental breaches/ scrubbers when the financial fines position improves • Negative publicity • Damage to human beings’ health

24 RSSC Integrated Report 2019 Current mitigation control(s) Loss/ Risk Risk Issue Causes Consequences or optimisation/leverage/ harm Rank replication capability category 7 Stability • Failure of equipment due to age • Negative impact on • Capital replacement of power and maintenance productivity programme in place supply • Potential mal-operation of • Increase in production • Maintenance programme equipment costs in place, including machine • Cost of fuel • Opportunity cost lost condition monitoring • Lack of diversity of fuel types in terms of saving • Skills training ‘imported’ power • Insurance claims 8 Not • Lack of availability of finance / • Threat to business • Regular update of the IGP achieving capex sustainability (Business Plan) against business • Not delivering the return on • Unsuccessful in reducing progress - quarterly growth and previous phase investment / unit cost optimisation capex • Lack of appropriate skills (project management) • Viability of the IGP due to decrease in profitability and reduced cash flow

The merit award given to RSSC by the CSSA/Johannesburg Stock Exchange is a good indicator on the progress made by RSSC in integrated reporting

25 RSSC Integrated Report 2019 26 RSSC Integrated Report 2019 27 RSSC Integrated Report 2019 05 OUR BUSINESS OUR VALUE-CREATION BUSINESS MODEL

NATURAL MANUFACTURED HUMAN CAPITAL CAPITAL CAPITAL • Simunye Sugar Mill FINANCIAL • 1 678 loyal, • 22 000 ha of • Mhlume Sugar Mill CAPITAL skilled and land • Refinery SOCIAL AND motivated • Energy • Equity funding • Ethanol plant RELATIONSHIP permanent • Water • Debt funding employees • 22 000 ha of cane CAPITAL • Cash resources • Experienced • 2 211 head of • Employee • Reinvestment management cattle relations • Investments in: team • 6 790 head of • Grower – Mhlume game relations Sugar • Community Company relations – Royal Swazi • Supplier base Distillers • Government – Mananga relations Sugar Packers • Shareholder – Inyoni Yami support Swaziland • Industry Irrigation relations Scheme • Customers – Simunye and customer Plaza relations – Quality Sugars

INTELLECTUAL CAPITAL • Processes and systems • Brand equity

• Sugarcane growing • Harvesting • Processing • Refining • Ethanol distilling • Distribution • Beef production • Hospitality • Power generation

28 RSSC Integrated Report 2019 505 575 Tons of sugar

29.8m E417m Litres of ethanol in Company tax, PAYE, Withholding tax and VAT paid to government

For more information on how 66 483kg 3 500 our Strategy enables value Beef Seasonal, casual creation for our stakeholders, and permanent please refer to pages 2, 9, jobs sustained 12, 16 and 47 E3.047bn E32.8m Revenue Staff development spend Value creation is the primary aim of our E218m E669.1m business. To this end Attributable income Salaries and wages we continuously review our value proposition in order to make the necessary adjustments to 1 050 641 Housing provided Tons of bagasse to about our processes and create 22 000 more value for all our People stakeholders. 116 938 Tons of stillage (solid and Healthcare services used for liquid fertilizer) to the value of procured back as liquid fertilizer E27.1m

For more information on the Risks that may impact our value creation, please refer to pages 22 to 23

29 RSSC Integrated Report 2019 05 OUR BUSINESS HUMAN RESOURCES

Human Resources (HR) is a Recruitment turnaround a ripple cycle of vacancy filling. This fundamental component of time required the additional attention of HR consultants, who incidentally our human and intellectual The HR Operations department were already stretched as a result of capitals, and during the has continued to track recruitment having to participate in the rollout of year under review we turnaround time for all positions the SAP Success Factors ERP module. continued with our efforts at RSSC. The average recruitment This technology ultimately aims to to optimise operations in turnaround time percentage for improve talent management and our 2018/19 is 75% against a target recruitment processes. There is more terms of recruitment, payroll of 80%. The increased number of information on this later on in this streamlining and training, vacancies in most departments is section. attributable to natural attrition. in line with the strategic Figure 6 reflects the progress of objectives of Simama 20-20. During the year under review, retired overall recruitment turnaround time To this end we undertook a employees were all replaced by for each quarter in percentages. number of initiatives during internal candidates, which triggered the year under review.

FIGURE 6 - Recruitment Turnaround Time 2018/2019

75% LinkedIn recruiter licence achievement of Service Level The average usage Agreements timelines with the business. recruitment The LinkedIn recruiter license piloted turnaround time in January 2018 and contracted for KRONOS Project in the July 2018 to June 2019 has been Agriculture Pilot Section against a target effective in realising cost savings of approximately E85 000 in recruitment The KRONOS project go-live date of 80% advertisements. With external talent was the end of February 2018 when now accustomed to interacting with employees were first paid via the job posts through social media and KRONOS-SAP payroll system at the website, print media costs can Agriculture Production, Section 03. be avoided except for cases where Since then, the system has had both pipelined talent has been identified successes and challenges in meeting IGP tidbits as inaccessible on the LinkedIn agriculture production requirements platform. regarding the automation of time and attendance capture and SAP Success Factors - ultimately interfacing the data into eRecruitment, succession SAP for payroll purposes. Given the challenges posed by the nature of planning & learning the agricultural sites, a decision was In October 2018 RSSC implemented taken to shelve the implementation a cloud-based automated system of KRONOS in this area of the HUMAN RESOURCES SKILLS, to support talent management business. The implementation at MOTIVATION & ALIGNMENT processes like recruitment, factories was instead identified as The IGP requires skilled personnel training and succession planning. low-hanging fruit, and full roll out will to be able to deal with the The eRecruitment system offers be done in one of the two factories in concomitant complexity and transparency and traceability of October 2019. This is limited to only expanded scope. progress and activities, enabling one factory at the moment due to more accountability on the insufficient funding.

30 RSSC Integrated Report 2019 stewards. In addition to this, the long enjoy free mobile calls to any Employee relations outstanding issues of harmonisation RSSC employee, provided The Industrial Relations Climate of terms and conditions of service they are part of the closed came under pressure during the year for the ex-Mhlume and ex-Simunye user group facility under review due to prolonged cost employees will be accelerated in the Employees continue to enjoy of living (COL) negotiations. This coming year in an effort to conclude the benefits of Group Life situation was further exacerbated by them. Assurance (three times annual the minimal progress made on the salary), Permanent Health harmonisation of the outstanding Remuneration & employee Insurance (at 75% of basic), terms and conditions of service benefits and Funeral Cover of E15 between the former Mhlume Sugar 000 inclusive of the E5 000 Company and Simunye Sugar Estate, Employee remuneration is a critical family support fund, with the including the unification of the aspect of attraction and retention. provision of insured benefits Recognition Agreements with the During the year we reviewed tendered out for the FY2020 four employee organisations (two a number of elements in our and the cost reduced by more SAPWU and two SAMASA). remuneration proposition: than E1m. One of the initiatives that will be The number of permanent The Corporation has also continued embarked upon in the new financial employees declined to 1 678 to place a retirement contribution year to improve the IR climate will at year-end (2018: 1 704), for seasonal employees through the include intensifying training on mainly due to natural attrition ENPF supplementary fund with the leadership roles and responsibilities In partnership with MTN our Eswatini National Provident Fund. for union officials and shop employees are now able to

31 RSSC Integrated Report 2019 05 OUR BUSINESS HUMAN RESOURCES - continued

Limiting financial exposure leadership skills and equipping These programmes included and cost rationalisation managers with skills and knowledge participants from other companies, for the handling of challenges and a total of 93 candidates (31 Leave management emanating from the Fourth Industrial external) from 17 companies With 6 368 sick leave days recorded Revolution (4IR). Three main successfully completed their at year-end, and 1 680 employees on programmes targeted supervisors, programmes and graduated on 22 the sick sheet, the cost of sick leave middle management and senior February 2019. management: amounted to E3.7m (2018: E3.5m). The measure for this key metric is the New Managers Development Sick leave days have averaged 6 800 number of managers scoring more Programme (NMDP) for the past three years. This is a very than 65% on Personal Effectiveness Managers Development high number considering the number and Leadership, Business and Programme (MDP) of wellness interventions initiated by Technical skills Training for the last Senior Managers the Corporation. 12 months / Cumulative number of Development Programme managers attending training over The leave liability stood at E23.8m (SMDP) at year-end (2018: E19.63m), an the last 12 months. The target was increase of 21%. No leave target was reached, with an overall score of 72%. set for the FY2019 as management had fully implemented interventions Training expenditure in 2018/19 designed to manage leave liability. However, the leave liability was not Training & Development 2017/18 2018/19 reduced as much as anticipated Expenditure (E) Expenditure (E) during the shutdown period due to Leadership Development 2 020 950 3 824 391 the extended crushing period which resulted in many employees in the Business Skills 320 555 241 517 Operations Division and Support Technical Skills 9 568 521 12 503 456 Services not taking the annual leave. Apprentices 14 369 126 16 182 934 There is a need to continuously manage this liability on a monthly TOTAL 26 279 152 32 752 298 basis.

Management of illness Thirteen employees were on the Disability/Income Replacement Scheme at year-end compared to 11 last year. Even though this number remains in line with the long-term average and the assumptions that informed the development of the existing cover parameters and costs of the contract with the insurer, the number of pending cases has risen to 34. The number of permanent disability cases has the potential to rise at any given time across the business. To closely monitor the situation we are enforcing the Management Of Illness At Work Policy.

Learning and Talent Skills development – personal effectiveness, leadership, business and technical Skills Through a partnership with the University of Stellenbosch – Executive Through the RSSC Leadership, we should be able to provide our people with the skills required to Development (USB-ED), the RSSC operate within the context of the 4th Industrial Revolution. Leadership Academy continues to make a positive impact on increasing

32 RSSC Integrated Report 2019 Succession planning – two Talent pipelines 50 – 60 years. About 8.7% will be successors per critical role The sugar industry requires retiring in the next 5 years. Only 0.8% The overall objective of RSSC’s specialized technical skills that are in artisans resigned in the past financial succession planning is to have in demand in the labour market due to year and 89% of newly recruited place at least two successors per growth of the sugar industry in the artisans were absorbed from the critical role by March 2020, as well as region and globally. RSSC’s approach Apprenticeship Programme. has always been to develop these to prepare identified employees to The Graduate Traineeship skills internally to ensure adherence take up specified future roles. At least Programme is another important to high quality standards of training 17% of middle and senior managers stream in the talent development and a consistent supply of skills. will be retiring in the next 10 years. initiative and is a feeder to Having removed the position of All divisions have identified at least engineering positions in the artisans from the list of approved two successors per critical role and Operations Division, as well as into Critical Skills three years ago, there a number of training interventions middle management/professional has been a focus in ensuring that are being implemented to equip positions in Services Division. The there is a steady supply in the talent potential successors with skills and current complement of Engineers development pipeline of apprentices, competencies for the roles they in Training (EITs) is at 70%, with with an investment of E1 438 483 have been identified for. Where an challenges experienced in attracting per apprentice over a four year adequate potential replacement does graduates in the mechanical period, which includes training costs, not exist internally, efforts are being discipline. The trend has been that accommodation, meals and wages made to identify an external pipeline. EITs resign in their 2nd or 3rd year of (see Figure 7 below). their training programme hence this Performance management risk was mitigated by reviewing their Recruitment of apprentices has also The SAP Individual Performance remuneration, as well as reviewing been informed by turnover trends Management (IPM) system which their career pathing requirements to and business needs. Currently, the is based on the Balanced Scorecard address their career aspirations. Only average age for artisans at RSSC is principles has for the past year been one EIT from mechanical engineering 39.4 years, 70% of them are aged used by employees in Grades T12, discipline resigned in the period between 25 – 44 years whilst 15.7% while the rest of the employees under review. are approaching retirement, aged were using the paper-based system because of obstacles like literacy and access to computers. A plan to roll out SAP IPM to the lower ranks is in place and in the period under FIGURE 7 - Breakdown of training costs for apprentices review, 272 employees in grades T10 & T11 have been therefore trained. These employees will now be able to do their performance appraisals electronically.

Moreover, an improvement in managing performance has been made. Line managers adhered to all the timelines of contracting, conducting mid-year and final year reviews.

E1.4m spent on one apprentice over a four year period

The RSSC Leadership Academy makes an impact on RSSC’s sustainability programmes but also contributes to the entire economy by enrolling participants from other companies as well.

