Dorbyl Limited Integrated Report - Sustainability Disclosure Database

Transcription

S T A T E M E N T S
F I N A N C I A L
C O N S O L I D A T E D
Dorbyl Limited
Integrated
Report
2011
Dorbyl Limited Integrated Report 2011
99
Contents
About the integrated report
1
Corporate summary
2
Report by the chairman and chief executive officer
5
Corporate Governance
7
Financial statements
12
Notice to shareholders
87
Form of proxy
95
About the integrated report
Scope of the report
The integrated report has been compiled in accordance with the integrated report principles contained in the Code of Corporate
Practices and Conduct set out in the King Report on Corporate Governance for South Africa 2009 (King III).
Dorbyl recognises that its business must serve all stakeholders. This is the first step in integrated reporting and will be further
enhanced on a continuous basis to ensure improvements in reporting to stakeholders.
Terms used
Please note that unless otherwise stated, the reference to “the Group” includes Dorbyl Limited, its subsidiaries and associated
companies. The reference to Dorbyl refers to Dorbyl Limited. The reference to “Guestro” or “Guestro Castings” refers to Guestro
Castings, a division of Dorbyl Limited.
re p ort
In the detailed financial statements section of this report, the reference to “Consolidated” refers to Dorbyl Limited, its subsidiaries
and associated companies. “Separate” or “Company” refers to the company Dorbyl Limited.
Statement by the Board
integrated
The Board acknowledges its responsibility to ensure the integrity of the integrated report. The Board has accordingly applied its
mind to the integrated report and in the opinion of the Board the integrated report addresses all material issues, and presents fairly
the integrated performance of the organisation and its impact. The integrated report has been prepared in line with best practice
pursuant to the King III.
On behalf of the Board
a b o u t
t h e
RF Röhrs
Chief Executive Officer
1
Corporate summary
Nature of the business, principal activities, products and services
Dorbyl Limited is a quoted industrial group. Pursuant to the disposal of several of the Group’s businesses and properties, the
remaining business comprises the castings business situated in Benoni South, referred to as Guestro Castings. The business
manufactures and markets high quality Spheriodal Graphite and Grey Iron Castings (in accordance with SABS 0157) for
automotive, mining, overhead line manufacturers, rail, energy, pumps and valves and general engineering businesses.
Shareholder information as at 31 March 2011
Size of holding
Number of shareholders
% of total
shareholders
1 – 5 000
5 001 – 10 000
10 001 – 50 000
50 001 – and over
634
51
69
37
80,2
6,4
8,7
4,7
791
100,0
Number of
of shares
567
433
1 763
31 306
% of total
issued shares
454
246
000
356
1,7
1,3
5,2
91,8
34 070 056
100,0
According to information available to the directors, shareholders holding in excess of 5% of the issued ordinary share capital at
31 March 2011 were:
Number of shares
Metkor Group Limited
RMB Securities (Pty) Limited
Rand Merchant Bank Limited
% of issued
shares
14 058 346
3 056 278
2 140 223
41,3
9,0
6,3
Number of
shares
% of issued
shares
788
3
19 205 749
14 864 307
56,3
43,7
1
1
1
660 000
14 058 346
145 961
2,0
41,3
0,4
791
34 070 056
100,0
5% cumulative preference shares
Public
157
528 848
71,5
Non-public
Old Sillery (Pty) Limited
1
211 177
28,5
Shareholder spread
Number of shareholders
Ordinary shares
Public
Non-public
Director
Wholly owned subsidiary
Total
Total
740 025
100,0
5,5% cumulative preference shares
Public
24
67 152
5,4
Non-public
1
1 182 848
94,6
Total
2
158
25
1 250 000
100,0
Ordinary share statistics
Share price – Year-end (cents)
Share price – High (cents)
Share price – Low (cents)
Volume traded (000)
Value traded (R’000)
2011
2010
290
495
275
15 351
58 437
390
505
300
2 637
10 258
Directorate and administration – 31 March 2011
EXECUTIVE DIRECTORS
RF Röhrs (59)
BEng (Industrial), MBA
(Group Chief Executive Officer – appointed 2006)
s u mmar y
Roland Röhrs was appointed to the Board as Chief Executive Officer on 1 September 2006. Prior to that he was the Managing
Director of Wispeco Holdings (Pty) Limited which position he held for nine years.
BP Wood (36)
CA(SA)
(Financial Director – appointed 2009)
Brendon Wood has been with the Dorbyl group for six years in various senior financial manager positions, including Group Financial
Manager for two years, prior to being appointed as Group Financial Director with effect from 1 April 2009.
cor p orate
NON-EXECUTIVE DIRECTOR
JW Dreyer (60)
BCom (Law); LLB; Higher Diploma Tax Law; Higher Diploma Company Law
(appointed 2009)
Jan Dreyer serves as an executive director of Remgro Limited and also serves on a number of Remgro Limited affiliated companies,
including Air Products SA (Pty) Limited, Kagiso Tiso Holdings Limited, RMB Holdings Limited, RMI Holdings Limited, Business
Partners Limited and TSB Sugar Holdings (Pty) Limited.
INDEPENDENT NON-EXECUTIVE DIRECTORS
JB Magwaza (69) (Chairman)
BA MA (Warwick, UK)
(appointed 1995)
JB Magwaza, amongst others, serves as a non-executive director on the Boards of Mutual and Federal Limited, Rainbow Chicken
Limited, Tongaat-Hulett (Pty) Limited, Pamodzi Investment Holdings Limited, Hulamin Limited and KAP International Limited.
PM Bester (70)
BSc, MBL
(appointed 2007)
Peter Bester is a director of Distell Limited. He was formerly executive chairperson of Cadbury Schweppes (SA) Limited until
retiring in 2001.
TA Morkel (44)
BCom (Acc); Honours (Financial Management)
(appointed 2008)
Tracy Morkel has extensive asset and hedge fund management experience. She worked at Fairheads, BOE and Coronation Capital
before co-founding Breakwater Capital in 2003.
3
Corporate summary (continued)
MEMBERS OF COMMITTEES
Audit and Risk Committee
PM Bester (Chairman)
JB Magwaza
TA Morkel
Remuneration and Nominations Committee
JB Magwaza (Chairman)
PM Bester
CHANGES TO THE BOARD SUBSEQUENT TO THE APPROVAL OF THE FINANCIAL STATEMENTS
Subsequent to the approval of the financials statements on 24 June 2011, Mr BD Bhikha was appointed as Financial Director,
effective 29 August 2011, pursuant to the resignation on 30 June 2011, of the previous Financial Director, Mr BP Wood.
Mr Bhikha holds a BCom degree in accounting, is a CA(SA), and also has a Higher Diploma Tax Law (Wits). Mr Bhikha has been
with Dorbyl for 23 years and his experience includes various financial positions over the years. Mr Bhikha was appointed Group
Company Secretary in January 1999 and will be continuing with this role.
ADMINISTRATION
Dorbyl Limited
Company registration number 1911/001510/06
Company secretary and registered office
BD Bhikha
Lincoln Road, Industrial Sites, Benoni South, 1501
(PO Box 5500, Benoni South, 1502)
Tel: +27 11 845 1557
Fax: +27 11 422 2941
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
PSG Capital (Pty) Limited
DM Kisch House, Inanda Greens Business Park, 54 Wierda Road West, Sandton, 2196
(PO Box 987, Parklands 2121)
Auditors
KPMG Inc.
KPMG House
Norvic Drive
Greenacres, 6045
(PO Box 1662, Port Elizabeth, 6000)
4
Report by the chairman and chief executive officer
Although Guestro is currently mainly making castings for
the heavy vehicle and light commercial vehicle market, a
growing percentage of sales is attributable to the mining,
water, rail, power, defence and general engineering markets.
A substantial portion of the turnover is from local customers
in South Africa, although a number of the components are
exported directly by Guestro or indirectly via its customers.
Competition is mainly from import alternatives, with a
small number of local manufacturers directly competing
in Guestro’s market segments. Guestro provides a quality
product at a competitive price in comparison to other lower
cost foundries in Asia. Guestro’s relative proximity to local
customers is attractive to its customers. In addition, the
customer base recognises Guestro’s comparatively stable
supply of electricity and scrap steel, two key inputs in the
casting process.
The production efficiency, quality of products, reliability
of supply and effective response to customer needs have
improved significantly during the past financial year. This has
resulted in a number of customer enquiries over the past six
officer
e x ec u ti v e
c h ief
Prospects and the business environment
Dorbyl’s disposal activities have been largely concluded,
thereby allowing the management team to focus on securing
an adequate return from the remaining operation and
property. Continuing historical corporate activities include
the post retirement medical aid scheme, pension fund and
some litigation matters not yet concluded. The Guestro
Foundry is one of the leading foundries in South Africa and
employs approximately 250 people. The production facility is
located on the Dorbyl owned property in Benoni South.
The intention is to continue to translate this growing
competitive advantage into increased sales and output,
thereby utilising the considerable spare capacity currently
available in the foundry.
The rehabilitation of the Benoni premises commenced during
the year and costs in this regard amounted to R5,2 million.
Further costs estimated at R7 million will be incurred for the
completion of this project. The rehabilitation will enhance
the value of the property accordingly.
and
Further details and commentary on the results for the year
under review are set out in the Directors’ Report.
c h airman
The net cash inflow for the Group amounted to R34,9 million
for the year (2010 – R12,5 million outflow).
Although operating conditions are expected to remain
challenging, management believes that Guestro Castings
is now well positioned to gain from the slow recovery in
general market conditions as a consequence of its improved
efficiencies and broadened market scope.
GOVERNANCE
Dorbyl is committed to sound corporate governance. The Board
endorses the recommendations as contained in the King III
Report released in September 2009. Compliance within the
framework of the King III Report, the Listings Requirements
of the JSE Limited and the recently promulgated Companies
Act, 2008 is an ongoing process.
DIRECTORATE
t h e
The total comprehensive loss for the Group for the year
was R7,5 million or 22 cents per share, which was mainly
attributable to Guestro Castings, the Benoni property and
the Corporate Head Office. The headline earnings loss
attributable to equity holders for the year amounted to
R28,2 million or 83,2 cents per share.
The results for the second half of the year were affected by
low market volumes in the November 2010 to March 2011
period. In the industries served by Guestro, the conversion
of a sales lead to a successful sale can range from two
to twelve months. During the past seven months, the
management team has focused significant effort to secure
further sales orders. This effort has been rewarded with
a steady increase in sales. The 21% increase in sales to
R127 million for the year ended 31 March 2011 is expected
to continue in the following financial year. This growth in
sales will require a continuing cash investment in net working
capital and some capital expenditure.
T van Wyk retired from the Board effective 31 January 2011.
There were no other changes to the composition of the Board
during the financial year.
EVENTS SUBSEQUENT TO THE APPROVAL OF
THE FINANCIAL STATEMENTS
b y
Financial review
The Group’s activities during the year under review were
primarily concentrated in the remaining business comprising
the castings business situated in Benoni South, referred
to as Guestro Castings. The business manufactures and
markets high quality Spheriodal Graphite (SG) and Grey
Iron Castings, made to international standards and used in
trucks and other transport applications, as well as in the
mining, energy, pumps and valves, general engineering and
automotive sectors.
months to resource away from foreign suppliers to Guestro.
Customers are also resourcing away from local foundries
which are facing closure or have been closed.
The following matters occurred subsequent to the approval by
the Board of the annual financial statements:
re p ort
operating review
Directorate change
BP Wood, the Group Financial Director resigned from the
Board with effect from 30 June 2011. BD Bhikha, was
appointed as Financial Director with effect from 29 August
2011.
5
Report by the chairman and chief executive officer (continued)
Litigation matter
Reference is made to the SENS announcement dated
29 July 2011, in which shareholders were advised of the
legal proceedings instituted by Dorbyl against a former
director as a result of certain undisclosed gains made by
the said director emanating from the non-disclosure of his
interest in various prior business disposals by Dorbyl.
As stated in the SENS announcement referred to, the matter was
heard in the High Court in February 2011 and the judgement
was handed down on 28 July 2011. In the judgement, Dorbyl
was successful in its claims which in aggregate amount to
R41,7 million plus interest and costs. Application for leave
to appeal the judgement was lodged by the defendant on
5 August 2011. The outcome of the application is awaited.
Shareholders are furthermore referred to the contingent
liability note in the annual financial statements for Dorbyl in
which the Company referred to certain claims made by the
former director against Dorbyl. In terms of the judgement
referred to above, the former director`s claims were dismissed.
APPRECIATION
We extend our appreciation to our colleagues on the Board
for their support and also thank our associates, staff and
management for their co-operation and hard work during the
past year.
JB Magwaza
Chairman
RF Röhrs
Chief Executive Officer
6
Corporate governance
The King III Report became effective on 1 March 2010. The
JSE Listings Requirements require all JSE-listed companies
to comply with the changes relating to King III in respect of
financial years commencing on or after 1 March 2010.
In February 2011, the Company examined the gap analysis
on its compliance in line with the “apply or explain”
principle outlined in King III. In conducting this assessment,
cognisance was taken of the current size and nature of
the business and the resources available. To this extent
it should be noted that pursuant to the several disposals
of businesses in the last 18 months, the only remaining
operation comprises the Castings operation located in Benoni
South. In addition, the Corporate Head Office comprises the
Chief Executive Officer, Financial Director and the Company
Secretary.
Various areas were identified where it was considered that
the Company either partially complied or was non-compliant.
These were discussed by the Board and appropriate
recommendations made to the extent that the areas were
relevant within the context of the nature and size of the Group
as noted above. This evaluation will be an ongoing process
particularly should there be future expansions or acquisitions
of businesses. The King III Report recommendations will be
re-visited on an annual basis by the Board (January/February
of each year) to ensure compliance and an assessment of
the implementation of recommendations made by the Board.
Board of Directors
The Board of Directors, which at present comprises four
non-executive directors (of which three are independent nonexecutives) and two executive directors, meets at least four
times per annum and on an ad hoc basis should a particular
issue require its attention and is chaired by an independent
non-executive director. The two executive directors comprise
the Chief Executive Officer and the Financial Director.
The composition of the Board is set out on page 3 of this
Integrated Report. Through its representation on various
Committees, its monitoring of executive management’s
strategies, plans and actions and clearly defined delegated
authority to ensure that all material matters are dealt with
at Board level, the Board retains full and effective control
over the Group.
The Chief Executive Officer meets regularly with senior
management and non-executive directors have access to
senior management when they consider it necessary.
Election, re-election and induction
Appointments to the Board are formal and transparent,
and a matter for the Board as a whole, assisted by the
Remuneration and Nominations Committee.
In terms of the Articles of Association of Dorbyl Limited,
the appointment or replacement of non-executive directors
during the year must be ratified at the next Annual General
Meeting. Non-executive directors have to retire by rotation,
at the end of every three years, the retirement age being
70 years. With regard to the age limit of 70 years, the Articles
allow shareholders to extend that date, should they deem it
desirable.
The Company Secretary furnishes all newly appointed
directors with a comprehensive pack which includes the
Company’s Articles of Association, the Board Mandate, the
Terms and References of the Committees, prior financial
statements and other published shareholder information and
the Code of Ethics. The Company Secretary together with the
Chief Executive Officer and Financial Director meets with the
newly appointed director if necessary.
go v ernance
King III
For their services as directors, the non-executive directors are
paid fees, which are not subject to the financial performance
of the Group.
Independence
The classification of independent and non-executive directors
are determined by reference to the guidelines as set out in
King III and the Companies Act 71 of 2008, as amended,
dealing with independence in determining the composition of
the Audit Committee. The following aspects are considered in
assessing independence of a director:
cor p orate
Dorbyl remains fully committed to effective corporate
governance and the need for integrity and high ethical
standards in the conduct of its business. The Board believes
that the Group has during the past financial year, complied
in all material respects and the substance of the principles as
contained in the third King Report of Corporate Governance
for South Africa (King III Report or King III). The Board
is also satisfied that the Group complies with the Listings
Requirements of the JSE Limited and the Companies Act
1973.
– is not a representative of a shareholder who has the ability
to control or significantly influence management;
– has not been employed by the Company or the Group of
which it currently forms part in any executive capacity,
or appointed as the designated auditor or partner in the
Group’s external audit firm, or senior legal advisor for the
past three financial years;
– is not a member of the immediate family of an individual
who is, or has been in any of the past three financial
years, employed by the Company or the Group in an
executive capacity;
– is not a professional advisor to the Company or the Group
other than in a director capacity;
– is free from any business or other relationship (contractual
or statutory) which could be seen by an objective outsider
to interfere materially with the individual’s capacity to act
in an independent manner, such as being a director of a
material customer of or supplier to the Company;
– does not have a direct or indirect interest in the Company
(including any parent or subsidiary in a consolidated
7
Corporate governance (continued)
Group with the Company) which exceeds 5% of the
Group’s total number of shares in issue;
– does not have a direct or indirect interest in the Company
which is less than 5% of the Group’s total number of
shares in issue, but is material to his personal wealth; and
– does not receive remuneration contingent upon the
performance of the Company.
The Board has considered the independence of the
independent non-executive directors and is satisfied that
there are no relationships or circumstances which are likely
to affect, or could appear to affect their judgement in their
capacity as independent non-executive directors.
Board charter
The formal Board charter was revisited by the Board and
amended to the extent necessary, taking into account the
guidelines as contained in King III. The updated charter was
approved in March 2011. As determined by the charter there
is a clear division of responsibilities to ensure a balance of
power and authority and that no one individual has unfettered
powers of decision making. The charter identifies, defines
and records the responsibilities, functions and composition
of the Board, and serves as a reference to new directors.
The charter will be reviewed again in the light of the new
Companies Act, which came into effect on 1 May 2011.
Board meetings
The Board meets at least four times per annum and on an
ad hoc basis should a particular issue require its attention.
Agendas for the meetings are prepared by the Company
Secretary, in consultation with the Chief Executive Officer
and the Financial Director. These are distributed to the
members of the Board timeously to facilitate adequate
preparation.
The details of attendances at Board meetings are set out on
page 18.
Committees of the Board
Audit and Risk Committee
The Audit and Risk Committee, appointed in terms of section
94 of the Companies Act, consists of three independent nonexecutive directors, chaired by an independent non-executive
director who is not the Chairman of the Board. It is noted that
whilst the composition is in compliance with the Companies
Act, 2008, as amended, King III states that the Chairman
of the Board should not be a member of the Audit and Risk
Committee. The Chairman of the Board, JB Magwaza, is
currently a member of the Audit and Risk Committee. To this
extent, the Board is of the opinion that given JB Magwaza’s
extensive experience, having served on audit commitees of
other companies and taking into account the current size of
Dorbyl’s operations, that JB Magwaza will continue serving on
the Audit and Risk Committee of Dorbyl.
The Committee is governed by the terms of reference
approved by the Board. The Committee reviews the financial
8
statements and the appropriateness of the Group’s accounting
and disclosure policies. The Committee also monitors the
effectiveness and efficiency of internal controls and risk
management practices within the Group as reported by
management. The Committee recommends the appointment
of external auditors to the Board, reviews the scope of their
audit as well as the scope of the internal audit plan. The
Committee has also established guidelines as to the extent
that the external auditors should be used for non-audit
services and their independence is reviewed regularly. The
external auditors have been independent from the Group and
the Company.
The members of the Committee meet at least three times
per annum with management. The external and internal
auditors have unrestricted access to this Committee and
attend the meetings to report on their findings and to discuss
accounting, auditing, internal control, financial reporting
matters and risk management exposures.
Details of attendances at the Committee meetings during the
year under review are set out on page 18.
Report of the Audit and Risk Committee
The Audit and Risk Committee submits the following
statement:
The Audit and Risk Committee consists of three non-executive
directors who act independently as described in section 94
of the Companies Act, 71 of 2008, as amended. During the
year under review three meetings were held. At the meetings
the members fulfilled all their functions as prescribed by the
Act. The Audit and Risk Committee has satisfied itself that
the auditors are independent of the Company and are thereby
able to conduct their audit functions without any influence
from the Company.
The Audit and Risk Committee, in conjunction with the Board
also assessed and was satisfied with the skills, expertise and
experience of the Financial Director during the year under
review.
Remuneration and Nominations Committee
The Committee consists of two non-executive directors (all
are independent) and is chaired by the Chairman of the
Board. The Committee is governed by the terms of reference
approved by the Board. The Committee’s main responsibility
is to monitor the remuneration policies of the Group and to
review and approve the remuneration (including performance
based bonus structures and targets) and terms of employment
of the executive directors and senior employees of the Group.
The Chief Executive Officer attends these meetings by
invitation. The Committee is also responsible for nominating
directors.
Details of attendances at the Committee meetings during the
year under review are set out on page 18.
