Tongaat Hulett - Financial Statements for the year ended 31 December 2003

Notes 1 - 10 to the Financial Statements


1.	PROPERTY, PLANT AND EQUIPMENT (Rmillion)
	Group		Total	Land	Plant and	Vehicles	Capitalised	Capital
				and	equipment	and other	leased	work in
				buildings			plant and	progress
							vehicles
	Carrying value at beginning of year		4 104	685	3 072	205	9	133
	Additions		351	7	102	19	86	137
	Disposals		(21)	(14)	(4)			(3)
	Depreciation		(223)	(9)	(178)	(32)	(4)
	Transfers			(10)	31	7		(28)
	Currency alignment		(47)	(25)	(8)	(4)	(9)	(1)
	Impairment		(2)		(2)

	Carrying value at end of year		4 162	634	3 013	195	82	238

	Comprising:
	2003
		At cost	5 485	748	3 956	423	120	238
		Less: Accumulated depreciation	1 323	114	943	228	38

			4 162	634	3 013	195	82	238

	2002
		At cost	5 287	790	3 922	397	45	133
		Less: Accumulated depreciation	1 183	105	850	192	36

			4 104	685	3 072	205	9	133

	Company
	Carrying value at beginning of year		1 889	296	1 342	129	7	115
	Additions		193	5	88	10		90
	Disposals		(19)	(14)	(2)			(3)
	Depreciation		(153)	(4)	(127)	(21)	(1)
	Transfers			(5)	36	(2)		(29)
	Impairment		(2)		(2)

	Carrying value at end of year		1 908	278	1 335	116	6	173

	Comprising:
	2003
		At cost	2 881	338	2 059	282	29	173
		Less: Accumulated depreciation	973	60	724	166	23

			1 908	278	1 335	116	6	173

	2002
		At cost	2 759	346	1 988	281	29	115
		Less: Accumulated depreciation	870	50	646	152	22

			1 889	296	1 342	129	7	115

	Plant and machinery with a book value of R46 million are encumbered as security for the secured finance lease obligations and as security for certain short-term borrowings of R14 million. The register of land and buildings is available for inspection at the company's registered office.


2.	GROWING CROPS (Rmillion)	Group		Company
		2003	2002	2003	2002
	Reconciliation of carrying value:
	Carrying value at beginning of year	168	165	100	99
	Increase due to purchases/increased area under cane	6
	Gain arising from physical growth and price changes	40	16	16	9
	Net decrease due to reduced area under cane	(27)	(2)	(22)	(8)
	Currency alignment	(8)	(11)

	Carrying value at end of year	179	168	94	100

	Area under cane (hectares)
	South Africa	13 436	14 802	13 436	14 802
	Mozambique	7 480	7 570
	Swaziland	3 811	3 754

		24 727	26 126	13 436	14 802



3.	LONG-TERM RECEIVABLE (Rmillion)		Group		Company
		2003	2002	2003	2002
	Advances to an export partnership	210	210	210	210

	The company participates in an export partnership engaged in the construction of luxury vessels in order to foster the use of aluminium plate in marine applications.


4.	GOODWILL (Rmillion)	Group
		2003	2002

	At cost	49	49

	Accumulated amortisation
	Balance at beginning of year	9	7
	Current charge	3	2

	Balance at end of year	12	9

	Carrying value at end of year	37	40

	Goodwill is amortised over 20 years.


5.	INVESTMENTS (Rmillion)	Group		Company
		2003	2002	2003	2002
	Associate:
	The carrying value of the Group's 49% interest in Açucareira de Xinavane, SARL (Mozambique) comprises:

	Unlisted shares	20	20
	Loan	74	72
	Cumulative share of post-acquisition deficits	(94)	(68)
	Balance at beginning of year	(68)	(53)
	Movement in currency translation reserve	19	21
	Loss for the year	(45)	(36)

	Book value	0	24

	Directors' valuation	0	24


	Net assets and results of associate:
	Property, plant and equipment	323	418
	Growing crops	42	42
	Current assets	99	34
	Current liabilities	(92)	(64)
	Borrowings:
	- External	(385)	(422)
	- Shareholders	(155)	(116)

	Net deficit	(168)	(108)

	Other shareholders' share of deficit	86	55

	Group share of deficits (pre and post-acquisition)	(82)	(53)


	Revenue	103	104

	Operating (loss)/earnings before depreciation	(3)	32
	Depreciation	(27)	(30)
	Foreign exchange loss	(31)	(43)

	Loss before financing costs	(61)	(41)
	Financing costs	(32)	(33)

	Loss for the year	(93)	(74)
	Other shareholders' interest	48	38

	Group share of loss	(45)	(36)

	Other investments:
	Unlisted shares at fair value	2	2
	Loans	3	3	2	2

	Book value	5	5	2	2


	Carrying value of investments	5	29	2	2

	A schedule of unlisted investments is available for inspection at the company's registered office.