33 RSSC Integrated Report 2019 05 OUR BUSINESS HEALTH AND WELLNESS

Health and wellness forms part of our human, and social and FIGURE 8 - Clinic revenue trends 2018/19 relationship capitals. Various initiatives were implemented during the year under review to ensure that employees, their dependents, and the community receive high quality health and wellness services. RSSC remains committed to ensuring that its employees, their dependents and community members remain healthy and contribute to the economic sustainability increase is mainly due to the gaps in wellness of its employees. About 450 of the organisation and the revenue collection which were not employees had an opportunity to country in general. addressed with the previous EPR engage on topical health issues, such system. as HIV prevention, mental health and Health and wellness objectives healthy lifestyle. and targets are aligned to increase Managing Director’s Health the effectiveness and efficiency of and Wellness Dinner Employees also took the opportunity support functions which ultimately to express their appreciation of support the strategy of reducing unit The RSSC Managing Director RSSC’s efforts in promoting their cost and maximising shareholder together with all senior management, wellbeing. Employees also committed value. hosted employees at a Health and to playing their role to complement Wellness Dinner in order to reaffirm the Corporation’s efforts. The goals and main focus are to the Company’s commitment to the ensure that employees remain healthy and productive and minimise absenteeism through ill health. The major contributors to ill health, such as communicable disease prevention and control are therefore closely monitored.

New Electronic Patient Record Management (EPR) system In line with the objective of keeping up with modern electronic patient data management, RSSC implemented an EPR system to improve the efficiency and quality of services. The new EPR system enables effective inventory management of pharmaceutical stock, improved patient data analysis and generation of various accurate reports. This enables management to make evidence-based decisions from reports generated. MD Nick Jackson receives an award from NERCHA CEO Khanya Mabuza. Our The new EPR system has also stakeholders continue to recognise the success of our Health and Wellness improved revenue collection in the programmes clinic, with a year-on-year increase of about 25% in revenue collection. The

34 RSSC Integrated Report 2019 3 804 HIV tests conducted in 2019 Health and Wellness Manager Dr Rhoy Shoshore cherishes one of our awards

Eswatini Business Sector Wellness (SWABCHA) FIGURE 9 - Employee HIV testing 2018/19 Awards RSSC participated in the annual World AIDS Day Commemoration 2018 and SWABCHA awards event. This resulted in our company receiving: Star Performing MD of the Year: Mr Nick Jackson – 1st category Best workplace Health and Wellness Programme: RSSC – 1st category Most Innovative Wellness Program Initiative: RSSC – 1st category Wellness Champion of the FIGURE 10 - Patients on antiretrovirals per patient category Year – Rosewell Mziyako – 2nd category Focal Person of the year – Lungile Shabangu – 2nd category

HIV prevention and management HIV testing remains important as the first stage in persuading patients living with HIV to undergo care and treatment. A total of 3 804 HIV tests RSSC continues to work with the A total of 2 500 patients are currently were conducted during the year Eswatini Ministry of Health to accessing HIV care and treatment under review, slightly lower than the provide HIV care and treatment. The from the RSSC medical facilities 3 945 tests performed in FY2018. public-private partnership in which at no cost to them. This is in line Approximately 3% of the individuals government provides antiretroviral with achieving the universal access who took the tests had positive drugs and RSSC provides human to HIV treatment and care as per results. All new HIV cases were linked resources for care and treatment saw World Health Organisation (WHO) into treatment and care. about 300 new cases being enrolled. recommendations.

35 RSSC Integrated Report 2019 05 OUR BUSINESS HEALTH AND WELLNESS - continued Communicable Diseases Management During the year under review, the number of upper respiratory tract FIGURE 11 - Upper respiratory tract infections trends and tuberculosis infections reported was the lowest recorded in the past five years. This is an indication that communicable disease prevention and control measures are effective. Upper respiratory tract infections and tuberculosis are the major contributors of productive man- hours lost through sick leave. Sick leave due to malaria was significantly reduced.

Employee Occupational Health and Safety A slightly increased number of injuries on duty cases occurred during FY2019, most of which FIGURE 12 - TB cases occurred during the crushing season. All the injured employees were treated successfully and were able to return to work. There were no fatal injuries as a high safety culture continues to be practised in all our workplaces. Occupational medical examinations are routinely carried out on all employees as an additional means of monitoring workplace health and safety. Of the targeted 1 132 employees, 1 021 (90%) were examined. 32 employees (3%) of those who were examined had occupationally-acquired conditions. The employees were referred for the appropriate medical management FIGURE 13 - Injuries on duty 2014/15 to date and measures were also taken to eliminate hazards and reduce risk at the workplace. While legislation recommends that 100% routine medical examinations should be conducted periodically

36 RSSC Integrated Report 2019 according to the inherent risk of FIGURE 14 - Routine medical examination 2018/19 the job and the work environment, 90% routine medicals were completed. Surveillance recorded 32 occupational illnesses, 6 acute illnesses, 9 chronic illnesses and 17 other conditions for further management. All were referred and treated accordingly.

Health and Wellness – outlook The focus areas for year 2020 are to: Offer quality and easily accessible health services at a reasonable cost to all patients Increase operational efficiency through an improved electronic patient record system and review of the Health and Wellness operational processes Reduce costs due to sick leave through more robust disease prevention strategies Implement health and safety education in the workplace in order to reduce the incidence of occupationally acquired diseases and injury on duty.

The short-, medium- and long-term perspective The cost of providing health and wellness services continues to increase in line with the global health sector trends There is an improvement in terms of reduction in HIV related deaths as more effective antiretroviral medications are being introduced There is a progressive increase in non-communicable diseases like diabetes, hypertension and cancer, a development requiring more resources to be channeled towards disease prevention, as opposed to the current skewed focus on curative RSSC also received the Star MD of the year for excellence in Health and Wellness. interventions Diagnostic technology is improving year by year, requiring medical services to remain up to date with current improvements in disease diagnostics equipment.

37 RSSC Integrated Report 2019 05 OUR BUSINESS INFORMATION TECHNOLOGY (IT)

IT forms part of our Activities and projects We successfully upgraded SAP intellectual and manufactured to the latest versions, with the IT supported a number of projects modules that were improved in the capitals. The IT strategy, during the year under review, course including: adjusted in February 2018, including performance management, is fully aligned to support with the rolling out of the Individual The sucrose solution the goals and objectives of Performance Management (IPM) The ABS Harvesting Plan to to grades T10 and T11, which was assist with in-bound logistics Simama 20-20. achieved on the SAP IPM platform, at very little cost. The various SAP Other systems implemented included Overview modules added included: the IoT initiative of remote crop Operationally, IT recorded a very SAP Success Factors monitoring in CanePro, where the successful year, with the majority health of the crop is improved by the Recruitment, which automates of our Service Level Agreements availability of normalised difference the recruitment process and achieved. The one exception is the vegetation index (NDVI) images of aides the efficiency in the HR closing of SAP support tickets for the farm, allowing management to Support Function new system developments on whose see crop growth, water usage as well achievement we continue to work on Learning, which manages as ripening. This utilises images from committedly. the training requirements, the European Space agency. planning administration and The majority of IT projects were training material delivered on time and on budget, Projects continuing into with the exception of the Business Succession Planning, which FY2020 Planning Consolidation project where automates the succession SAP Budgeting, planning and the complexity of the business was planning and assists the HR consolidation (BPC). The first phase under-estimated. department with efficiency of this project was launched to assist The IT department welcomed three with the budgeting process and to IoT – These were delivered in new employees, and one manager replace a legacy system, with go-live the SAP cloud platform, SAP left during the year under review. We scheduled for September 2019. Leonardo and SAP Analytics Cloud. also trained Super Users and signed This project was nominated, and them up to the SAP on-line training Key IT indicators qualified for the finals, for an SAP courses. The pipeline of work at IT Global Innovation award, and sits at 43 days, which means that Business value included: each employee has on average 43 We achieved our business value days of scheduled work at any one Inbound Vehicle Logistics – targets by concentrating on strategic time. This impacts IT performance Managing and monitoring the projects, ensuring the long-term and decreases the satisfaction of internal harvest fleet, as well sustainability of the systems and by users due to delays in starting work. as the third-party fleet which spending within budget and within delivers RSSC cane the target range for medium-sized IT Of the 20 strategic initiatives during organisations. the year under review, IT is involved Bulk Water Management – in 15, and directly responsible for Monitoring the flow of water Innovation four. Of special note during FY2019, on the Mbuluzi river During the year under review, we are the innovative Internet of Things introduced: (IoT) projects, with Inbound Logistics SAP SOLMAN Business and Bulk Water having gone live Process monitoring and New technologies, including during the prior year. analysis, a system that allows IoT, Analytics, Big Data, and the monitoring, analysis the Success Factors cloud Inbound logistics utilises sensors in and management of SAP solutions. the harvesting vehicles to assist in processes, with the Procure decision-making and in reducing to Pay, the performance New capabilities in the form no-cane stops. We will also be monitoring of purchasing of process-mapping and analysing the data in order to cycle, and warehousing, design thinking improve availability, routes and and the creditor payment An improvement in business maintenance of the fleet. For the Bulk processes all rolled out during operational efficiencies Water project, we have mapped the the year with the introduction of the flow in the Mbuluzi river in order to process-monitoring tools improve the levels in the Mnjoli dam, BEST – A SAP add-on which while still fulfilling our obligations to assists with the creditor An RSSC Technology downstream users. reconciliation process by committee to oversee scanning supplier statements the introduction of all and automating the approval new technology into the of invoices organisation.

38 RSSC Integrated Report 2019 PROPERTY SERVICES

RSSC’s Property Services Guarding of dumpsites to Security and crime Department (PSD) forms a prevent illegal dumping of prevention part of our manufactured inappropriate waste that pollutes the environment Year-on-year crime statistics have capital, and is responsible improved, with FY2019 ending at 80 for the maintenance of 5 800 Filling longstanding Planner incidents, as against 127 in the prior and Supervisor vacancies to residential and commercial year. This represents a 37% reduction improve efficiencies in crime, and is due to improved buildings and some 125km intelligence, raids and crime of village roads. In addition, The quality of maintenance works prevention awareness campaigns. the department provides delivery has improved significantly a potable water supply, and contractors found to have Capital expenditure done substandard works are now security services, grounds instructed to correct at their own (Capex) maintenance, solid waste cost. The efficiency level is at 94%. The bulk of this department’s FY2019 removal, and the management The painting of houses using capex was used to rehabilitate the of an engineered landfill insourced materials and outsourced road linking corporate head office in support of business labour is in progress, with painting and the MR3 main national road, costs decreasing by 30%. returning it to a serviceable level. operations. Other expenditure was allocated The relocation of identified third to a harmonisation project for the In a master data clean-up, conducted parties was almost completed during installation of electric geysers in during the year under review, we the year, save for a few and company previously coal-fired houses at initiated a confirmation of housing employees were allocated houses Mhlume and A-type houses at Lusoti features and updating of the master accordingly. which currently do not have water- data to ensure that all 5 800 housing heating appliances. units are correctly billed. We have seen 60% progress in this exercise. In addition, we confirmed all commercial properties and ensured that the master data and billing FIGURE 15 - Maintenance budget information is updated accordingly. This was an important exercise, and was one of our set of strategic objectives set for the year, which also included: The improvement of quality control for maintenance works and enforcement of warranty/guarantee terms and conditions to recover costs The introduction of insourcing and outsourcing of works implemented based on economic viability The relocation of third parties from the busy villages to the FIGURE 16 - Housing occupancy rate less populated agricultural villages in order to open up space for employees Engagement with all relevant stakeholders on a long-term plan to solve the issue of the shortage of appropriate housing

39 RSSC Integrated Report 2019 05 OUR BUSINESS PROPERTY SERVICES

Addressing challenges Despite reduced manpower resulting FIGURE 18 - Crime statistics from the Voluntary Exit Process in prior years, PSD has improved the quality of work supervision, moving from 5% - 70%, from month to month. We initiated interventions directed at resolving issues identified through customer satisfaction surveys and during interdepartmental interactions.