Remuneration policy and report
Dorbyl’s remuneration policy and strategy is to attract,
motivate and retain the best calibre of employees.
Non-executive directors’ fees
In respect of non-executive directors, the Remuneration and
Nominations Committee proposes fees to be payable for
members of the Board and Committees. The fees are not
subject to attendance at each meeting and are not linked to
the performance of the Group.
Details of the fees and remuneration paid for the year ended
31 March 2011 are contained in the Directors’ Report.
Fees payable in respect of non-executive directors, for
the year ended 31 March 2012, will be submitted to the
shareholders for approval at the Annual General Meeting to
be held on 21 November 2011. The proposed fees, which
remain unaltered from those paid for the year ended 31
March 2011 are as follows:
– Chairman of the Board: R320 000 per annum, payable
quarterly;
– Non-executive directors: R80 000 per annum, payable
quarterly;
– Chairman of the Audit and Risk Committee: R80 000 per
annum, payable quarterly;
– Members of the Audit and Risk Committee: R40 000 per
annum, payable quarterly;
– Chairman of the Remuneration and Nominations
Committee: R40 000 per annum, payable quarterly; and
– Members of the Remuneration and Nominations
Committee: R25 000 per annum, payable quarterly.
Sustainable development
Communication with stakeholders
The Board accepts its duty to present a balanced and
transparent assessment of the Group’s financial and nonfinancial matters in reporting to all stakeholders. Stakeholders
include shareholders, employees, customers, suppliers,
unions and regulatory bodies. The communication methods
include:
– training workshops;
– notice boards placed at strategic locations to enhance
visibility;
– release of interim results, full year provisional results and
the annual Integrated Report (previously referred to as the
Annual Report), in compliance with the Companies Act 71
of 2008, as amended and the Listings Requirements of
the JSE Limited;
– SENS announcements on all corporate activities in
compliance with the Listings Requirements of the JSE
Limited;
– Results are placed in English and Afrikaans in the print
media on the day that the results are released. Other
SENS announcements are also placed in the print media
in compliance with the Listings Requirements of the JSE
Limited;
go v ernance
Disclosure of top three earners
The King III Report requires that the salaries of the top three
earners, who are not executive directors be disclosed. Due
to their specialised skills and industry knowledge, the Board
does not consider it in the interest of Dorbyl to disclose the
names or positions of the three top earners. However the
total combined salaries (including basic salary, medical aid
and retirement benefits) of the top three earners amounted to
R3 230 987 for the year ended 31 March 2011.
– regular meetings with employees and shop stewards;
– Interim results, full year provisional results and the annual
Integrated Report are also distributed by mail to all
shareholders;
– At the request of any shareholder, the Chief Executive
Officer communicates on matters which are disclosable
when the Company is not in a closed period;
– Regular meetings and visits to both customers and
strategic suppliers; and
– Meetings with shop stewards and union representatives
as and when circumstances require such meetings and
interventions.
cor p orate
Remuneration offered for the recruitment of new skilled
staff is market related. The annual review of salary increases
are based on market trends, individual performance and
inflation. Under performers are dealt with outside of these
guidelines. Increases are subject to the approval by the
Remuneration and Nominations Committee.
Employment equity
All employees of Dorbyl have equal opportunities in the
workplace to advance and improve their current standing.
The work environment is one which respects and develops
people to their full potential and the equity policy and plans
enshrine these values.
The equity policy and plans detail the equity goals in
terms of hiring, training and promotion and are discussed
and monitored at regular meetings which are attended
by representatives across all occupational levels. This
information is available to the entire workforce to ensure
transparency.
Skills development and training
Training and development is crucial, particularly in view of
the shortage of skills within which the business operates. A
daily focus of on the job training ensures personal growth,
job satisfaction and promotion opportunities. Continuous
improvements in the quality of the products and processes
are an important result of this training as well as a proud and
dedicated workforce.
External training focuses on improving the operator
knowledge of the foundry processes through the University
of Johannesburg. A total of 37 operators have benefited from
the Advanced Foundry Training course at the University.
9
Corporate governance (continued)
Safety, health and the environment
Dorbyl is committed to ensuring that health, safety and
the environment are priorities and are in compliance with
the Occupational Health and Safety Act 1993 (Act 85 of
1993). Management is dedicated to continually identifying
potential hazards and reducing risks at the operations, by
developing procedures to mitigate and eliminate potential
hazards in the work environment. Waste, both non-hazardous
and hazardous, is stored at designated sites on the premises
and is then sent for its safe and controlled eventual disposal.
There is currently a project underway for the rehabilitation of
the Benoni site.
supplied to the customers is one of the key elements in not
just surviving but growing a healthy viable business.
Quality
The Dorbyl Quality Management System (QMS) ensures
a formal process for new product introduction (taking
into account the customer requirements), the control of
production and continuous improvements. All levels of
management and the workforce understand (through constant
training and updates), that the quality of the products
HIV/AIDS
Dorbyl has undertaken a drive to enable all employees
to know their HIV/AIDS status and to raise the general
awareness, concerns and treatment surrounding HIV/AIDS.
The on site clinic is available for tests, counselling and
referral for treatment. The rights of the employees are
safeguarded at all times.
The current certifications at Guestro Castings include:
• Grey Iron Metal products carries the SABS mark (SANS
1034/SABS1034:2008); and
• SABS mark (SANS 1622:2009) for Machined Brake
drums.
Preparations are in progress for the re-certification audit for
TS16949 and ISO9001, planned for November 2011.
Risk management
The Board recognises that the management of risk is crucial in order to protect the Group against uncertainties that could impact
on the sustainability of the business. Major risk areas are continually identified and mitigated by management and are reported to
the Audit and Risk Committee.
Risk
Risk management/mitigation
Skills retention and succession
Training and ensuring that salaries are market related.
In-store health and safetyTesting and continuous consultation, external Safetec Audits and safety progammes.
Industrial relations
Upkeeping the staff morale and positive participation.
BrandDevelop brand awareness through quality SABS approved products and through delivery of
outstganding service
CompetitionEnsuring close monitoring of the particular industry within which the business operates,
continuous productivity improvements, cost competitiveness, price sensitivity and customer
satisfaction.
Gross margins
Alternate suppliers, material cost downs. Actions in place to ensure competitive sourcing.
Liquidity and going concernThe cash resources of the Group are monitored by senior management on a daily basis and
reported upon in the management accounts presented to the Board. The going concern and
working capital adequacy statements are reviewed and signed off by the Board annually
confirming that the Group will have sufficient cash resources to continue operating in the next
year ahead.
Quality and product liabilityProcess control and conforming to customer requirements and agreed test methods.
Appropriate levels of insurance are in place.
Safeguarding of assetsThe Group’s assets are insured against loss and business interruption. Premises access
security is in place at all times.
Compliance with legislationIntroduction of standard operating procedures and standard emergency procedures. The Group
uses external specialists and advise where considered necessary.
Fire and hazardous substancesMaintaining of fire protection equipment and safe storage of all materials, in particular the
storage of hazardous materials.
Market demand fluctuationTo broaden both the customer and product base, in order to limit dependence on a single
segment of demand.
10
Exchange rate volatility
Increase local market penetration.
Competitor activity
To be cost effective and service orientated.
Electricity costs
Flexible working hours to avoid the high electrical tariffs.
Company Secretary
The Board has access to the advice and services of
the Company Secretary and where necessary, may seek
professional advice.
Code of Ethics
All employees of the Dorbyl Group are required to maintain
the highest ethical standards in their dealings with each
other and other stakeholders. In line with the relevant
recommendation of the King III Report, these values have
been formalised in a Code of Ethics which is widely
distributed to employees.
Whistleblowing procedures
go v ernance
A whistleblowing procedure has been implemented by the
Group. This programme, monitored by the Audit and Risk
Committee, enables employees, customers, suppliers and
other stakeholders, on a confidential basis, to raise concerns
in cases where conduct is alleged to be contrary to ethical
behaviour. Such concerns are pursued vigorously.
Risk management and internal control
The Internal Audit function is outsourced to Remgro
Management Services Limited, an appraisal function
operating within the Remgro Group, which continues to follow
a risk based audit methodology.
Reports issued by the Internal Audit function are also
reviewed by the external auditors.
cor p orate
Sponsor
PSG Capital (Pty) Limited acts as sponsor to Dorbyl to
advise the Company on the interpretation of, and compliance
with, the Listings Requirements of the JSE Limited (JSE)
regulations and to review all notices required in terms of the
JSE rules and regulations.
Dealing in securities
Directors, officers and selected employees are made aware
of the restricted or “closed” periods for dealing in Dorbyl
shares and the provisions of the Insider Trading legislation.
The closed period lasts from the end of the financial reporting
period until the publication of the financial results for that
period. Additional closed periods may be declared from time
to time as circumstances warrant.
11
Contents
Financial
Statements
Directors’ responsibility statement
13
Declaration by the company secretary
13
Report of the independent auditors to the
consolidated financial statements
14
Directors’ report
15
Consolidated statement of financial position
19
Consolidated statement of comprehensive income
20
Consolidated statement of cash flows
21
Consolidated statement of changes in equity
22
Notes to the consolidated financial statements
23
Report of the independent auditors to the
separate financial statements
59
Separate statement of financial position
60
Separate statement of comprehensive income
61
Separate statement of cash flows
62
Separate statement of changes in equity
63
Notes to the separate financial statements
64
Please note that the reference to “Consolidated” refers to Dorbyl
Limited, its subsidiaries and associated companies. “Separate”
refers to the company Dorbyl Limited.
12
Directors’ responsibility statement
The Company’s directors are responsible for the preparation and fair presentation of the consolidated and separate annual financial
statements, comprising the statement of financial position at 31 March 2011, and the statements of comprehensive income,
changes in equity and cash flows for the year then ended, and the notes to the financial statements, which include a summary of
significant accounting policies and other explanatory notes, and the directors’ report, in accordance with International Financial
Reporting Standards and in the manner required by the Companies Act of South Africa.
The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate
accounting records and an effective system of risk management.
The directors’ have made an assessment of the ability of the Company and its subsidiaries to continue as going concerns and have
no reason to believe that the businesses will not be going concerns in the year ahead.
The auditor is responsible for reporting on whether the consolidated annual financial statements and separate annual financial
statements are fairly presented in accordance with the applicable financial reporting framework.
Approval of the consolidated and separate annual financial statements
The consolidated and separate annual financial statements of Dorbyl Limited, as identified in the first paragraph, were approved
by the Board of Directors on 24 June 2011 and are signed on its behalf by:
JB Magwaza
Chairman
RF Röhrs
Group Chief Executive
Declaration by the Company Secretary
I certify that the Company has lodged with the Registrar of Companies all such returns as are required of a public company, in
terms of the Companies Act, 1973, and that all such returns are true, correct and up to date.
BD Bhikha
Company Secretary
13
Independent auditor’s report to the consolidated financial statements
To the members of Dorbyl Limited
We have audited the Group annual financial statements of Dorbyl Limited, which comprise the statement of financial position at
31 March 2011 and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and the
notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, and the
directors’ report.
Directors’ Responsibility for the Financial Statements
The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance
with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, these financial statements present fairly, in all material respects, the consolidated financial position of Dorbyl
Limited at 31 March 2011, and its consolidated financial performance and consolidated cash flows for the year then ended in
accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.
KPMG Inc.
Registered Auditor
Per: AD Barr
Chartered Accountant (SA)
Registered Auditor
Director
24 June 2011
KPMG Inc.
KPMG House
Norvic Drive
Greenacres
6045
14
Directors’ report
NATURE OF BUSINESS
Dorbyl Limited is a JSE quoted industrial group. Pursuant to the disposal of several of the Group’s businesses and properties,
the remaining business comprises the Castings business situated in Benoni South, referred to as Guestro Castings. The business
manufactures and markets high quality Spheriodal Graphite and Grey Iron Castings (in accordance with SABS 0157) to automotive,
mining, overhead line manufacturers, rail, energy, pumps and valves and general engineering businesses.
FINANCIAL RESULTS
Net cash position
The net cash position at R81,1 million, is R35 million higher than the position at 31 March 2010 of R46,1 million mainly due
to the receipt of the proceeds on the disposal of Guestro Forging and Machining, Dorbyl Automotive Systems and the proceeds on
the disposal of the Uitenhage, Struandale and Rosslyn properties, less the special dividend paid during the year.
At 31 March 2011, the only outstanding sale proceeds related to the disposal of the 50% interest in Dorbyl Magnetto Wheels to
the joint venture partner, Magnetto Wheels S.p.A., for a consideration of R5,6 million. The proceeds were received subsequent to
31 March 2011.
re p ort
Change in accounting treatment
Guestro Castings and the Benoni property are no longer accounted for as being held for sale. In respect of the Benoni property,
the carrying value has been increased to reflect the fair market value, net of certain rehabilitation costs still to be incurred. This
results in a direct increase in reserves, thereby not having an effect on the basic or headline earnings.
Net asset value as at 31 March 2011
directors ’
The net asset value per share as at 31 March 2011 of 315 cents per share is comparable to the 487 cents per share as at
31 March 2010. The decrease in the net asset value per share included a special dividend paid of 150 cents per share.
The net asset value at 31 March 2011 can be summarised as follows:
Benoni property
Guestro Castings business Cash Net employee fund liabilities
Other net corporate liabilities Total net asset value R36,8 million or
R26,0 million or
R81,1 million or
R23,5 million or
R13,5 million or
108
77
239
-69
-40
cents
cents
cents
cents
cents
per
per
per
per
per
share
share
share
share
share
R106,9 million or 315 cents per share
The net asset value does not include the possible impact of Secondary Tax on Companies (STC).
Due to the assessed tax losses and capital losses within the relevant corporate entities, the Group is not expected to pay Income
Tax or Capital Gains Tax in the foreseeable future.
Results
As stated in the Group’s Interim Results, the results in respect of the prior periods, related to the Group’s businesses which
operated mainly in the automotive industry. Pursuant to the several business disposals now concluded, the remaining operating
business is Guestro Castings, which operates in the automotive aftermarket and general engineering sectors.
The total comprehensive loss for the year was R7,5 million or 22 cents per share, which was mainly attributable to the remaining
business units being, Guestro Castings, the Benoni property and the Corporate Head Office.
Guestro Castings and the Benoni property are no longer accounted for as being held for sale. The prior two years’ statements of
comprehensive income has been re-presented for comparative purposes.
15
Directors’ report (continued)
GOING CONCERN
The directors have reviewed the Group and Company cash flow forecasts and assumptions and have satisfied themselves that the
Group and Company has adequate resources to meet its foreseeable cash requirements. On this basis, the directors consider it
appropriate to adopt the going concern basis in preparing the Group and Company financial statements.
SUBSIDIARIES
Subsidiaries of the Group are set out in note 34 to the separate financial statements of Dorbyl Limited.
DIVIDENDS
No interim dividend was declared for the year under review (2010 – nil).
A special dividend of 150 cents per share was declared on 18 October 2010.
No final dividend was declared for the financial year under review (2010 – nil).
The following half-yearly dividends were declared and paid to preference shareholders during the year ended 31 March 2011:
Amount
2011
Amount
2010
5% preference shares
6 months to 30 June 2010
5,0
R37 000
6 months to 31 December 2010
5,0
R37 000
R37 000
R37 000
5,5% preference shares
6 months to 30 June 2010
5,5
R68 750
6 months to 31 December 2010
5,5
R68 750
R68 750
R68 750
Cents per share
SHARE CAPITAL
Details of the authorised and issued share capital of Dorbyl at 31 March 2011 are set out in notes 10 and 12 to the separate
financial statements. There was no change in the authorised and issued ordinary share capital, nor the authorised and issued
preference share capital during the year.
SPECIAL RESOLUTIONS
Dorbyl Limited – On 19 October 2010, the Company’s shareholders resolved that the Company may, by way of a renewable general
authority, purchase its own ordinary shares or have its ordinary shares purchased by any subsidiary of the Company in accordance
with the Companies Act of South Africa, 1973 and the Listings Requirements of the JSE Limited.
Dorbyl Limited – On 19 October 2010, the shareholders passed a special resolution relating to the two classes of preference shares
in issue, proposing for the preference shares to be redeemable, subject to the approval of the preference shareholders.
Univel Transmissions (Pty) Limited – On 9 November 2010, the shareholders passed a special resolution, whereby the Company
may in general meeting or the directors may from time to time declare a dividend to be paid to the members in proportion to the
number of shares held by them in each class, or in such other proportion as the shareholders may otherwise mutually agree.
EMPLOYEE SHARE SCHEME
In terms of the current rules of the Scheme, the maximum number of unissued shares available to the Scheme within each ten year
period shall be 15% of the Company’s issued share capital. Each ten year period commences from the date of the first allocation
to participants of the Scheme. At present there are no participants in the Scheme. The last reservation of unissued shares made
available to the scheme was in 1999. The ten year period expired on 7 December 2008. Any unallocated shares cannot be rolled
over into the next ten year cycle. The Board has not made any new shares available to the Scheme, and will consider same as and
when the need arises. As a result, the Scheme is currently dormant.
16
DIRECTORATE
The names of the directors and the Company Secretary in office at the date of this report and the Company’s business and postal
addresses appear on pages 3 and 4. T van Wyk retired from the Board effective 31 January 2011. BP Wood has resigned from the
Board effective 30 June 2011.
In terms of the Company’s Articles of Association (clauses 15.16 and 17.1), Messrs PM Bester and JW Dreyer retire at the
forthcoming Annual General Meeting. JW Dreyer and PM Bester, both being eligible, are available for re-election. The CVs of the
directors appear on page 3.
DIRECTORS’ INTERESTS IN THE SHARE CAPITAL OF THE COMPANY
The interest of the current directors in the ordinary share capital of the Company as at 31 March 2011 and 31 March 2010 was
as follows:
Director
Non-
beneficially held directly
TA Morkel
–
Non-
beneficially
held
indirectly
Beneficially
held
directly
Beneficially
held
indirectly
Total
shares
Percentage
–
–
660 000
660 000
1.9
re p ort
There were no changes in the shareholdings of the directors between 31 March 2011 and the date of this report.
DIRECTORS’ REMUNERATION
Directors’ Basic
Other
Retirement/
fees remuneration
benefits
medical
R’000
R’000
R’000
R’000
Retention
and
contractual
bonuses
R’000
Total
R’000
Executive
–
2 439
209
308
1 845
4 801
RF Röhrs
BP Wood
–
–
1 508
931
165
44
147
161
1 845
–
3 665
1 136
Non-executive
873
–
–
–
–
873
JB Magwaza
PM Bester
T van Wyk*
TA Morkel
JW Dreyer*
400
185
88
120
80
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
400
185
88
120
80
31 March 2011
873
2 439
209
308
1 845
5 674
Executive
–
3 027
208
417
1 038
4 690
RF Röhrs
BP Wood
–
–
2 066
961
166
43
259
158
651
387
3 141
1 549
Non-executive
927
–
–
–
–
927
JB Magwaza
JE Newbury
PM Bester
T van Wyk*
TA Morkel
JW Dreyer*
272
200
185
105
85
80
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
272
200
185
105
85
80
31 March 2010
927
3 027
208
417
1 038
5 617
directors ’
The directors’ remuneration was as follows:
17
Directors’ report (continued)
* Paid to the company that these directors represent.
MEETING ATTENDANCE
The details of the Board and Committee meeting attendances by the directors for the financial year are set out below. The number
in brackets reflects the number of meetings attended, whilst the director was in office.
