NOTES (11-20) TO THE FINANCIAL STATEMENTS



11.  
SHARE CAPITAL (Rmillion)   Consolidated Company
  2013  2012  2013  2012 
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 
Nil (2012: 6 000 000)  B1 ordinary  shares of R1,00 each    6    6 
Nil (2012:  10 500 000)  B2 ordinary  shares of R1,00 each    11    11 
Nil (2012: 3 200 000)  B3 ordinary  shares of R1,00 each    3    3 
10 redeemable preference shares of R1,00 each         
  180  200  180  200 
Issued and fully paid:        
108 647 700 (2012:  105 143 181) ordinary  shares of R1,00 each  109  105  109  105 
25 104 976 A preferred ordinary shares of R1,00 each  25  25  25  25 
Nil (2012: 5 422 829)  B1 ordinary  shares of R1,00 each    6    6 
Nil (2012: 3 296 657)  B2 ordinary  shares of R1,00 each    3    3 
Nil (2012: 1 021 422)  B3 ordinary  shares of R1,00 each    1    1 
  134  140  134  140 
 
  Under control of the directors:
  • for the purposes of the employee share option schemes in accordance with previous shareholder authority: 10 604 926 shares (2012: 10 086 316 shares).
  • in terms of a shareholders’ resolution: 5 257 159 shares (2012: 5 250 709 shares).
   
  The employee (ESOP) and management (MSOP) share ownership plans, which were created in 2007 through the issue of unlisted B ordinary shares, vested in the trusts during the current year, being the fifth anniversary of the issue and allotment of the B ordinary shares. Tongaat Hulett repurchased from the ESOP and MSOP Trusts a total of 6 383 283 B ordinary shares, as determined in accordance with the repurchase formulae set out in the 2007 Circular to Shareholders, at an acquisition price of one cent per share, for a total amount of R63 833. The repurchased shares were cancelled immediately. The 3 357 625 remaining shares were converted into Tongaat Hulett ordinary shares of R1,00 each, ranking pari passu with the existing ordinary shares and listed on the Johannesburg Stock Exchange Limited on 25 September 2012.
   
 
  Shares in issue Share buyback Remaining shares
B1 ordinary shares 5 422 829 4 293 825 1 129 004
B2 ordinary shares 3 296 657 1 990 618 1 306 039
B3 ordinary shares 1 021 422 98 840 922 582
  9 740 908 6 383 283 3 357 625
   
  Details of the employee share incentive schemes are set out in note 33. Following the unbundling of Hulamin in 2007, the options granted to employees in terms of the original employee share option schemes, 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 note 33. At 31 March 2013, employees have an option to subscribe for 191 900 shares, at an average price of R33,86 per share (2012: 338 794 shares at an average price of R32,96 per share) in respect of the Tongaat Hulett component, and the equivalent of approximately 68 000 shares in respect of the Hulamin component (2012: 90 000 shares).

The original share option schemes were 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
  2013  2012 
     
25 104 976 A preferred ordinary shares of R1,00 each 839  839 
1 313 393 (2012: nil) ordinary shares of R1,00 each 34   
Nil (2012: 5 422 829) B1 ordinary shares of R1,00 each   136 
Nil (2012: 3 296 657) B2 ordinary shares of R1,00 each   46 
Nil (2012: 1 021 422) B3 ordinary shares of R1,00 each   45 
  873  1 066 
     
Less amount attributable to A preferred ordinary shareholders (126) (111)
Less amortisation of IFRS 2 charge on shares relating to the employee share ownership plans (notes 3 and 34)   (156)
  747  799 
   
   
13.
DEFERRED TAX  (Rmillion) Consolidated  Company 
  2013  2012  2013  2012 
         
Balance at beginning of year  1 663  1 365  462  447 
Currency alignment  194  94     
Accounted for in equity  (1) 1  (1) 1 
Current year Income Statement charge / (relief) on:        
Earnings before capital profits  88  189  28  15 
Capital profits  3  3  3  3 
Rate change adjustment  5  16     
Prior year  (1) (5)   (4)
Balance at end of year  1 951  1 663  492  462 
         
Comprising temporary differences relative to:         
         
Property, plant and equipment  1 345  1 264  517  483 
Growing crops  842  598  281  172 
Long-term receivables and pension fund asset  144  132  144  132 
Current assets  151  126  8  8 
Current liabilities  (124) (95) (38) (32)
Tax losses  (279) (269) (260) (161)
Other  (128) (93) (160) (140)
  1 951  1 663  492  462 
   
  A deferred tax asset has been raised in respect of the tax losses of foreign subsidiaries only where these losses may be utilised in the short term or will not expire in terms of applicable tax legislation.
   
   
14.
BORROWINGS (Rmillion)   Consolidated Company
    2013 2012 2013 2012
           
Long-term   3 481 1 732 3 202 1 419
Short-term and bank overdraft   2 078 3 264 1 907 2 970
Long-term borrowings comprise:   5 559 4 996 5 109 4 389
  Effective
interest
rate (%)		        
Secured:          
SA Rand
Repayable 2020/2021		 8,20 308 339    
Finance leases (refer to note 28) 7,00 3 2 3 2
Foreign          
Finance leases (refer to note 28)     5    
    311 346 3 2
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
Repayable 2014/15 3 month
JIBAR + 1,35		 668 736 668 736
Repayable 2017/18 3 month
JIBAR + 2,33		 500   500  
Repayable 2016/17 3 month
JIBAR + 2,17		 250   250  
Repayable 2015/16 3 month
JIBAR + 2,20		 600   600  
Repayable 2014/15 3 month
JIBAR + 2,50		 500   500  
Foreign          
Indefinite nil 5 5    
    3 273 1491 3 268 1 486
Long-term borrowings   3 584 1 837 3 271 1 488
Less current portion included in short-term borrowings   103 105 69 69
    3 481 1 732 3 202 1 419
   
  Plant and machinery of Mozambique and Zimbabwe subsidiaries with a book value of R748 million (2012: R957 million) are encumbered as security for the secured long-term borrowings and certain short-term borrowings of R92 million (2012: R132 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 R43 million (2012: R148 million) and in Zimbabwe equivalent to R79 million (2012: R108 million).


