Plant and machinery of Mozambique and Zimbabwe subsidiaries with a book value of R787 million (2010: R311 million) are encumbered as security for the secured long-term borrowings and certain short-term borrowings of R291 million (2010: R232 million).
Land and agricultural improvements, to which Tongaat Hulett has rights in Zimbabwe, have been included in the consolidation of the Zimbabwe subsidiaries.
The register of land and buildings is available for inspection at the company’s registered office.
2.
GROWING CROPS (Rmillion)
Consolidated
Company
2011
2010
2011
2010
Carrying value at beginning of year
2 041
742
256
130
Consolidation of subsidiaries
342
Gain arising from physical growth and price changes
611
1 231
58
76
Increase due to increased area under cane
102
141
55
54
Decrease due to reduced area under cane
(8)
(8)
(6)
(4)
Currency alignment
(138)
(407)
Carrying value at end of year
2 608
2 041
363
256
The carrying value comprises:
Roots
1 179
895
221
144
Standing cane
1 429
1 146
142
112
2 608
2 041
363
256
Area under cane (hectares)
South Africa
18 859
13 910
18 859
13 910
Mozambique
24 664
22 609
Swaziland
3 838
3 767
Zimbabwe
28 494
27 753
75 855
68 039
18 859
13 910
In terms of IAS 41 Agriculture sugar cane growing crops are accounted for as biological assets and are measured and recognised at fair value. Changes in the fair value, replanting and agricultural operating costs incurred are included in profit and loss.
The fair value of roots is determined on a current amortised cost basis, which is adjusted for cost increases, and the amortisation takes place over the life of the roots (between approximately 6 and 12 years).
The fair value of standing cane is determined by the growth of the cane, the yield, sucrose content, selling prices (including specifics such as European Union exports), less costs to harvest and transport, over-the-weighbridge costs and costs into the market.
The statement of financial position reflects the following in respect of growing crops:
2011
2010
South Africa
Swaziland
Zimbabwe
Mozambique
Total
Roots
Hectares under cane
18 859
3 838
28 494
24 664
75 855
68 039
Amortised root value
(Rand per hectare)
11 718
12 261
12 993
21 915
15 540
13 148
Standing cane
Hectares for harvest
17 047
3 756
28 229
24 047
73 079
67 419
Standing cane value
(Rand per hectare)
8 356
23 032
22 865
23 057
19 552
17 000
Yield
Tons cane per hectare
54
124
98
85
85
91
Balance Sheet (Rmillion)
Roots
221
47
370
541
1 179
895
Standing cane
142
87
646
554
1 429
1 146
Total
363
134
1 016
1 095
2 608
2 041
Rmillion
Carrying value at beginning of year
2 041
Change in fair value *
662
Foreign currency translation
(138)
Other
43
Carrying value at end of year
2 608
The IAS 41 fair value change included in profit or loss for the year ended 31 March 2011 is as follows:
Rmillion
Rmillion
Roots
332
South Africa
109
Swaziland
7
Standing cane
330
Zimbabwe
283
Mozambique
263
Change in fair value *
662
Change in fair value *
662
*
This represents the change in fair value from opening balance sheet date to closing balance sheet date. The agricultural costs actually incurred in generating this increase in fair value are charged to cost of sales.
3.
LONG-TERM RECEIVABLE AND PREPAYMENT (Rmillion)
Consolidated
Company
2011
2010
2011
2010
Long-term receivable
Carrying value at beginning of year - advances to an export partnership
196
196
Settlement - export partnership
(196)
(196)
Pension fund employer surplus account allocation (refer to note 32)
216
216
216
216
Less current portion of employer surplus account allocation
(81)
(81)
Carrying value at end of year
135
135
Prepayment
Contribution to the BEE Employee Share Ownership Plan
136
136
132
132
Contribution to the BEE Management Share Ownership Plan
91
91
78
78
227
227
210
210
Less Accumulated amortisation at end of year
(114)
(72)
(106)
(67)
At beginning of year
(72)
(43)
(67)
(40)
Charge for the year
(42)
(29)
(39)
(27)
Less BEE share ownership plan consolidation shares
(113)
(155)
104
143
Carrying value at end of year
135
239
143
The prepayment relates to awards made in terms of the company’s BEE employee share ownership plans, details of which are set out in note 35.