Audit
Board and Risk
Director
meetings
Committee
PM Bester
JW Dreyer
JB Magwaza TA Morkel
RF Röhrs
BP Wood
T van Wyk
18
7
7
7
7
7
7
5
(7)
3 (3)
(6)
(7)
3 (3)
(7) 3 (3)
(7)
(7)
(5)
Remuneration
and
Nominations
Committee
1 (1)
1 (1)
1 (1)
Consolidated statement of financial position
as at 31 March 2011
2011
R’000
2010
R’000
ASSETS
Non-current assets
Property, plant and equipment
6
44 221 103
Total non-current assets
44 221 103
Current assets
Inventories
9
Taxation receivable
Trade and other receivables
10 Employee benefits
16 Cash and cash equivalents
12 Assets classified as held for sale
11 25 330
47
28 886
1 503
81 065
–
Total current assets
136 831 346 195
Total assets
181 052 346 298
25
2
64
253
–
–
598
821
685
091
13 725 (2 477)
13 725
(2 477)
Stated capital
Reserves
14 Retained earnings
11 248 25 771 69 922 11 248
74 466
79 566
Total equity attributable to equity holders of the Company
Non-controlling interest
106 941 624 165 280
1 310
Total equity
107 565 166 590
Non-current liabilities
Preference share capital
16 3 980 24 974 3 980
23 911
Total non-current liabilities
28 954 27 891
Current liabilities
Bank overdraft
12 Trade and other payables
18 Provisions
17 Taxation payable
Liabilities classified as held for sale
11 –
44 227 300 6
–
22 602
23 829
300
–
105 086
Total current liabilities
44 533 151 817
Total liabilities
73 487 179 708
Total equity and liabilities
181 052 346 298
Net asset value per share (cents)
315,2 487,2
F I N A N C I A L
EQUITY AND LIABILITIES
Equity
Share capital
13 Treasury shares
13 S T A T E M E N T S
Notes
19
Consolidated statement of comprehensive income
for the year ended 31 March 2011
2011
2010
2009
Re-presented* Re-presented*
Notes
R’000
R’000
R’000
Continuing operations:
Revenue
19
126 959 104 400 Cost of sales
(126 209)
(108 154)
Gross profit/(loss)
Other operating income
20
Administrative expenses
Sales and distribution expenses
Other operating expenses
Environmental costs
Reversal/(impairment) of property, plant and equipment
Employee benefit liabilities (raised)/reversed
16
750 6 408 (23 880)
(3 559)
(5 199)
–
(2 381)
Results from operating activities
20
Net finance income
754)
972 061)
496)
–
10 329 2 942 –
(60 193)
(7 909)
(27 861)
5 604 (9 068)
4 596 (142 155)
2 873
21
21
5 989 (385)
5 001 (405)
6 648
(3 775)
7
–
(21 943)
(5 741)
Loss before income tax
Income tax expense
22
(22 257)
(4 919)
(26 415)
–
(145 023)
(67)
Loss from continuing operations
Discontinued operations
Loss from discontinued operations (net of income tax)
24
(27 176)
(2 530)
(26 415)
(87 387)
(145 090)
Loss for the year
20
(29 706)
(113 802)
(259 845)
Other comprehensive income/(expense)
Revaluation/(devaluation) of property, plant and equipment
21 771 (5 000)
102 017
Other comprehensive income/(expense) for the year, net of income tax
21 771 (5 000)
102 017
Total comprehensive loss for the year
(7 935)
(118 802)
(157 828)
Loss attributable to:
Owners of the parent
(29 224)
(482)
(94 848)
(18 954)
(237 932)
(21 913)
Loss for the year
(29 706)
(113 802)
(259 845)
Total comprehensive loss attributable to:
(7 453)
(482)
(99 848)
(18 954)
(135 915)
(21 913)
Total comprehensive loss for the year
(7 935)
(118 802)
(157 828)
25
(86,1)
(279,6)
(701,4)
Continuing operations
(78,7)
(7,4)
(77,9)
(201,7)
(427,7)
(273,7)
Dividends paid per ordinary share (cents)
Special – 22 November 2010
150,0 –
Finance income
Finance costs
Share of loss of equity accounted investee (net of income tax)
Basic and diluted loss per share (cents)
* See Discontinued operations – note 24.
20
(3
2
(19
(2
122 896
(160 841)
(37
10
(41
(5
945)
073
172)
009)
(114 755)
–
Consolidated statement of cash flows
(113 802)
2
9
(4
(3
21
866
942
865)
103)
943
(237)
7 500
(322)
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Change in provisions and employee benefits
(28 780)
(11 767)
6 643 510 2 381 (80
51
3
(53
(3
Cash utilised by operating activities
Interest expense
21
Income tax (paid)/refunded
26
(31 013)
(329)
(4 918)
(81 197)
(929)
769
Net cash from operating activities
Cash flows from investing activities
(36 260)
122 091 (81 357)
68 850
Interest income
21
Proceeds on disposal of property, plant and equipment
Acquisition of property, plant and equipment
– expansion
– replacement
Proceeds on disposal of discontinued operations,
net of cash disposed of
27
Change in advances made to associates
5 947 77 608 –
(6 134)
43 479 1 191 4 032
62 922
Cash flows from financing activities
(50 886)
–
Dividends paid
(50 886)
–
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Classified as held for sale at beginning of year
Classified as held for sale at end of year
34 945 42 083 4 037 –
Cash and cash equivalents at end of year
81 065 12
S T A T E M E N T S
Cash flows from operating activities
Loss for the year
(29 706)
Adjustments for:
Depreciation
615 (Reversal)/impairment of losses on property, plant and equipment
(750)
Impairment/(reversal) of losses on investments in associates
3 280 Net interest income
(5 618)
Share of loss of equity accounted investee
–
Gain on sale of property, plant and equipment
(1 520)
Loss on sale of discontinued operations
–
Income tax expense/(relief)
4 919 2010
R’000
078)
879
982
568)
412)
F I N A N C I A L
2011
R’000
(3 990)
(2 352)
Notes
10 000
(1 762)
(12
51
7
(4
507)
431
196
037)
42 083
21
Consolidated statement of changes in equity
Equity
holders
Stated Retained of the capital Reserves earnings Company Note R’000 R’000 R’000 R’000 Balance 31 March 2009 11 248 106 017 147 863 Total comprehensive loss for the year: Loss for the year –
– (94 848)
Total other comprehensive loss for the year Devaluation of property, plant
and equipment Transfer of revaluation reserve on
sale of property Depreciation on revaluation of property – (31 551)
265 128 Minority interest R’000 Total
equity
R’000
20 264 285 392
(94 848) (18 954) (113 802)
26 551 (5 000)
–
(5 000)
(5 000)
14 –
(5 000)
–
(5 000)
–
14 14 – (26 326)
–
(225)
26 326 225 –
–
–
–
–
–
79 566 165 280 1 310 166 590
Total comprehensive loss for the year: Loss for the year –
– (29 224)
Total other comprehensive income for the year – (48 695) 70 466 (29 224)
21 771 (482)
–
(29 706)
21 771
Balance 31 March 2010 Revaluation of property, plant
and equipment Transfer of revaluation reserve on
sale of property 11 248 74 466 14 –
21 771 –
21 771 –
21 771
14 – (70 466)
70 466 –
–
–
Transactions with owners, recorded directly
to equity: Total contribution by and distributions
to owners –
– (50 886)
(50 886)
(204)
(51 090)
Dividends to shareholders Disposal of non-controlling interest –
–
(50 886)
–
–
(204)
(50 886)
(204)
Balance 31 March 2011 11 248 106 941 624 107 565
– (50 886)
–
–
25 771 69 922 Details of reserves are set out in note 14.
Share capital is reflected net of treasury shares. Details of share capital and treasury shares are set out in note 13.
A special dividend of 150 cents per ordinary share was paid on 22 November 2010. Secondary Tax on Companies amounting to
R4,9 million was paid in this regard.
22
Notes to the consolidated financial statements
1.
Reporting entity
Dorbyl Limited (“the Company”) is a company domiciled in South Africa. The address of the Company’s registered office is
13 Lincoln Road, Industrial Sites, Benoni South, 1501. The consolidated financial statements of the Group as at and for the
year ended 31 March 2011 comprise the Company and its subsidiaries (together referred to as the “Group” and individually
as “Group entities”) and the Group’s interest in associates. The Group is primarily involved in the manufacture of automotive
aftermarket and general engineering.
2.Basis of preparation
S T A T E M E N T S
(a) Statement of compliance
The consolidated and separate financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board, the Listings
Requirements of the JSE Limited, the requirements of the Companies Act of South Africa, 1973 as amended and AC500
Standards as issued by the Accounting Practice Board.
The consolidated and separate financial statements were approved by the Board of Directors on 24 June 2011.
(b)Basis of measurement
The consolidated and separate financial statements have been prepared on the historical cost basis except for the
F I N A N C I A L
following:
• derivative financial instruments are measured at fair value;
• owner occupied properties are measured at fair value; and
• the defined benefit asset is recognised as the net total of the plan assets, plus unrecognised past service cost
and unrecognised actuarial losses, less unrecognised actuarial gains and the present value of the defined benefit
obligation.
The methods used to measure fair values are discussed further in note 33 of the consolidated financial statements and
note 29 of the separate financial statements.
(c) Functional and presentation currency
The consolidated and separate financial statements are presented in South African Rand, which is the Company’s
functional currency, and rounded to the nearest thousand, unless indicated otherwise.
(d) Use of estimates and judgements
The preparation of consolidated and separate financial statements in conformity with IFRS requires management to
make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of
assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis
of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
In particular, information about significant areas of estimation, uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amounts recognised in the consolidated and separate
financial statements is included in the following notes:
23
Notes to the consolidated financial statements (continued)
• Notes 31 and 32 consolidated and 27 and 28 of the separate financial statements – measurement of defined benefit
obligations
• Notes 17 and 28 consolidated and 14 and 24 of the separate financial statements – provisions and contingencies
• Notes 6 and 36 consolidated and 2 and 32 of the separate financial statements – impairment of property, plant and
equipment
• Notes 6 consolidated and 2 of the separate financial statements – revaluation of owner occupied properties
• Notes 22 consolidated and 19 of the separate financial statements – utilisation of tax losses
3.
Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated and
separate financial statements, and have been applied consistently by Group entities.
Certain comparative amounts in the statement of comprehensive income have been restated as if an operation discontinued
in the prior period had been continued from the start of the comparative period (see note 23).
(a)Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial
and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting
rights that currently are exercisable or convertible are taken into account. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control commences until the date that
control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the
policies adopted by the Group.
(ii) Investments in associates(equity accounted investees)
Associates are those entities in which the Group has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent
of the voting power of another entity. Associates are accounted for using the equity method (equity accounted
investees) and are initially recognised at cost. The consolidated financial statements include the Group’s share of
the profit or loss and other comprehensive income, and equity movements of equity accounted investees, from the
date that significant influence commences until the date that significant influence ceases. When the Group’s share
of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest is reduced to nil
and recognition of further losses is discontinued except to the extent that the Group has an obligation or has made
payments on behalf of the investee.
(iii)Transactions eliminated on consolidation
Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with
equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is
no evidence of impairment.
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated at the respective foreign exchange rate ruling at the dates of the
24
transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are restated to
Rand at the foreign exchange rate ruling at that date. The foreign currency gain or loss on the monetary items is the
difference between amortised cost in the functional currency at the beginning of the year, adjusted for the effective
interest and payments during the year, and the amortised cost in the foreign currency translated at the exchange
rate at the end of the year.
Foreign exchange differences arising on restatement of monetary assets and liabilities at the reporting date are
recognised in profit or loss.
(c) Financial instruments
S T A T E M E N T S
(i) Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity, trade and other receivables, cash and cash
equivalents, loans and borrowings, and trade and other payables.
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other
financial assets (including assets designated at fair value through profit and loss) are recognised initially on the trade
date, which is the date that the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the assets expire,
or it transfers the rights to receive the contractual cash flows on the financial assets in a transaction in which
substantially all the risks and rewards of ownership of the financial assets are transferred. Any interest in transferred
F I N A N C I A L
financial assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand
and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents
for the purpose of the statement of cash flows. Subsequent to initial recognition, cash and cash equivalents are
measured at amortised cost.
Accounting for finance income and expense is discussed in note 21 to the consolidated financial statements and
note 18 to the separate financial statements.
Other
Other non-derivative financial instruments are measured at amortised cost using the effective interest method, and
in the case of financial assets less any impairment losses.
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated.
All other financial liabilities (including liabilities designated at fair value through profit and loss) are recognised
initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the
instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
(ii) Derivative financial instruments
The Group holds derivative financial instruments to hedge its foreign currency risk exposures.
Derivatives are recognised initially at fair value. Attributable transaction costs are recognised in profit and loss when
incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are accounted
for as described below:
25
• Gains and losses arising from a change in fair value of financial instruments that are not part of the hedging
relationship are included in net profit or loss in the period in which the change arises.
• Gains and losses from measuring the hedging instruments relating to a fair value hedge at fair value are
recognised immediately in net profit or loss.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and
share options are recognised as a deduction from equity, net of any tax effects.
Preference share capital is classified as a liability if it is redeemable on a specific date or at the option of the
shareholders or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense in
profit or loss as accrued.
Repurchase of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly
attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified
as treasury shares and presented as a deduction from total equity. When treasury shares are sold or re-issued
subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the
transaction is transferred to/from retained earnings.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
(d)Property, plant and equipment
(i) Recognition and measurement
ll property, plant and equipment are initially recorded at cost. Land and buildings are carried at a revalued amount,
A
being the fair value at the date of revaluation, determined from market based evidence by appraisal undertaken
by professional valuers, less any subsequent accumulated depreciation and subsequent accumulated impairment
losses.
evaluations are performed annually by management and every three years by professional valuers, such that the
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carrying amount does not differ materially from that which would be determined using the fair value at the reporting
date.
ny revaluation increase arising on the revaluation of such land and buildings is recognised in other comprehensive
A
income and accumulated in the revaluation reserve. A decrease in the carrying amount arising on the revaluation of
such land and buildings is recognised in profit or loss, however, the decrease is recognised in other comprehensive
income to the extent that it reduces any existing credit balance in the revaluation reserve.
he realised portion of the revaluation reserve is transferred to retained earnings. An annual transfer from the
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revaluation reserve to retained earnings is made for the difference between depreciation based on the revalued
carrying amount of the assets and depreciation based on the asset’s original cost. Additionally, accumulated
depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net
amount is restated to the revalued amount of the asset.
Other items of plant and equipment are carried at cost less accumulated depreciation and any accumulated
impairment losses.
26
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset
to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the
site on which they are located. Purchased software that is integral to the functionality of the related equipment is
capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Gains and losses on disposal of any item of plant and equipment are determined by comparing the proceeds from
S T A T E M E N T S
disposal with the carrying amount of plant and equipment and are recognised net within “other income” in profit or
loss.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of an
item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost
can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-today servicing of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are
F I N A N C I A L
assessed and if a component has a useful life that is different from the remainder of the asset, that component is
depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an
item of property, plant and equipment. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
• plant and equipment
50 – 100 years
5 – 20 years
• office equipment
5 years
• vehicles
4 years
• buildings
Depreciation methods, useful lives and the residual value are reviewed at each reporting date and adjusted if
appropriate.
(iv) Derecognition
The carrying amount of an item of property, plant and equipment is derecognised at the earlier of:
• disposal; or
• when no future economic benefits are expected from its use or disposal.
Any gain or loss on derecognition of an item of property, plant and equipment is recognised in profit or loss.
(e) Non-current assets held for sale
Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered principally
through sale rather than through continuing use are classified as held for sale. Immediately before classification as
held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Group’s accounting
27
policies. Thereafter, the assets (or disposal groups) are measured at the lower of their carrying amount and the fair value
less costs to sell.
Depreciation on non-current assets held for sale is ceased from the date that the asset is classified as held for sale.
Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities
on a prorata basis except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefits
and investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment
losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit
and loss.
Gains are not recognised in excess of any cumulative impairment losses.
Associates are equity accounted for up to the date that they become held for sale. Thereafter investment in associates
are carried at the lower of their carrying amount and the fair value less costs to sell.
(f) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based at standard cost
which approximates actual cost and is determined using the first-in first-out principle, and includes expenditure incurred
in acquiring the inventories, production and conversion costs and other costs incurred in bringing them to their existing
location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share
of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
(g) Impairment
(i) Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is
impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have
had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at the original
effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial
asset recognised previously in other comprehensive income is transferred to profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment
loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are
debt securities, the reversal is recognised in profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists then the asset’s recoverable amount is estimated.
28
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset or cash generating unit. For purposes of impairment testing, assets are grouped together into the smallest
group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of
other assets or groups of assets (“the cash generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of
cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and
S T A T E M E N T S
then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
(h) Employee benefits
(i) Defined contribution plan
F I N A N C I A L
A defined contribution plan is a post employment benefit plan under which an entity pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions
to defined contribution pension plans are recognised as an employee benefit expense in profit or loss when they
are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a deduction in future
payments is available.
(ii) Defined benefit plan
A defined benefit plan is a post employment benefit plan other than a defined contribution plan. The Group’s net
obligation in respect of a defined benefit pension plan is calculated separately for each plan by estimating the
amount of future benefits that employees have earned in return for their service in the current and prior periods;
that benefit is discounted to determine its present value. The difference between the fair value of plan assets and
the present value of the plan obligations represents the Group’s defined benefit obligation. Any unrecognised past
service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date
on government bonds that have maturity dates approximating to the terms of the Group’s obligations and that are
denominated in the same currency in which the benefits are expected to be paid. The calculation is performed
annually by a qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Group, the recognised asset is limited to the net total of any
unrecognised past service costs and the present value of any future refunds from the plan or reductions in future
contributions to the plan.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees
is recognised as an expense in profit or loss on a straight-line basis over the average period until the benefits become
vested. To the extent that the benefits vest immediately the expense is recognised immediately in profit or loss.
The Group recognises all actuarial gains and losses arising from defined benefit plans directly in profit or loss
immediately.
(iii) Other long-term service benefits
The Group’s net obligation in respect of long-term service benefits, other than pension plans, is the amount of
future benefits that employees have earned in return for their service in the current and prior periods; that benefit
29
is discounted to determine its present value, and the fair value of any related assets is deducted. The discount rate
is the yield at the reporting date on government bonds that have maturity dates approximating to the terms of the
Group’s obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or
losses are recognised in profit or loss in the period in which they arise.
(iv) Termination benefits
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic
possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement
date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination
benefits for voluntary redundancies are recognised as an expense if the Group has made an offer encouraging
voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated
reliably.
(v) Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if
the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by
the employee and the obligation can be estimated reliably.
(i)Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised
as a finance cost.
(i) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a
contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured
at the present value of the lower of the expected cost of terminating the contract and the expected net cost of
continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the
assets associated with that contract.
(j) Revenue
(i) Goods sold
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of
returns, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of
ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and
possible return of goods can be estimated reliably, there is no continuing management involvement with the goods,
and the amount of revenue can be measured reliably.
(ii) Services
Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the
transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.
30
(k) Other income
(i) Rental income
ental income from sub-leases is recognised in profit or loss on a straight-line basis over the term of the lease. Lease
R
incentives granted are recognised as an integral part of the total rental income, over the term of the lease.
(ii) Motor Industry Development Programme (MIDP) incentive income
S T A T E M E N T S
Export rebates earned under the Motor Industry Development Programme are accrued and brought to account at
the time of export. Whilst all claim formalities may not have necessarily been completed at the time of accrual,
the amount included in “gross profit” represents an estimate of the cash benefits that will accrue to the Company,
based on actual past experience.
(l) Finance income and expenses
inance income comprises interest income on funds invested, dividend income, foreign currency gains, changes in the
F
fair value of financial assets at fair value through profit or loss. Interest income is recognised as it accrues in profit or
loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the Group’s
right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
F I N A N C I A L
inance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, dividends on the
F
preference shares classified as liabilities, foreign currency losses, changes in the fair value of financial assets at fair value
through profit or loss, impairment losses recognised on financial assets (other than trade receivables) that are recognised
in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method.
(m) Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the
extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised
in other comprehensive income or equity.
urrent tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
C
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
eferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying
D
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that
is not a business combination and that affect neither accounting nor taxable profit to the extent that it is probable that
they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied
to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by
the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or
on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and
liabilities will be realised simultaneously.
deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
A
which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will be realised.
dditional income taxes (Secondary Tax on Companies) that arise from the distribution of dividends are recognised at the
A
same time as the liability to pay the related dividend is recognised.
(n) Discontinued operations
discontinued operation is a component of the Group’s business that represents a separate major line of business or
A
geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with
a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria
31
to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative
income statement is re-presented as if the operation had been discontinued from the start of the comparative period.
(o) Earnings per share
The Group presents basic and diluted earnings per share (EPS) and headline EPS data for its ordinary shares. Basic
EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or
loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects
of all dilutive potential ordinary shares.
(p)Headline earnings per share
Headline earnings per share is calculated by dividing the headline profit or loss attributable to ordinary shareholders of
the Company by the weighted average number of ordinary shares outstanding during the period.
(q) Related party transactions
Related party transactions are transactions which result in a transfer of resources, services or obligations between related
parties, regardless of whether a price is charged. Related parties refer to entities in which the Group directly or indirectly
through one or more intermediaries controls or is controlled by or is in common control with. These include the holding
company, subsidiaries, fellow subsidiaries, associates and key management.
(r) Segment reporting
n operating segment is a component of the Group that engages in business activities from which it may earn revenues
A
and incur expenses, including revenues and expenses that relate to transactions with entities within the Group. An
operating segment’s operating results are reviewed regularly by the Board of Directors to make decisions about resources
to be allocated to the segment and assess its performance.
Entities within the Group are aggregated into one segment due the similarity of the nature of its products, production
process, type of class of customer and the method used to distribute their products. The basis of segment reporting is
representative of the internal structure used for management reporting.
