| | | GROUP | COMPANY | |
| | | | 8 months | | 8 months | |
| | | Year ended | ended | Year ended | ended | |
| | | 31 December | 31 December | 31 December | 31 December | |
| | | 2004 | 2003 | 2004 | 2003 | |
| | | | R'000 | R'000 | R'000 | R'000 | |
| 31. | Cash flow statement | | | | | |
| 31.1 | Cash generated from/(utilised by) operations | | | | | |
| | Operating profit/(loss) before taxation | 319 103 | 8 105 | (3 386) | 22 183 | |
| | Adjusted for: | | | | | |
| | Depreciation | 35 706 | 9 322 | - | 129 | |
| | Release of negative goodwill | (190 039) | - | - | - | |
| | (Profit)/loss on disposal of property, plant and equipment | (3 104) | (2 250) | 200 | (396) | |
| | (Profit)/loss on disposal of subsidiaries | (3 111) | 148 | - | - | |
| | Profit on sale of investments | - | (757) | - | - | |
| | (Decrease)/increase in retirement benefit obligation | (1 925) | 1 296 | (434) | (11 612) | |
| | AC133 fair value adjustment to long term debtors | - | 2 739 | - | - | |
| | Increase in fair value of biological assets | (3 785) | (1 222) | - | - | |
| | Foreign exchange differences | 99 | (9 045) | - | (9 843) | |
| | Reversal of negative provision for impairment of investment in subsidiaries on sale | - | - | 9 655 | - | |
| | Adjustments to fixed assets | - | (84) | - | - | |
| | Impairment of investments | - | 455 | - | 26 | |
| | Interest received | (8 838) | (8 982) | (15 828) | (20 958) | |
| | Interest paid | 19 435 | 22 618 | 8 068 | 19 269 | |
| | Dividends received | - | (244) | - | - | |
| | Income from joint ventures | (1 247) | - | - | - | |
| | Share of result before tax of associate | - | 1 964 | - | - | |
| | Operating profit/(loss) before changes in working capital | 162 294 | 24 063 | (1 725) | (1 202) | |
| | Movements in working capital: | | | | | |
| | (Increase)/decrease in inventory and biological assets | (36 209) | 38 845 | - | - | |
| | Decrease/(increase) in accounts receivable | 11 999 | (7 170) | 62 | 3 236 | |
| | Decrease in accounts payable and provisions | (23 951) | (37 495) | (1 479) | (5 932) | |
| | Cash generated from/(utilised by) operations | 114 133 | 18 243 | (3 142) | (3 898) | |
| 31.2 | Taxation paid is reconciled as follows: | | | | | |
| | Amounts unpaid at the beginning of the period | (5 259) | (1 458) | (4 497) | - | |
| | Subsidiaries acquired | (6 951) | - | - | - | |
| | Disposal of subsidiaries | 56 | - | - | - | |
| | Charged to the income statement | (3 050) | (9) | (1 828) | (1 497) | |
| | Amounts reallocated from creditors | - | (3 991) | - | (3 000) | |
| | Amounts unpaid at the end of the period | 1 644 | 5 259 | 4 416 | 4 497 | |
| | Taxation paid | (13 560) | (199) | (1 909) | - | |
| | | | |
| | | GROUP | |
| | | | 8 months | |
| | | Year ended | ended | |
| | | 31 December | 31 December | |
| | | 2004 | 2003 | |
| | | | R'000 | R'000 | |
| 31. | Cash flow statement | | | |
| 31.3 | Acquisition of subsidiaries | | | |
| | Particulars of net assets acquired at date of acquisition: | | | |
| | Property, plant and equipment | 321 777 | - | |
| | Investment property | 6 049 | - | |
| | Investments in joint ventures | 10 796 | - | |
| | Receivables and loans | 26 810 | - | |
| | Inventory | 264 958 | - | |
| | Accounts receivable | 391 376 | - | |