There remains a challenge of Outlook FIGURE 17 - Capex expenditure shortage of appropriate housing stock to accommodate employees In the short to medium term we according to their grades, especially anticipate: at the artisan level. While, in the short Improvement in customer term, there has been no change or satisfaction as measured in improvement, we are nevertheless the next biennial customer continuing to work on finding a surveys from its current solution by involving all relevant standing in the lower 60s to stakeholders. 70s Ageing infrastructure of over 50 Depending on its cost- years’ vintage, has almost reached effectiveness, the increasing its service life and is in need of use by PSD of a combination major rehabilitation. We engaged of insourcing and outsourcing geotechnical engineering specialists services for a study of the foundation soils Improved competency levels with a view to developing remedial both for in-house and vendor actions to address the structural personnel doing PSD work, deterioration. resulting in enhanced service Waste water effluent quality is still delivery not compliant with regulations. A much-improved However, a master plan is in place to maintenance backlog as we address this challenge in a phased unlock potential through cost- manner depending on budget cutting measures IGP tidbits availability. Intervention has had to be postponed again due to other Improved terms of service pressing priorities in the business. delivery and cost savings, contributing meaningfully towards RSSC sustainability

SECURE MORE WATER Securing water for the business 5 800 is one of the focal areas for the residential and IGP. Our water usage strategies continue to evolve in support of commercial building the IGP. maintenance

40 RSSC Integrated Report 2019 41 RSSC Integrated Report 2019 05 OUR BUSINESS PUBLIC AFFAIRS CSI During the year under review, we continued with our established programmes, as well as a number of other initiatives:

Initiative Nature and outcome Siyaka 1800 This is a soccer development programme, in which we partner with the Football Association of Eswatini. FY2019 saw the fourth cycle of this programme, with close to 4 000 participants benefitting. The Entrepreneurship In the second cycle of this programme, which provides support to unemployed and other disadvantaged Programme young people. There were 30 participants during the year’s competition, with the aim of empowering them by fostering entrepreneurial skills. The prizes comprise seed capital of E100 000 for the top three businesses, and the programme was once again very successful, to the extent that as a result of the high level of entries that we had, we were able to make awards to four winners. Cyclone relief Employees collected clothing and perishable food to the value of over E20,000 which was taken to Mozambique for victims of the cyclone that struck that country. School assistance In this initiative we worked with employees to assist at a preschool in the area. We painted the centre and helped with looking after the children for the day and cooking and providing meals Surveys We conducted two surveys during the year under review. A survey to check whether RSSC is indeed an active contributor to the socio-economic development of Eswatini. This was a stakeholder survey with government ministries, parastatals, community leaders and area schools, and was completed in September 2018. The results were extremely pleasing, with stakeholders recognising who RSSC is, and able to articulate what we do in the national context. We approached the small farmers in the rural areas to measure their perception of RSSC, in a survey with Outgrowers to gain insights into our relationship with them. Corporate Brand Store This was established to enable employees to purchase corporate apparel and RSSC branded items. The excellent response is an indication of the loyalty and identification with the brand among employees. RSSC Annual Charity Golf Day The funds raised from this event enabled us to provide water to about 3,000 people from two boreholes in June 2019. Employee welfare annual We participated in this project, which was part of a national project to raise funds for charity. survivor challenge Sponsorship of an Outgrowers We provided E10 000 to sponsor this event competition run by ESA Donations We donated wheelchairs to a rehabilitation centre, and a second-hand ambulance to the Good Shepherd Hospital which services the entire area of the estate. First Lego League into Orbit This was a robotics competition held in Detroit. We were able to raise funds for students from our school, six World Festival. students and teacher from our school Thembelisha, to take part, and attain medals for participation. Annual Biggest Loser All the participants were able to use the Mhlume, Simunye and Ngomane gyms for free for the healthy BMI competition and Healthy BMI competition, which ran in tandem with the Biggest Loser competition. We achieved the highest participation in competition the last three years, with the free use of the gyms being the biggest draw.

42 RSSC Integrated Report 2019 Communication Public Affairs, and are working Stakeholder management on extending this to other The year under review also departments as well. saw a number of Public Affairs Our stakeholders constitute communications initiatives: Towards to the end of 2018, an important part of our social we launched a new SMS and relationship capital. We We published a CSI booklet internal communications understand that there is a for internal and external platform for quick access stakeholders, as well as a to employees who have no wide range of material matters booklet aligned with the access to email, to provide arising from our relationships ongoing IGP expansion them with important with our stakeholders and that programme, and covering information such as updates phases 1 and 2. these concerns have an impact and electrical outages. While on our ability to create value. We produced a 30-minute there was initially some skepticism for reasons of video for internal and We therefore follow a rigorous plan privacy, once employees external stakeholders, and to resolve these concerns through saw that others were being which we uploaded to the regular and rigorous consultation kept updated, they started RSSC website. The video is and engagement with our choosing to participate. And also used for inductions and stakeholders. We work to a carefully our contact list now stands at visitors to the MD. devised stakeholder management around 600-700. We continued with our plan in order to regularly assess our individual Simama 20- We continued with our status with regard to these material 20 stories, upgrading generic platforms – the matters as measured against our the initiative to include intranet service and the desired position, and maintain clearly departmental stories for updating of the news boards. defined actions and timelines in order to achieve our objectives. We are committed to scrupulous adherence to our plan as it allows us to gain a clear understanding of the measures we need to implement to facilitate the creation of value for our shareholders, and to maintain strong and mutually beneficial relationships with all of them.

RSSC seeks to propagate the culture of social investment through promoting employee involvement.

We are proud that our strategic partnerships with suppliers and the National Disaster Management Agency (NDMA) have resulted in 6 boreholes, giving clean water to about 6 000 people in our communities.

43 RSSC Integrated Report 2019 05 OUR BUSINESS PUBLIC AFFAIRS - continued Our stakeholder management plan – FY2019

Ranking Level Stakeholder Material Issue Current Position Desired Position Level of PI Required Action Frequency of Influence Ranking Power Organised Increased Because of Employees tax regime High Low Keep Consultations with Management Labour compliance to SRA Tax Audit, fully complies with Informed organised labour Briefs, Income Tax Order employees Income Tax Order representatives and divisional expected to pay shop stewards on meetings and more income tax new reality consultation from April 2018 sessions with thus reducing their Prepare all employee reps disposable income employees for change through Pressure will increased be brought on awareness ER climate as a result of increased demand for RSSC to make up shortfall created by tax through higher pay increases Ministry of Localisation and Imposes one- Ministry’s understanding High Low Keep Continuous Periodic Labour and Training size-fits-all on and acceptance of what Informed relationship building sessions Social Security localisation and drives the industry and with Training with TLC training standards RSSC business model and Localisation and annual or requirements in terms of localisation Committee including presentation that restrict optimal quotas and training annual presentation to committee human resource- needs on RSSC’s status management and challenges Local Talent tracking Poor collaboration Demand-driven Low Low Monitor Participation As invited by Universities with local programmes and in curriculum UNESWA and universities in effective human development forums Professional developing demand resource development with UNESWA and Institutions driven programmes through tracker studies other institutions and tracking talent in monitoring talent Low Low Monitor Annual meeting with Annual relevant for RSSC from training stages in Ministry of Labour business collaboration with these and Social Security institutions to share information on SD-sponsored students in RSA universities Suppliers/ Supplier/ contractors Service/ pricing not Quality, timely and High High Manage Host Suppliers Day Annual Contractors service delivery aligned to RSSCs adequately priced closely event to engage low-cost strategy service delivery from all suppliers on Sustainable and and operational RSSC suppliers contractors on how productive working/ efficiencies to improve business contractual Timely payment for relations between all relationships Increase in number services/products parties of workplace delivered incidents by contractors (health Reduced number of and safety issues) incidents/ Improved health and safety culture Unsatisfactory compliance with Implementation of RSSC-adopted systems to comply standards with RSSC-adopted or legislative standards/regulatory requirements, requirements i.e. ISO

44 RSSC Integrated Report 2019 Our stakeholder management plan – FY2019 - continued

Ranking Level Stakeholder Material Issue Current Position Desired Position Level of PI Required Action Frequency of Influence Ranking Power Board/ Seek board IGP Phase 2 tabled Board approval of Low High Keep Table Phase 3 Quarterly Shareholders approval for the and approved by Phase 3 as part of Satisfied proposal for review implementation of the board objective to increase and subsequent IGP Phase 2 capacity of Mhlume board approval factory back-end by increasing capacity of processing equipment sizes which includes pans, crystallisers and centrifugation stations Phase 2 implemented Low High Keep Increased capacity Once-off Satisfied and better performance at Mhlume factory Financial Financing of IGP Development Acquire desired funding High High Manage Meet with financing Once-off Institutions Phase 2 and 3 of IGP included ingeniously with long- Closely institutions to review required interaction term goal of eventual Phase 3 funding with financing control proposals institutions to table proposal Employee Employee Employees familiar Employees buy-in in High High Manage Employees engaged On-going engagement on IGP with IGP but need subsequent stage of Closely on expectations progress to be kept engaged IGP for their input and and any changes on progress implementation affecting them due to the project Employees RSSC Strategy Industry changes Implement reviewed High High Manage Strategy review with VUKA sessions Review require review of strategy that addresses closely internal & external current strategy to new issues resulting input address emerging in industry and sugar issues market changes Achieve operational High High Manage Strategy retreat for Annual excellence through closely ExCo and senior adherence to strategy management framework SAP Embedment SAP system Optimal usage of SAP to High High Manage Optimal value of Once-off underutilised and fullest potential closely return experienced optimal benefits of through adequate the system are yet implementation and to be realised utilisation of the system, resulting in seamless cohesion within RSSC business processes Business Process Business Business process maps High High Manage Business process Once-off Mapping processes mapped adherence in everyday closely videos developed operational activities and roll-out through-out the company for educational purposes Downstream Water Quality Poor quality Good potable water Low Low Monitor Sink, groundwater Annual effluent water effluent water quality for downstream monitoring, users discharges from water users boreholes the villages, factories and Continue with distillery that could current mitigation potentially damage controls the ecosystem Reduce COD of treated effluent from the Simunye ETP from 1000mg/l to 900 mg/l

45 RSSC Integrated Report 2019 05 OUR BUSINESS PUBLIC AFFAIRS - continued Our stakeholder management plan – FY2019 - continued

Ranking Level Stakeholder Material Issue Current Position Desired Position Level of PI Required Action Frequency of Influence Ranking Power Teachers of RSSC-aided No housing Teachers to be Low High Keep Housing Once –off RSSC-aided government school system in place to prioritised for housing to satisfied arrangement that government teachers’ housing address the issue ensure recruitment and provides subsidy for schools of accommodation retention of the qualified housing of teachers shortages within teachers for the schools. the schools for PSD recognises teachers and staff and prioritises the members housing of school staff within the RSSC houses Recognised housing Low High Keep estate currently occupied system that addresses satisfied by teachers with both RSSC and teachers no recoveries due issues to be in place and to past anomalies implemented to address in the absence of the current state. recognised housing arrangement Teachers of RSSC-aided No housing Teachers to be Low High Keep Housing Once –off RSSC-aided government school system in place to prioritised for housing to satisfied arrangement that government teachers’ housing address the issue ensure recruitment and provides subsidy for schools of accommodation retention of the qualified housing of teachers shortages within teachers for the schools. the schools for PSD recognises teachers and staff and prioritises the members housing of school staff within the RSSC houses Recognised housing estate currently occupied system that addresses by teachers with both RSSC and teachers no recoveries due issues to be in place and to past anomalies implemented to address in the absence of the current state. recognised housing arrangement Local media Media engagement Media relations Media partners to Low High Keep Host Media Day Annual are stable and maintain positive open satisfied where RSSC openly proactively relations with RSSC, invites and engages managed to remain ultimately driving media on business favourable favourable reputation for updates the corporation to the national audience Prompt interactions Illegal farmers Unavailability of Illegal farmers on Access to agricultural Low Low Monitor Enforce compliance Annual land and water for unallocated land and water resources where possible agricultural use using water illegally through the courts and demanding Structured allocation and engage relevant Lawlessness of land their cane to be stakeholders such Hygiene issues milled, against the as Tibiyo and SSA, rules where necessary Customers Product that meets Customer Fair treatment and Low High Keep Achieve ISO 9001 Ongoing specification complaints effective service delivery satisfied certification as part of customer-centric Timely payment Challenges with Quality product focus legal compliance Continued accessibility Monitor and Latest technology reduce customer complaints Regular feedback Customer surveys Professional and approachable personnel Accurate/ correct and efficient billing