Summary of future loan repayments by financial year:
   
 
Year 2014/15 2015/16 2016/17 2017/18 2018/19 Thereafter
Rmillion 1 138 640 694 547 401 61
   
   
15. NON-RECOURSE EQUITY-SETTLED BEE BORROWINGS (Rmillion)
 
    Consolidated  
    2013  2012     
           
The non-recourse equity-settled BEE borrowings comprise:          
  Effective
interest
rate (%)
        
4 122 000 Class A redeemable preference shares 9,335 nacs 98 167    
4 122 000 Class B redeemable preference shares 11,960 nacs 605 551    
Accrued dividends   20 20    
    723 738    
Less: BEE cash resources   1 1    
    722 737    
   
  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 shares are redeemable by no later than 30 June 2014 and have a fixed coupon payable semi-annually on 2 January and 1 July each year. The total debt due will be settled by the SPVs utilising preferred ordinary dividends received from Tongaat Hulett and by the shares that they hold in Tongaat Hulett and will have no further impact on the cash flows of Tongaat Hulett. These SPVs will continue to be consolidated while Tongaat Hulett carries a residual risk in these entities.
   
   
16.
PROVISIONS (Rmillion) Consolidated Company
  2013 2012 2013 2012
         
Post-retirement medical aid obligations 396 357 298 274
Retirement gratuity obligations 136 116 83 77
Other 122 101    
  654 574 381 351
   
  Further details on provisions are set out in note 31.
   
   
17.
TRADE AND OTHER PAYABLES (Rmillion)     Consolidated Company
  2013 2012 2013 2012
         
Accounts payable 2 356 1 836 1 137 951
Maize obligation - interest bearing 216 161 216 161
  2 572 1 997 1 353 1 112
  The directors consider that the carrying amount of trade and other payables approximates their fair value.
   
18.
OPERATING PROFIT (Rmillion) Consolidated Company
  2013  2012  2013  2012 
         
Revenue  14 373  12 081  7 643  7 006 
Cost of sales  (11 223) (8 885) (6 788) (6 030)
Administration expenses  (1 508) (1 664) (510) (449)
Marketing and selling expenses  (287) (259) (201) (180)
Other income (including growing crops fair value change *) 790  648  589  325 
Profit from Tongaat Hulett operations  2 145  1 921  733  672 
Bulk sales/capital profit on land (refer to note 19) 16  3  53  104 
Other capital items (refer to note 19) (1)      
BEE IFRS 2 charge and transaction costs  (44) (48) (41) (45)
Valuation adjustments  3  2     
Operating profit after corporate transactions  2 119  1 878  745  731 
Disclosable items included in operating profit:         
Income from subsidiaries:        
Dividends received      97  81 
Management fees      78  51 
Amortisation of intangible assets
 9  5  9  5 
Depreciation charged:        
Buildings  59  41  7  6 
Plant and equipment  272  219  139  135 
Vehicles and other  141  106  26  23 
Growing crops: change in fair value *  468  465  265  192 
Profit/(loss) on disposal of plant and equipment    (2) 1  (1)
Management fees paid to subsidiaries        
Management fees paid to third parties  4  4  1  1 
Technical fees paid  13  12  13  12 
Operating lease charges (property, plant and vehicles) 48  43  43  38 
Share-based payments:        
IFRS 2 charge on share options, SARS, LTIP and DBP  57  47  47  32 
BEE IFRS 2 charge  37  42  35  39 
Auditors’ remuneration:        
Fees  13  11  5  5 
Other services  1  2  1  1 
Net (losses)/gains on:        
Fair value hedges, losses on the hedged item  (7) (40) (7) (40)
Fair value hedges, gains on the hedging instrument  7  40  7  40 
Valuation adjustments on financial instruments and other items:        
Translation of foreign currency:        
- foreign cash holdings  3  3     
- other  7  (15) (2) (1)
Other financial instruments  9  (1) 9  (5)
   
  * 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
  2013 2012 2013 2012
         
Comprises:        
Surplus on sale of land 16 3 53 104
Other (1)      
Capital profits before tax 15 3 53 104
Tax (refer to note 21) (3) (3) (3) (3)
Capital profits after tax 12   50 101
   
   
20.
NET FINANCING (COSTS)/INCOME (Rmillion) Consolidated Company
  2013 2012 2013 2012
         
Net financing costs comprise:         
Interest paid - external  (596) (528) (416) (332)
Interest capitalised   1     
Interest paid - subsidiaries      (41) (42)
Financing costs   (596) (527) (457) (374)
Interest received - external  36  20  4  5 
Interest received - subsidiaries      2  2 
Finance income  36  20  6  7 
Net financing costs  (560) (507) (451) (367)
   


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