| | Deferred taxation assets | 147 384 | - | |
| | Short term loans receivable | 3 385 | - | |
| | SARS - income tax receivable | 207 | - | |
| | Cash and cash equivalents | 30 098 | - | |
| | Minorities | (6 811) | - | |
| | Interest-bearing borrowings | (134 284) | - | |
| | Deferred taxation liabilities | (5 693) | - | |
| | Retirement benefit obligations | (32 652) | - | |
| | Accounts payable | (307 607) | - | |
| | Provisions | (23 169) | - | |
| | SARS - income tax payable | (7 158) | - | |
| | Short term borrowings | (21 085) | - | |
| | Bank overdraft | (95 818) | - | |
| | Net assets acquired | 568 563 | - | |
| | Negative goodwill | (190 039) | - | |
| | Purchase consideration | 378 524 | - | |
| | Bank overdrafts acquired | 65 720 | - | |
| | Subsidiaries acquired, net of bank overdrafts acquired | 444 244 | - | |
| |
The subsidiaries acquired on 1 July 2004 are as follows (all 100% unless otherwise indicated):
Calan Limited, Calan Retread Services (Proprietary) Limited, Carlo de Firenze (Proprietary) Limited, Casa Rosada Investments
(Proprietary) Limited, Centeon Pharma (Proprietary) Limited, Chemical Leasing (Proprietary) Limited, Chemical Plant Finance
(Proprietary) Limited, Conshu Holdings Limited, Conshu Limited, Conshu Trading (Proprietary) Limited, Dano Textile Industries
(Proprietary) Limited, Danoduv Investments (Proprietary) Limited, Durban Fibres (Proprietary) Limited, Feltex Fehrer
(Proprietary) Limited (74%), Feltex Limited, Hosaf Fibres (Proprietary) Limited, Jordan Footwear Namibia (Proprietary) Limited,
Lanatex Weaving Manufacturers (Proprietary) Limited, Marker Investments (Proprietary) Limited, Persaltum (Proprietary)
Limited and Textowel Weavers (Proprietary) Limited. All the above acquisitions were accounted for by the purchase method of
accounting. |
| | | | |
| | | GROUP | |
| | | | 8 months | |
| | | Year ended | ended | |
| | | 31 December | 31 December | |
| | | 2004 | 2003 | |
| | | | R'000 | R'000 | |
| 31. | Cash flow statement | | | |
| 31.3 | Acquisition of subsidiaries | | | |
| | The purchase consideration comprises the following: | | | |
| | Cost of acquisition (issuance of shares) | 375 900 | - | |
| | Costs directly relating to acquisition | 2 624 | - | |
| | Purchase consideration | 378 524 | - | |
| | In December 2003 the group acquired 100% of the
share capital of PF2 Properties (Proprietary) Limited in terms of an option to purchase such shares that was
part of a structured finance arrangement. The option price was R1,00. All assets received for the
consideration had already been capitalised previously. | | | |
| 31.4 | Disposal of subsidiaries | | | |
| | Particulars of net assets sold at date of sale: | | | |
| | Property, plant and equipment | 423 | 2 | |
| | Investments and loans | - | 1 | |
| | Inventory | 1 409 | 14 981 | |
| | Accounts receivable | 495 | 30 630 | |
| | Cash and cash equivalents | - | 40 | |
| | Bank overdraft | (161) | - | |
| | Long term liabilities | - | (23 194) | |
| | Accounts payable | (3 121) | (22 312) | |
| | SARS - income tax payable | (56) | - | |
| | Net (liabilities)/assets sold | (1 011) | 148 | |
| | Profit/(loss) on disposal | 3 111 | (148) | |
| | Sale consideration | 2 100 | - | |