46 RSSC Integrated Report 2019 Our stakeholder management plan – FY2019 - continued

Ranking Level Stakeholder Material Issue Current Position Desired Position Level of PI Required Action Frequ-ency of Influence Ranking Power Employees Labour unrest Unstable relations Fair remuneration High High Manage Effective /regular Ongoing between labour closely engagements with unions and Clearly defined job staff employer descriptions and Tough economic performance contracts Effective environment engagements with Job security, if Trade Unions retrenchments are imminent, early warning Ongoing and expected effective engagement Compensation in case with surrounding of injury communities Acceptable work Training of staff environment representatives and Fair treatment: line managers Consistency Team/ relationship Training building Transparency Performance Regular communication evaluation Safe and healthy Job descriptions working environment as Competency- per the OSH Act management Continued compliance with safety and health legislation Growers Industry Vision Differing views and Fruitful negotiation on High High Manage Internal recalibration Once-off (Swaziland interests on sugar industries issues which Closely on expectation and Cane Growers) industry issues are of mutual interest subsequent action and benefit, such as Legislation and sugar marketing and Engagement with sugar agreement co-generation issues, Growers on issues not updated to thereby progressing of of mutual concern meet current Industry Vision and benefit sugar industry circumstances Ministry Water Security As part of RSSC Actively participate in High High Manage Continue positive On-going of Natural long term plan assisting Government in Closely engagements with Resources + Protection and on water security the building of the Silele ministries through Ministry of preservation of continued efforts and Silingane dams senior officials and Agriculture environment on reducing future portfolio committees exposure have to Reduced pollution to the Eswatini be pursued environment E3m already set Environmental aside for feasibility Authority (EEA) Air pollution studies for construction of the two dams Implement pollution mitigation measures and install scrubbers Community Youth Local out-of-school Provide platform that Low High Keep Host annual Annual Entrepreneurship youths faced with offers young people satisfied competition where Support unemployment, within the RSSC applicants are Unemployment poverty community to engage capacitated with in entrepreneurship as free business Access to health a means to creating a training as well as facilities sustainable livelihood, standing a chance which combats to win grant capital unemployment, poverty towards funding and incidentally tackles small businesses, crime issues and be eligible for funding from other financial institutions

47 RSSC Integrated Report 2019 Being an active contributor to the socio-economic development of the country has given us light….

“We teach the youth to fish, for them to live their entire lives and open more job opportunities,” RSSC MD NICK JACKSON

Our Youth Entrepreneurship Programme has trained 60 youth members and awarded 7 with E210 000 seed capital to kick-start their businesses

Entrepreneurship is the future of the Kingdom of Eswatini

48 RSSC Integrated Report 2019 69 812 tons 96 Pol sugar produced higher than FY2018

49 RSSC Integrated Report 2019 06 OUR PERFORMANCE DELIVERING VALUE

Our cane crop and water resources are both fundamental parts of our natural and manufactured capitals, and RSSC is committed to working within the parameters of our Simama 20-20 strategic objectives, and the IGP as it is implemented phase by phase, in order to maintain growth, profitability and sustainability in the short, medium and long term.

Our performance against strategy Our key drivers – FY2019 has been excellent during the year under review, enabling us to Key Drivers Actual 2017/18 Actual 2018/19 exceed the budget. Through careful management and the disciplined Estate cane (tons 000’s) 1 970 2 229 application of expertise and Out-growers’ cane (tons 000’s) 1 273 1 497 technology, the year under review Total cane (tons 000’s) 3 243 3 726 proved to be very successful both in our crop yield and our resulting Sugar 96 pol (tons 000’s) 436 506 factory output, both of which Cane to sugar (96 Pol) ratio 7.44 7.37 produced record numbers. Ethanol production (litres 000’s) 25 468 29 844 Ethanol sales (litres 000’s) 24 443 29 179 Price Sugar – E/ton 5 813 5 098 Ethanol - E/litre 8.04 9.15

IGP tidbits FIGURE 19 - Age comparison 2018

ENERGY SELF-SUFFICIENCY Through the IGP, the strategy is to improve energy generation for the sustainability of our business.

50 RSSC Integrated Report 2019 Our crop Both cane yields and cane quality FIGURE 20 - Summer radiation comparison were better than budget for the year under review, as well as against the actuals for FY2018. This is mainly the result of the following two contributing factors:

Increased harvest age The average harvest age for estate cane was 12.3 months against a budget of 11.8 months and actual for FY2018 of 11.9 months. The start of the 2018/19 crushing season was delayed by the commissioning of Phase 1 of the IGP, which entailed the expansion of the Mhlume mill. Consequently, the growing period for the cane was increased. This, FIGURE 21 - Summer rainfall comparison combined with favorable climate and crop management practices, led to the record crop which exceeded the budget by 149 056 tons and the FY2018 actual by 258 786 tons.

Favourable climate conditions The radiation received in the 2018/19 season in the summer months was higher than in 2017 season (i.e September 2017 to January 2018). In addition, rainfall received during the same period (November to February), was comparable to last season. With dam levels higher during the reporting season, irrigation was not restricted. These factors precipitated a bumper crop. 258 786 Figure 20 shows a comparison in radiation distribution during the tons cane higher than summer months in the two seasons, FY2018 while Figure 21 shows the rainfall comparison.

An overview of our yield over the past 10 years provides an insight into the record performance we were able to achieve during FY2019, and in particular after the extremely difficult two seasons during which the drought held sway.

Our Thembelisha Preparatory School flew the country’s flag high in the US, where students joined a global Robotics contest as a result of RSSC joining hands with its stakeholders.

51 RSSC Integrated Report 2019 06 OUR PERFORMANCE DELIVERING VALUE

Cane value FIGURE 22 - Year yield trend - Tonnes cane per ha (TCH) The value of our cane at 31 March 2019 was E75 million higher than its value at 31 March 2018, due to our larger crop and an increase in sucrose price. The sucrose content at 31 March 2019, is however, lower due to a 2018/2019 season extension, and the resulting younger cane.

FIGURE 23 - Year yield trend - Tonnes sucrose per ha (TSH) E75m HIGHER The value of cane was higher than previous year

IGP tidbits Our biological assets

Actual Actual 31 Mar 18 31 Mar 19 Sucrose Production assumed for next season 296 190 320 501 Sucrose Content % 54.5% 52% Sucrose tons valued 161 376 166 738 GROW MORE CANE RSSC Share 148 555 152 523 Increasing land under cane as Estimate Ave Sucrose price (E) 3 056 3 466 part of the IGP will ensure that the business is sustainable in the long Value of Standing Cane (E’000) 453 931 528 644 term Standing cane income stmt cr/(dr) (E’M) 53 949 74 713

52 RSSC Integrated Report 2019 Our water resources FIGURE 24 - Mhlume Estate rainfall It has been very gratifying to see our water availability situation continuing to improve. It was significantly better during the year under review compared with the situation during 2017/18. This position was influenced by a number of factors including: Dam storages, known as Reference Storages, at the start of the season Rainfall River flows, and

Local water conservation FIGURE 25 - Simunye Estate rainfall efforts

FIGURE 26 - Observed flows to Mnjoli Dam

Rainfall River flow The rainfall received in the Komati There was a notable improvement Reference Storages and Mbuluzi catchments during in river flow during the year under the FY2019, while below the review, compared with FY2019. This is Storages at the beginning of the year long-term average, were slightly evident in the observed flows into the under review were 90.1%, 61.6%, and better than that of the previous Mnjoli dam as indicated in Figure 26, 67.6% for the Maguga Dam, Mnjoli financial year. At catchment which shows the improvement of the Dam and the Sand River Reservoir scale the rainfall impacted on inflows to above the 25% percentile (SRR) respectively. This position was river flow, while at the estate during the late autumn and 2018/19 far better than that prevailing during level, it influenced the amount of summer rains. This was in contrast to the previous season, as more water irrigation required and ultimately the observed flows during FY2018, was available to support our cane the rate of withdrawal from the which remained consistently below growing operations at the start the dams. The rainfall received in the the 15% percentile throughout the season. two RSSC estates is as indicated in season. Figures 24 and 25.

53 RSSC Integrated Report 2019 06 OUR PERFORMANCE DELIVERING VALUE

A similar analysis done by Komati Basin Water Authority (KOBWA) on FIGURE 27 - Dam storage 2018/19 the Komati system indicated an even better situation, with the observed inflows to the Maguga dam during FY2019 consistently above the 60% percentile, with the highest flow on record observed in February 2019. This resulted in the Maguga dam filling up and overflowing from 15 February 2019.

Water conservation efforts It was established during the course of the year that the Mbuluzi system was slow in recovery compared with the Komati system, due to a bigger and wetter catchment. In response to this, and in order to assist in FIGURE 28 - Dam storage 2017/18 the system’s recovery, efforts were made to save water in the Mbuluzi. These efforts included the following strategies: Proactive reduction in water requests due to rainfall received within the RSSC estates so that withdrawals from the dams could be reduced Interbasin transfers from the full and spilling Komati system in order to increase the storage level of Mnjoli Dam, with a total of 6.8 million cubic metres transferred from the Komati to the Mbuluzi system The implementation of a 20% restriction on crop water requirement, which was monitored and controlled so as to avoid negatively affecting the yields.

There is a concerted effort to improve the artisan pipeline.

54 RSSC Integrated Report 2019 Performance of dams and undertaking the following activities implementation during FY2020. as part of the efforts: future outlook We put forward proposals for the The performance of the major dams funding of the Isilele Dam feasibility Water harvesting ponds study submitted through the supplying water to RSSC during the We secured Initial Environmental year under review, as well as that Eswatini Government to the SADC Evaluation (IEE) approval from Infrastructure and ADB African Water of the previous financial year, are Eswatini Environmental Authority depicted in Figures 27 and 28. Facility, and are awaiting feedback (EEA) to proceed with the from funding agencies. The amount of water stored in the construction of water harvesting dams during the year under review ponds on identified sites within the was much better compared with the RSSC Estates. The following sites Increasing irrigation situation during the same period were prioritised for implementation efficiencies in the previous season. At the end during the year under review: During the year under review, we of March 2019 the dam storages converted 165.7 ha from furrow and were 99.7%, 90.1% and 98.3% for Ngomane balancing dam – sprinkler irrigation to drip irrigation, Maguga and Mnjoli Dams and Sand which is more efficient. River Reservoir, respectively. Given 100 000 cubic metres the water availability status at the We completed the installation of end of the FY2019, water supply in buoyancy gates on the dam spillway, the Komati has been maintained at and this has resulted in a 100 000 100% of annual allocations, while m3 increase in storage capacity. This water restrictions on the Mbuluzi project will enable RSSC to harvest have been maintained at 20% of crop and store excess water, which would water requirement (80% supply). otherwise go to waste, in the Mnjoli system. This wastage could occur Strategic objectives for during power outages, or with sudden water request cancellations water management due to rainfall and when Mnjoli is full Water security and overflowing. We have converted Water security has remained an an additional important strategic objective because Thunzini Area IV – 6.1 million water is a key input to the RSSC cubic metres cane growing and sugar production We concluded preliminary designs processes. We have therefore for this project during the year continued to pursue initiatives under review, and will be proceeding 166ha to improve our water security, to the detailed design stage and to drip irrigation

6.8m cubic metres transferred from Komati to Mbuluzi system

55 RSSC Integrated Report 2019 06 OUR PERFORMANCE OUR FACTORIES

Our factories form part of our manufactured and financial capitals. With the excellent crop yield, we were able to crush a record amount of cane during the year under review.

56 RSSC Integrated Report 2019 Consolidated Factory output Outlook Actual FY2018 Actual FY2019 The factories will aim to embed Phases 1 and 2 of the IGP, seeking to Cane Milled (tons) 3 243 080 3 725 617 maximise benefits from the modern Sugar 96 pol (tons) 435 763 505 575 equipment. The remaining phases of Sugar MTTQ 404 363 469 979 the IGP will continue to be exercised with the diligence exercised to-date Refined Sugar MTTQ 122 210 85 195 and with the lessons learnt from the VHP Sugar MTTQ 281 042 377 264 previous two phases, improving our Raw Sugar MTTQ 1 111 7 522 implementation efforts.