4.
GOODWILL (Rmillion)
Consolidated
2011
2010
Carrying value at beginning of year
240
99
Consolidation of subsidiaries
8
207
Currency exchange rate changes
(18)
(66)
Carrying value at end of year
230
240
Goodwill is attributable to the Mozambique and Zimbabwe sugar operations and a Botswana and a Namibian subsidiary. Goodwill is tested 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 March 2011, the carrying value of goodwill was considered not to require impairment.
5.
INTANGIBLE ASSETS (Rmillion)
Consolidated
Company
2011
2010
2011
2010
Cost:
At beginning of year
22
17
19
12
Consolidation of subsidiaries
2
Additions
26
7
26
7
Currency alignment
(2)
At end of year
50
22
45
19
Accumulated amortisation:
At beginning of year
13
11
11
8
Consolidation of subsidiaries
1
Charge for the year
4
3
3
3
Currency alignment
(1)
At end of year
18
13
14
11
Carrying value at end of year
32
9
31
8
The carrying value comprises:
Software and information technology
28
4
27
3
Cane supply agreements
4
5
4
5
32
9
31
8
6.
INVESTMENTS (Rmillion)
Consolidated
Company
2011
2010
2011
2010
Unlisted shares at cost
6
7
Loans
1
3
2
Carrying value of investments (Directors’ valuation)
7
10
2
A schedule of unlisted investments is available for inspection at the company’s registered office.
7.
SUBSIDIARIES AND JOINT VENTURES (Rmillion)
Company
2011
2010
Shares at cost, less amounts written off
4 703
2 733
Indebtedness by
42
1 498
Indebtedness to
(828)
(535)
3 917
3 696
Consolidated
2011
2010
Tongaat Hulett’s proportionate share of the assets, liabilities and post-acquisition reserves of joint ventures, which comprise in the main, Effingham Development (33%) and Tongaat Hulett/IFA Resort Developments (50%) and which are included in the consolidated financial statements are set out below.
Property, plant and equipment
7
8
Current assets
345
283
Less: Current liabilities
(110)
(68)
Interest in joint ventures
242
223
12 months to
15 months to
31 March
31 March
2011
2010
Tongaat Hulett’s proportionate share of the trading results of the joint ventures is as follows:
Revenue
111
21
Profit before tax
54
19
Tax
(15)
(4)
Net profit after tax
39
15
Tongaat Hulett’s proportionate share of cash flows of the joint ventures is as follows:
Cash flows from operating activities
40
(4)
Net cash used in investing activities
(35)
(38)
Movement in net cash resources
5
(42)
8.
INVENTORIES (Rmillion)
Consolidated
Company
2011
2010
2011
2010
Raw materials
255
464
209
464
Work in progress
17
14
17
13
Finished goods
178
204
95
120
Consumables
502
402
115
123
Development properties
413
289
1 365
1 373
436
720
Included in raw materials is an amount of R164 million (2010: R360 million) that relates to the constructive obligation that has been recognised on maize procurement contracts.
9.
DERIVATIVE INSTRUMENTS (Rmillion)
Consolidated
Company
2011
2010
2011
2010
The fair value of derivative instruments at year end was:
Forward exchange contracts - hedge accounted
3
9
3
9
Forward exchange contracts - not hedge accounted
5
5
Futures contracts - hedge accounted
1
(3)
1
(3)
9
6
9
6
Summarised as:
Derivative assets
11
9
11
9
Derivative liabilities
(2)
(3)
(2)
(3)
9
6
9
6
Further details on derivative instruments are set out in note 25.
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.