| | Cash sold | 161 | (40) | |
| | Proceeds on disposal of subsidiaries | 2 261 | (40) | |
| |
The subsidiaries sold on 1 January 2004 are as follows (all 100%):
Exotan (Proprietary) Limited, Matsapa Hides & Stores (Proprietary) Limited, Border Export (Proprietary) Limited, Bregin & Co
(Cape) (Proprietary) Limited, Cape Produce Export Co (Proprietary) Limited, South West Wool Sorters (Proprietary) Limited,
OSB Exports (Proprietary) Limited, Kaftan NV, Manzini Hide Collectors (Proprietary) Limited, S M Lurie and Company
(Botswana) (Proprietary) Limited, GH Hackmann (Proprietary) Limited, Hideskin Namibia (Proprietary) Limited, African Hide
Trading Namibia (Proprietary) Limited, Oudtshoorn Ostrich Processors (Proprietary) Limited, Kolosus Leathers Africa, Barvan
Pvt and Velskin Product (Proprietary) Limited. |
| |
| | | | | Company | | Payments |
| | | Basic salary | contributions | Bonuses | in kind | Total | |
| | | | R'000 | R'000 | R'000 | R'000 | R'000 | |
| 32. | Directors' emoluments | | | | | | | |
| Executive directors | | | | | | | | |
| P C T Schouten | | 590 | 20 | - | - | 610 | |
| R D Radford | | 525 | 65 | 659 | - | 1 249 | |
| A J Keyser* | | 686 | 64 | - | - | 750 | |
| L C Campher* | | 577 | 132 | - | - | 709 | |
| Total | | 2 378 | 281 | 659 | - | 3 318 | |
|
*resigned 12 November 2004 | | | | | | | |
| | | | |
| | Service | Fees (R) | |
| Non-executive directors | | | | | | |
| C E Daun | | | | Chairman | 10 000 | |
| M J Jooste | | | | Chairman of audit committee | 9 375 | |
| J B Magwaza | | | | Chairman of remuneration committee | 8 750 | |
| S H Nomvete | | | | Member of audit committee | 8 125 | |
| I N Moloto | | | | Member of remuneration committee | 7 750 | |
| F Möller | | | | | 6 250 | |
| Total | | | | | 50 250 | |
| | | | Beneficial direct | Beneficial indirect | Total | % | |
| Directors' shareholding as at 31 December 2004 | | | | | |
| C E Daun | 811 | 301 301 229 | 301 302 040 | 72,0 | |
| M J Jooste | - | 11 000 020 | 11 000 020 | 2,6 | |
| J B Magwaza | - | 700 000 | 700 000 | 0,2 | |
| S H Nomvete | - | 6 510 000 | 6 510 000 | 1,6 | |
| I N Moloto | - | 6 510 000 | 6 510 000 | 1,6 | |
| P C T Schouten | 4 000 000 | - | 4 000 000 | 1,0 | |
| R D Radford | 2 500 000 | - | 2 500 000 | 0,6 | |
| There are
no service contracts with directors of the company with a notice period of
greater than one year and with compensation on termination of greater than
one year's salary. | |
| | | | | | |
| Remuneration paid by holding company | - | |
| Remuneration paid by subsidiary companies | 2 708 | |
| Remuneration paid by related parties | 610 | |
| | | | | 3 318 | |
|
Daun & Cie AG has granted 27,0 million options to purchase ordinary shares in the company to certain key executives. The granting
of these options is conditional on the achievement of agreed profit targets both in individual divisions/subsidiaries and for the group.
Options will be granted at a strike price of ¤0.1664 per share and bear notional interest of 4% per annum from the effective date
of 9 November 2004, compounded monthly until the date of exercising the option. 20% of the options may be granted each year
until 2009.
It is intended that the options to be granted will be controlled by a vesting management trust.