It is imperative that in pursuit of our IGP expansion benefits Simunye, having started two weeks low cost strategy, sugar volumes ahead of Mhlume, was nonetheless are maximised while costs are We run two factories – at Mhlume able almost to meet the budget, and Simunye. At Mhlume, phase 1 contained. In this regard our efforts as it had 36 weeks, processing just at continously improving the LTA of the IGP was completed, with the under 2 million tons of cane crushed, installation of evaporators, which and Overall Recovery in our mills will against a budget of 2.061 million continue to receive maximum focus. should be capable of raising our tons, leaving us with a variance crushing capacity from 350 tons per We remain proud of the performance of 61 000. Most of this shortfall of our mills in the region. hour to 440 tons per hour. was covered by Mhlume, which This has allowed us to save time, performed exceptionally well. allowing us to clean the evaporators Of the 27 Southern African sugar while still on line without stoppages factories, Simunye was placed first in in the factory. We had budgeted for overall sugar recovery, while Mhlume 202 hours, but used only 138 hours. was placed third. This is what facilitated the record crushing of 1.725 million tons in Challenges and risks 35 weeks, surpassing the previous record of 1.636 million tons set in The loss of the generator at Simunye 2014 – and that in 37 weeks. This constituted a risk, which, while it was new capacity has also enabled us to repaired, will require the installation make a saving of 5% in our fuel costs of a completely new rotor. The new for the year. rotor was supplied but not in time for 440 installation during the off-crop We also upgraded the pan floor with TONS/HOUR maintenance of FY2019. The power a new continuous 120 cubic metre station at Mhlume is also still crushing capacity vacuum pan, as well as a new batch under-capacitated, requiring the pan. These innovations have proven following the import of costly power. Factory to be working very well in improving risk therefore resides mainly in the expansion of Mhlume the efficiency of the factory. power generation component of our Factory The Simunye factory continued as operations. normal, with normal maintenance The performance of the boilers and production routine for the year, at Simunye has been problematic also saving about 5% of the budget. with numerous tripping incidents The 30mw Turbo Alternator set at occurring. Mitigating actions thus this mill presented problems, forcing far have not been successful. us to run without it for 13 weeks. Consequently, sufficient phased IGP tidbits Without internal generating capacity, Capex has been scheduled for the we were forced to import electricity. FY2020 off-crop as, well the ensuing This action diluted profitability one. against budget by E49 million in the mill. To mitigate this extra cost, irrigation electricity demand Molasses was curtailed as much as possible, As cane quality was good, the trade- reducing the net impact on the off was evident in lower molasses PRODUCE MORE ETHANOL Group against budget to E25 million. volumes. Both factories experienced Producing more ethanol is one of a reduction in molasses production the critical steps to sustainability from the normal 4% of the total cane via the IGP. to around 3.76%, which affected the distillery volumes.

57 RSSC Integrated Report 2019 06 OUR PERFORMANCE ETHANOL 34m With ethanol forming part LITRES of our manufactured and budget for the new financial capitals, the distillery performed very well during financial year is on the year under review. We target at the distillery made a strategic decision to run only the larger 100 While the old distillation plant With the strategic decision to use kilolitres (KL) per day plant, yields about 220litres of alcohol only our No. 2 plant, we began recovery per ton of molasses after achieving alcohol recovery of around and not utilise the other less fermentation, the new one yields 245litres/ton, which at times reached efficient 40KL with its greater 250litres/ton. The molasses quality 250litres/ton of molasses. As we energy demands. The larger was very good, with the total had a good supply of molasses to capacity plant, installed in reducible sugar averaging 50%, consume, the plant ran comfortably 2006/7, uses state-of-the- and the unfermentable averaging through the year until mid-April, with around 7%, which means that we are the support of steam from the sugar art technology, with much achieving around 43% fermentable mill boilers, which meant that we less steam and electricity sugar to make the alcohol. were able to enter the new season consumption, and much as well. better recovery of alcohol. We manufactured approximately Actual Actual 29.8 million litres of alcohol 17/18 18/19 during the year under review. Production - ‘000 litres 25 468 29 844 Sales - ‘000 litres 24 443 29 179 Molasses Used - tons 115 789 131 370 Molasses Yield - litres/ton 220 227 Ex Mill Selling Price/ Litre - E 8,04 9,15

29.8m LITRES manufactured in 2018/19

58 RSSC Integrated Report 2019 ETHANOL MARKETING

The year under review saw a Due to these market dynamics we Non-tariff barriers shift in market dynamics, with made a strategic decision to move up the value chain, and to concentrate In the SACU market we have resultant challenges. The EU on value-adds. We thus continue to continued to experience non tariff market remains depressed, sell into Europe, which in the recent barriers which made our access to with the price of €0.43/ past was our major market, although this market to be very restricted in our mainstream ENA product spite of Eswatini being a member of LAA FOB (port of loading) the customs union. standing below our break- still fetches a price below our full absorption cost, but slightly higher even point, especially for our RSSC continues to participate in this than our marginal cost. market as a niche player supplying main product of extra-neutral The East Africa market, to which specific suppliers who have specific alcohol (ENA). we have preferential duty-free requirements. access, has seen a number of The portion of the SADC market distilleries mushrooming in the outside of SACU remains a good FIGURE 29 - YTD sales by production region, especially in Tanzania and market for us, although the banning Uganda, with competitors in the of sachets in that market, while a former country producing more good ethical decision, affects our than 20 million litres per annum volumes. Packaging in sachets is at a price lower than our cost of faster and cheaper than other forms production particularly considering of packaging. that these producers are based within the market and have much In Mozambique, which is our outlet lower distribution costs compared to to the sea, the transit cost was raised importers. to US$100 000 per container, which is multiplied by a factor of 40, if the About 50% of our operating cost product is moved by train. relates to molasses – our raw material, which is a by-product of In Tanzania, road liquor transport the sugar manufacturing process. limits were reduced from 32 tons The industry structure dictates that to 25 tons. This has had the effect FIGURE 30 - Annual sales by marker - we have to buy this molasses from of increasing freight costs. It can FY2019 the Eswatini Sugar Association now also take up to a month for the (ESA). While the net sugar price after Tanzania Food and Drug Authority discounts for FY2019 was lower than to conduct laboratory tests. This has FY2018, the same did not occur resulted in sharp increases in the with molasses pricing, in spite of demurrage bill. Naturally this will the agreed principle of correlation lead to serious reduction of imports in the price of the two products. So into that market. molasses has continued to impact the costs of production upwards, in turn putting pressure on the profitability of the ethanol business. This has rendered RSSC ethanol uncompetitive in our main markets.

IGP tidbits

OPERATIONAL EFFICIENCY The IGP aims to ensure that not only do we do things right but we also do the right things. A lot of work has gone into building the required skills.

59 RSSC Integrated Report 2019 06 OUR PERFORMANCE ETHANOL MARKETING - continued

Outlook The ethanol market is expected to remain tough. However, ethanol, as FIGURE 31 - Ethanol sales projections (litres) 2017/18 - 2026/27 a product, is expected to maintain its place in the world economy. In the current environment, RSSC is positioning itself as a niche player with a diversified ethanol product range and to provide efficiencies and improve partnership with our ethanol customers. Work is ongoing to improve efficiencies in logistics with a view to ensuring timely delivery at controlled cost. Initiatives are also pursued aimed at introducing new ethanol products into the RSSC ethanol product range. RSSC realises that ethanol as a product has the potential to contribute not only to RSSC’s are also engaged in discussions with We are convinced that with the profitability, but to the economy of the Government of the Kingdom available opportunities the ethanol the country as well. That is why we of Eswatini on the introduction of business remains viable well into the a bio-fuel mandate in the country. foreseeable future.

Our cane and sugar production broke all records, a cause for celebration.

60 RSSC Integrated Report 2019 PROCUREMENT

Procurement forms part of the intellectual, social and relationship capitals of RSSC. During the year under review we issued a number of Requests For Prices (RFPs), and awarded various contracts for fixed-term services, mainly for the maintenance of our estate houses. Previously this had been done on an inefficient ad hoc basis.

Each contractor was allocated a zone, which increased our efficiencies in both quality and processes. There were challenges with some contractors who had benefitted from the previous ad hoc process, and escalated their dissatisfaction to court. They were not successful in these matters, and we proceeded to adjudicate our awards.

IGP contracts publish the inquiry in this and successfully negotiated a virtual tender box without configuration of our system The year under review also saw the including all the details. This so that the levy can be paid implementation of phase 2 of the enables the browser to view directly by us. This has a IGP with respect to procurement. In what is on offer, and this has discount associated with it, phase 1 we had awarded a major aroused global interest. and will result in savings once mechanical installation contract it is implemented in FY2020. to a Mauritian company which During the year the division conducted a feasibility study sub-contracted a local fabricating We have included the quantification to introduce a supplier company, and in phase 2 we are of the savings that will be realised interface. The intention was proud of being able to award by these initiatives in our strategic to look at the possibility of the contract directly to the local monitoring process for FY2020. company. putting in place an interface which would allow suppliers This has yielded very good results, to capture their invoices, with the local contractor now also and the buyer would be sub-contracting Mauritian employees able to float inquires to the – something that augurs well for various suppliers that are local growth. registered within the net. This IGP tidbits initiative will continue into Procurement initiatives the new year and is aimed at improving efficiencies in We introduced several new initiatives our procurement, as well as in FY2019: the servicing of our supplier Placing our tender box on accounts. our website and changing The Construction Industry EXPAND MHLUME FACTORY from email to a web-based Council (CIC) requires that platform. This improved our The expansion of Mhlume for all construction work, the Factory is beginning to bear fruit. visibility, and we have had a contractor must remit a 1% Increasing productivity is one of number of responses from levy. We engaged with CIC, the key goals of the IGP. global companies. We now

61 RSSC Integrated Report 2019 06 OUR PERFORMANCE IYSIS IYSIS represents an important Vegetation survey that the entire company, comprising part of the natural and the feedlot, the ranch, the hunting, We commissioned a vegetation the abattoir and the butchery, taken financial capitals of RSSC, and survey, and in the course of the as a whole, has delivered a good the year under review saw investigation, in the area designated performance during the year under sugar producing an excellent for cane expansion there was a review. yield on IYSIS fields, and beef first recording of a tree known as the hairy star-apple. This discovery Outlook production on the ranch the temporarily delayed the process of best ever recorded. the IGP expansion, until a further As a ranching operation, IYSIS search of the area revealed several remains fairly resilient to climate more specimens. The next step was issues, except in the case of While we are still below long-term to investigate other areas of the exceptional circumstances, such as rainfall averages, there has been ranch, and leading to the discovery the drought experienced between abundant grass on the ranch during of yet more specimens. This means 2016 and 2018. We do not see any the year under review. This is possibly that the intended area for cane major challenges to our operations an outcome of less pressure on the development will no longer be in the short to medium term. Our grazing as a result of the number of prejudiced by the presence of the Board is always willing to authorise animals lost in the drought. tree. the necessary capital expenditure Although in the past we worked on to improve facilities, and this will a grazing rate figure of five hectares Butchery continue, with the result that the per large stock unit, that figure now operation can remain sustainable, This operation continues to reflect sits at six hectares, and will in all productive and profitable. a low volume of sales. There is a likelihood remain so. This has had macro-economic input into this The animals we buy for the feedlot the effect of promoting the breeding situation, with a gradual reduction come from farming communities, and of the animals, with more calves in the purchase of beef, due to less as that herd is still in the process of being born as a result of improved disposable income of the people in being rebuilt, in the short to medium nutrition. the community. term there will be limited animals for There are certain species of game purchase by IYSIS. This situation will In addition, our abattoir is grappling that will still take years to recover, see a gradual improvement. with the lack of market for hides, the however, and we have removed result of diminished global demand, An attraction will be the new ‘booze species such as the waterbuck, and causing us simply to dispose of cruiser’ boat that we have ordered, wildebeest and bushbuck from the hides. which, when delivered during the hunting list. Out hunting operations course of FY2020, will add to the have been continuing smoothly, with While increased electricity costs also offering for the recreation and fishing sufficient animals removed, and no exacerbate the losses, the vertically components of our business. live capture at all permitted. integrated structure of IYSIS means Our proportion of Nguni cattle in the herd has been increasing, while the red Brangus has been decreasing. We believe that this may be due to the Ngunis protecting their calves more 66 483kg effectively against predators. BEEF SOLD Succession planning in 2018/19 With the retirement of our ranch manager during the prior year, the changeover has gone smoothly, with the current incumbent due to retire in three years’ time. The designated successor, a Master’s degree candidate being groomed for the position, we are comfortable that change is being managed efficiently and productively.