(s) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not yet effective for the year ended
31 March 2011, and have not been applied in preparing these consolidated financial statements. None of these will have
a material effect on the consolidated financial statements.
(t) Investments in subsidiaries
Investments in subsidiaries are carried at the lower of cost less accumulated impairment losses in the Company.
4.
Change in accounting policies
There were no changes in accounting policies during the year.
5.
Financial risk management
Overview
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
• Operational risk
32
his note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
T
processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management
framework. The Board has established the Audit and Risk Committee, which is responsible for developing and monitoring the
Group’s risk management policies. The Committee reports regularly to the Board of Directors on its activities.
S T A T E M E N T S
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management
standards and procedures, aims to develop a disciplined and constructive control environment in which all employees
understand their roles and obligations.
The Group Audit and Risk Committee oversees how management monitors compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the
Group. The Group Audit and Risk Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both
regular and ad hoc reviews of risk management controls and procedures, following a risk based approach, the results of which
are reported to the Audit and Risk Committee. The Audit and Risk Committee is satisfied that the Financial Director has the
necessary skills and expertise to perform his duties.
F I N A N C I A L
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers.
he Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics
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of the Group’s customer base, including the default risk of the industry and country in which customers operate, has less of
an influence on credit risk. The risk arising on trade receivables is managed through normal credit policies using credit limits;
credit insurance, continual review and exception reporting. The exposure to credit risk relating to trade receivables is not
concentrated in any specific area.
Cash and cash equivalents
The risk on cash and cash equivalents is managed by investing only with financially sound institutions and by setting prudent
exposure limits for each institution.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or damage to the
Group’s reputation.
Market risk
arket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
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affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk on sale and purchase transactions that are denominated in currencies other than the
Rand, primarily the Euro (EUR) and US Dollars (USD). In addition, the Group is indirectly exposed to significant input costs,
the prices of which are linked to exchange rates.
33
Interest rate risk
The Group places excess cash on call or short-term fixed deposits to maximise interest income.
Equity price risk
The Group is indirectly exposed to equity price risk through the underlying investments supporting the Dorbyl Pension Fund
and post retirement medical obligations.
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes,
personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those
arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise
from all of the Group’s operations.
The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the
Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior
management within each business unit. This responsibility is supported by the development of overall Group standards for the
management of operational risk in the following areas:
– Requirements for appropriate segregation of duties, including the independent authorisation of transactions
– Requirements for the reconciliation and monitoring of transactions
– Compliance with regulatory and other legal requirements
– Documentation of controls and procedures
– Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to
address the risks identified
– Requirements for the reporting of operational losses and proposed remedial action
– Development of contingency plans
– Training and professional development
– Ethical and business standards
– Risk mitigation, including insurance where this is effective
Compliance with Group standards is supported by a programme of periodic reviews undertaken by Internal Audit, on a
combined assurance basis, along with management and the external auditors. The results of Internal Audit reviews are
discussed with the management of the business unit to which they relate, with summaries submitted to the Audit and Risk
Committee and senior management of the Group.
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines
as net operating income divided by total shareholders’ equity. The Board of Directors also monitors the level of dividends to
ordinary shareholders. There were no changes in the Group’s approach to capital management during the current year. None
of the Group’s entities or the Company are subject to externally imposed capital requirements.
34
6.Property, plant and equipment
128 515
–
3 057 –
–
17 645 –
–
82 438 6 134 14 077 1 354 –
14 077
104 494
6 134
–
–
21 771 –
–
(4 500)
–
(13 461)
21 771
(17 961)
Less: Accumulated depreciation
and impairment losses
–
5 704 76 620 1 970 At the beginning of the year
Transfer from assets held for sale
Disposals
Depreciation for the year
–
–
–
–
–
5 373
–
331
–
80 939 (4 500)
181 13 974 1 354 (13 461)
103 At the beginning of the year
Acquisitions
Revaluation of property, plant and
equipment
Disposals
84 294
13 974
87 666
(17 961)
615
Carrying amount
3 057 33 712 7 452 –
44 221
2010
Cost or valuation
–
–
–
14 077 14 077
3 471 –
37 695 –
107 195 193 14 971 –
163 332
193
–
(3 471)
–
(5 000)
(32 695)
–
–
(1 341)
(106 047)
–
–
(894)
–
–
–
13 974 13 974
At the beginning of the year
Disposals
Transfer to assets held for sale
Impairment during the year
–
–
–
–
–
790 –
(1 041)
–
251 77 109 (79 363)
(1 041)
862 2 433 14 607 (815)
–
–
182 92 506
(80 178)
(2 082)
862
2 866
Carrying amount
–
–
–
103 103
3 471 –
36 905 –
30 086 –
364 103 70 826
103
–
–
–
103 103
3 057 33 712 7 452 –
44 221
Acquisitions
Devaluation of property, plant and
equipment
Disposals
Carrying amounts
At 1 April 2009
At 31 March 2010
At 1 April 2010
At 31 March 2011
S T A T E M E N T S
2011
Cost or valuation
3 057 39 416 84 072 1 970 Total
R’000
F I N A N C I A L
Office
equipment
R’000
(5 000)
(37 507)
(106 941)
Plant and
Land*Buildings*
equipment
R’000
R’000
R’000
Details of land and buildings are available for inspection at the registered office of the Company.
* Carried at valuation at 31 March.
35
6.Property, plant and equipment (continued)
Disposal of property, plant and equipment
Redundant property, plant and equipment were disposed of during the year, realising R1,5 million in cash.
Impairment losses
Impairment losses of R20,4 million were recognised during the prior period due to the carrying value of these items
exceeding their expected value to be realised on the disposal of these operations and properties. These impairment losses
recognised in profit and loss, were allocated as follows: Rosslyn property – R5 million, Uitenhage property R5 million, Seating
and Components operation – R9,5 million and Transmission Systems operation – R0,9 million. The impairment raised on
the Benoni property during the year ended on 31 March 2009, was reversed during the prior period to profit and loss –
R10,3 million.
During the current period, management decided not to dispose of the Benoni property and the Castings operation. Property,
plant and equipment previously classified as held for sale, have now been reclassified as property, plant and equipment:
Benoni property – R15,3 million and the Castings operation – R1,5 million. The net book value of the property, plant and
equipment of the Castings operation includes previous impairment losses amounting to R49,9 million.
Revaluation of owner occupied properties
The Group states property at fair value.
Management’s assessment of the fair value of land and buildings has been based on valuations by independent valuers
performed in 2009 and still relevant in the current market conditions.
The Benoni property was valued by i-VAL Consultants (Pty) Limited.
The Benoni property is stated at fair value of R37,4 million (net of certain rehabilitation costs still to be incurred
of R6,6 million).
Due to its classification as held for sale in the prior period, the property could not be reflected at a value above the lower of
cost or fair value less costs to sell at the date it was first classified as held for sale, being R15,3 million.
7.
Investment in equity accounted investee
2011
% Holding
2010
% Holding
2011
R’000
Unlisted
Dorbyl Magnetto Wheels (Pty) Limited
–
50 Transferred to assets held for sale
–
–
–
2010
R’000
10 118
(10 118)
–
Impairment losses on investments in unlisted shares of associate companies were made with reference to management’s
valuations of those companies. Where this resulted in the value of the investment having a fair value lower than the carrying
value, the investments were impaired.
36
Investment in equity accounted investee (continued)
Movement in carrying value:
Carrying value of equity accounted investee at beginning of the year
Attributable retained income during the year
Loss for the year
–
–
25 434
(21 943)
–
(21 943)
Carrying value of equity accounted investee at end of the year
Add: Impairment reversal
–
–
3 491
4 865
Advances to equity accounted investee
–
–
8 356
1 762
Reclassified as assets held for sale
–
–
Investment and advances – equity accounted investee
–
–
Directors’ valuation of equity accounted investee (including advances)
–
–
Share of post-acquisition reserves of equity accounted investee until date of decision to
dispose
Retained loss
–
S T A T E M E N T S
7.
2010
R’000
10 118
(10 118)
(27 684)
F I N A N C I A L
2011
R’000
Dorbyl decided to dispose of its interest in Dorbyl Magnetto Wheels (Pty) Limited in
January 2010 and has therefore not accounted for its share of the results of the associate
from this date.
8.
Deferred tax assets and liabilities
Deferred tax assets
Deferred tax liabilities
–
–
–
–
Net deferred tax liability
–
–
Deferred tax liabilities comprise:
Accelerated capital allowances
Disallowed provisions
–
–
(188)
95
Future tax losses accounted for
–
–
(93)
93
–
Movement:
Balance at beginning of year
Balance at beginning of year – liabilities held for sale
Per income statement
Classified as held for sale
–
–
–
–
Balance at end of year
–
The disposal of the interest in Dorbyl Magnetto Wheels (Pty) Limited was finalised during
the current year and the proceeds of R5,6 million received in May 2011.
–
–
(203)
47
156
–
37
8.
Deferred tax assets and liabilities (continued)
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the tax effect of the following
items:
Capital allowances
Other timing differences
2011
R’000
2010
R’000
2 508 7 830 472 9 066
7 328
872
Estimated tax losses
10 810 67 590 17 266
72 690
78 400 89 956
Estimated tax losses carried forward
241 392 259 939
Used in computation of deferred tax
Not used in computation of deferred tax
–
241 392 332
259 607
Inventories
Finished goods
Work in progress
Raw materials
Consumable stores
11 545 11 317 1 774 694 –
–
–
–
25 330 –
3 752 –
Deferred tax assets have not been recognised in respect of these items because it is not
probable that future taxable profits will be available for utilisation by the Group.
9.
Finished goods included above stated at net realisable value.
An amount of R2,3 million (2010 – Rnil) has been provided against inventory.
10. Trade and other receivables
Receivables from sale of business
Receivables from sale of investment in equity accounted investee
Accounting for straight-lining of leases
3 325
21 783
–
490
28 886 25 598
The maximum exposure to credit risk for trade receivables at 31 March by geographic
region was:
South Africa
Europe
21 580 1 368 25 108
–
22 948 25 108
The ageing of trade receivables at 31 March was:
Not past due
Past due 0 – 30 days
Past due more than 90 days
22 618 271 59 –
25 108
–
–
–
22 948 25 108
22 948
–
5 647
291
Trade receivables are exposed to credit risk as described in accounting policy note 5.
38
11. Assets and liabilities classified as held for sale
Management embarked on a plan to dispose of properties and operating businesses.
The sale of the Neave property and Forging and Machining operation was concluded during the prior year.
The Neave property realised R36 million in cash. A R10 million deposit was received for the Forging and Machining disposal
during the prior year and the balance of R21,8 million was received in April 2010.
Sale agreements for the disposal of the Struandale, Uitenhage and Rosslyn properties, entered into during the prior period,
were concluded during the current period realising R35 million, R30 million and R11 million respectively in cash.
S T A T E M E N T S
The Dorbyl Automotive Systems operation was disposed of effective 1 April 2010 realising R23,9 million in cash.
During the current year, management decided not to dispose of the Benoni property and the Castings operation. The assets
and liabilities of these units are therefore no longer classified as held for sale.
The major classes of assets and liabilities of businesses and subsidiaries that have been classified as held for sale are as
follows:
2010
R’000
Assets classified as held for sale:
Property, plant and equipment (*)
Inventories
Tax receivable
–
–
–
–
–
–
–
253 091
091 000)
118)
849)
124)
–
–
–
–
–
Balance at the end of the year
–
–
Liabilities classified as held for sale:
Deferred tax liabilities
Minority shareholders for dividends
Trade and other payables, including derivatives
Taxation payable
–
–
–
–
156
2 161
102 692
77
–
105 086
105 086 (84 753)
(20 333)
–
–
–
–
–
Balance at the beginning of the year
Disposal of land and buildings
Disposal of investment in equity accounted investee
Disposal of discontinued operations
Reclassified out of assets held for sale
253
(76
(10
(108
(58
101
10
62
75
161
118
490
120
165
4 037
F I N A N C I A L
2011
R’000
(*) Net of impairments of Rnil (2010 – R75,1 million).
39
2011
R’000
2010
R’000
11 478 69 587 44 022
24 700
81 065 –
68 722
(4 037)
Bank overdrafts used for cash management purposes
81 065 –
64 685
(22 602)
81 065 42 083
13 725 (2 477)
13 725
(2 477)
11 248 11 248
12. Cash and cash equivalents
Bank balances
Call and fixed deposits
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets
and liabilities are disclosed in note 33.
Dorbyl Limited has pledged R8 million (2010 – R11 million) with FirstRand Bank
Limited as security against short-term direct and long-term indirect facilities available
to the Group.
Dorbyl Limited has pledged R1,6 million (2010 – R1,6 million) with ABSA Bank Limited
as security against long-term indirect facilities available to the Group.
13. Share capital
Ordinary share capital
Authorised
40 000 000 ordinary shares of no par value
Issued
34 070 056 (2010 – 34 070 056) ordinary shares of no par value
145 961 (2010 – 145 961) held by subsidiary
According to information available to the directors, shareholders holding in excess of
5% of the issued share capital at 31 March 2011 were:
RMB Securities (Pty) Limited
Rand Merchant Bank Limited
At the Annual General Meeting held on 19 October 2010, the directors were granted
a general authority to buy back up to 10% of the issued share capital of the Company
until the next Annual General Meeting. There were no buy back of shares during 2011
and 2010.
40
Number of
shares
14 058 346 3 056 278 2 140 223 % of issued
shares
41,3
9,0
6,3
14. Reserves
Direct movements in reserves
2010
R’000
(48 695)
(31 551)
21 771 (70 466)
–
(5 000)
(26 326)
(225)
(48 695)
74 466 (31 551)
106 017
Balance at end of the year
25 771 74 466
Comprising:
Capital redemption reserve fund
Property revaluation reserve
4 000 21 771 4 000
70 466
25 771 74 466
1 500 2 500 4 000 1 500
2 500
4 000
Issued
740 025 5% cumulative preference shares of R2 each
1 250 000 5,5% cumulative preference shares of R2 each
1 480 2 500 1 480
2 500
3 980 3 980
Transfer to retained earnings on sale of property
Depreciation on revaluation transferred to retained earnings
Movement for the year
Balance at beginning of the year
S T A T E M E N T S
2011
R’000
The capital redemption reserve is a statutory reserve created on the redemption of
share capital.
15.Preference share capital
Authorised 750 000 5% cumulative preference shares of R2 each
2 000 000 5,75% redeemable cumulative preference shares of R2 each F I N A N C I A L
This reserve relates to the revaluation of the Group’s owner occupied fixed property
to market values. The surplus is released to retained earnings to off-set depreciation
charges or as and when the related properties are disposed.
Preference shares are accounted for as financial liabilities at amortised cost (refer note 33).
On 19 October 2010, the shareholders passed a special resolution relating to the two preference share classes in
issue, proposing for the preference shares to be redeemable. This proposal is subject to the approval of the preference
shareholders.
41
2011
R’000
2010
R’000
24 974 (1 503)
23 911
(2 821)
Included in current assets
23 471 1 503 21 090
2 821
Included in non-current liabilities
24 974 23 911
The movement in employee benefit liabilities is analysed as follows:
21 090 24 032
23 911 (2 821)
22 672
1 360
–
–
–
–
–
–
16. Employee benefit liabilities and assets
Post retirement medical aid obligations (refer note 32)
Benefit fund assets (refer note 31)
Post retirement medical aid obligations
Benefit funds
Utilised during the year
Benefit funds
Raised/(reversed) during the year
Benefit funds
Benefit funds
2 381 (2 942)
1 063 1 318 1 239
(4 181)
23 471 21 090
24 974 (1 503)
23 911
(2 821)
Post retirement medical aid obligations – The Group has an obligation to contribute
to the post retirement medical aid costs of certain current and past employees
(refer note 32).
Benefit funds – The most current actuarial valuation of the Dorbyl Pension Fund
indicates that the Group would be able to access the surplus (refer note 31).
17.Provisions
Other
300 300
Included in current liabilities
300 300
The movement in provisions is analysed as follows:
300 770
300 770
Other
Reversed during the year
Other
Other
–
(470)
–
(470)
300 300
300 300
Other – The provision relates mainly to legal claims in respect of various court cases in progress. The underlying disputes
relate mainly to labour related issues and past business disposals.
42
18. Trade and other payables
Trade payables
Other payables
2011
R’000
2010
R’000
19 177 23 393 1 657 –
20 544
3 285
44 227 23 829
The Group’s exposure to currency and liquidity risk relating to trade and other payables is disclosed in note 33.
123 877 3 082 502 564 92 725 760 448
140 324
126 959 595 289 900 772
126 959 104 400 122 896
123 877 3 082 103 025 1 375 119 816
3 080
–
490 889 777 876
–
–
399 539 91 350 640 632
137 244
126 959 595 289 900 772
Local sales
Export sales
Local sales
Export sales
20. Loss for the year
Included in loss for the year which includes continuing operations,
discontinued operations and profit on sale of discontinued operations
are the items detailed below (before taxation):
Income items
Income from associate – unlisted
1 424 4 661 Fees
Rental
Operating lease rentals received
– Continuing operations
– Discontinued operations
Profit/(loss) on disposal of property, plant and equipment
S T A T E M E N T S
2009
Re-presented
R’000
F I N A N C I A L
19. Revenue
Sale of goods and related services
Local sales
Export sales
2010
Re-presented
R’000
2011
R’000
6 606
–
1 424 120 4 541 390
6 216
2 382 3 558 5 791
2 382 –
2 157 1 401 2 016
3 775
1 520 237 (56)
1 520 –
–
237 (184)
128
43
2011
R’000
2010
Re-presented
R’000
20. Loss for the year (continued)
Expense items
Auditors’ remuneration
1 265 1 135 Audit fees – current year
Audit fees – prior year
Other services
Depreciation and amortisation
Owned assets
(refer note 23 – discontinued operations)
Impairment of assets
(Reversal of impairment)/impairment of property, plant and equipment
Impairment/(reversal) of investment in associate
Employee benefits
Contributions to pension and provident funds
Pension fund obligation (refer note 31)
Post retirement medical obligation (refer note 32)
Employee benefits
Employee costs (including employee benefits)
JSE Limited – listing fee
Operating lease charges
Premises
Machinery and equipment
Office equipment
Professional fees
Research and development costs
44
2009
Re-presented
R’000
1 828
761 411 93 616 –
519 1 349
–
479
1 265 1 135 1 828
1 265 –
725 410 884
944
615 2 866 19 383
615 2 866 19 383
615 2 866 19 383
615 –
431 2 435 2 774
16 609
–
2 530 7 500 5 077 –
140 579
(750)
3 280 9 942 (4 865)
129 139
11 440
2 530 5 077 140 579
–
2 530 (10 329)
15 406 60 193
80 386
4 297 6 521 17 229
1 916 1 318 1 063 9 463 (4 181)
1 239 9 320
1 056
6 853
4 297 6 521 17 229
4 297 –
(76)
6 597 11 596
5 633
51 159 139 057 233 462
51 159 –
47 520 91 537 91 333
142 129
58 4 740 128 11 555 142
9 469
3 539 1 006 195 6 922 3 951 682 2 938
5 931
600
4 740 11 555 9 469
4 740 –
4 708 6 847 5 687
3 782
1 761 3 019 3 550
1 761 –
2 746 273 3 283
267
52 –
91
2011
R’000
3 760
272
–
2 317
5 431
6 973
–
301
3 058
1 620
5 989 11 780 11 952
5 989 –
5 001 6 779 6 648
5 304
Finance costs
Interest paid to financial institutions
Interest paid to subsidiaries and equity accounted investee
Interest paid to Revenue Authorities
Foreign exchange losses – realised
Foreign exchange losses – unrealised
Interest paid – other
–
–
(117)
–
(56)
(212)
(717)
–
–
(16 020)
(11)
(212)
(929)
(434)
–
(9 118)
(1 925)
(212)
(385)
(16 960)
(12 618)
(385)
–
(405)
(16 555)
(3 775)
(8 843)
Net finance income/(costs)
5 604 (5 180)
(666)
3
(120)
(7 196)
3
–
–
–
2
(47)
(75)
–
Secondary Tax on Companies Capital Gains Tax
3
4 916 –
(120)
–
(202)
(7 196)
441
202
Total income tax expense/(relief)
4 919 (322)
(6 553)
S T A T E M E N T S
5 947
–
–
42
–
2009
Re-presented
R’000
F I N A N C I A L
21. Net finance income/(costs)
Finance income
Interest received from financial institutions
Interest received from subsidiaries and equity accounted investee
Interest received from Revenue Authorities
Foreign exchange gains – realised
Foreign exchange gains – unrealised
2010
Re-presented
R’000
22. Income tax expense/(relief)
South African
Current year
Normal
Deferred
Prior year (over)/under provision
Normal
Deferred
Interest paid – other relates to dividends on preference shares classified
as interest.