Conditional options granted to directors are as follows: | |
| | P C T Schouten | 4,0 million shares | |
| R D Radford | 2,5 million shares | |
|
No options or conditional options have been granted to non-executive directors. | |
| | | | | | | | | | | |
|
33.
|
Foreign exchange derivative instruments and foreign currency risk management
| |
|
33.1
|
Foreign exchange risk management
| |
| |
Forward exchange contracts
The group utilises currency derivatives to eliminate or reduce the exposure of its foreign currency denominated assets and
liabilities, and to hedge future transactions and cash flows. The group is party to foreign currency forward exchange contracts
in the management of its exchange rate exposures. The instruments purchased are primarily denominated in the currencies
of its principal markets. As a matter of policy, the group does not enter into derivative contracts for speculative purposes.
| |
|
33.2
|
Foreign foward exchange contracts
| |
| |
Foreign forward exchange contracts are used by the group to manage its exposure to foreign exchange fluctuations.
At year end open contracts were marked to market and resulted in the following financial asset or liability. These amounts have
been included under other receivables or payables in notes 13 and
23 respectively.
| |
| |
Forward exchange assets (liabilities)
At the balance sheet date, the company had contracted to buy the following amounts under forward exchange contracts in
respect of future commitments which expire at various dates:
| |
| | | FEC | Estimated | FEC | FEC | Estimated | FEC | Contract | Contract | |
| | | value | fair value | liability | value | fair value | asset | rate | rate | |
| | | 2004 | 2004 | 2004 | 2003 | 2003 | 2003 | 2004 | 2003 | |
| | | R'000 | R'000 | R'000 | R'000 | R'000 | R'000 | | | |
| | USD | (41 659) | 38 606 | (3 053) | (7 410) | 7 485 | 75 | 6.1500 | 6.8802 | |
| | EUR | (36 878) | 35 093 | (1 785) | (7 473) | 7 479 | 6 | 8.4659 | 8.4350 | |
| | GBP | (3 571) | 3 426 | (145) | (1 927) | 2 041 | 114 | 11.3611 | 11.6084 | |
| | Total | (82 108) | 77 125 | (4 983) | (16 810) | 17 005 | 195 | | | |
| | | |
|
33.3
|
Uncovered foreign currency balances
| |
| |
The following unhedged and uncovered foreign assets relating to accounts receivable were in existence at year end:
| |
| | | | Foreign amount | Rate | Rand amount | |
| | | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | |
| | Foreign currency | '000 | '000 | | | R'000 | R'000 | |
| | EUR | 1 991 | - | 7.65 | - | 15 227 | - | |
| | USD | 918 | - | 5.64 | - | 5 178 | - | |
| | GBP | 602 | - | 10.82 | - | 6 514 | - | |
| | CHF | 467 | - | 4.98 | - | 2 326 | - | |
| | | | | | | 29 245 | - | |
| | The following unhedged and uncovered foreign liabilities relating to accounts payable were in existence at year end:
|
| | | Foreign amount | Rate | Rand amount |
| | | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | |
| | Foreign currency | '000 | '000 | | | R'000 | R'000 | |
| | USD | 3 077 | - | 5.64 | - | 17 366 | - | |
| | EUR | 264 | - | 7.65 | - | 2 020 | - | |
| | GBP | 38 | - | 10.82 | - | 411 | - | |
| | CHF | 15 | - | 4.98 | - | 75 | - | |
| | | | | | | 19 872 | - | |
| |
| |
| |
|
GROUP |
COMPANY |
|
| |
|
2004 |
2003 |
2004 |
2003 |
|
| |
|
R’000 |
R’000 |
R’000 |
R’000 |
|
| 34. |
Capital commitments |
|
|
|
|
|
| |