62 RSSC Integrated Report 2019 MANANGA SUGAR PACKERS

Mananga Sugar Packers (MSP) is a Actual (E) Actual (E) End March 2019 50% subsidiary of RSSC. 2017/18 2018/19 During the year under review, Net Pricing 9 892 9 198 Mananga Sugar Packers performed Net Cost 8 951 8 045 well as production exceeded what was planned. As of end of March Contribution margin 941 1 153 2019, MSP has produced 124 794 Fixed cost 488 443 tons versus a budget of 114 612 Net Margin 453 710 tons, which is 10 182 tons more than budget. EBIT(M) 43 422 52 398 Trading conditions continue to be tough, with competition from residual imported sugar. This is compounded by the shrinking of the market due to the sugar tax in South Africa. MSP will continue to monitor the situation. MSP sells and markets sugar through Quality Sugars based in South Africa. Quality Sugars is owned by RCL Sugar at 75% and RSSC at 25%. About 99% of sugar packed at MSP is sold in South Africa and the balance is sold in Eswatini.

OUTGROWERS There are around 4 000 While there was a late start to the as stumbling blocks to their ability to ha under cane farmed crushing season for the Outgrowers maximise their operations. as a result of the expansion activities Among these issues is the fact by approximately 286 at Mhlume mill, deliveries went that Outgrowers have specified outgrowers, who produce smoothly during the year under quotas that bind them to particular cane independently of the review. There was sufficient water mills, and the distance to the mill for most of the growers, although RSSC estate, and send that where the quota exists, may not be some small growers remained under cane for processing to the optimal. Within the confines of this water restrictions. For most growers, arrangement, growers therefore feel mills, where the sugar is however, there was an above average that the relationship with RSSC could manufactured. That sugar, crop. be improved. Engagement on the like all the output of the It is the Vuvulane Irrigated Farmers differences of opinion and priorities factories, is then marketed (VIF) who continue to grapple with is hampered by frustration in by the ESA which then inadequate infrastructure and must communication and responses. Issues distributes a portion of the contend with a restricted volume of with payment for the beneficial use proceeds from sales. The allocated water. This grouping also of bagasse which is used as fuel struggles with a land tenure issue, for the generation of electricity growers are thus affected by as the land they occupy belongs to have reached a deadlock with the the state of the market, and the nation, and they have no rights Corporation and are indicative, from the same logistical issues as of occupation. This is a burning issue the perspective of the growers, of the Corporation. Aside from for them and has implications for the the problematic relationship with the industry in general, and will require Corporation. the impact of the EU market’s resolution in the short term. (For For the growers, there appears low prices and over supply, more on VIF, see page 18.) the next biggest challenges to be a difference between their interpretation of that agreement with that growers have faced are Relationship with RSSC The Outgrower Department at industry and the interpretation by the rising costs of labour and RSSC provides much appreciated the mills. The essential gap is that the electricity. assistance to the growers with land agreement with the mills is for sugar, preparation, planting, equipment, and not for cane. Other beneficial and harvesting services. However, use accrues from the latter, which issues persist that the growers view the growers believe they should be shared with them.

63 RSSC Integrated Report 2019 Building the youth through sport via the Siyakha 1800 soccer initiative. More than 4 000 children play Our drive to cultivate the culture of social investment among our soccer in our communities. employees is bearing fruit. Our Health and Wellness support groups produce food for themselves and donate to the community.

Good Shepherd Hospital now has an ambulance to service the community following a donation by RSSC. Our programme of matching whatever our employees donate is benefiting many needy school children in our community.

Through collaboration with our employees we are pleased to have made a contribution towards the response to Our CSI focus extends to early childhood development. We Mozambique floods, among many other initiatives. provide the equipment necessary for well-developed children. 64 RSSC Integrated Report 2019 RSSC is committed to and subscribes to best corporate governance practices. We are guided in this regard by, among others, the code of corporate practice and conduct contained in King IV and other international guidelines on corporate governance.

65 RSSC Integrated Report 2019 07 OUR GOVERNANCE FRAMEWORK OUR BOARD OF DIRECTORS

Dr AT Dlamini – Chairman MBA, Bcom Dr Absalom Themba Dlamini is the Chairman of the RSSC Board of Directors (the Board). He is the current Managing Director of Tibiyo TakaNgwane, and a former Prime Minister of the Kingdom of Eswatini. He has held RSSC’s subcommittees are: executive positions in various local institutions, such as Risk Committee the Central Bank of Eswatini, Eswatini National Provident Fund and Swaziland Industrial Development Company. Remuneration Committee He currently serves on other boards including Ubombo Audit Committee Sugar Limited, Mananga Sugar Packers and Royal Villas. He has received awards and honours from among others Committee on Non- His Majesty King Mswati III and the President of China Executive Remuneration on Taiwan.

1 2 3 4 5

Ms Busangani Mkhaliphi – Member Chief Zibuse Ndlangamandla – Member Mr Andrew Westermeyer – Member 1 2 3 IMBA, BCom, Dip. Accounting and Business Dip Accounting B Com (Hons), Chartered Accountant (SA) Studies Chief Zibuse Ndlangamandla is the traditional Mr Andrew Westermeyer is the Financial Director of Busangani G. Mkhaliphi is employed by the Ministry leader of Manyandzeni community in the RCL Foods. He qualified as a Chartered Accountant of Finance as Director of the Public Enterprises Unit. Shiselweni Region, Eswatini. He is a businessman CA(SA) in 2002 and spent a year on secondment She had also worked for the Ministry of Agriculture and a farmer. On the Board, he is responsible for with Deloitte in Luanda, Angola. Upon returning to under the Monitoring and Evaluation Unit. She is a providing strategic direction on economic and South Africa he joined RCL Foods where he has held member of the Board of Directors of the Eswatini social development matters of the community. He various financial and commercial roles across the Royal Insurance Corporation where she sits on the is also a member of His Majesty the King’s Advisory Group. Remuneration, Investment and Audit Committees. Board. She is also a member of the Board of Directors of Kobolondo Mining Swaziland.

66 RSSC Integrated Report 2019 6 7 8 9 10 11

Mr Gerhard van der Walt – Member HRH Princess Lomajuba – Member Mr Nick Jackson – Executive Member 4 BCom (Hons), Chartered Accountant (SA). 7 BSC in Hotel, Restaurant and Tourism 10 BSc (Hons) Biochemistry Management Gerhard van der Walt is currently employed by Nick Jackson joined the RSSC as Managing Director Remgro Limited as part of the executive team. HRH Princess Lomajuba is an experienced director in February 2009 and is the only executive Board He has more than 30 years’ experience in the with vast corporate experience having served member. Mr Jackson is Chairman of SWABCHA. auditing, financial and commercial environment. He on numerous boards. She currently serves as a He also serves on several other boards including has 28 years of experience in the sugar industry board member of the Eswatini Electricity Company, NERCHA, the Eswatini Sugar Association, Country where he served in several leadership positions the Firearms Licensing Board and the Minerals Coordinating Mechanism (CCM), UNESWA and has been involved in several large capital and Management Board. She obtained her qualifications Foundation and the Federation of Swaziland expansion projects with his previous employer as at Western Kentucky University USA, and at Employers and Chamber of Commerce. Prior to the Financial Director of RCL FOODS Sugar and Vincennes University USA and was awarded a joining the RSSC, he was the CEO of the Guyana Milling Ltd . He also played a key role in the design ServSafe Certificate also from Vincennes University. Sugar Corporation in the Caribbean. and implementation of several grower financing She has previously worked as an Assistant Manager schemes. at Shoney’s Restaurant in the United States where Mr Mike Shongwe – Member she honed her skills in the hospitality industry. 11 MDP, Dip Creation and Development of SMEs Mr Zombodze Robert Magagula – 5 Mr Jameson Gule – Member Mike Shongwe is a retired career banker, now a Member 8 businessman and Eswatini Franchisee of PostNet MBA, CIS, Business Studies, Dip. Farm LLB, LLM (Insurance Law) Masters in Sports SA. He retired as Head of SBSA Community Banking Management, Cert. Finance Management Organisation Management; Post-grad. Dip Fund, a broad based black economic empowerment (International Law) Jameson Gule is a former General Manager (BBBEE) initiative after 38 years of commercial/retail Zombodze Robert Magagula is currently practicing Corporate Affairs at Tibiyo TakaNgwane and banking, including seven years as Executive Director law as partner at the law firm Mlangeni and prior to that he was Managing Director of The of Inhlanyelo ‘Seed Capital’ Fund. Mr Shongwe Company in Manzini and runs other business Swazi Observer. He has since retired from Tibiyo received extensive banking industry expertise operations. He served as board member in several TakaNgwane, where he held several managerial development from various SA academic institutions, boards and as trustee of retirement funds. He positions. He has also served as director on the namely, WBS, GIBS, SBSA Group Global Leadership was also involved with the Olympic Movement boards of The Swazi Observer, Maloma Colliery Centre (GLC), SADC states (Botswana and both locally and continental. His working life was Ltd, Tisuka TakaNgwane, Swaziland Cane Growers Zimbabwe) and abroad (London, UK and Turin, Italy). spent as a prosecutor in Government Service and Executive Committee, SESA Finance and the He has served on various boards and committees, Chief Executive Officer at Eswatini Royal Insurance Swaziland Sugar Industry Board. including at inception a Director of FINCORP, Corporation. Chairman of SEDCO and Member of the Government Mr John du Plessis – Member Task Force appointed to review and propose a 9 framework for SME financing in Eswatini. Mr Idris Alhaji Ahmed – Member BSc Agriculture, MDP 6 MIAD, MBA, BSc (Accountancy) John du Plessis is the Managing Director – RCL Idris Alhaji Ahmed is the Accountant-General of Foods Sugar and Milling (Pty) Limited. Prior to the Federation in Nigeria. He has held various joining RCL Foods Sugar and Milling (Pty) Limited executive positions in the federal Civil Service such (formerly Tsb) in 2009 he was the Managing as Director (Finance and Accounts) at the Nigeria Director of RSSC. Over the last 25 years he has held Security and Civil Defence Corps (NSCDC) Wuse managerial and executive positions in a number of Zone 5, Abuja and at the Ministry of Mines and Steel organisations within the sugar industry, including Development Wuse II, Abuja. He is a member of a Booker Tate Limited in the United Kingdom, Zambia number of financial institutions in Nigeria. He was Sugar, PLC-Zambia, Ramu Sugar Ltd in Papua New appointed RSSC Board member on 3 September Guinea and Illovo Sugar in South Africa. Mr du 2015. He has presented various papers on many Plessis is also chairman of the South African Sugar topical issues including Reform in the Nigeria Capital Millers’ Association and Booker Tate in the UK. Market, Fraud in the Banking Services Delivery and Supervisory Skills in Banking Service Delivery. He also sits on several boards.

