Annual Financial Statements


Financial Statements for the year ended 31 March 2014


NOTES (11-20) TO THE FINANCIAL STATEMENTS

11.  SHARE CAPITAL (Rmillion) Consolidated  Company 
      2014  2013  2014  2013 
                 
   Authorised:             
   150 000 000 ordinary shares of R1,00 each  150  150  150  150 
   30 000 000 A preferred ordinary shares of R1,00 each  30  30  30  30 
   10 redeemable preference shares of R1,00 each             
      180  180  180  180 
                 
   Issued and fully paid:             
   109 967 030 (2013: 108 647 700) ordinary shares of R1,00 each  110  109  110  109 
   25 104 976 A preferred ordinary shares of R1,00 each  25  25  25  25 
    135  134  135  134 
                   
  Under control of the directors: 
for the purposes of the employee share option schemes in accordance with previous shareholder authority: 10 934 183 shares
(2013: 10 604 926 shares).
in terms of a shareholders' resolution: 5 432 385 shares (2013: 5 257 159 shares).

Details of the employee share incentive schemes are set out in the Remuneration Report. Following the unbundling of Hulamin in 2007, the options granted to employees in terms of the original employee share option scheme which had not been exercised at the unbundling date were converted into two components, a Tongaat Hulett Limited component and a Hulamin Limited component, as described in the Remuneration Report. At 31 March 2014 employees have an option to subscribe for 16 200 shares at a price of R35,90 per share (2013: 191 900 shares at an average price of R33,86 per share) in respect of the Tongaat Hulett component and the equivalent of approximately 46 000 shares in respect of the Hulamin component (2013: 68 000 shares). 

The original share option scheme was replaced in 2005 with a new share incentive scheme comprising the Share Appreciation Right Scheme 2005, the Long Term Incentive Plan 2005 and the Deferred Bonus Plan 2005. In 2010, shareholders approved that retention awards be included within the Long Term Incentive Plan 2005.

         
12.  BEE HELD CONSOLIDATION SHARES (Rmillion) Consolidated      
      2014  2013       
   25 104 976 A preferred ordinary shares of R1,00 each  839  839       
   1 080 938 (2013: 1 313 393) ordinary shares of R1,00 each  18  34       
      857  873       
                 
   Less amount attributable to A preferred ordinary shareholders  (157) (126)      
      700  747       
                   
                   
13.  DEFERRED TAX (Rmillion) Consolidated Company 
      2014  2013  2014  2013 
       Restated    Restated 
   Balance at beginning of year  1 930  1 651  463  441 
                 
   Currency alignment  179  194       
                 
   Current year Other Comprehensive Income (relief) / charge on:             
   Actuarial loss  (5) (12) (3) (13)
   Hedge reserve  (1) (1)
                 
   Current year Income Statement charge / (relief) on:             
   Earnings before capital profits  16  91  33  33 
   Capital profits  13  13 
   Rate change adjustment  (4)      
   Prior year     (1)      
   Balance at end of year  2 131  1 930  508  463 
                 
   Comprising temporary differences relative to :             
                 
   Property, plant and equipment  1 477  1 345  527  517 
   Growing crops  925  842  361  281 
   Long-term receivable  154  144  154  144 
   Current assets  162  151 
   Current liabilities  (104) (124) (40) (38)
   Tax losses  (370) (279) (264) (260)
   Other  (113) (149) (239) (189)
      2 131  1 930  508  463 
                   
         
14.  BORROWINGS (Rmillion)    Consolidated  Company 
         2014  2013  2014  2013 
   Long-term     4 094  3 481  3 852  3 202 
   Short-term and bank overdraft     1 293  2 078  1 006  1 907 
         5 387  5 559  4 858  5 109 
   Long-term borrowings comprise:                
      Effective            
    interest         
      rate             
   Secured:                
   SA Rand                
   Repayable 2020/21  9,00%  274  308       
   Finance leases (refer to note 28) 7,50% 
         277  311 
   Unsecured:                
   SA Rand                
   Bond repayable 2018/19  3 month
JIBAR + 2,60% 
350  350  350  350 
   Bond repayable 2016/17  3 month
JIBAR + 2,43% 
400  400  400  400 
   Bond repayable 2018/19  3 month
JIBAR + 2,40% 
170     170    
   Repayable 2017/18  3 month
JIBAR + 2,33% 
500  500  500  500 
   Repayable 2017/18  3 month
JIBAR + 2,70% 
180     180    
   Repayable 2016/17  3 month
JIBAR + 2,17% 
250  250  250  250 
   Repayable 2015/16  3 month
JIBAR + 1,35% 
600  668  600  668 
   Repayable 2015/16  3 month
JIBAR + 2,20% 
600  600  600  600 
   Repayable 2015/16  3 month
JIBAR + 2,50% 
500  500  500  500 
   Repayable 2015/16  3 month
JIBAR + 2,10% 
300     300    
                
   Foreign            
   Indefinite  nil       
     3 854  3 273  3 850  3 268 
                
   Long-term borrowings 4 131  3 584  3 853  3 271 
   Less current portion included in short-term borrowings  37  103  69 
     4 094  3 481  3 852  3 202 
           
  Plant and machinery of Mozambique subsidiaries with a book value of R495 million (2013: R748 million) are encumbered as security for the secured long-term borrowings and certain short-term borrowings of R101 million (2013: R92 million). 

Short-term borrowings comprise call loans and bank overdrafts with various South African financial institutions at interest rates linked to the prime overdraft rate as well as short-term borrowings in Mozambique equivalent to R39 million (2013: R43 million) and in Zimbabwe equivalent to R203 million (2013: R79 million).