Capital expenditure |
|
|
|
|
|
| |
Authorised by directors |
|
|
|
|
|
| |
- contracted |
24 485 |
- |
- |
- |
|
| |
- not yet contracted |
20 238 |
11 037 |
- |
- |
|
| |
The capital expenditure is to be financed from internally generated funds and
external credit facilities. |
|
|
|
|
|
| 35. |
Operating lease commitments |
|
|
|
|
|
|
At the balance sheet date, the group had outstanding commitments under non-cancellable operating leases with a term
of more than one year, which fall due as follows: |
|
|
|
|
|
| |
Within one year |
18 686 |
4 498 |
- |
- |
|
| |
In the second to fifth year inclusive |
48 546 |
22 720 |
- |
- |
|
| |
Over five years |
- |
8 317 |
- |
- |
|
| |
|
67 232 |
35 535 |
- |
- |
|
| 36. |
Operating lease receivables |
|
|
|
|
|
|
At the balance sheet date, the group had outstanding receivables under non-cancellable operating leases as follows: |
|
|
|
|
|
| |
Within one year |
1 406 |
- |
392 |
- |
|
| |
In the second to fifth year inclusive |
4 351 |
- |
- |
- |
|
| |
Over five years |
3 405 |
- |
- |
|
|
| |
|
9 162 |
- |
392 |
- |
|
| 37. |
Related parties |
|
|
37.1 |
Controlling entity |
|
|
|
The ultimate holding company is Daun & Cie AG, a company incorporated in the Federal Republic of Germany. This is a large and complex group of companies with investments and subsidiaries in South Africa and globally. The following entities have been identified as having a related party relationship due to common shareholding or significant influence as a result of representation by the shareholder or its representative on the board of directors of the companies and their subsidiaries:
KAP Textile Holdings SA Limited (fellow subsidiary of Daun & Cie AG) and its subsidiaries or associates
Bertrand Holdings SA (Proprietary) Limited
Saprotex International (Proprietary) Limited
Good Hope Textile Corporation (Proprietary) Limited
Mooi River Home Textile (Proprietary) Limited
Yarntex (Proprietary) Limited
Sherco Group (Proprietary) Limited
Union Spinning Mills (Proprietary) Limited
Gelvenor Textiles division
SA Fine Worsteds division
Da Gama Textiles division
Courthiel Holdings (Proprietary) Limited (fellow subsidiary of Daun & Cie AG) and its subsidiaries
Wellington Industries (Proprietary) Limited
Table Bay Spinners Limited
Boland Fine Spinners (Proprietary) Limited
Home Fabrics division
The Fabric Library division
Springbok Commodities (Proprietary) Limited
African Hide Trading Corporation (Proprietary) Limited
Spilo (Proprietary) Limited
Platex (Proprietary) Limited
Camexo SA Limited
Court Fabrics (Proprietary) Limited
Heystekrand Furniture Factory (Proprietary) Limited
Other
Conrapp Properties (Proprietary) Limited
West African Hides & Skins (Proprietary) Limited (Namibia)
West African Hides & Skins (Proprietary) Limited (Botswana)
Lauffenmuhle AG
Zimbabwe Spinners & Weavers (Pvt) Limited
The group transacts with some of the above mentioned companies in the normal course of business on a strictly arm’s
length basis.
|
|
|
|
|
GROUP |
|
|
|
|
2004 |
2003 |
|
| |
|
|
R’000 |
R’000 |
|
|
|
Transactions with related parties and the resultant balances |
|
|
|
|
|
receivable or payable at year end include the following: |
|
|
|
|
|
Sale of goods to related parties |
|
|
|
|
|
African Hide Trading Corporation (Proprietary) Limited |
29 895 |
20 674 |
|
|
|
KAP Textile Holdings SA Limited |