70
(7 323)
57
–
Allocated as follows:
4 919 –
–
(322)
67
(6 620)
Income tax rate reconciliation:
Loss before income tax – continuing operations
Loss before income tax – discontinued operations
(22 257)
(2 530)
(26 415)
(87 709)
(145 023)
(121 375)
(24 787)
(114 124)
(266 398)
45
2011
2010
2009
Re-presentedRe-presented
R’000
R’000
R’000
22. Income tax expense/(relief) (continued)
Income tax expense at standard rate 28%
(2010 – 28%, 2009 – 28%)
Increases/(reductions) due to the following: Dividends and share of associate retained loss
Expenses not allowed/(income not taxable)
Deferred tax asset not raised
(Under)/over provision in respect of prior years
Capital loss on disposal of businesses
Impairment of investment in associate
Capital Gains Tax
Secondary Tax on
Companies
28%
(48%)
(6 940)
11 859 0%
(7%)
(17%)
0%
0%
(4%)
0%
(20%)
28% (31 955)
(28%) 31 633 28% (74 591)
(26%) 68 038
–
1 823 4 202 –
–
918 –
(5%)
(1%)
(21%)
0%
(2%)
1%
0%
(1%)
0%
(23%)
0%
0%
(1%)
0%
4 916 0%
6 144 726 24 302 (75)
2 100 (1 362)
(202)
–
0%
1 607
673
61 855
57
–
3 203
202
441
Total tax expense/(relief)
4 919 (322)
(6 553)
Effective tax rate
(20,6%)
0,3%
2,5%
23. Loss on sale of discontinued operations and controlling interest in subsidiary
On 1 April 2010, the Group disposed of the assets and liabilities of Dorbyl Automotive Systems (a division of Dorbyl Limited)
for R23,9 million in cash as well as its 51% interest in Pullmaflex Southern Africa (Pty) Limited for no consideration.
During the prior period, the following disposals were made:
On 29 January 2010, Guestro Steering Gears (Pty) Limited acquired the assets and liabilities of Guestro Forging and
Machining (a division of Dorbyl Limited) to the value of R66,4 million for a consideration of R58,9 million resulting in a loss of
R7,5 million to Dorbyl Limited.
On 1 February 2010, the Group disposed of the assets and liabilities of Guestro Steering Gears (Pty) Limited for a cash
consideration of R31,8 million.
On 1 February 2010, the Group disposed of its interest in Guestro Steering Gears (Pty) Limited (now dormant after disposing
of its assets and liabilities as above) for R1, after recapitalising the subsidiary and utilising the injected cash to repay the
advances owing to the Company.
On 1 March 2010, the Group disposed of the assets of Guestro Distribution Company (Pty) Limited for a cash consideration
of R4,4 million.
46
23. Loss on sale of discontinued operations and controlling interest
in subsidiary (continued)
Effect of disposals of discontinued operations on the financial position
of the Group:
Inventories
Trade and other payables
2010
Re-presented
R’000
2009
Re-presented
R’000
600 538 676 923)
–
21 460 37 632 (15 407)
–
–
–
–
Net assets disposed of
Loss on disposal
23 891 –
43 685 (7 500)
–
–
Proceeds
23 891 36 185 –
8
48
48
(81
S T A T E M E N T S
2011
R’000
24. Discontinued operations
The disposals of the Neave property and Forging and Machining operation were concluded during the prior year.
The Neave property was sold for R36 million and the cash was received in June 2009.
F I N A N C I A L
The Forging and Machining operation was sold for R31,8 million of which R10 million was received in March 2010 and the
balance of R21,8 million was received in April 2010.
The disposals of the Struandale, Uitenhage and Rosslyn properties were concluded during the current year.
The proceeds of the sale of the Uitenhage property (R30 million) and the Rosslyn property (R11 million) were received in
April 2010 upon transfer of the properties. The proceeds of the sale of the Struandale property (R35 million) was received in
July 2010 upon transfer of the property.
The Dorbyl Automotive Systems operation was disposed effective 1 April 2010 realising R23,9 million in cash.
All operations at the Transmission Systems operation were discontinued on 30 September 2009 and the property, plant and
equipment were disposed of for R26,9 million.
The comparative statement of comprehensive income has been re-presented to show the Benoni property and Castings
operation as continuing operations.
47
2011
R’000
2010
Re-presented
R’000
24. Discontinued operations (continued)
Results of discontinued operations:
Revenue
–
490 889 Cost of sales
–
(502 999)
777 876
(772 329)
Gross (loss)/profit
Other operating expenses:
Profit/(loss) on sale of discontinued operations (refer note 23)
Impairment of property, plant and equipment
(Impairment)/reversal of impairment of investment in equity
accounted investee
–
–
–
750 –
(12 110)
739 (43 656)
(7 500)
(20 271)
5 547
3 899
(46 896)
(3 280)
4 865 (11 440)
Operating loss
Net finance costs
(2 530)
–
(77 933)
(9 776)
(117 836)
(3 539)
Finance income
Finance costs
–
–
6 779 (16 555)
5 304
(8 843)
Income tax relief
(2 530)
–
(87 709)
322 (121 375)
6 620
Loss for the year
(2 530)
(87 387)
(114 755)
Attributable to:
(2 530)
(68 433)
–
(18 954)
(92 842)
(21 913)
Loss for the year
(2 530)
–
(68 946)
(87 387)
(114 755)
Cash flows utilised by discontinued operations
–
(50 196)
–
101 443 Cash flows from financing activities
–
–
24 771
(11 469)
–
48
2009
Re-presented
R’000
–
51 247 13 302
Headline and diluted loss per share (cents)
The calculation of basic loss per share is based on the weighted average
number of ordinary shares in issue during the year and profit for the
year attributable to the equity shareholders of the parent.
Weighted average number of shares – net of treasury shares (000)
Headline loss per share was arrived at after the following adjustments:
2009
Re-presented
R’000
(86,1)
(279,6)
(701,4)
(78,7)
(7,4)
(77,9)
(201,7)
(427,7)
(273,7)
(83,2)
(220,7)
(316,8)
(83,2)
–
(108,3)
(112,4)
(285,9)
(30,9)
S T A T E M E N T S
25. Loss per share
Basic and diluted loss per share (cents)
2010
Re-presented
R’000
33 924 33 924 R’000
R’000
Loss for the year
Adjusted for:
(Profit)/loss on disposal of plant, vehicles and equipment
Loss on discontinuance of operations (refer note 23)
(Reversal of impairments)/impairment of assets
Less: Minority interest
Impairment/(reversal of impairment) of investment in equity
accounted investee
Share of impairment of assets of equity accounted investee (refer note 7)
(29 224)
(1 520)
–
(750)
–
(94 848)
(237)
7 500 9 942 (862)
3 280 –
(4 865)
8 500 Headline loss
(28 214)
(74 870)
33 924
R’000
(237 932)
56
–
129 139
(10 185)
F I N A N C I A L
2011
R’000
11 440
–
(107 482)
The headline loss before taxation and headline loss after taxation are equal due to the estimated tax loss position of the
Group.
The calculation of headline loss per share was based on a headline loss attributable to ordinary shareholders of
R28,214 million (2010 – R74,870 million), and a weighted average number of ordinary shares outstanding of 33,924 million
(2010 – 33,924 million).
Net asset value
Net asset value per share is the total equity attributable to equity holders of the Company divided by the number of ordinary
shares in issue at year end.
26. Income tax paid/(received)
Amounts receivable at beginning of the year
Amounts outstanding classified as held for sale at beginning of the year
Per statement of comprehensive income (excluding deferred tax)
Taxation payable disposed of
Interest included in the balance at beginning of the year
Amounts receivable at end of the year
2011
R’000
2010
R’000
–
(88)
4 919 –
(72)
118 41 (769)
187
(275)
88
–
–
–
4 918 (769)
49
27. Disposal of businesses
Inventories
Taxation payable
Deferred tax
Minority interest
2011
R’000
8
48
49
2
(84
2010
R’000
995 927 053 195 846)
(72)
(156)
(205)
–
21 460
37 632
–
(15 407)
–
–
–
Net identifiable assets and liabilities
Loss on disposal
23 891 –
43 685
(7 500)
Total proceeds
Included in trade and other receivables
Included in held for sale assets
Cash and cash equivalents disposed of
23 891 21 783 –
(2 195)
36 185
(21 783)
(4 402)
–
Net proceeds
43 479 10 000
28. Contingent liabilities
Outstanding legal matters
Guarantees have been issued by the Group in favour of the liquidator of certain companies against which the Group has
claims in order for the liquidator to pursue further claims against former directors and shareholders of those companies and/
or associated companies. These actions are still in progress. The amounts are material. The directors, however, on advice
of the Group’s legal advisors, believe that the prospects of the liquidators prevailing are good. The counterparties in those
actions have, from time to time during the proceedings, indicated their intention to institute action for material consequential
damages against the liquidators and, through the guarantees, the Group. The directors, however, on advice of the Group’s legal
advisors, believe these claims to be spurious and without substance.
There are legal claims in progress relating to labour disputes. These claims are not expected to have any material effect on
Dorbyl.
Claims by former director
Claims have been submitted by a former director following his dismissal. Legal opinion has been obtained and indications are
that these claims are not expected to have any material effect on the financial statements. Counterclaims have been made.
Guarantees given for bank overdrafts
Dorbyl Limited has given guarantees for bank overdrafts of subsidiary companies. Bank overdraft balances at 31 March 2011
were Rnil (2010 – R22,6 million).
50
29. Operating lease commitments/receivables
Lease commitments
Property
Payable within one year
Payable later than one year, but not later than five years
Plant, vehicles and equipment
Total commitments
Liabilities raised in respect of above property leases
Straight-lining of lease liability (refer note 18)
The leased property has been sub-let by the Group.
The lease and sub-lease expire in 2012.
Property lease receivables
Receivable within one year (*)
Receivable later than one year, but not later than five years (*)
Receivable thereafter (*)
2011
R’000
2010
R’000
(3 373)
(9 588)
(3 373)
–
(6 215)
(3 373)
–
(752)
–
–
(752)
–
(3 373)
(10 340)
(1 657)
(3 285)
S T A T E M E N T S
Assets raised in respect of the above sub-leases
Straight-lining of lease (refer note 10)
11 341
33 088
147 526
2 049 191 955
291 490
Property leases and sub-leases include commercial terms and conditions and
escalation clauses.
(*) Included in property lease receivables are amounts relating to the Uitenhage
and Struandale properties.
The Uitenhage property was sold in April 2010 and the Struandale property in July 2010.
Property lease receivables relating to Uitenhage and Struandale properties
Receivable within one year
Receivable in following five years
Receivable thereafter
–
–
–
9 033
31 039
147 526
–
187 598
2 049 –
–
F I N A N C I A L
30.Borrowing capacity
In terms of the Company’s Articles of Association, the Group is entitled to borrow up to the total amount of ordinary and
preference shareholders’ funds, excluding any reserves arising out of the revaluation of assets.
51
31.Pension and provident funds
The Group operates a defined benefit pension plan and a defined contribution provident plan. The funds are registered in
terms of the Pension Funds Act, 1956 as amended. The assets of the respective funds are under the control of the trustees.
Employees who are not members of the above funds are members of the appropriate industry pension and provident funds.
Dorbyl Provident Fund
Obligations for the contributions to the defined contribution plan are recognised as an expense incurred and amounted to
R0,9 million (2010 – R4,2 million). The number of members at 31 March 2011 was 16 (2010 – 77). Employees contribute
7% of earnings, with the employer contributing 11%.
Dorbyl Pension Fund
Number of members 31 March 2011
Employer’s contribution (%)
Employees’ contribution (%)
Date of last statutory valuation approved by Financial Services Board
Date of last statutory valuation submitted to Financial Services Board
Date of last statutory valuation ready for submission to Financial Services Board
Financing vehicle
Nature of scheme
Valuation method
2011
%
2010
%
Principal actuarial assumptions at 31 March were as follows:
– Discount factor
– Future price inflation
– Future salary increases
– Expected return on plan assets
– Future pension increases
9,00 5,75 7,75 7,50 2,83 9,00
5,25
7,25
6,50
2,83
Based on the valuation by an independent firm of consulting actuaries,
the funded status of the defined benefit funds at 31 March 2011 was as follows: Fair value of scheme assets
Present actuarial value of pension fund defined benefits obligations
Net surplus
Asset raised in respect of surplus and other uncertainties
Reconciliation of defined benefit obligations:
Defined benefit obligation at beginning of year
Current service cost
Member contributions
Interest cost
Settlement
Actuarial gain
Benefits paid
Risk premiums
Defined benefit obligation at end of year
52
15
26
20
7
31 December 2004
31 December 2007
Not applicable
Self administered fund invests
own assets
Defined benefit
Projected unit credit method
R’000
R’000
29 566 28 063 50 037
47 216
1 503 2 821
1 503 47 216 57 15 3 404 (4 789)
(1 653)
(16 157)
(30)
2 821
75 318
762
168
6 844
–
(3 503)
(32 323)
(50)
28 063 47 216
2010
R’000
31.Pension and provident funds (continued)
Reconciliation of plan assets:
Assets at fair market value at beginning of year
Expected return on assets
Contributions
Risk premiums
Benefits paid
Settlement
Actuarial (loss)/gain
50 037 2 631 240 (30)
(16 157)
(5 028)
(2 127)
73 958
5 388
647
(50)
(32 323)
–
2 417
Assets at fair market value at end of year
29 566 50 037
Plan assets comprise:
– Precient Cash QuantPlus Portfolio
– Cash
– Property (forward sale agreement)
11 977 2 933 14 656 32 239
3 142
14 656
29 566 50 037
1 543 (3 702)
474 57 3 404 (2 631)
239 (5 920)
762
6 844
(5 388)
–
Actuarially determined present value of total obligation at 31 March Fair value of fund assets at 31 March
47 718 22 744 47 349
23 438
Present value of funded obligations
24 974 23 911
Liability raised
24 974 23 911
Net liability for funded obligations at beginning of the year
Loss taken to profit and loss
23 911 1 063 22 672
1 239
Net liability for funded obligations at end of the year
24 974 23 911
Reconciliation of obligations:
Obligation at beginning of year
Current service costs
Interest cost
Actuarial (gain)/loss
Benefit payments
47 349 263 4 076 (93)
(3 877)
45 988
311
3 970
613
(3 533)
Obligation at end of year
47 718 47 349
Amount recognised as expense/(income) during year
Expense recognised in the profit and loss excluding surplus provision:
Net actuarial loss/(gains) recognised in the year
Interest cost
Expected return on plan assets
Settlement
S T A T E M E N T S
2011
R’000
F I N A N C I A L
32.Post retirement medical aid obligations
The Group provides post retirement medical subsidies to certain retired employees
and is responsible for provision of post retirement medical benefits to eligible current
and past employees. The value of funded liabilities is recognised in full in the
financial statements.
53
2011
R’000
2010
R’000
23 438 2 250 (3 877)
933 23 316
2 243
(1 791)
(330)
22 744 23 438
Benefit available to be taken to profit and loss:
Net actuarial loss recognised in the year
Interest cost
Benefit payments
Actual benefit payments from plan assets
(1 026)
(2 250)
4 076 263 (3 877)
3 877 943
(2 243)
3 970
311
(3 533)
1 791
1 063 1 239
32.Post retirement medical aid obligations (continued)
Benefit payments from plan assets
Actuarial gain/(loss)
Principal actuarial assumptions for the post retirement medical aid obligations: Discount rate
Annual increase in healthcare costs
CPI inflation
Expected retirement age
Membership of medical aid discontinued on retirement
%
%
9,00
7,75 5,75 63 nil
9,00
7,25
5,25
63
nil
Sensitivity – the recalculated liability to show the effect of a one percentage point decrease or increase in the rate of
healthcare cost inflation is as follows:
Central assumption
Central assumption - 1%
Central assumption + 1%
Accrued
liability
31 March 2011
R’000
47 718 46 963 48 572 Current
service
cost plus
interest costs
2011/12
R’000
4 297
4 225
4 378
The majority of the active employees are currently contributing to their own endowment policies to provide for post
retirement medical aid costs and the Group has no obligations in this regard.
However, in regard to a specific category of employees, where the Group still has an obligation, these policies are available
as a set-off. The value of these policies to the Group at 31 March 2011, was R10,9 million (2010 – R9,7 million).
54
33. Financial instruments
Exposure to currency, interest rate and credit risk arises in the normal course of the Group’s business.
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as
follows:
Carrying amount
2011
2010
R’000
R’000
Categories of financial instruments:
Financial assets
Loans and receivables (at amortised cost)
– Trade and other receivables
– Cash and cash equivalents
Total financial assets
Fair value
2011
2010
R’000
R’000
109 951 169 440 109 951 169 440
28 886 81 065 100 718 68 722 28 886 81 065 100 718
68 722
109 951 169 440 109 951 169 440
S T A T E M E N T S
Financial liabilities (at amortised cost)
(3 980)
(44 227)
–
– Preference shares
– Trade and other payables
– Bank overdraft
(3 980)
(124 856)
(22 602)
(3 980)
(44 227)
–
(3 980)
(124 856)
(22 602)
– Forward exchange contracts
Total financial liabilities
–
(1 665)
–
(1 665)
(48 207)
(153 103)
(48 207)
(153 103)
F I N A N C I A L
Financial liabilities (at fair value)
Liquidity risk
The following are the Group’s contractual maturities of financial liabilities, including estimated interest payments:
Carrying
amount
R’000
Contractual
cash flows
R’000
6 months
or less
R’000
6-12 months
R’000
1-3 years
R’000
31 March 2011
Non-derivative financial
liabilities
Preference shares
3 980 (3 980)
(106)
(106)
(636)
Trade and other payables*
44 227 (44 227)
(44 227)
–
–
Derivative financial
liabilities
Forward exchange
contracts**
–
–
–
–
–
48 207 (3 132)
–
–
(48 207)
(44 333)
(106)
(636)
(3 132)
980 856 602 (3 980)
(124 856)
(22 602)
(106)
(124 856)
(22 602)
(106)
–
(636)
–
(3 132)
–
665 (1 665)
(1 665)
–
–
153 103 (153 103)
(149 229)
(106)
(636)
31 March 2010
liabilities
Preference shares
3
124
22
liabilities
Forward exchange contracts**
1
Thereafter
R’000
–
(3 132)
* Excludes derivatives (shown separately).
** Included in trade and other payables, including derivatives, in liabilities held for sale – note 11.
55
33. Financial instruments (continued)
Currency risk
The Group incurs currency risk as a result of purchases and sales which are denominated in a currency other than the
Group’s functional currency. Due to the very low volume of both imports and exports, the Group is not hedging any of these
transactions.
(Refer accounting policy note 5.)
No forward cover contracts were in place at 31 March 2011.
Exposure to currency risk
The Group’s exposure to foreign currency risk was as follows based on notional amounts:
31 March 2011
(R’000) EUR
USD
Trade receivables
Trade payables
–
(21)
1 368 –
–
–
–
(37)
244 (55 523)
–
(182)
Gross balance sheet
exposure
(21)
1 368 –
(37)
(55 279)
(182)
–
–
–
–
34 874 (21)
1 368 –
(37)
(20 405)
Forward exchange
contracts
Net exposure
The following significant
exchange rates were
applied at the reporting
date:
6,9141
GBP
9,8139
USD
7,3450
31 March 2010
(R’000)
EUR
9,9128
GBP
–
(182)
11,1162
Sensitivity analysis
Based on the Group’s net exposure to currency risk, a 10% strengthening of the Rand at 31 March would have changed profit
by the amounts shown below, assuming all other variables remain constant:
(Profit)/loss for the year
before tax
USD
(2)
31 March 2011
(R’000) EUR
137 GBP
–
USD
(4)
31 March 2010
(R’000)
EUR
(2 041)
GBP
(18)
A 10% weakening of the Rand at 31 March would have had the equal but opposite effect on the above currencies to the
amounts shown above, on the basis that all other variables remain constant.
56
Interest rate risk
The interest rate risk profile of financial liabilities of the Group at 31 March was:
Fixed rate financial liabilities
2011
2010
R’000
R’000
Preference shares
3 980 3 980 Weighted average
interest rate (*)
2011
2010
%
%
5,31%
5,31%
Variable rate financial assets
2011
2010
R’000
R’000
Cash and cash equivalents (net)
– Call accounts
– Current accounts (net)
81 065 46 120
69 587 11 478 24 700 21 420 S T A T E M E N T S
(*) The interest rate will remain constant in future periods.
Interest rate (*)
2011
2010
%
%
5,50%
4,25%
6,00%
5,25%
(*) Interest linked to prime (at the reporting date).