Summary of future loan repayments by financial year:
           
  Year 2014/15  2015/16  2016/17  2017/18  2018/19  2019/20  Thereafter 
  Rmillion 37  2 041  694  728  573  54 
                 
  In terms of the company's memorandum of incorporation the borrowing powers exercisable by the directors is limited to R18 285 million.
 
           
15.  NON-RECOURSE EQUITY-SETTLED BEE BORROWINGS (Rmillion)            
         Consolidated       
         2014  2013       
   The non-recourse equity-settled BEE borrowings comprise:                
                    
      Effective 
interest 
rate 
           
   4 122 000 Class A redeemable preference shares  9,335% nacs  24  98       
   4 122 000 Class B redeemable preference shares  11,960% nacs  649  605       
                    
   Accrued dividends     19  20       
         692  723       
                    
   Less BEE cash resources          
         691  722       
                    
   These borrowings relate to Tongaat Hulett's black economic empowerment partners, yoMoba SPV (Pty) Limited and
TH Infrastructure SPV (Pty) Limited, which have been fully consolidated in terms of IFRS. yoMoba SPV (Pty) Limited owns 11 157 767 A preferred ordinary shares and TH Infrastructure SPV (Pty) Limited owns 13 947 209 A preferred ordinary shares in Tongaat Hulett. 

The preference share structure runs until mid-2014 and has a fixed coupon payable semi-annually on 2 January and 1 July each year. The debt due will be settled by the SPVs utilising dividends received from Tongaat Hulett and ultimately by the shares that they hold in Tongaat Hulett. These SPVs will continue to be consolidated while Tongaat Hulett carries a residual risk in these entities. 
 
                   
16.  PROVISIONS (Rmillion) Consolidated  Company 
    2014  2013  2014  2013 
         Restated    Restated 
   Post-retirement medical aid obligations  487  448  396  383 
   Retirement gratuity obligations  176  152  112  102 
   Other  33  122       
      696  722  508  485 
                 
   Further details on provisions are set out in note 31
 
           
                 
17.  TRADE AND OTHER PAYABLES (Rmillion) Consolidated  Company 
      2014  2013  2014  2013 
   Accounts payable  2 407  2 356  1 147  1 137 
   Maize obligation - interest bearing  334  216  334  216 
      2 741  2 572  1 481  1 353 
                 
   The directors consider that the carrying amount of trade and other payables approximates their fair value.   
 
                    
18.  OPERATING PROFIT (Rmillion) Consolidated  Company 
    2014  2013  2014  2013 
         Restated     Restated 
   Revenue  15 716  14 373  8 393  7 643 
   Cost of sales - cane and maize purchases    (4 423) (3 700) (3 545) (2 831)
   Cost of sales - other (goods, services, salaries and wages) (7 085) (7 511) (3 558) (3 940)
   Administration and other expenses  (1 678) (1 505) (718) (510)
   Marketing and selling expenses  (334) (287) (247) (201)
   Other net income (including growing crops fair value change *) 133  790  504  589 
   Capital profits (refer to note 19) 66  15  135  53 
   BEE IFRS 2 charge and transaction costs  (21) (44) (20) (41)
   Operating profit  2 374  2 131  944  762 
                 
   Disclosable items included in operating profit:             
                 
   Income from subsidiaries:             
   Dividends received        148  97 
   Management fees        91  78 
                 
   Amortisation of intangible assets  15  15 
   Auditors' remuneration:             
   Fees  14  13 
   Other services 
   Depreciation charged:             
   Buildings  80  59 
   Plant and equipment  321  272  168  139 
   Vehicles and other  170  141  31  26 
   Growing crops: (loss)/gain from change in fair value *  (153) 468  178  265 
   Management fees paid to subsidiaries       
   Management fees paid to third parties       
   Operating lease charges (property, plant and vehicles) 71  48  65  43 
   Profit on disposal of plant and equipment       
   Technical fees paid  13  13  13  13 
   Translation of foreign currencies  37  10  (2)
   Share-based payments:             
   IFRS 2 charge on share options, SARS, LTIP and DBP  67  57  57  47 
   BEE IFRS 2 charge  16  37  15  35 
   Valuation adjustments:             
   Financial instruments 
   Fair value hedges:             
   Net gains/(losses) on the hedged item  47  (7) 47  (7)
   Net gains/(losses) on the hedging instrument  (47) (47)
                 
  
This represents the gross change in fair value. The agricultural costs actually incurred in generating this increase in fair value are charged to cost of sales.
    
                 
19.  CAPITAL PROFITS (Rmillion) Consolidated  Company 
    2014  2013  2014  2013 
    Restated    Restated   
   Comprises:             
   Surplus on sale of land and buildings  74  21  142  58 
   Costs thereon  (8) (5) (7) (5)
   Other surpluses     (1)      
   Capital profits before tax  66  15  135  53 
                 
   Tax (refer to note 21) (18) (3) (13) (3)
   Capital profits after tax  48  12  122  50 
                 
                 
20.  NET FINANCING (COSTS)/INCOME (Rmillion) Consolidated  Company 
    2014 2013 2014 2013
  Net financing costs comprise:             
   Interest paid - external  (646) (596) (469) (416)
   Interest paid - subsidiaries        (76) (41)
   Financing costs  (646) (596) (545) (457)
                 
   Interest received - external  37  36 
   Interest received - subsidiaries       
   Finance income  37  36 
                 
   Net financing costs  (609) (560) (541) (451)