14 174 |
– |
|
|
|
Table Bay Spinners Limited |
3 943 |
– |
|
|
|
Lauffenmuhle AG |
1 998 |
– |
|
|
|
Mooi River Home Textile (Proprietary) Limited |
566 |
– |
|
|
|
Camexo SA Limited (formerly Camdeboo Meat Processors Limited) |
– |
2 073 |
|
|
|
Conshu Trading (Proprietary) Limited |
– |
2 634 |
|
|
|
Feltex Limited |
– |
762 |
|
|
|
|
50 576 |
26 143 |
|
|
|
Purchase of goods from related parties |
|
|
|
|
|
African Hide Trading Corporation (Proprietary) Limited |
18 754 |
– |
|
|
|
KAP Textile Holdings SA Limited |
5 203 |
– |
|
|
|
Table Bay Spinners Limited |
81 |
– |
|
|
|
Zimbabwe Spinners & Weavers (Pvt) Limited |
5 489 |
– |
|
|
|
Camexo SA Limited (formerly Camdeboo Meat Processors Limited) |
– |
238 |
|
|
|
|
29 527 |
238 |
|
|
|
Operating lease rentals received |
|
|
|
|
|
African Hide Trading Corporation (Proprietary) Limited |
1 082 |
– |
|
|
|
A Z Keyzer |
18 |
18 |
|
|
|
|
1 100 |
18 |
|
|
|
Operating lease rentals paid |
|
|
|
|
|
Courthiel Holdings (Proprietary) Limited |
2 660 |
– |
|
|
|
Conrapp Properties (Proprietary) Limited |
1 028 |
– |
|
|
|
|
3 688 |
– |
|
|
|
Interest paid |
|
|
|
|
|
Daun & Cie AG |
4 612 |
14 984 |
|
|
|
Courthiel Holdings (Proprietary) Limited |
3 376 |
– |
|
|
|
Conrapp Properties (Proprietary) Limited |
129 |
– |
|
|
|
African Hide Trading Corporation (Proprietary) Limited |
2 |
– |
|
|
|
|
8 119 |
14 984 |
|
|
|
Interest received |
|
|
|
|
|
African Hide Trading Corporation (Proprietary) Limited |
1 109 |
– |
|
|
|
KAP Textile Holdings SA Limited |
989 |
– |
|
|
|
Courthiel Holdings (Proprietary) Limited |
3 500 |
– |
|
|
|
|
5 598 |
– |
|
|
|
Management fees paid |
|
|
|
|
|
Courthiel Holdings (Proprietary) Limited |
2 076 |
88 |
|
|
|
Accounts receivable |
|
|
|
|
|
African Hide Trading Corporation (Proprietary) Limited |
1 222 |
18 899 |
|
|
|
KAP Textile Holdings SA Limited |
729 |
– |
|
|
|
Table Bay Spinners Limited |
2 589 |
– |
|
|
|
Courthiel Holdings (Proprietary) Limited |
959 |
– |
|
|
|
Inyati Limited |
3 446 |
– |
|
|
|
|
8 945 |
18 899 |
|
|
|
Accounts payable |
|
|
|
|
|
KAP Textile Holdings SA Limited |
63 |
– |
|
|
|
Zimbabwe Spinners & Weavers (Pvt) Limited |
674 |
– |
|
|
|
Mooi River Home Textile (Proprietary) Limited |
320 |
– |
|
|
|
Table Bay Spinners Limited |
30 |
– |
|
|
|
|
1 087 |
– |
|
| |
| | | GROUP | COMPANY | |
| | | 2004 | 2003 | 2004 | 2003 | |
| | | | R'000 | R'000 | R'000 | R'000 | |
| | Purchase of subsidiaries from Daun & Cie AG
and KAP Beteiligungs AG | | | | | |
| | Various companies were acquired from Daun & Cie AG
and KAP Beteiligungs AG as detailed in the directors' report. | | | | | |
| | Loans from related parties | | | | | |
| | Daun & Cie AG advanced various secured,
interest-bearing loans as follows: | | | | | |
| | At 10,75% per annum (2003: 11,25%) | 22 027 | 28 939 | 22 027 | 28 939 | |
| | At 9% per annum | 38 697 | - | - | - | |
| | At LIBOR (USD 5 million) | - | 33 520 | - | 33 520 | |
| | Details of the security offered are indicated below.
Daun & Cie AG also advanced an unsecured, interest-free loan as follows: | 6 710 | 6 710 | 6 710 | 6 710 | |
| |
The joint venture (Rieter-Feltex Automotive Manufacturing (Proprietary) Limited) advanced an unsecured loan of R1,0 million
which bears interest at 8,38% floating rate. No fixed terms of repayment have been negotiated.
