Annual Financial Statements


Financial Statements for the year ended 31 December 2006


Notes to the Annual Financial Statments (1 - 10)


1 . PROPERTY, PLANT AND EQUIPMENT (Rmillion)            
    Total Land Plant and Vehicles Capitalised Capital
        and equipment and other leased work in
      buildings     plant and progress
  Group         vehicles  
  Carrying value at beginning of year 4 093 607 3 017 163 70 236
  Additions 482 55 196 31 1 199
  Disposals (33) (26) (3) (4)    
  Depreciation (272) (12) (235) (23) (2)  
  Transfers   8 83 15   (106)
  Carrying value at end of year 4 270 632 3 058 182 69 329
  Comprising:            
  2006            
    At cost 6 134 773 4 494 426 112 329
    Accumulated depreciation 1 864 141 1 436 244 43  
    4 270 632 3 058 182 69 329
  2005            
    At cost 5 781 736 4 288 410 111 236
    Accumulated depreciation 1 688 129 1 271 247 41  
    4 093 607 3 017 163 70 236
  Company            
  Carrying value at beginning of year 1 879 264 1 374 93 4 144
  Additions 317 47 149 15 1 105
  Disposals (28) (25) (3)      
  Depreciation (176) (5) (157) (14)    
  Transfers   3 64 15   (82)
  Carrying value at end of year 1 992 284 1 427 109 5 167
  Comprising:            
  2006            
    At cost 3 267 353 2 438 279 30 167
    Accumulated depreciation 1 275 69 1 011 170 25  
    1 992 284 1 427 109 5 167
  2005            
    At cost 3 065 328 2 298 266 29 144
    Accumulated depreciation 1 186 64 924 173 25  
    1 879 264 1 374 93 4 144
  Plant and machinery with a book value of R88 million (2005 – R89 million) are encumbered as security for the secured finance lease obligations and as security for certain short-term borrowings of R50 million (2005 – R2 million).
 
The register of land and buildings is available for inspection at the company's registered office.
 
       
2. GROWING CROPS (Rmillion) Group Company
    2006 2005 2006 2005
           
  Carrying value at beginning of year 182 185 77 76
  Gain arising from physical growth and price changes 29 10 13 6
  Increase due to increased area under cane 4      
  Decrease due to reduced area under cane (3) (5) (3) (5)
  Currency alignment   (8)    
  Carrying value at end of year 212 182 87 77
  The carrying value comprises:        
    Roots 116 100 46 42
    Standing cane 96 82 41 35
      212 182 87 77
             
    Area under cane (hectares)        
    South Africa 9 639 10 162 9 639 10 162
    Mozambique 7 444 7 200    
    Swaziland 3 744 3 726    
      20 827 21 088 9 639 10 162
             
       
3.  LONG-TERM RECEIVABLE (Rmillion) Group Company
      2006 2005 2006 2005
  Advances to an export partnership        
    Fair value at beginning of year 203 210 203 210
    Fair value adjustment due to reduction in tax rate   (7)   (7)
    Fair value at end of year 203 203 203 203
    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    
    2006 2005    
  Carrying value at beginning at year 21 23    
  Currency exchange rate changes   (2)    
  Carrying value at end of year 21 21    
  Goodwill is attributable to the Mozambique sugar operations. The Group tests goodwill annually for impairment. The recoverable amount of goodwill was determined from the "value in use" discounted cash flow model. The value in use cash flow projections, which cover a period of twenty years, are based on the most recent budgets and forecasts approved by management and the extrapolation of cash flows which incorporate growth rates consistent with the average long term growth trends of the market. As at 31 December 2006, the carrying value of goodwill was considered not to require impairment.
 
       
5. INTANGIBLE ASSETS (Rmillion) Group Company
      2006 2005 2006 2005
  Software at cost:        
    At beginning of year 23 19 7 7
    Additions 3 4    
    At end of year 26 23 7 7
           
  Accumulated amortisation:        
    At beginning of year 11 10 7 7
    Charge for the year 1 1    
    At end of year 12 11 7 7
  Carrying value at end of year 14 12    
           
       
6. INVESTMENTS (Rmillion) Group Company
          2006 2005 2006 2005
  Associate:        
    The carrying value of the Group's 49% interest in        
    Açucareira de Xinavane, SARL (Mozambique) comprises:        
      Unlisted shares 128 128    
      Loan 54 30    
      Cumulative share of post-acquisition deficits (121) (117)    
          Balance at beginning of year (117) (95)    
          Movement in currency translation reserve   3    
          Loss for the year (4) (25)    
           