F I N A N C I A L
A change of 100 basis points in interest rates would have increased/decreased profit and loss and equity by R811 000 (2010
– R461 000).
Credit risk
Management has a credit control policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit
evaluations are performed on all customers requiring credit over a certain amount. Reputable financial institutions are used
for investing and cash handling purposes. At the reporting date there were no significant concentrations of credit risk. Credit
insurance is taken out where the Group’s credit risk lies, excluding South African Original Equipment Manufacturers and
international first tier suppliers to Automotive Original Equipment Manufacturers.
34. Related parties
Group
The Company is an associate of Remgro Limited. Any subsidiaries or associates of this group are considered to be related
parties. The Group also utilises the Internal Audit services provided by Remgro Limited. The cost in this regard amounted to
R0,3 million (2010 – R0,3 million). Remgro Management Services Limited, a subsidiary of Remgro Limited, was further paid
R0,2 million (2010 – R0,2 million) in respect of directors’ fees and reimbursement of travel expenses. There were no further
transactions with the Remgro Group.
Company
The Subsidiaries of the Group are identified in note 34 to the separate financial statements of Dorbyl Limited and the
associates in note 7. All of these entities are related parties of the Company. Dorbyl Limited has made loans and advances
to (certain of which have been impaired) and has received loans and advances from certain subsidiaries and the associate.
These are set out in note 34 to the separate financial statements of Dorbyl Limited and note 7. Details of interest received
on these loans together with dividends, fees and rentals received from these related parties are included in notes 20 and 21.
Directors
Information with respect to the directors of the Company and their remuneration are included in the Directors’ Report.
Key management personnel compensation
In addition to their salaries, the Group also contributes to Group life and disability insurance and post retirement medical
cover for certain executive officers.
Key management personnel (including executive directors) compensation paid during the year amounted to R7,0 million
(2010 – R14,6 million).
57
35. Segmental reporting
Segmental operating income includes revenue and expenditure directly relating to a business segment and excludes net
financial costs/income and taxation.
Segmental assets and liabilities include assets and liabilities directly relating to a business segment but exclude taxation
related and interest bearing assets and liabilities.
Entities within the Group are aggregated into one segment due to the similarity of the nature of its products, production
representative of the internal structure used for management reporting. All entities within the segment are South African
based operations.
Due to the fact that the whole business is considered as one segment, no segmental reporting has been provided.
36. Accounting estimates and judgements
Group management has discussed with the Audit and Risk Committee the development, selection and disclosure of the
Group’s current accounting policies and estimates and the application of these policies.
Key sources of uncertainty relate to:
Dorbyl Limited. (Refer note 28.)
37. Subsequent events
The following non-adjusting post balance sheet events took place.
The proceeds on the disposal of the Group’s interest in Dorbyl Magnetto Wheels (Pty) Limited (R5,6 million) was received in
May 2011.
No other matter which is material to the financial affairs of the Company or the Group has occurred between the balance sheet
date and that of approval of the financial statements.
58
Independent auditor’s report to the separate financial statements
To the members of Dorbyl Limited
We have audited the annual financial statements of Dorbyl Limited, which comprise the statement of financial position at
31 March 2011 and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and the
notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, and the
Directors’ Report.
Directors’ Responsibility for the Financial Statements
The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance
with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material
S T A T E M E N T S
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
F I N A N C I A L
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, these financial statements present fairly, in all material respects, the financial position of Dorbyl Limited at
31 March 2011, and its financial performance and cash flows for the year then ended in accordance with International Financial
Reporting Standards, and in the manner required by the Companies Act of South Africa.
se p arate
KPMG Inc.
Registered Auditor
Per: AD Barr
Chartered Accountant (SA)
Registered Auditor
Director
24 June 2011
KPMG Inc.
KPMG House
Norvic Drive
Greenacres
6045
59
Separate statement of financial position
as at 31 March 2011
Notes
2010
R’000
ASSETS
Non-current assets
2
44 221 Investment in subsidiaries
3
39 585 Advances to subsidiaries
3
1 240 103
39 604
19 668
Total non-current assets
85 046 59 375
Current assets
Inventories
6
7
Employee benefits
13 Cash and cash equivalents
9
Assets classified as held for sale
8
25
28
1
79
330
885
503
378
–
25
2
64
245
–
598
821
685
498
Total current assets
135 096 338 602
Total assets
220 142 397 977
EQUITY AND LIABILITIES
Equity
Share capital
10 13 725 13 725
Stated capital
Reserves
11 Retained earnings
13 725 50 866 35 900 13 725
99 561
27 080
100 491 140 366
Total equity
100 491 140 366
Non-current liabilities
13 3 980 24 974 3 980
23 911
Total non-current liabilities
28 954 27 891
Current liabilities
Bank overdraft
9
15 Provisions
14 Advances from subsidiaries
3
Liabilities classified as held for sale
8
–
44 230 300 46 167 –
22 602
23 829
300
81 048
101 941
Total current liabilities
90 697 229 720
Total liabilities
119 651 257 611
Total equity and liabilities
220 142 397 977
Total equity attributable to equity holders of the Company
60
2011
R’000
Separate statement of comprehensive income
2011
2010
2009
Re-presented* Re-presented*
Notes
R’000
R’000
R’000
Continuing operations:
Revenue
16
Cost of sales
126 959 (126 209)
104 400 (108 154)
122 896
(160 841)
Gross profit/(loss)
750 24 016 (3 754)
2 972 (37 945)
12 027
Dividends from subsidiaries
Other
17
18 042 5 974 –
2 972 Administrative expenses
Sales and distribution expenses
Other operating expenses
Environmental costs
Reversal/(impairment) of property, plant and equipment
Employee benefit liabilities (raised)/reversed
13
(23 340)
(3 559)
(5 199)
–
(2 381)
(19 061)
(2 496)
–
10 329 2 942 –
(60 193)
(7 909)
Results from operating activities
17
Net finance income
(9 713)
4 832 (9 068)
10 430 (141 819)
11 817
18
18
5 877 (1 045)
10 886 (456)
14 684
(2 867)
(Loss)/profit before income tax
Income tax expense
19
(4 881)
(3 111)
1 362 –
(130 002)
(67)
(Loss)/profit from continuing operations
Loss from discontinued operations (net of income tax)
21
(7 992)
(2 549)
1 362 (105 128)
(130 069)
17
(10 541)
(103 766)
(236 688)
Other comprehensive income/(expense)
21 771 (5 000)
102 017
Other comprehensive income/(expense) for the year, net of income tax
21 771 (5 000)
102 017
Total comprehensive income/(loss) for the year
11 230 (108 766)
S T A T E M E N T S
F I N A N C I A L
Loss for the year
(42 795)
(5 004)
(106 619)
se p arate
Finance income
Finance costs
2 193
9 834
(134 671)
61
Separate statement of cash flows
Notes
2011
R’000
Loss for the year
(10 541)
Adjustments for:
Depreciation
615 (Reversal)/impairment of losses on property, plant and equipment
(750)
Impairment losses on investments in and advances to subsidiaries
–
Impairment losses on investment in associate
3 280 Net interest income
(4 846)
Gain on sale of property, plant and equipment
(1 520)
Loss on sale of controlling interest in subsidiary
19 Loss on the sale of discontinued operations
–
Income tax expense
3 111 (103 766)
431
8 867
261
22 818
(8 373)
(563)
37 737
7 500
–
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Change in provisions and employee benefits
(10 632)
(11 767)
26 497 380 2 381 Cash generated/(utilised) by operating activities
Interest expense
18
Income taxes (paid)/received
22
6 859 (989)
(3 111)
(102 102)
(980)
974
Net cash flows from operating activities
2 759 85 641 (102 108)
98 734
Interest income
18
Proceeds on disposal of property, plant and equipment
Acquisition of property, plant and equipment
– expansion
– replacement
Proceeds on disposal of businesses and subsidiaries
23
Recapitalisation of subsidiaries
Change in advances made to subsidiaries
Change in advances made to associates
5 835 77 308 –
(6 134)
23 891 –
(16 450)
1 191 Cash flows from financing activities
(51 105)
–
Dividends paid
(51 105)
–
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
37 295 42 083 (3 374)
45 457
Cash and cash equivalents at end of year
79 378 42 083
62
2010
R’000
9
(35
8
(68
(3
(3
088)
923
936)
589)
412)
9 353
36 000
(3 990)
(2 159)
–
(96 719)
158 011
(1 762)
Separate statement of changes in equity
Balance 31 March 2009 Stated capital Reserves R’000 R’000 13 725 131 112 Retained earnings R’000 Total
equity
R’000
104 295 249 132
Total comprehensive loss for the year: Loss for the year –
–
(103 766)
Total other comprehensive loss for the year –
(31 551)
26 551 Devaluation of property, plant and equipment Transfer of revaluation reserve on sale of property Depreciation on revaluation of property 11 11 11 Balance 31 March 2010 –
–
–
(5 000)
(26 326)
(225)
–
26 326 225 13 725 99 561 27 080 Total comprehensive loss for the year:
Loss for the year –
–
(10 541)
Total other comprehensive income for the year –
(48 695)
70 466 Revaluation of property, plant and equipment Transfer of revaluation reserve on sale of property 11 11 –
–
21 771 (70 466)
–
70 466 (103 766)
(5 000)
(5 000)
–
–
140 366
S T A T E M E N T S
Note (10 541)
21 771
21 771
–
Transactions with owners, recorded directly to equity: Total contributions by and distributions to owners –
–
(51 105)
(51 105)
Dividends to shareholders –
–
(51 105)
(51 105)
Balance 31 March 2011 13 725 50 866 35 900 100 491
F I N A N C I A L
Details of reserves are set out in note 11.
se p arate
Share capital is reflected net of treasury shares. Details of share capital and treasury shares are set out in note 10.
63
Notes to the separate financial statements
1.
Accounting Policies
The accounting policies of the Company are as those appied for the consolidated financial statements set out on pages 23
to 34.
2.Property, plant and equipment
Plant and
Land*Buildings*
equipment
R’000
R’000
R’000
Office
equipment
R’000
Total
R’000
2011
Cost or valuation
3 057 39 416 84 072 1 970 –
3 057 –
–
17 645 –
–
82 438 6 134 14 077 1 354 –
14 077
104 494
6 134
–
–
21 771 –
–
(4 500)
–
(13 461)
21 771
(17 961)
–
5 704 76 620 1 970 At the beginning of the year
Disposals
–
–
–
–
–
5 373
–
331
–
80 939 (4 500)
181 13 974 1 354 (13 461)
103 At the beginning of the year
Acquisitions
Revaluation of property, plant and
equipment
Disposals
84 294
13 974
87 666
(17 961)
615
Carrying amount
3 057 33 712 7 452 –
44 221
2010
Cost or valuation
–
–
–
14 077 14 077
3 471 –
37 814 –
–
–
14 077 –
55 362
–
–
(3 471)
(5 000)
(32 814)
–
–
–
–
Less: Accumulated depreciation and
impairment losses
–
–
–
13 974 13 974
Disposals
–
–
–
–
1 285 –
(1 536)
251 –
–
–
–
13 794
–
–
180
15 079
–
(1 536)
431
Carrying amount
–
–
–
103 103
Carrying amounts
At 1 April 2009
3 471 36 529 –
283 40 283
Acquisitions
Devaluation of property, plant and
equipment
(5 000)
(36 285)
At 31 March 2010
–
–
–
103 103
At 1 April 2010
–
–
–
103 103
3 057 33 712 7 452 –
44 221
At 31 March 2011
Details of land and buildings are available for inspection at the registered office of the Company.
* Carried at valuation at 31 March.
64
128 515
2.Property, plant and equipment (continued)
Disposal of property, plant and equipment
Redundant property, plant and equipment were disposed of during the year, realising R1,5 million in cash.
Impairment losses
Impairment losses of R19,5 million were recognised during the prior period due to the carrying value of these items exceeding
their expected value to be realised on the disposal of these operations and properties. These impairment losses recognised
in profit and loss, were allocated as follows: Rosslyn property – R5 million, Uitenhage property R5 million, Seating and
Components operation – R9,5 million. The impairment raised on the Benoni property during the year ended on 31 March
2009, was reversed during the prior period to profit and loss – R10,3 million.
S T A T E M E N T S
During the current period, management decided not to dispose of the Benoni property and the Castings operation. Property,
plant and equipment previously classified as held for sale, have now been reclassified as property, plant and equipment:
Benoni property – R15,3 million and the Castings operation – R1,5 million. The net book value of the property, plant and
equipment of the Castings operation includes previous impairment losses amounting to R49,9 million.
Revaluation of owner occupied properties
The Company states property at fair value.
Management’s assessment of the fair value of land and buildings has been based on valuations by independent valuers
performed in 2009 and still relevant in the current market conditions.
The Benoni property was valued by i-VAL Consultants (Pty) Limited.
F I N A N C I A L
The Benoni property is stated at fair value of R37,4 million (net of certain rehabilitation costs still to be incurred of
R6,6 million).
2011
R’000
2010
R’000
Investment in subsidiaries
Unlisted shares
39 585 39 604
At cost
Less: Impairment losses
98 872 (59 287)
98 891
(59 287)
Advances to subsidiaries 1 240 Interest free
Less: Impairment losses
22 867 (21 627)
41 295
(21 627)
Advances from subsidiaries
(46 167)
(81 048)
(5 657)
(40 510)
(36 638)
(44 410)
(5 342)
(21 776)
3.
Interest bearing – current liabilities
Interest free – current liabilities
Net investment in subsidiaries
se p arate
Due to its classification as held for sale in the prior period, the property could not be reflected at a value above the lower of
cost or fair value less costs to sell at the date it was first classified as held for sale, being R15,3 million.
19 668
65
Notes to the separate financial statements (continued)
3.
Investment in subsidiaries (continued)
All subsidiaries’ financial information included in the consolidated financial statements is prepared as at the reporting date
of the parent.
Impairment losses on investments in unlisted shares of subsidiary companies were made with reference to the net asset value
of those companies. Where this resulted in the value of the investment having a fair value lower than the carrying value, the
investments were impaired.
Impairment losses on the loans to subsidiary companies were made with reference to the net asset value of those companies
and their ability to repay the loans. Where this resulted in the value of the loan having a recoverable amount lower than its
carrying value, the loans were impaired.
Impairment losses on loans to Guestro Steering Gears (Pty) Limited were reversed as a result of the related loan being repaid
during the prior year after recapitalising the subsidiary. The interest in Guestro Steering Gears (Pty) Limited was disposed of
on 1 February 2010 (refer note 20).
Interest bearing advances to/(from) subsidiaries are unsecured, bear interest at rates earned by the Company on call deposits
and have no fixed terms of repayment.
Interest free advances to/(from) subsidiaries are unsecured and have no fixed terms of repayment.
Details of interests in subsidiaries appear in note 34.
4.
2011
% Holding
2010
% Holding
2011
R’000
Unlisted
Dorbyl Magnetto Wheels (Pty) Limited
–
50 Transferred to assets held for sale
–
–
–
2010
R’000
10 118
(10 118)
–
Impairment losses on investments in unlisted shares of associate companies were made with reference to management’s
valuations of those companies. Where this resulted in the value of the investment having a fair value lower than the carrying
value, the investments were impaired.
2011
R’000
2010
R’000
Carrying value of equity accounted investee at beginning of the year
–
31 174
Carrying value of equity accounted investee at end of the year
Impairment
–
–
31 174
(22 818)
Advances to equity accounted investee
–
–
Reclassified as assets held for sale
–
Investment and advances – equity accounted investee
–
8 356
1 762
10 118
(10 118)
–
The disposal of the interest in Dorbyl Magnetto Wheels (Pty) Limited was finalised during the current year and the proceeds
of R5,6 million received in May 2011.
66
Deferred tax assets and liabilities
Unrecognised deferred tax assets:
Deferred tax assets have not been recognised in respect of the tax effect of
the following items:
Capital allowances
Other timing differences
2 508 7 830 382 9 320
7 323
783
Estimated tax losses
10 720 67 590 17 426
53 587
78 310 71 013
Deferred tax assets have not been recognised in respect of these items because it is
not probable that future taxable profits will be available for utilisation by the Company.
6.
2010
R’000
Estimated tax losses carried forward
241 392 191 381
Not used in computation of deferred tax
241 392 191 381
Inventories
Finished goods
Work in progress
Raw materials
Consumable stores
11 545 11 317 1 774 694 –
–
–
–
25 330 –
3 752 –
Finished goods included above stated at net realisable value
S T A T E M E N T S
5.
2011
R’000
F I N A N C I A L
7.
Receivables from sale of business
Receivables from sale of investment in equity accounted investee
22 947
–
5 647
291
3 325
21 783
–
490
28 885 25 598
The maximum exposure to credit risk for trade receivables at 31 March by geographic
region was:
South Africa
Europe
21 579 1 368 25 108
–
22 947 25 108
The ageing of trade receivables at 31 March was:
Not past due
Past due more than 90 days
22 617 271 59 –
25 108
–
–
–
22 947 25 108
se p arate
An amount of R2,3 million (2010 – Rnil) has been provided against inventory.
Trade receivables are exposed to credit risk as described in accounting policy note 5.
67
8.
Assets and liabilities classified as held for sale
The sale of the Neave property and Forging and Machining operation was concluded during the prior year.
The Neave property realised R36 million in cash. A R10 million deposit was received for the Forging and Machining disposal
during the prior year and the balance of R21,8 million was received in April 2010.
Sale agreements for the disposal of the Struandale, Uitenhage and Rosslyn properties, entered into during the prior period,
were concluded during the current period realising R35 million, R30 million and R11 million respectively in cash.
The Dorbyl Automotive Systems operation was disposed of effective 1 April 2010 realising R23,9 million in cash.
The major classes of assets and liabilities of businesses and subsidiaries that have been classified as held for sale are as
follows:
2010
R’000
Assets classified as held for sale:
Property, plant and equipment (*)
Investment in equity accounted investees
Inventories
–
–
–
–
100
10
62
72
–
245 498
498 000)
118)
814)
566)
–
–
–
–
–
–
–
Liabilities classified as held for sale:
Trade and other payables, including derivatives
–
101 941
–
101 941
101 941 (81 923)
(20 018)
–
–
–
–
–
Disposal of land and buildings
Disposal of investment in equity accounted investee
(*) Net of impairments of Rnil (2010 – R82,2 million).
68
2011
R’000
245
(76
(10
(105
(53
466
118
101
813
2011
R’000
2010
R’000
Bank balances
Call and fixed deposits
9 791 69 587 39 985
24 700
Bank overdrafts used for cash management purposes
79 378 –
64 685
(22 602)
79 378 42 083
13 725 13 725
13 725 13 725
(48 695)
(31 551)
21 771 (70 466)
–
(5 000)
(26 326)
(225)
(48 695)
99 561 (31 551)
131 112
50 866 99 561
Comprising:
Surplus on restatement of fixed property transferred within the Group to Group cost
General capital reserve
5
4
19
21
50 866 9.
The Company’s exposure to interest rate risk and a sensitivity analysis for financial assets
and liabilities are disclosed in note 29.
S T A T E M E N T S
The Company has pledged R8 million (2010 – R11 million) with FirstRand Bank Limited
as security against short-term direct and long-term indirect facilities available to the
Group.
10. Share capital
Ordinary share capital
Authorised
40 000 000 ordinary shares of no par value
Issued
34 070 056 (2010 – 34 070 056) ordinary shares of no par value
F I N A N C I A L
The Company has pledged R1,6 million (2010 – R1,6 million) with ABSA Bank Limited
as security against long-term indirect facilities available to the Group.
11. Reserves
Direct movements in reserves
Transfer to retained earnings on sale of property
Depreciation on revaluation transferred to retained earnings
Movement for the year
se p arate
At the Annual General Meeting held on 19 October 2010, the directors were granted
a general authority to buy back up to 10% of the issued share capital of the Company
until the next Annual General Meeting. There were no buy back of shares during 2011
and 2010.
409
000
686
771
5
4
19
70
409
000
686
466
99 561
Surplus on restatement of fixed property transferred within the Group to Group cost:
This reserve relates to the revaluation of fixed properties transferred from subsidiaries to the holding company to original
Group cost.
69
11. Reserves (continued)
The capital redemption reserve is a statutory reserve created on the redemption of share capital.
General capital reserve
The general capital reserve was created in the Company to allow for the write-off of goodwill in the Group directly against
reserves in prior years.
This reserve relates to the revaluation of the Company’s owner occupied fixed property to market values. The surplus is released
to retained earnings to off-set depreciation charges or as and when the related properties are disposed.