Loans to related parties
An interest-bearing loan to African Hide Trading Corporation (Proprietary) Limited of R8,9 million
bears interest at prime rate
and is repayable in 48 equal monthly instalments. Suretyship has been provided by Courthiel Holdings (Proprietary) Limited,
who is co-principal debtor to the loan and is also a related party.
An interest-free loan to African Hide Trading Corporation (Proprietary) Limited of R9,5 million is repayable in four equal
annual instalments. Suretyship has been provided by Courthiel Holdings (Proprietary) Limited, who is co-principal debtor to the
above loan and is also a related party.
Security in favour of related parties
Bull Brand Foods (Proprietary) Limited (formerly Kolosus Foods (Proprietary) Limited) has issued the following security:
- A general notarial bond in favour of Daun & Cie AG in the amount of R108,2 million
- A special notarial bond in favour of Daun & Cie AG in the amount of R18,8 million
- An unlimited deed of cession, deed of pledge and cession and original share certificates in favour of Daun & Cie AG.
|
|
37.2
|
Directors
|
| |
The directors named in the attached directors' report each held office as a director of the company during the year ended
31 December 2004.
Transactions with Daun & Cie AG have been detailed in the directors' report. C E Daun (non-executive chairman) controls 100%
of Daun & Cie AG.
Transactions with KAP Beteiligungs AG have been detailed in the directors' report. F Möller (independent, non-executive
director) is the managing director of KAP Beteiligungs AG and is also a non-executive director of Daun & Cie AG.
P C T Schouten (chief executive officer) is an executive director of KAP Beteiligungs AG. Daun & Cie AG controls KAP
Beteiligungs AG.
I N Moloto and S H Nomvete (both independent, non-executive directors) are also joint CEO's and shareholders of Motseng
Investment Holdings (Proprietary) Limited which owns 51% of Mooi River Home Textile (Proprietary) Limited, which engages in
various arm's length transactions with the KAP International group. C E Daun, F Möller and P C T Schouten are also directors
of the holding company of Mooi River Home Textile (Proprietary) Limited. |
| | |
|
37.3
|
Transaction with entities in the wholly owned group
|
| |
The company and subsidiaries within the group advanced, received and repaid loans to other entities in the wholly owned group
during the current and previous financial years. The company and subsidiaries also transacted with each other during the year
in the normal course of business. All material inter-group transactions have been eliminated on consolidation.
In respect of balances with companies in the group refer to note
4- Interests in subsidiaries and note 5- Interests in
joint ventures. A complete list of the group's subsidiaries is provided in Annexure A. |
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38.
|
Contingent liabilities and guarantees
|
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The company has guaranteed the overdraft facilities of any subsidiary linked to the cash management system. The amount is
limited to R30 million (2003: R20 million). At period end the overdraft of subsidiaries guaranteed by the company amounted to
Rnil (2003: Rnil).
The group has issued guarantees through various banks of R9,6 million
(2003: R2,7 million).
A general notarial bond in the amount of R20,0 million has been issued in respect of the assets of the Jordan & Co division of Feltex
Holdings (Proprietary) Limited in favour of First National Bank.
A mortgage bond of R10,0 million over the Hosaf Fibres Milnerton property (book value R9,1 million) and a mortgage bond of
R20,0 million over the Hosaf Durban property (book value R19,1 million) have been registered in favour of Standard Bank Limited.
A specific notarial bond over all the movable assets of the Hosaf Fibres division of Feltex Holdings (Proprietary) Limited (book value
R107,8 million) has been registered in favour of Standard Bank Limited.
A guarantee of USD 750 000 in favour of Lloyds Bank Plc was issued in 1995 in respect of Inyati UK Limited, which has been sold
out of the group to a related party, subject to warranties, on 31 December 2004. The validity of the guarantee is uncertain.
The group is confident that there will be legal recourse to the seller of Inyati UK Limited should a claim materialise against the
group.