6.	DERIVATIVE INSTRUMENTS (Rmillion)
	The fair value of derivative instruments at year end was:
		Group		Company
		2003	2002	2003	2002
	Forward exchange contracts - hedge accounted	(34)	(86)	10	24
	Forward exchange contracts - not hedge accounted	(1)	(2)	(1)	(2)
	Options		(12)		(12)
	Futures contracts - hedge accounted	(7)	(11)	1	(11)
	Other embedded derivatives		(24)		(24)

		(42)	(135)	10	(25)

	Summarised as:
	Derivative assets	11	51	11	39
	Derivative liabilities	(53)	(186)	(1)	(64)


		(42)	(135)	10	(25)

	The book value of other financial instruments approximates fair value with the exception of the fixed rate debt of R1 168 million (2002 - R1 096 million) which will be discharged at face value during 2004. The fair value of this fixed rate debt is R1 215 million (2002 - R1 155 million) which has been determined using a discounted cash flow calculation that uses current market interest rates charged for loans with similar terms and credit risk. Further details on derivative instruments are set out in note 30.

SUBSIDIARIES AND JOINT VENTURES (Rmillion)

Company

2003

2002

Shares at cost, less amounts written off

498

409

Indebtedness by

527

720

Indebtedness to

(106)

(490)

919

639

The Group's proportionate share of the assets, liabilities and post-acquisition reserves of joint ventures, which comprise in the main, Hulett Aluminium, is included in the consolidated financial statements as follows:

Property, plant, equipment and investments

1 987

1 998

Current assets

639

650

Less: Current liabilities

(274)

(228)

Capital employed

2 352

2 420

Less: Long-term borrowings

(470)

(564)

Post-acquisition reserves

(1 169)

(1 168)

Deferred tax, provisions and derivative instruments

(583)

(639)

Minority interests in subsidiary

(6)

(6)

Interest in joint ventures

124

The Group's proportionate share of the trading results of the joint ventures is as follows:

Revenue

1 618

1 625

(Loss)/earnings for the year

(74)

Tax

(17)

Minority interest

(1)

Total net (loss)/earnings

(51)

The Group's proportionate share of cash flows of the joint ventures is as follows:

Cash flows from operating activities

(19)

110

Net cash used in investing activities

(55)

(31)

Net movement in cash resources

(74)

The assets, liabilities and results of Triangle, which are not included in the consolidated financial statements and which have not been adjusted for inflation, are translated at the official Zimbabwe dollar exchange rate as follows:

2003

2002

2003

2002

Equity

365

393

Property, plant and equipment

216

Minority interest

Growing crops

392

334

Deferred tax

121

138

Current assets

486

986

Long-term borrowings

Current liabilities

(401)

(956)

499

580

499

580

Revenue

954

2 180

After tax earnings:

Net operating earnings

152

Surplus on revaluation of growing

crops to current fair value

293

Total net earnings

445

117

*	Property, plant and equipment have been accounted for in terms of the historical cost convention.

INVENTORIES (Rmillion)

Group

Company

2003

2002

2003

2002

Raw materials

586

576

493

479

Work in progress

111

Finished goods

775

846

697

698

Consumable stores

117

Development properties

214

256

1 769

1 887

1 251

1 246

Included in raw materials is an amount of R517 million (2002 - R424 million) that relates to the constructive obligation that has been recognised on maize procurement contracts.

SHARE CAPITAL (Rmillion)

2003

2002

Authorised:

150 000 000 ordinary shares of R1 each

150

150

Issued and fully paid:

101 467 417 (2002 - 101 351 797)

101

101

Unissued:

Under option to employees, for a period of ten years from date granted, to subscribe for 7 040 460 shares at an average price of R38,36 per share (2002 - 5 957 600 shares at R39,50 per share).

Under control of directors for the purposes of the company's share incentive scheme 3 106 282 shares (2002 - 4 177 580 shares).

Under control of directors in terms of a shareholders' resolution 38 385 841 shares (2002 - 38 513 023 shares).

Details of share options are set out in note 24.

10.

DEFERRED TAX (Rmillion)

Group

Company

2003

2002

2003

2002

Restated at beginning of year

1 006

911

401

305

Accounted for in equity

(12)

Prior years

(10)

(13)

Currency alignment

(2)

(5)

Current year (relief)/charge on:

* Earnings before exceptional items

(128)

(91)

Exceptional items

(2)

(2)

(2)

(2)

Balance at end of year

866

1 006

296

401

Comprising temporary differences relative to:

Property, plant and equipment

888

865

362

346

Growing crops

Export partnership

210

210

210

210

Current assets

Current liabilities

(112)

(103)

(95)

(89)

Tax losses

(229)

(128)

(225)

(105)

Other

866

1 006

296

401

*	Included in the current year relief is the reversal of R64 million relating to the reserves of foreign subsidiaries which will no longer be taxable on repatriation to South Africa as a result of amended tax legislation.

Annual Financial Statements

Financial Statements for the year ended 31 December 2003

Notes 1 - 10 to the Financial Statements