  Book value 61 41    
  Directors' valuation 61 41    
           
  Summarised balance sheet:        
    Property, plant and equipment 306 309    
    Growing crops 70 53    
    Current assets 117 105    
    Current liabilities (68) (74)    
    Borrowings:        
      External (280) (276)    
      Shareholders (192) (158)    
  Net deficit (47) (41)    
  Other shareholders' share of deficit 24 21    
  Group share of deficits (pre and post-acquisition) (23) (20)    
           
  Summarised income statement:        
    Revenue 223 167    
    Profit before depreciation 42 11    
    Depreciation (16) (16)    
    Foreign exchange loss (5) (19)    
    Profit/(loss) before financing costs 21 (24)    
    Financing costs (29) (28)    
    Loss after financing costs (8) (52)    
    Other shareholders' interest 4 27    
    Group share of loss (4) (25)    
           
  Other investments:        
    Unlisted shares at fair value 256 13    
    Loans 3 3 2 3
    Book value 259 16 2 3
  Carrying value of investments 320 57 2 3
  A schedule of unlisted investments is available for inspection at the company's registered office.
 
     
7. SUBSIDIARIES AND JOINT VENTURES (Rmillion) Company
    2006 2005
  Shares at cost, less amounts written off 853 563
  Indebtedness by 1 107 826
  Indebtedness to (126) (301)
    1 834 1 088
       
    Group
              2006 2005
  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 1 982 1 950
  Current assets 1 497 1 012
  Less: Current liabilities (652) (372)
  Capital employed 2 827 2 590
  Less: Borrowings (94) (411)
            Post-acquisition reserves (1 216) (1 253)
            Deferred tax and provisions (499) (511)
            Minority interest in subsidiary (19) (16)
  Interest in joint ventures 999 399
  The Group's proportionate share of the trading results of the joint ventures is as follows:    
     Revenue 2 848 2 241
     Profit before tax 157 167
     Tax (47) (27)
     Minority interest (4) (4)
     Net profit 106 136
  The Group's proportionate share of cash flows of the joint ventures is as follows:    
     Cash flows from operating activities 53 192
     Net cash used in investing activities 90 (72)
  Net movement in cash resources 143 120
  The original investment in Triangle Sugar is retained at a nominal value with the subsequent investment held at cost. Its unaudited assets, liabilities and results, 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:
    2006 2005     2006 2005
  Equity 668 115   ≠  Property, plant and equipment 37 14
  Minority interest 15 6      Growing crops 388 97
  Deferred tax 123 31   + Investment in Hippo Valley 254  
  Long-term borrowings 4 3      Current assets 484 118
             Current liabilities (353) (74)
    810 155     810 155
 
 
Revenue 1 547 728   Net profit 636 359
 
Property, plant and equipment have been accounted for in terms of the historical cost convention.
+ Not consolidated.
 
       
8. INVENTORIES (Rmillion) Group Company
    2006 2005 2006 2005
  Raw materials 323 294 132 147
  Work in progress 180 107 10 9
  Finished goods 785 736 692 655
  Consumable stores 146 117 77 63
  Development properties 161 202    
    1 595 1 456 911 874
  Included in raw materials is an amount of R127 million (2005 – R106 million) that relates to the constructive obligation that has been recognised on maize procurement contracts.
 
       
9.  DERIVATIVE INSTRUMENTS (Rmillion)    
    Group Company
    2006 2005 2006 2005
  The fair value of derivative instruments at year end was:        
           
  Forward exchange contracts – hedge accounted 9 (1) 4 4
  Forward exchange contracts – not hedge accounted 7      
  Futures contracts – hedge accounted 10 25 (3) 18
  Futures contracts – not hedge accounted (9)      
  Other embedded derivatives   (1)    
    17 23 1 22
  Summarised as:        
     Derivative assets 33 41 6 31
     Derivative liabilities (16) (18) (5) (9)
    17 23 1 22
  Further details on derivative instruments are set out in note 23.
 
   
10. CASH AND CASH EQUIVALENTS
  Cash and cash equivalents include cash on hand, cash on deposit and cash advanced, repayable on demand and excludes bank overdrafts.