If certain operations ceased, certain effluent dams utilised by the group would be required to be rehabilitated. No provision has
been made for this rehabilitation, as there is no intention to cease operations and future costs, if any, cannot be reliably measured.
Dano Textile Industries (Proprietary) Limited is currently in a dispute with employees regarding alleged unfair dismissals. The
possible estimated financial effect is R0,2 million. The group is confident that this claim will not be successful.
Borrowings by the group from FirstRand Bank Limited are secured as detailed in note
14. |
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39.
|
Financial instruments
|
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|
39.1
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Credit risk management
|
| |
Potential concentrations of credit risk relate mainly to accounts receivable, other loans and bank and cash balances.
Trade accounts receivable consist of a large widespread customer base. Group companies monitor the financial position of their
customers on an ongoing basis. The granting of credit is controlled by application and account limits. Provision is made, based
on management's best estimate, for doubtful debts using the history of bad debts. At year end management believe that any
material credit risk exposure was covered by the bad debt provision. Certain companies have taken out third party cover over
trade accounts receivable.
Other loans include loans to third parties and loans to related parties. Provisions for the loan are based on management's best
estimate of their recoverability and, where loans are considered irrecoverable, they are written off.
The group's cash equivalents are placed with high quality financial institutions. With regard to foreign exchange contracts,
the group's exposure is on the full amount of the foreign currency receivable on settlement. The group minimises the risk by
limiting the counterparties to a group of major banks and does not expect to incur any loss as a result of non-performance by
these counterparties. |
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39.2
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Interest rate risk management
| |
| |
The group's exposure to interest rate risk and the effective interest rates on financial instruments at balance sheet date are as
follows: | |
| | | Interest | | | | | |
| | | rate | Year 1 | Years 2 - 5 | Over 5 years | Total | |
| | | % | R'000 | R'000 | R'000 | R'000 | |
| Group 2004 | | | | | | |
| Assets | | | | | | |
| Other investments and loans | | | | | | |
| | | Interest-free loans | Interest-free | - | 7 852 | - | 7 852 | |
| | | Interest-bearing | Prime | - | 6 458 | - | 6 458 | |
| Accounts receivable | Interest-free | 474 623 | - | - | 474 623 | |
| SARS - income tax receivable | Interest-free | 7 386 | - | - | 7 386 | |
| Short term loans | Interest-free | 12 482 | - | - | 12 482 | |
| Short term loans | Prime | 2 500 | - | - | 2 500 | |
| Cash and cash equivalents | 5,75% | 45 013 | - | - | 45 013 | |
| | | 542 004 | 14 310 | - | 556 314 | |
| Liabilities | | | | | | |
| Instalment sale agreements | 3% to Prime -1,5% | 4 333 | 10 321 | - | 14 654 | |
| Finance leases | Prime -1,5% to Prime | 1 117 | 3 385 | - | 4 502 | |
| Shareholder's loan | 10,75% | 22 027 | - | - | 22 027 | |
| Shareholder's loan | 9% | 38 697 | - | - | 38 697 | |
| Shareholder's loan | Interest-free | 6 710 | - | - | 6 710 | |
| Other loans | Interest-free | 780 | 2 340 | - | 3 120 | |
| Other loans | 5,11% | 8 024 | 9 089 | - | 17 113 | |
| Other loans | Prime -2,5% to Prime | 9 447 | 6 212 | - | 15 659 | |
| Other loans | Prime -2,25% | 20 091 | 47 211 | - | 67 302 | |
| Other loans | 9% | 7 429 | - | - | 7 429 | |
| Accounts payable | Interest-free | 341 145 | - | - | 341 145 | |
| Bank overdraft | Prime -3% to Prime -1% | 45 313 | - | - | 45 313 | |
| SARS - income tax payable | Interest-free | 9 017 | - | - | 9 017 | |
| | | | 514 129 | 78 559 | - | 592 688 | |
| Company 2004 | | |