67 RSSC Integrated Report 2019 07 OUR GOVERNANCE FRAMEWORK GOVERNANCE OVERVIEW

We review our governance at all times. Furthermore, there are The following appointments to the structures and practices policies in place concerning directors’ board were made in 2018/19: conduct. These policies are aimed HRH Princess Lomajuba and enhance them on an at ensuring that directors perform Mr Andrew Westermeyer ongoing basis in order to their fiduciary duties diligently in the implement appropriate and best interests of the company and Induction applicable recommendations stakeholders. On appointment, new directors on good governance that are Board responsibilities undergo an induction programme to suitable for the Corporation’s facilitate their understanding of the The Board functions in terms of a sugar industry, business environment circumstances. Our aim Board Charter, which records the and markets in which the company is to incorporate those Board’s continued objective of operates, as well as information on providing ethical business leadership. recommendations that are directors’ roles and responsibilities It regulates and addresses among key to delivering sustainable in terms of legislation, regulatory others, the role of the Board growth in the interest of all requirements and best practice (King as the custodian of corporate Reports on Corporate Governance). stakeholders. governance, the fiduciary duties This programme includes, inter and responsibilities of the Board alia, information and guidance on, We see corporate governance and individual directors towards the group structure and long range as the responsibility of both the company. Board and Executive Management, plan/business strategy, financial and with a culture of good governance Although there is no formal non-financial performance, reciprocal embedded throughout the evaluation of the performance expectations, familiarisation through organisation. and effectiveness of the Board, its site visits, and consultation with committees and individual directors, senior management, as well as The Board of Directors (the Board) the Board is satisfied that during corporate policies and procedures. endorses the principles of fairness, the year under review, it effectively During the year there were two responsibility, transparency and carried out its responsibilities as induction sessions – for HRH accountability articulated in the King described in the Board Charter. Reports. Princess Lomajuba and Mr Andrew The Board meets quarterly and Westermeyer. The Board applies a stakeholder- special meetings are convened inclusive approach in its decision- from time to time when considered Remuneration making processes, having necessary. To facilitate a meaningful due regard to the interests of decision-making process, Board Directors’ emoluments are contained shareholders and other stakeholders, papers are circulated timeously to the in the financial statements and the while demonstrating concern directors to allow them to thoroughly disclosure therein is considered for sustainability as a business peruse the content and raise adequate. opportunity that guides the appropriate issues. Members of the formulation of strategy. Executive Committee attend Board Board – Key focus areas in In line with the “apply or explain” meetings to ensure comprehensive FY2019 principle, where application of the reporting to directors. During the year under review, recommended King IV principles has Through monthly reports and been identified as unsuitable for the regular briefings by management on the Board executed all its Group’s circumstances, this is clearly material issues, the Board is able to scheduled activities as set out explained and where appropriate, monitor, among others, operational in the Board Charter and the other controls are put in place to and financial performance of the ensure good governance. Board of Directors’ Annual business, key risk matters and major Work Plan. The RSSC Board has a unitary company initiatives. structure, comprising 12 non- The governance practices of Following the successful commission executive directors (including RSSC are clearly set out in the of Phase I of the IGP which entailed one elected exclusively by small Company’s Annual Reports which the expansion of the Mhlume mill shareholders) and one executive are circulated to all shareholders and and the subsequent approval of director. The directors are not key stakeholders. Our website also Phase II, as well as the conclusion of regarded as independent within the alludes to our corporate governance the finance agreements, the Board definition of King 1V, as they are all practices. has, during the year under review, shareholder appointees. The Board continued to closely monitor the is, however, of the view that this Changes to the Board in FY2019 implementation of the expansion does not affect its independence, as Two non-executive directors retired/ project, the identification of critical all non-executive directors exercise resigned from the Board in 2018/19: risks and overseeing management’s HRH Princess Phumelele independent judgement in all mitigation strategies to manage the Mr D van Niekerk Board deliberations and decisions identifies risks. In addition, the Board

68 RSSC Integrated Report 2019 monitored the economic, social and Oversight continued in connection As part of our commitment to good political environment to ensure that with the two EU projects – Umbombo governance practices, the Board also: the corporation’s strategic objective Wendlovu and Mnyangombili, to Reviewed and approved the was being achieved throughout the ensure increased cane supply and Board Charter year. meeting the requirements of the Reviewed and approved expanded Mhlume factory capacity the Legal and Regulatory Challenges to the successful under the IGP. Compliance Policy achievement of this strategic Undertook annual and initiative were mainly related to The Board also established an ad hoc continuous disclosure of sugar prices, difficult ethanol markets committee to exercise oversight on directors’ interests and unfavorable exchange rate funding requirements for strategic Reviewed sub-committee movements when they occurred. projects. membership

BOARD COMMITTEES

The Board has established sub-committees to assist in the discharge of its duties and responsibilities.

AUDIT COMMITTEE

Responsibilities: Reviewing and assessing the Assisting the Board of Ensuring compliance with integrity and effectiveness Directors with the selection, and adherence to applicable of the accounting, financial, compensation, freedom legal, regulatory and financial compliance and other control and performance of the reporting standards/ systems; Company’s external auditors accounting requirements; Assisting the Board of Inculcating the independence Oversight with respect to Directors in discharging of the internal and external embedding a culture of its duties relating to the audit functions to ensure their discipline and control which safeguarding of assets and effectiveness; will reduce the opportunity the evaluation of internal Ensuring effective for fraud; and control frameworks within the communication between the Monitoring financial risks Company; internal auditors, the external and mitigation thereof by Considering the internal and auditors, the Board and management. external audit processes and management; the accounting principles and policies;

IG van der Walt (Chairman) A Westermeyer B Mkhaliphi JN Gule

REMUNERATION COMMITTEE

Responsibilities: Ensuring that the mix of fixed Reviewing the design and Overseeing the setting and and variable pay, in cash, management of remuneration administering of remuneration and other elements, meets structures, policies and at all levels in RSSC and the company’s needs and incentive schemes and to reviewed remuneration trends strategic objectives; and ensure that they motivate across the the Corporation; Obtaining reliable, up-to- sustained high performance Reviewing major changes in date information about and are linked to corporate employee benefits structures remuneration in other performance; for EXCO members and other companies and generally in Assisting the Board in senior executives; any relevant skills market, for ensuring that the Company Determining the framework the purposes of comparing remunerates executives fairly for the remuneration of EXCO remuneration levels. and responsibly; members and other Senior Executives;

Dr AT Dlamini (Chairman) J du Plessis ZR Magagula

69 RSSC Integrated Report 2019 07 OUR GOVERNANCE FRAMEWORK BOARD COMMITTEES

RISK COMMITTEE

Responsibilities: Setting risk management Making recommendations Reviewing policies and priorities and to ensure to the Board concerning procedures for management that frameworks and the levels of tolerance and of ethics, detecting fraud methodologies are appetite and monitoring risk and prevention of bribery/ implemented to increase the management within Board- corruption; possibility of anticipating approved levels of tolerance Setting risk management unpredictable risks; and appetite; priorities and ensuring Overseeing the compilation Reviewing inherent risks at that frameworks and and maintenance of a least once per year; methodologies are business continuity plan; Ensuring risk management implemented; Receiving reports from assessments on a Ensuring that adequate management on the risk continuous basis and insurance policies and covers management programme and monitoring management’s are always in place; and monitoring risk management responsiveness to findings Reviewing all Safety, Health, action plans; and recommendations; Environment, Quality and Ethics policies and procedures.

ZR Magagula (Chairman) Chief ZN Ndlangamandla MSM Shongwe

Board and sub-committee meeting attendance 2018/19

Nature of Meeting Board Audit Risk Remuneration Board Member SM AM SM AM SM AM SM AM AT Dlamini 1 4 4 - - - - 2 2 Chief ZN Ndlangamandla 4 4 - - 3 3 - - IG van der Walt 2 4 4 4 4 - - - - HRH Princess Phumelele 3 2 2 - - - - - ZR Magagula 4 4 4 2 2 1 1 2 2 ID van Niekerk 5 2 2 - - 2 2 - - MSM Shongwe 4 4 - - 3 3 - - JN Gule 4 4 3 3 - - - - NM Jackson 6 4 4 3 3 3 3 2 2 J du Plessis 4 4 - - - - 2 2 B Mkhaliphi 4 4 3 3 - - - - I Ahmed 4 2 ------HRH Princess Lomajuba 7 2 2 ------A Westermeyer 8 2 2 1 1 - - - - Dr B Wadinga 9 - 2

Legend SM: Number of scheduled meetings held 1. Board and Remuneration Committee 6. Managing Director during the period in which the director was a Chairman 7. Replaced HRH Princess Phumelele member of the Board and/or subcommittee 2. Audit Committee Chairman 8. Replaced ID van Niekerk 3. Resigned 31 October 2018 9. Alternate to I Ahmed; attended two AM: Number of scheduled meetings attended 4. Risk, Social & Ethics Committee Chairman meetings in his stead by directors as a member of the Board and / 5. Retired 14 September 2018 or subcommittee – Not applicable to alternate directors

70 RSSC Integrated Report 2019 OUR EXECUTIVE MANAGEMENT

Executive Management Management Executive Committee in accordance with agreed-upon and the IT Steering Committee) budgets and timelines, oversee Below the level of the Board, and individual members of the human development and succession key management decisions management team who assist the planning in order to develop future are made by the Managing MD in guiding and controlling the leaders for the Company, allocate overall direction of the business and human resources throughout Director (MD), who in terms monitoring business performance. the Corporation, and ensure that of the Policy on Matters Ad hoc management committees, appropriate IT systems exist to Reserved for the Board and are put in place to focus and monitor support the business operations Delegated Powers has been issues of strategic importance to and to provide useful management delegated authority on a the Corporation. The MD however information to facilitate effective remains accountable to the Board for decision-making. wide range of matters in all authority delegated to him. relation to financial, strategic, Regular management meetings, in The senior management committees particular monthly Exco meetings, operational, governance, risk and/or senior managers act, among are used to monitor the aspects and other functional issues. others, to translate and implement described above in order to address The MD has in turn delegated the Company’s strategic direction day-to-day operations-related authority to senior management in an operational plan, monitor challenges, strategic business issues, committees (which include Exco, its successful implementation and sustainability and strategic project the Tender Committee, the Risk the achievement of performance developments. OUR EXECUTIVE MANAGEMENT TEAM Our Group Executive Committee

1 2 3 4

Mr Nick Jackson – Managing Director Mr Stephen Potts – General Manager Mr Muhawu I. Maziya – General Manager 1 3 4 Bsc (Hons) Biochemistry Finance Commercial (See page 67 for full biography) BCom (Accounting), Chartered Accountant (Z) Dip. Journalism, Dip. Industrial Relations, BA Law, LLB, LLM, Advocate Stephen Potts has many years’ experience in Advocate Muhawu Maziya, a Fulbright Mr Patrick Myeni – General Manager Finance, Projects Finance, Sugar Marketing, alumnus, has served as Head of Law at the 2 Operations Business and Strategic Planning. He reports to University of Eswatini and Deputy Executive BSc, MBL, MSc Agric Mechanisation the RSSC Board on all financial matters and attends the Audit, Risk and Remuneration Director of the Federation of Swaziland Patrick Myeni joined RSSC as a Trainee in Committee meetings. He is also a director of Employers and Chamber of Commerce. 1981, was appointed Section Manager in Mananga Sugar Packers (Pty) Ltd and He has also served as director of Nedbank 1987 and moved up the ranks to General chairman of the Audit and Risk Committee, (Swaziland) Limited, Chairman of the Financial Manager Agriculture in 2007. He serves on a a director of Quality Sugars (Pty) Ltd, and a Services Regulatory Authority, Chairman of number of committees including the Eswatini member of the Audit and Risk Committee. He the National Maize Corporation and Chairman Fuel Pricing, National Adaptation Strategy and is also Chairman of the IYSIS Audit and Risk of Newera Partners Limited. At RSSC he has the Eswatini Sugar Association Council. He is Committee and a member of the IYSIS Board. also served as Group Company Secretary and also a member of the IYSIS Board. Legal Advisor before taking up his current responsibility.

71 RSSC Integrated Report 2019 07 OUR GOVERNANCE FRAMEWORK APPROACH TO GOVERNANCE

The Company manages Corporation performance at the conduct. All matters received via the significant risks affecting Annual General Meeting (AGM) line are investigated, appropriately which also offers an opportunity resolved and reported upon to the the Group and the business for shareholders to ask questions. Risk Committee. environment in which it The Corporation also undertakes operates by maintaining proactive engagement with Controls internal controls and systems institutional shareholders on a The Corporation conducts a designed for the purpose continuous basis and we employ a variety of both formal and number of reviews to determine the of providing reasonable informal engagement processes effectiveness of various elements of assurance against material to ensure alignment with the its internal controls, procedures and misstatement or loss. interests of shareholders and to systems. Reviews undertaken during enable an understanding of their the year under review concerned The internal audit function views. (For more about shareholder controls relating to: monitors the system of internal engagement, see page 44.) Information management control and reports its findings and environment recommendations to management Ethics Reliability and integrity of and the Audit Committee. The financial and operating purpose, authority and responsibility Our fundamental policy of information of the internal audit function are conducting business with honesty, Safeguarding of assets, formally defined in the Board- integrity and in accordance including fraud prevention, approved internal audit charter. with the highest legal and ethical and effective use of the The annual audit plan is based standards is central to our company’s resources on an assessment of risk areas operations. Guidance regarding identified by internal audit in liaison the ethical and behavioural No material internal control with management as well as areas standards to which the Board weaknesses were noted from these highlighted by the Audit Committee. adheres in carrying out its duties and reviews. Corrective action responsibilities in a manner that is was taken as and when control Other work undertaken by the consistent with effective corporate deficiencies or opportunities for function includes consulting governance practices, is provided by improvement in the systems were engagements and special requests the Board’s Code of Conduct. identified. Based on these reviews, and fraud prevention and awareness there is reasonable assurance that an workshops. RSSC records its pledge to promote effective system of internal controls and enforce ethical business and risk management is in place. Induction and development practices and standards throughout the Company in its approved Code Governance outlook RSSC is committed to the continuing of Ethics, its guide in day-today development of its directors to decision-making processes. All With a view to improving our support them in building on their employees are expected to comply governance processes, enhancing expertise and developing a more with the principles and ethical operational effectiveness and detailed understanding of their standards defined in the code as well ensuring process optimisation and responsibilities. Directors receive as with various other policies and improved capital allocation, the briefings on new legal developments procedures put in place in support Corporation adopted an integrated and changes in the risk and the of it. These include among others approach to governance, risk and general business environment on an policies on the declaration of conflict compliance with effect from 1 April ongoing basis. of interest, “whistle-blowing” and 2017. This integrated approach entails a consolidation of the Open dialogue is encouraged fraud prevention. governance and compliance function between individual Board members with the risk control and IMS and the MD and other members The Company does not engage in or department. of the management team to accept or condone any illegal acts enable directors to gain a better in the conduct of its business, and understanding of the Corporation operates a “whistle-blowing” line and its operations. managed by an independent firm of auditors. Shareholder engagement This line provides an impartial facility for all stakeholders to anonymously The Corporation is committed to report fraud, statutory malpractice communicating and engaging and other crimes, unsafe behaviours, with shareholders, and pursues deviations from procurement policies this interaction in line with the or any other deviation from ethical King VI principles on stakeholder management. Shareholders are provided with an update on the