2011
R’000
2010
R’000
1 500 2 500 4 000 1 500
2 500
4 000
Issued
740 025 5% cumulative preference shares of R2 each
1 480 2 500 1 480
2 500
3 980 3 980
24 974 (1 503)
23 911
(2 821)
Included in current assets
23 471 1 503 21 090
2 821
Included in non-current liabilities
24 974 23 911
The movement in employee benefit liabilities is analysed as follows:
21 090 24 032
23 911 (2 821)
22 672
1 360
12.Preference share capital
Authorised 750 000 5% cumulative preference shares of R2 each
2 000 000 5,75% redeemable cumulative preference shares of R2 each Preference shares are accounted for as financial liabilities at amortised cost
(refer note 29).
On 19 October 2010, the shareholders passed a special resolution relating to the two
preference share classes in issue, proposing for the preference shares to be redeemable.
This proposal is subject to the approval of the preference shareholders.
13. Employee benefit liabilities and assets
Post retirement medical aid obligations (refer note 28)
Benefit fund assets (refer note 27)
Benefit funds
Raised/(reversed) during the year
Benefit funds
Benefit funds
2 381 (2 942)
1 063 1 318 1 239
(4 181)
23 471 21 090
24 974 (1 503)
23 911
(2 821)
Post retirement medical aid obligations – The Company has an obligation to contribute to the post-retirement medical aid
costs of certain current and past employees (refer note 28).
Benefit Funds – The most current actuarial valuation of the Dorbyl Pension Fund indicates that the Company would be able
to access the surplus (refer note 27).
70
2011
R’000
14.Provisions
Other
2010
R’000
300 300
Included in current liabilities
300 300
The movement in provisions is analysed as follows:
300 770
300 770
Other
Reversed during the year
Other
Other
–
(470)
–
(470)
300 300
300 300
19 180 23 393 1 657 –
20 544
3 285
44 230 23 829
S T A T E M E N T S
15. Trade and other payables
Trade payables
Other payables
F I N A N C I A L
Other – The provision relates mainly to legal claims in respect of various court cases
in progress. The underlying disputes relate mainly to labour related issues and
past business disposals.
The Company’s exposure to currency and liquidity risk relating to trade and other payables is disclosed in note 29.
16. Revenue
Sale of goods and related services
Local sales
Export sales
Sales to subsidiary companies
2010
Re-presented
R’000
2009
Re-presented
R’000
123 877 3 082 –
415 412 60 392 41 818 473 108
54 463
59 140
126 959 517 622 586 711
126 959 104 400 122 896
123 877 3 082 –
92 449 1 375 10 576 115 939
3 080
3 877
–
413 222 586 711
–
–
–
322 963 59 017 31 242 473 108
54 463
59 140
126 959 517 622 709 607
Local sales
Export sales
Local sales
Export sales
se p arate
2011
R’000
71
2011
R’000
17. Loss for the year
Included in loss for the year which includes continuing operations,
discontinued operations and profit on sale of discontinued operations
are the items detailed below (before taxation):
2010
Re-presented
R’000
Income items
Income from associate – unlisted
1 424 4 661 6 606
–
1 424 120 4 541 390
6 216
18 042 2 228 6 036
18 042 –
–
–
1 862 366 2 193
2 161
1 682
2 382 3 558 5 791
2 382 –
2 157 1 401 2 016
3 775
1 520 563 269
1 520 –
523 40 269
–
Expense items
1 204 1 076 1 308
Fees
Rental
Income from subsidiaries
Dividends
Fees
Rental
Operating lease rentals received
Profit on disposal of property, plant and equipment
700 411 93 596 –
480 930
–
378
1 204 1 076 1 308
1 204 –
725 351 884
424
615 431 15 035
Owned assets
615 615 431 431 15 035
15 035
615 –
431 –
7 680
7 355
(19)
37 737 –
–
7 500 –
Audit fees – current year
Audit fees – prior year
Other services
Loss on sale of controlling interest in subsidiary
72
2009
Re-presented
R’000
Employee benefits
Contributions to pension and provident funds
Pension fund obligation (refer note 27)
Post retirement medical obligation (refer note 28)
Employee benefits
Employee costs (including employee benefits)
JSE Limited – listing fee
Premises Machinery and equipment Office equipment
Professional fees
Research and development costs
2 530 31 946 155 595
(750)
–
3 280 8 867 261 22 818 105 069
39 086
11 440
2 530 31 946 155 595
–
2 530 –
31 946 49 864
105 731
4 297 4 801 15 116
1 916 1 318 1 063 7 743 (4 181)
1 239 7 207
1 056
6 853
4 297 4 801 15 116
4 297 –
(76)
4 877 11 596
3 520
50 853 116 003 178 321
50 853 –
47 520 68 483 91 333
86 988
58 128 142
4 696 10 349 8 796
3 539 962 195 5 939 3 765 645 2 938
5 299
559
4 696 10 349 8 796
4 696 –
4 708 5 641 5 687
3 109
1 761 2 899 3 369
1 761 –
2 746 153 3 283
86
52 –
91
S T A T E M E N T S
(Reversal of impairment)/impairment of property, plant and equipment
Impairment of investments in and advances to subsidiaries
Impairment of investment in associate
2009
Re-presented
R’000
F I N A N C I A L
17. Loss for the year (continued)
2010
Re-presented
R’000
se p arate
2011
R’000
73
2011
R’000
18. Net finance income/(costs)
Finance income
Interest received from financial institutions
Interest received from subsidiaries and equity accounted investee
Interest received from Revenue Authorities
Foreign exchange gains – realised
Foreign exchange gains – unrealised
2010
Re-presented
R’000
2009
Re-presented
R’000
3 196 6 157 –
2 233 5 431 6 694
7 689
301
–
971
5 877 17 017 15 655
5 877 –
10 886 6 131 14 684
971
–
(777)
–
(56)
(212)
(717)
(51)
(8 789)
–
(212)
(470)
(434)
(4 199)
(251)
(212)
(1 045)
(9 769)
(5 566)
(1 045)
–
(456)
(9 313)
(2 867)
(2 699)
4 832 7 248 10 089
–
–
56
–
–
–
–
–
–
–
–
56
–
Secondary Tax on Companies Capital Gains Tax
–
3 111 –
–
–
–
56
11
–
Total income tax expense
3 111 –
67
Finance costs
Interest paid to financial institutions
Interest paid to subsidiaries and equity accounted investee
Foreign exchange losses – realised
Foreign exchange losses – unrealised
Interest paid – other
Net finance income
5 835
–
–
42
–
Interest paid – other relates to dividends on preference shares.
19. Income tax expense
South African
Current year
Normal
Deferred
Prior year under provision
Normal
Deferred
Allocated as follows:
3 111 –
–
–
Income tax rate reconciliation:
(Loss)/profit before income tax – continuing operations
Loss before income tax – discontinued operations
(4 881)
(2 549)
1 362 (105 128)
(130 002)
(106 619)
(7 430)
(103 766)
(236 621)
74
–
–
67
–
2011
2010
2009
Re-presentedRe-presented
R’000
R’000
R’000
Dividends and share of associate retained loss
Expenses not allowed/(income not taxable)
Deferred tax not raised
Over provision in respect of prior years
Capital loss on disposal of businesses
Impairment of investments in
associates/subsidiaries
and loans to subsidiaries
Secondary Tax on Companies
28%
(70%)
(2 080)
5 191 68%
(24%)
(60%)
0%
0%
(5 052)
1 791 4 423 –
–
0%
(1%)
(9%)
0%
(2%)
(12%)
(42%)
918 3 111 (16%)
0%
28% (29 054)
(28%) 29 054 –
726
9 200
–
2 100
28% (66 254)
(28%) 66 321
0%
0%
(22%)
0%
0%
17 028 –
(6%)
0%
(614)
639
52 082
56
–
S T A T E M E N T S
19. Income tax expense (continued)
Income tax expense at standard rate 28%
(2010 – 28%, 2009 – 28%)
Increases/(reductions) due to the following: 14 147
11
Total tax expense
3 111 – 67
Effective tax rate
(43,4%)
0,0%
0,0%
20. Loss on sale of discontinued operations and controlling interest in subsidiary
On 1 April 2010, the Company disposed of the assets and liabilities of Dorbyl Automotive Systems (a division of Dorbyl
Limited) for R23,9 million in cash as well as its 51% interest in Pullmaflex Southern Africa (Pty) Limited for no consideration.
During the prior period, the following disposals were made:
F I N A N C I A L
On 29 January 2010, Guestro Steering Gears (Pty) Limited acquired the assets and liabilities of Guestro Forging and
Machining (a division of Dorbyl Limited) to the value of R66,4 million for a consideration of R58,9 million resulting in a loss
of R7,5 million to Dorbyl Limited.
On 1 February 2010, the Group disposed of the assets and liabilities of Guestro Steering Gears (Pty) Limited for a cash
consideration of R31,8 million.
On 1 February 2010, the Company disposed of its interest in Guestro Steering Gears (Pty) Limited (now dormant after
disposing of its assets and liabilities as above) for R1, after recapitalising the subsidiary and utilising the injected cash to
repay the advances owing to the Company.
2011
R’000
Effect of disposals of discontinued operations on the financial position
of the Company:
Inventories
2010
Re-presented
R’000
2009
Re-presented
R’000
600 538 676 923)
–
9 903 69 358 (12 905)
–
–
–
–
Net assets disposed of
Loss on disposal
23 891 –
66 356 (7 500)
–
–
Proceeds
23 891 58 856 –
Effect of disposals of investments on the financial position
of the Company:
Loss on sale of investment in subsidiary
Reversal of prior impairments of advances repaid in the current year
(19)
–
(96 719)
58 982 –
–
Net loss on sale of shares in and loans to subsidiary
(19)
(37 737)
–
8
48
48
(81
se p arate
On 1 March 2010, the Group disposed of the assets of Guestro Distribution Company (Pty) Limited for a cash consideration
of R4,4 million.
75
21. Discontinued operations
The disposals of the Neave property and Forging and Machining operation were concluded during the prior year.
The Neave property was sold for R36 million and the cash was received in June 2009.
The Forging and Machining operation was sold for R31,8 million of which R10 million was received in March 2010 and the
balance of R21,8 million was received in April 2010.
The disposals of the Struandale, Uitenhage and Rosslyn properties were concluded during the current year.
The proceeds of the sale of the Uitenhage property (R30 million) and the Rosslyn property (R11 million) were received in
April 2010 upon transfer of the properties. The proceeds of the sale of the Struandale property (R35 million) was received in
July 2010 upon transfer of the property.
The Dorbyl Automotive Systems operation was disposed effective 1 April 2010 realising R23,9 million in cash.
The comparative statement of comprehensive income has been re-presented to show the Benoni property and Castings
operation as continuing operations.
2011
R’000
2010
Re-presented
R’000
Results of discontinued operations
Revenue
–
413 222 Cost of sales
–
(415 515)
76
Gross (loss)/profit
Other operating expenses:
Loss on sale of discontinued operations (refer note 20)
Profit/(loss) on sale of controlling interest in subsidiary (refer note 20)
Impairment of property, plant and equipment
Impairment of investments in and advances to subsidiaries
Impairment of investment in equity accounted investee
–
–
–
750 (19) –
–
(3 280)
Operating loss
Net finance costs
Finance income
Finance costs
2009
Re-presented
R’000
463 815
(455 054)
(2 293)
118 (12 259)
(7 500)
(37 737)
(19 196)
(261)
(22 818)
8 761
–
(18 250)
(2 549)
–
(101 946)
(3 182)
(104 891)
(1 728)
–
–
6 130 (9 312)
971
(2 699)
Income tax expense
(2 549)
–
(105 128)
–
(106 619)
–
Loss for the year
(2 549)
(105 128)
(106 619)
Cash flows utilised by discontinued operations
Cash flows from financing activities
–
–
–
37 543 (97 385)
–
(1 450)
(14 116)
–
–
(59 842)
(15 566)
–
–
(44 876)
(39 086)
(11 440)
2011
R’000
2010
R’000
22. Income tax paid/(received)
Amounts receivable at beginning of the year
–
Per the income statements (excluding deferred tax)
3 111 Amounts receivable at end of the year
–
(974)
–
–
3 111 (974)
23. Disposal of businesses
Inventories
8
48
48
(81
600 538 676 923)
–
9 903
69 358
(12 905)
Net identifiable assets and liabilities
Loss on disposal
23 891 –
66 356
(7 500)
Total proceeds
Off-set of intercompany loan on sale
23 891 –
58 856
(58 856)
Net proceeds
23 891 S T A T E M E N T S
–
F I N A N C I A L
24. Contingent liabilities
Dorbyl.
se p arate
Claims by former director
Claims have been submitted by a former director following his dismissal. Legal opinion has been obtained and indications are
that these claims are not expected to have any material effect on the financial statements. Counterclaims have been made.
Guarantees given for bank overdrafts
Dorbyl Limited has given guarantees for bank overdrafts of subsidiary companies. Bank overdraft balances at 31 March 2011
were Rnil (2010 – R22,6 million).
77
2011
R’000
2010
R’000
(3 373)
(9 588)
(3 373)
–
(6 215)
(3 373)
–
(752)
–
–
(752)
–
Total commitments
(3 373)
(10 340)
Liabilities raised in respect of above property leases
(1 657)
(3 285)
(1 657)
(3 285)
25. Operating lease commitments/receivables
Lease commitments
Property
Plant, vehicles and equipment
Straight-lining of lease liability (refer note 15)
The leased property has been sub-let by the Company.
The lease and sub-lease expire in 2012.
Property lease receivables
Receivable within one year (*)
Receivable later than one year, but not later than five years (*)
Receivable thereafter (*)
2 049 –
–
11 341
33 088
147 526
2 049 191 955
291 490
Property lease receivables relating to Uitenhage and Struandale properties
Receivable within one year
Receivable in following five years
Receivable thereafter
–
–
–
9 033
31 039
147 526
–
187 598
Assets raised in respect of the above sub-leases
Straight-lining of lease (refer note 7)
Property leases and sub-leases include commercial terms and conditions and
escalation clauses.
(*) Included in property lease receivables are amounts relating to the Uitenhage
and Struandale properties.
The Uitenhage property was sold in April 2010 and the Struandale property
in July 2010.
26.Borrowing capacity
In terms of the Company’s Articles of Association, the Group is entitled to borrow up to the total amount of ordinary and
preference shareholders’ funds, excluding any reserves arising out of the revaluation of assets.
78
27.Pension and provident funds
The Company operates a defined benefit pension plan and a defined contribution provident plan. The funds are registered in
terms of the Pension Funds Act, 1956 as amended. The assets of the respective funds are under the control of the trustees.
Employees who are not members of the above funds are members of the appropriate industry pension and provident funds.
Dorbyl Provident Fund
Obligations for the contributions to the defined contribution plan are recognised as an expense incurred and amounted to
R0,9 million (2010 – R4,2 million). The number of members at 31 March 2011 was 16 (2010 – 77). Employees contribute
7% of earnings, with the employer contributing 11%.
Dorbyl Pension Fund
2011
%
2010
%
Principal actuarial assumptions at 31 March were as follows:
– Discount factor
– Future price inflation
– Future salary increases
– Expected return on plan assets
– Future pension increases
9,00 5,75 7,75 7,50 2,83 9,00
5,25
7,25
6,50
2,83
Based on the valuation by an independent firm of consulting actuaries,
the funded status of the defined benefit funds at 31 March 2011 was as follows: Fair value of scheme assets
Present actuarial value of pension fund defined benefit obligations
Net surplus
Asset raised in respect of surplus and other uncertainties
Reconciliation of defined benefit obligations:
Defined benefit obligation at beginning of year
Current service cost
Member contributions
Interest cost
Settlement
Actuarial gain
Benefits paid
Risk premiums
Defined benefit obligation at end of year
R 000
R 000
29 566 28 063 50 037
47 216
1 503 2 821
1 503 47 216 57 15 3 404 (4 789)
(1 653)
(16 157)
(30)
2 821
75 318
762
168
6 844
–
(3 503)
(32 323)
(50)
28 063 47 216
F I N A N C I A L
S T A T E M E N T S
15
26
20
7
31 December 2004
31 December 2007
Not applicable
Self administered fund invests
own assets
Defined benefit
Projected unit credit method
se p arate
Employer’s contribution (%)
Employees’ contribution (%)
Date of last statutory valuation approved by Financial Services Board
Date of last statutory valuation submitted to Financial Services Board
Date of last statutory valuation ready for submission to Financial Services Board
Financing vehicle
Nature of scheme
Valuation method
79
2011
R’000
2010
R’000
27.Pension and provident funds (continued)
Contributions
Risk premiums
Benefits paid
Settlement
Actuarial (loss)/gain
50 037 2 631 240 (30)
(16 157)
(5 028)
(2 127)
73 958
5 388
647
(50)
(32 323)
–
2 417
29 566 50 037
Plan assets comprise:
– Precient Cash QuantPlus Portfolio
– Cash
– Property (forward sale agreement)
11 977 2 933 14 656 32 239
3 142
14 656
29 566 50 037
1 543 (3 702)
474 57 3 404 (2 631)
239 (5 920)
762
6 844
(5 388)
–
Actuarially determined present value of total obligation at 31 March Fair value of fund assets at 31 March
47 718 22 744 47 349
23 438
Present value of funded obligations
24 974 23 911
Liability raised
24 974 23 911
Net liability for funded obligations at beginning of the year
Loss taken to profit and loss
23 911 1 063 22 672
1 239
Net liability for funded obligations at end of the year
24 974 23 911
Reconciliation of obligations:
Obligation at beginning of year
Interest cost
Actuarial (gain)/loss
Benefit payments
47 349 263 4 076 (93)
(3 877)
45 988
311
3 970
613
(3 533)
Obligation at end of the year
47 718 47 349
Amount recognised as expense/(income) during year
Expense recognised in profit and loss excluding surplus provision:
Net actuarial loss/(gains) recognised in the year
Currents service costs
Interest cost
Settlement
28.Post retirement medical aid obligations
The Company provides post retirement medical subsidies to certain retired employees
and is responsible for provision of post retirement medical benefits to eligible current
and past employees. The value of funded liabilities is recognised in full in the
financial statements.
80
2010
R’000
23 438 2 250 (3 877)
933 23 316
2 243
(1 791)
(330)
22 744 23 438
Benefit available to be taken to profit and loss:
Net actuarial loss recognised in the year
Interest cost
Benefit payments
Actual benefit payments from plan assets
(1 026)
(2 250)
4 076 263 (3 877)
3 877 943
(2 243)
3 970
311
(3 533)
1 791
1 063 1 239
Principal actuarial assumptions for the post retirement medical aid obligations:
Discount rate
Annual increase in healthcare costs
CPI inflation
Expected retirement age
Membership of medical aid discontinued on retirement
%
9,00
7,75 5,75 63 nil
%
9,00
7,25
5,25
63
nil
F I N A N C I A L
28.Post retirement medical aid obligations (continued)
Benefit payments from plan assets
Actuarial gain/(loss)
S T A T E M E N T S
2011
R’000
Sensitivity – the recalculated liability to show the effect of a one percentage point decrease or increase in the rate of health
care cost inflation is as follows:
Central assumption
Central assumption – 1%
Central assumption + 1%
Accrued
liability
31 March 2011
R’000
47 718 46 963 48 572 Current
service
cost plus
interest costs
2011/12
R’000
se p arate
4 297
4 225
4 378
The majority of the active employees are currently contributing to their own endowment policies to provide for post retirement
medical aid costs and the Company has no obligations in this regard.
However, in regard to a specific category of employees, where the Company still has an obligation, these policies are available
as a set-off. The value of these policies to the Company at 31 March 2011, was R10,9 million (2010 – R9,7 million).
81
29. Financial instruments
Exposure to currency, interest rate and credit risk arises in the normal course of the Company’s business.
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:
Carrying amount
2011
2010
R’000
R’000
Categories of financial instruments
Financial assets
Loans and receivables (at amortised cost)
– Trade and other receivables
– Cash and cash equivalents
Total financial assets
Fair value
2011
2010
R’000
R’000
108 263 163 096 108 263 163 096
28 885 79 378 98 411 64 685 28 885 79 378 98 411
64 685
108 263 163 096 108 263 163 096
Financial liabilities (at amortised cost)
(3 980)
(44 230)
–
– Preference shares
– Trade and other payables
– Bank overdraft
(3 980)
(44 230)
–
(3 980)
(124 105)
(22 602)
(3 980)
(124 105)
(22 602)
Financial liabilities (at fair value)
– Forward exchange contracts
Total financial liabilities
–
(1 665)
–
(1 665)
(48 210)
(153 352)
(48 210)
(153 352)
Liquidity risk
The following are the Company’s contractual maturities of financial liabilities, including estimated interest payments:
Carrying
amount
R’000
Contractual
cash flows
R’000
6 months
or less
R’000
6-12 months
R’000
1-3 years
R’000
31 March 2011
liabilities
Preference shares
3 980 (3 980)
(106)
(106)
(636)
44 230 (44 230)
(44 230)
–
–
liabilities
Forward exchange
contracts**
–
–
–
–
–
48 210 –
(44 336)
(106)
(636)
(3 132)
980 105 602 (3 980)
(124 105)
(22 602)
(106)
(124 105)
(22 602)
(106)
–
(636)
–
(3 132)
–
665 (1 665)
(1 665)
–
–
152 352 (152 352)
(148 478)
(106)
(636)
* Excludes derivatives (shown separately).