72 RSSC Integrated Report 2019 ABBREVIATED FINANCIAL STATEMENTS 07 FOR THE YEAR ENDED 31 MARCH 2019

CONTENTS

Statement of responsibility by the Board of Directors...... 74

Auditors’ report...... 75 - 78

Directors’ report...... 79

Statements of financial position...... 80

Statements of profit or loss and other comprehensive income ...... 81

Statements of changes in equity...... 82

Statements of cash flows...... 83

73 RSSC Integrated Report 2019 DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2019

The Directors have pleasure in presenting their report together with the financial statements for the year ended 31 March 2019. General review of operations The Group’s principal activities are the growing and milling of sugar cane, the manufacture of sugar, and the manufacture of ethanol from molasses. The results of operations are fully disclosed in the attached financial statements. Dividends The following dividends have been declared: A first interim dividend for the year ended 31 March 2019 of 56.2 cents per share which was paid in November 2018; and A final dividend for the year ended 31 March 2019 of 96.18 cents per share which will be paid in June 2019.

Board structure Commercial The Board comprises one executive and eleven non-executive directors. M I Maziya* General Manager Commercial M Gamedze Stores Manager Directorate S Saxena Head of Distillery The directors of the Company during the period were: J Shiba Purchasing Manager M Zikalala Logistics and Marketing Manager Directors A T Dlamini (Chairman) Operations N M Jackson (Managing Director) P Myeni* General Manager - Operations J M du Plessis C Crick Head of Agriculture HRH Princess Lomajuba Vacant Head of Factories J N Gule M Gama Agricultural Manager - Production I Ahmed B Shongwe Agricultural Manager - Water Resources Z R Magagula J Tfwala Factories Manager B Mkhaliphi M Tshawuka Agricultural Manager - Services Chief Z N Ndlangamandla V Malubane Agronomy Manager M S M Shongwe I G van der Walt Finance A Westermeyer S G Potts* General Manager - Finance D V Dhliwayo Financial Manager – Business Planning & Reporting Alternates M Zwane Financial Manager – Financial Management A Adeyemi (to I Ahmed) A B Hlatshwayo Financial Manager – Tax and Projects M Ndlela (to J N Gule) I Fakudze Property Services Manager A Ngcobo (to A T Dlamini)

Human Resources Secretary and registered office Vacant* Group Human Resources Manager Secretary Registered Office B A Maziya Head of Human Resources Operations L S Masango Simunye Sugar Estate A Mdluli Employee Relations Manager P O Box 1 S Shiba Human Resources Manager - Learning Simunye and Talent Auditors Dr R Shoshore Human Resources Manager - Health and Wellness KPMG Chartered Accountants (Swaziland)

Umkhiwa House Governance, Risk and Compliance Lot 195, Kal Grant Street L Masango Head: Governance, Risk and Compliance Mbabane

Bankers Information Technology Standard Bank Swaziland Limited R Coombe Group IT Manager Nedbank (Swaziland) Limited First National Bank of Swaziland Limited Office of Strategy Management P M Dlamini Head of Strategy Transfer secretaries KPMG Advisory (Swaziland) (Proprietary) Limited Public Affairs P O Box 331 S Nyembe Group Public Affairs Manager Mbabane H100

Management structure Managing Director *Members of the Executive Committee (Exco) N M Jackson*

74 RSSC Integrated Report 2019 DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2019 Material events after year-end

No matter, which material to the financial affairs of the Company and Group, has occurred between the reporting date and the date of approval of the financial statements.

______A T Dlamini N M Jackson (Chairman) (Director)

INDEPENDENT AUDITOR’S REPORT ON THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2019

The Group auditors, KPMG, have issued an unmodified audit report on the consolidated annual financial statements for the year ended 31 March 2019 from which this information has been extracted. A copy of their audit report on the consolidated annual financial statements is available for inspection on RSSC’s website, and is incorporated in the full annual financial statements.

75 RSSC Integrated Report 2019 STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2019

GROUP

2019 2018 E’000 E’000 Assets Property, plant and equipment 1 678 118 1 468 894 Goodwill 286 481 286 481 Intangible assets 2 823 2 966 Investments in subsidiaries - - Equity accounted investees 146 181 118 776 Deferred tax assets 119 150 Total non-current assets 2 113 722 1 877 267 Inventories 171 037 149 009 Biological asset - growing cane 528 644 453 931 Biological asset - livestock 7 902 6 468 Trade and other receivables 291 459 235 376 Taxation prepaid 13 799 - Cash and cash equivalents 3 684 216 935 Total current assets 1 016 525 1 061 719

Total assets 3 130 247 2 938 986

Equity Share capital 128 639 128 639 Share premium 632 379 632 379 Preference share redemption reserve 78 104 78 104 Retained earnings 1 214 238 1 143 247 Total equity 2 053 360 1 982 369

Liabilities Deferred tax liabilities 371 824 316 581 Loans and borrowings 116 250 - Employee benefits 83 172 90 420 Total non-current liabilities 571 246 407 001 Trade and other payables 305 194 437 289 Short term employee benefits 75 110 93 566 Bank overdraft 13 298 4 728 Current portion of loans and borrowings 19 375 - Current tax liabilities - 14 033 Dividends payable 92 664 - Total current liabilities 505 641 549 616 Total liabilities 1 076 887 956 617 Total equity and liabilities 3 130 247 2 938 986

76 RSSC Integrated Report 2019 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2019

GROUP

2019 2018 E’000 E’000 Continuing Operations Revenue 3 047 455 2 961 672 Cost of sales (2 543 599) (2 314 046) Change in fair value of biological assets 76 147 (54 534)

Gross profit 580 003 593 092 Other income 66 140 104 069 Distribution expenses (7 527) (6 679) Administration expenses (396 015) (360 386) Operating profit 242 601 330 096 Finance income 24 196 53 482 Finance costs (12 620) (2 211) Net finance income 11 576 51 271 Share of profit of equity accounted associate companies (net of income tax) 28 015 20 318 Profit before taxation 282 192 401 685 Income tax expense (72 079) (97 327) Profit from continuing operations attributable to owners of the Company 210 113 304 358 Other comprehensive income (OCI) Items that will not be reclassified to profit or loss Remeasurements of defined benefit liabilities 10 607 (4 325) Related deferred tax (2 917) 1 189 Other comprehensive income, net of tax 7 690 (3 136) Total comprehensive income for the year attributable to owners of the Company 217 803 301 222 Basic and diluted earnings per share (cents) 218.1 315.9

77 RSSC Integrated Report 2019 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2019

Preference Share Share Share Redemption Retained Capital Premium Reserve Earnings Total E’000 E’000 E’000 E’000 E’000 GROUP 2019 Balance at 1 April 2018 128 639 632 379 78 104 1 143 247 1 982 369 Profit - - - 210 113 210 113 Other comprehensive income - - - 7 690 7 690 Total comprehensive income for the year - - - 217 803 217 803 Transactions with owners recorded directly in equity - Dividends - - - (146 812) (146 812) Balance at 31 March 2019 128 639 632 379 78 104 1 214 238 2 053 360

2018 Balance at 1 April 2017 128 639 632 379 78 104 1 053 987 1 893 109 Profit - - - 304 358 304 358 Other comprehensive income - - - (3 136) (3 136) Total comprehensive income for the year - - - 301 222 301 222 Transactions with owners recorded directly in equity - Dividends - - - (211 962) (211 962) Balance at 31 March 2018 128 639 632 379 78 104 1 143 247 1 982 369

78 RSSC Integrated Report 2019 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2019

GROUP

2019 2018 E’000 E’000 Cash flows from operating activities Profit before taxation 282 192 401 685 Adjusted for: Depreciation 193 590 182 215 Amortisation of intangible assets 143 144 (Increase)/ decrease in fair value of biological assets - growing cane (74 713) 53 949 (Increase)/decrease in fair value of biological assets - livestock (1 434) 585 Increase/ (decrease) in non-current employee benefits 3 359 (14 093) (Profit)/ loss on disposal of property, plant and equipment (665) 5 537 Dividend income - - Finance income (22 506) (38 109) Finance costs 12 620 2 211 Unrealised currency (gain)/ loss (348) 4 014 Share of associated company net profit (28 015) (20 318) Operating cash flows before movement in working capital 364 223 577 820 Movement in working capital Increase in inventory (22 028) (20 734) Increase in trade and other receivables (56 083) (119 469) (Decrease)/ increase in trade and other payables (132 095) 55 925 Decrease in short term employee benefits (18 456) (19 730) Cash generated from operations 135 561 473 812 Interest paid (12 620) (2 211) Taxation paid (47 554) (80 034) Net cash generated by operating activities 75 387 391 567 Cash flows from investing activities Finance income 22 506 38 109 Dividends received 610 12 632 Proceeds from sale of property, plant and equipment 676 105 Acquisition of property, plant and equipment (402 825) (315 886) Net cash (utilised in)/generated by investing activities (379 033) (265 040)

Cash flows from financing activities Proceeds from loans and borrowings 155 000 - Repayment of borrowings (19 375) (23 571) Dividends paid (54 148) (290 988) Net cash generated by/ (utilised in) financing activities 81 477 (314 559) Net decrease in cash and cash equivalents (222 169) (188 032) Cash and cash equivalents at beginning of year 212 207 404 253 Effect of exchange rate fluctuations on cash held 348 (4 014) Cash and cash equivalents at year end (9 614) 212 207

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79 RSSC Integrated Report 2019 ABBREVIATIONS AND ACRONYMS

ACP Africa, Caribbean and Pacific LTI Long-term Incentive BOM Bills of Materials MD Managing Director CDC Commonwealth Development Corporation MLSS Ministry of Labour and Social Security CMP Comprehensive Mitigation Plan MoU Memorandum of Understanding CMS Concentrated molasses stillage MSP Mananga Sugar Packers CSI Corporate Social Investment NERCHA National Emergency Response Council on HIV and Aids CXL An EU import duty on sugar OSM Office of Strategy Management DIFR Disabling Injury Frequency Rate PHC Primary Health Care EAP Employee Assistance Programme PMS Performance Management System EIA Environmental Impact Assessment Pol Polarity EIT Engineers-in-Training PPP Public Private Partnership ENA Extra Neutral Alcohol PSD Property Services Department ERM Enterprise Risk Management SACU Southern African Customs Union ERP Enterprise Resource Planning SCGA Swaziland Cane Growers Association EU European Union SEA Swaziland Environmental Authority EVP Employee Value Proposition SEC Swaziland Electricity Company FOB Free On Board SIA Sugar Industry Agreement GM General Manager SRA Swaziland Revenue Authority HCRP Human Capital Rationalisation Project SSA The Swaziland Sugar Association HR Human Resources STI Short-term Incentive IGP Integrated Growth Plan TCH Tonnes cane per hectare IR Industrial relations TSH Tonnes sucrose per hectare ISO International Sugar Organisation TCHR Tonnes cane per hour IYSIS Inyoni Yami Swaziland Irrigation Scheme TOR Terms of Reference KPI Key Performance Indicator TRP Temporary Residence Permit LAA Litres of absolute alcohol VHP Very high polarisation LDC Less Developed Country WWMP Waste Water Management Master Plan LTA Lost time available YTD Year-to-date

80 RSSC Integrated Report 2019