** Included in trade and other payables, including derivatives, in liabilities held for sale – note 8.
82
(3 132)
–
(48 210)
31 March 2010
liabilities
Preference shares
3
124
22
liabilities
Forward exchange contracts**
1
Thereafter
R’000
–
(3 132)
Currency risk
The Company incurs currency risk as a result of purchases and sales which are denominated in a currency other than the
Company’s functional currency. Due to the very low volume of both imports and exports, the Company is not hedging any of
these transactions.
(Refer Group accounting policy note 5.)
No forward cover contracts were in place at 31 March 2011.
Exposure to currency risk
The Company’s exposure to foreign currency risk was as follows based on notional amounts:
31 March 2011
(R’000) USD
EUR
Trade receivables
Trade payables
–
(21)
1 368 –
–
(37)
244
(55 523)
Gross balance sheet
exposure
(21)
1 368 (37)
(55 279)
–
–
–
(21)
1 368 (37)
The following significant exchange rates were
applied at the reporting date:
6,9141
9,8139
7,3450
S T A T E M E N T S
Net exposure
34 874
(20 405)
9,9128
F I N A N C I A L
Forward exchange contracts
31 March 2010
(R’000)
USD
EUR
Based on the Company’s net exposure to currency risk, a 10% strengthening of the Rand at 31 March would have changed
profit by the amounts shown below, assuming all other variables remain constant:
(Profit)/loss for the year
before tax
31 March 2011
(R’000) USD
EUR
(2)
137 31 March 2010
(R’000)
USD
EUR
(4)
(2 041)
se p arate
A 10% weakening of the Rand at 31 March would have had the equal but opposite effect on the above currencies to the
amounts shown above, on the basis that all other variables remain constant.
83
Interest rate risk
The interest rate risk profile of financial liabilities of the Company at 31 March was:
Fixed rate financial liabilities
2011
2010
R’000
R’000
Preference shares
3 980 3 980 Weighted average
interest rate (*)
2011
2010
%
%
5,31%
5,31%
(*) The interest rate will remain constant in future periods.
Variable rate financial assets
2011
2010
R’000
R’000
Cash and cash equivalents (net)
– Call accounts
– Current accounts (net)
79 378 42 083
69 587 9 791 24 700 21 420 Interest rate (*)
2011
2010
%
%
5,50%
4,25%
6,00%
5,25%
(*) Interest linked to prime (at the reporting date).
A change of 100 basis points in interest rates would have increased/decreased equity by R794 000 (2010 – R421 000).
Credit risk
Management has a credit control policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit
evaluations are performed on all customers requiring credit over a certain amount. Reputable financial institutions are used
for investing and cash handling purposes. At the reporting date there were no significant concentrations of credit risk. Credit
insurance is taken out where the Company’s credit risk lies, excluding South African Original Equipment Manufacturers and
international first tier suppliers to Automotive Original Equipment Manufacturers.
30. Related parties
Group
The Company is an associate of Remgro Limited. Any subsidiaries or associates of this group are considered to be related
parties. The Company also utilises the internal audit services provided by Remgro Limited. The cost in this regard amounted
to R0,3 million (2010 – R0,3 million). Remgro Management Services Limited, a subsidiary of Remgro Limited, was further
paid R0,2 million (2010 – R0,2 million) in respect of directors’ fees and reimbursement of travel expenses. There were no
further transactions with the Remgro Group.
Company
The subsidiaries of the Group are identified in note 34 and the associates in note 4. All of these entities are related parties of
the Company. Dorbyl Limited has made loans and advances to (certain of which have been impaired) and has received loans
and advances from certain subsidiaries and the associate. These are set out in notes 3, 4 and 34. Details of interest received
on these loans together with dividends, fees and rentals received from these related parties are included in notes 17 and 18.
Directors
Information with respect to the directors of the Company and their remuneration is included in the Directors’ Report.
Key management personnel compensation
In addition to their salaries, the Company also contributes to Group life and disability insurance and post retirement medical
cover for certain executive officers.
Key management personnel (including executive directors) compensation paid during the year amounted to R7,0 million
(2010 – R14,6 million).
84
31. Segmental reporting
Segmental operating income includes revenue and expenditure directly relating to a business segment and excludes net
financial costs/income and taxation.
Segmental assets and liabilities include assets and liabilities directly relating to a business segment but exclude taxation
related and interest bearing assets and liabilities.
Entities within the Group are aggregated into one segment due to the similarity of the nature of its products, production
representative of the internal structure used for management reporting. All entities within the segment are South African
based operations.
Due to the fact that the whole business is considered as one segment, no segmental reporting has been provided.
S T A T E M E N T S
32. Accounting estimates and judgements
Management has discussed with the Audit and Risk Committee the development, selection and disclosure of the Company’s
current accounting policies and estimates and the application of these policies.
Key sources of uncertainty relate to:
F I N A N C I A L
Guarantees have been issued by the Company in favour of the liquidator of certain companies against which the Company
has claims in order for the liquidator to pursue further claims against former directors and shareholders of those companies
and/or associated companies. These actions are still in progress. The amounts are material. The directors, however, on
advice of the Company’s legal advisors, believe that the prospects of the liquidators prevailing are good. The counterparties
in those actions have, from time to time during the proceedings, indicated their intention to institute action for material
consequential damages against the liquidators and, through the guarantees, the Company. The directors, however, on advice
of the Company’s legal advisors, believe these claims to be spurious and without substance.
Dorbyl Limited. (Refer to note 24.)
33. Subsequent events
The following non-adjusting post balance sheet events took place.
The proceeds on the disposal of the Company’s interest in Dorbyl Magnetto Wheels (Pty) Limited (R5,6 million) was received
in May 2011.
se p arate
No other matter which are material to the financial affairs of the Company have occurred between the balance sheet date and
that of approval of the financial statements.
85
Issued share capital
2011
2010
R’000
R’000
34. Subsidiaries
Operating subsidiaries
Local
Guestro Distribution
Company (Pty) Limited
Pullmaflex Southern
Africa (Pty) Limited **
Univel Transmissions
(Pty) Limited*
Investment
Dorbyl Properties
(Pty) Limited Effective interest
2011
2010
%
%
2
2
100 –
20 60 60 Carrying value of interest
Shares
Advances to/(from)
2011
2010
2011
2010
R’000
R’000
R’000
R’000
100 –
–
1 241 1 224
–
51 –
19 –
–
50 50 30 30 (5 657) (18 194)
14 940 14 940 100 100 39 552 39 552 (37 775) (39 552)
Dormant companies
Automotive Steering
Wheels (Pty) Limited
–
–
51 51 –
–
–
Other***
–
–
100 100 3
3
(2 736)
*
39 585 39 604 –
(4 858)
(44 927) (61 380)
Companies where the Group has a 50% interest, but has management control, have been treated as subsidiaries. The
operations of Univel Transmissions (Pty) Limited were discontinued on 30 September 2009 and the Company is in the
process of winding down.
** On 1 April 2010, Dorbyl Limited disposed of its interest in Pullmaflex Southern Africa (Pty) Limited.
*** Details available on request at the registered office of the Company.
The Company’s interests in subsidiaries are shown at the lower of cost and cost less accumulated impairment losses
determined on an individual basis.
86
2011
R’000
2010
R’000
Income earned by subsidiaries attributable to the Company:
Aggregate profits after taxation
Aggregate losses (after taxation where applicable)
43 4
(1 185) (53 796)
(1 142) (53 792)
s h are h olders
Notice of annual general meeting to shareholders
DORBYL LIMITED
Incorporated in the Republic of South Africa
Registration number 1911/001510/06
“Dorbyl” or “the Company”
Notice is hereby given that the one hundred and first Annual General Meeting of members of Dorbyl (“the AGM”) will be held at
the registered office of the Company, being 13 Lincoln Road, Industrial Sites, Benoni South at 10:00 on 21 November 2011 to,
if approved, pass the following resolutions with or without modification:
to
Purpose
The purpose of the AGM is to transact the business set out in the agenda below. For the avoidance of doubt, the Memorandum and
meeting
Articles of Association of the Company are referred to as the Memorandum of Incorporation in accordance with the terminology used
in the new Companies Act 2008 (Act 71 of 2008), as amended (“the Companies Act”), which became effective on 1 May 2011.
Agenda
1. Presentation of the audited annual financial statements of the Company, including the reports of the directors and the Audit
and Risk Committee for the year ended 31 March 2011 as set out in the Company’s Integrated Report 2011 of which this
notice forms part of.
general
2. In terms of articles 15.2 and 17.1 of the Company’s Memorandum of Incorporation, one third of the non-excutive directors
of the Company retire by rotation at each AGM of the Company and shall be eligible for re-election.
3. To consider and, if deemed fit, approve, with or without modification, the following ordinary and special resolutions:
Notes:
For any of the ordinary resolutions numbers 1 to 9 to be adopted, more than 50% of the voting rights exercised on each such
ordinary resolution must be exercised in favour thereof.
1.
RATIFICATION OF DIRECTORS’ FEES
ann u al
Ordinary Resolution Number 1
“Resolved that the directors’ fees amounting to R872 791 paid for the year ended 31 March 2011 in terms of article 21 of
the Company’s Memorandum of Incorporation be confirmed and ratified.”
The reason for ordinary resolution number 1 is that article 21.1 of the Company’s Memorandum of Incorporation requires that
directors’ fees be confirmed by the Company at a General Meeting.
of
RE-APPOINTMENT OF AUDITORS
“Resolved that the appointment of KPMG Inc., as auditors of the Company for the ensuing year be confirmed on the
recommendation of the Company’s Audit and Risk Committee. The audit partner at KPMG Inc., will be Gary Parker.”
notice
2.
The reason for ordinary resolution number 2 is that the Company, being a public listed company, must have its financial
results audited and such auditor must be appointed or re-appointed each year at the AGM of the Company as required by the
Companies Act.
87
Notice of annual general meeting to shareholders (continued)
3.
AUDITOR’S REMUNERATION
“Resolved that the auditor’s remuneration for the year ended 31 March 2011 as determined by the Audit and Risk Committee
of the Company be and is hereby confirmed.”
The reason for ordinary resolution number 3 is that article 13.1 of the Memorandum of Incorporation of the Company and
section 94(7)(b) of the Companies Act requires that the remuneration of the auditor be considered at the AGM.
4.
RE-ELECTION OF DIRECTORS
“Resolved that Mr JW Dreyer, who retires by rotation in terms of article 17.1 of the Company’s Memorandum of Incorporation
and who has offered himself for re-election, be hereby re-elected as director of the Company.”
Jan Dreyer serves as an executive director of Remgro Limited and also serves on a number of Remgro Limited affiliated
companies, including Air Products SA (Pty) Limited, Kagiso Tiso Holdings Limited, RMB Holdings Limited, RMI Holdings
Limited, Business Partners Limited and TSB Sugar Holdings (Pty) Limited.
The reason for ordinary resolution number 4 is that article 17.1 of the Memorandum of Incorporation of the Company and, to
the extent applicable, the Companies Act, requires that a component of the non-executive directors rotate at the AGM and,
being eligible may offer themselves for re-election as directors.
“Resolved that Mr PM Bester, who retires by rotation in terms of article 17.1 of the Company’s Memorandum of Incorporation
and who has offered himself for re-election, be hereby re-elected as director of the Company.”
retiring in 2001.
The reason for ordinary resolution number 5 is that article 17.1 of the Memorandum of Incorporation of the Company and, to
the extent applicable, the Companies Act, requires that a component of the non-executive directors rotate at the AGM and,
being eligible may offer themselves for re-election as directors.
5.
ELECTION OF THE MEMBERS TO THE AUDIT AND RISK COMMITTEE
“Resolved that Mr PM Bester be elected a member of the Audit and Risk Committee, with effect from the conclusion of this
AGM in terms of section 94(2) of the Companies Act.”
retiring in 2001.
“Resolved that Mrs TA Morkel be elected a member of the Audit and Risk Committee, with effect from the conclusion of this
AGM in terms of section 94(2) of the Companies Act.”
Tracy Morkel has extensive asset and hedge fund management experience. She worked at Fairheads, BOE and Coronation
Capital before co-founding Breakwater Capital in 2003.
“Resolved that Mr JB Magwaza be elected a member of the Audit and Risk Committee, with effect from the conclusion of this
meeting in terms of section 94(2) of the Companies Act.”
JB Magwaza amongst others, serves as a non-executive director on the Boards of Mutual and Federal Limited, Rainbow Chicken
Limited, Tongaat-Hulett (Pty) Limited, Pamodzi Investment Holdings Limited, Hulamin Limited and KAP International Limited.
88
6.
s h are h olders
The reason for ordinary resolution numbers 6 to 8 is that the Company, being a public listed company, must appoint an audit
committee as prescribed by sections 66(2) and 94(2) of the Companies Act, which also require that the members of such
Audit Committee be appointed, or re-appointed, as the case may be, at each AGM of a company.
AUTHORISE DIRECTORS AND/OR THE COMPANY SECRETARY
“Resolved that any one director of the Company and/or the Company Secretary is hereby authorised to do all such things and
sign all such documents as deemed necessary to implement the ordinary and special resolutions as set out in this notice
convening the AGM at which these resolutions will be considered.”
The reason for ordinary resolution number 9 is to ensure that the resolution voted favourably upon is duly implemented.
7.
REMUNERATION OF NON-EXECUTIVE DIRECTORS TO 31 MARCH 2012
to
Special Resolution Number 1
“Resolved that the remuneration of non-executive directors for the year ending 31 March 2012 be approved on the following
basis:
– Chairman of the Board: R320 000 per annum, payable quarterly;
meeting
– Non-executive directors’: R80 000 per annum, payable quarterly;
– Chairman of the Audit and Risk Committee: R80 000 per annum, payable quarterly;
– Members of the Audit and Risk Committee: R40 000 per annum, payable quarterly;
– Chairman of the Remuneration and Nominations Committee: R40 000 per annum, payable quarterly; and
general
– Members of the Remuneration and Nominations Committee: R25 000 per annum, payable quarterly.”
Reasons for and effect of special resolution number 1
The reason for the proposed special resolution, is to comply with section 66(9) of the Companies Act, which requires the
approval of directors’ fees prior to the payment of such fees.
The effect of special resolution number 1 is that the Company will be able to pay its non-executive directors for the services
they render to the Company as directors without requiring further shareholder approval until the next AGM.
AUTHORITY TO REPURCHASE SHARES BY THE COMPANY AND ITS SUBSIDIARIES
of
“Resolved that as a special resolution that the Company be and is hereby authorised, as a general approval, to repurchase any
of the shares issued by the Company, upon such terms and conditions and in such amounts as the directors may from time to
time determine, but subject to the provisions of sections 46 and 48 of the Companies Act, the Memorandum of Incorporation
of the Company and the Listings Requirements of the JSE, namely that:
– the general repurchase of the shares may only be implemented on the open market of the JSE and done without any prior
understanding or arrangement between the Company and the counterparty;
notice
8.
ann u al
In terms of the Companies Act, 75% of the votes cast by shareholders present or represented by proxy at this meeting must
be cast in favour of this special resolution for it to be adopted.
– this general authority shall only be valid until the next AGM of the Company, provided that it shall not extend beyond
15 months from the date of this resolution;
89
– an announcement must be published as soon as the Company has acquired shares constituting, on a cumulative basis,
3% of the number of shares in issue prior to the acquisition, pursuant to which the aforesaid 3% threshold is reached,
containing full details thereof, as well as for each 3% in aggregate of the initial number of shares acquired thereafter;
– the general authority to repurchase is limited to a maximum of 20% in the aggregate in any one financial year of the
Company’s issued share capital at the time the authority is granted;
– a resolution has been passed by the Board of Directors approving the purchase, that the Company has satisfied the solvency
and liquidity test as defined in the Companies Act and that since the solvency and liquidity test was applied there have
been no material changes to the financial position of the Group;
– the general repurchase is authorised by the Company’s Memorandum of Incorporation;
– repurchases must not be made at a price more than 10% above the weighted average of the market value of the shares
for five business days immediately preceding the date that the transaction is effected. The JSE should be consulted for a
ruling if the shares of the Company have not traded in such five business day period;
– the Company may at any point in time only appoint one agent to effect any repurchase(s) on the Company’s behalf;
– the Company may not effect a repurchase during any prohibited period as defined in terms of the Listings Requirements of
the JSE unless there is a repurchase programme in place as contemplated in terms of 5.72(g) of the Listings Requirements
of the JSE; and
– the Company must ensure that its sponsor provides the JSE with the required working capital letters before it commences
the repurchase of any shares.”
The reason for and effect of special resolution number 2 is to grant the directors a general authority in terms of its
Memorandum of Incorporation and the Listings Requirements of the JSE and for the acquisition by the Company of shares
issued by it on the basis reflected in the special resolution.
In terms of the Listings Requirements of the JSE any general repurchase by the Company must, inter alia, be limited to a
maximum of 20% of the Company’s issued share capital in any one financial year of that class at the time the authority is
granted.
“Resolved that as a special resolution that the Company, insofar as it may be necessary to do so, hereby approves, as a general
approval, and authorises the acquisition by any subsidiary of the Company (“the subsidiary” or “the acquiree”) of shares
issued by such subsidiary and/or shares issued by the Company, upon such terms and conditions and in such amounts as
the directors of any such subsidiary may from time to time determine, but subject to the provisions of sections 46 and 48 of
the Companies Act, the Memorandum of Incorporation of the Company and the Listings Requirements of the JSE, including,
inter alia, that:
– the general repurchase of shares may only be implemented on the open market of the JSE and done without any prior
understanding or arrangement between the acquiree and the other counterparty;
– this general authority shall only be valid until the next AGM of the Company, provided that it shall not extend beyond
15 months from the date of this resolution;
– an announcement must be published as soon as the acquiree has acquired shares constituting, on a cumulative basis, 3%
of the number of shares of the acquiree company in issue prior to the acquisition, pursuant to which the aforesaid 3%
threshold is reached, containing full details thereof, as well as for each 3% in aggregate of the initial number of shares
acquired thereafter;
90
s h are h olders
– this general authority to repurchase is limited to a maximum of 20% in the aggregate in any one financial year of the
acquiree’s issued share capital at the time the authority is granted, subject to a maximum of 10% in the aggregate in the
event that it is the Company’s share capital that is repurchased by a subsidiary;
– a resolution has been passed by the Board of Directors approving the purchase, that the Company has satisfied the solvency
and liquidity test as defined in the Companies Act and that since the solvency and liquidity test was applied there have
been no material changes to the financial position of the Group;
– the general purchase is authorised by the Company’s Memorandum of Incorporation;
– repurchases must not be made at a price more than 10% above the weighted average of the market value of the shares for
the five business days immediately preceding the date that the transaction is effected. The JSE should be consulted for a
ruling if the securities have not traded in such five business day period;
– the Company and/or subsidiary may at any point in time only appoint one agent to effect any repurchase(s) on the
subsidiary Company’s behalf;
to
– the subsidiary Company may not effect a repurchase during any prohibited period as defined in terms of the Listings
Requirements of the JSE unless there is a repurchase programme in place as contemplated in terms of 5.72(g) of the
Listings Requirements of the JSE; and
meeting
– the Company must ensure that its sponsor provides the JSE with the required working capital letters before it commences
the repurchase of any shares.”
The reason for and effect of special resolution number 3 is to grant the Board of Directors of any subsidiary of the Company
a general authority in terms of the Listings Requirements of the JSE to acquire shares issued by such subsidiary and/or to
acquire shares issued by the Company on the basis reflected in the special resolution.
general
In terms of the Listings Requirements of the JSE, any general purchase by a subsidiary of shares must, inter alia, be limited
to a maximum of 20% of the issued share capital of the acquiree Company in any one financial year of that class at the time
the authority is granted, subject to a maximum of 10% in the event that it is the Company’s share capital that is repurchased
by a subsidiary.
FINANCIAL ASSISTANCE TO SUBSIDIARIES AND OTHER INTER-RELATED ENTITIES
ann u al
9.
“Resolved that, the Company be and is hereby authorised to provide direct or indirect financial assistance to any subsidiary
or inter-related company (as defined in the Companies Act) of the Company by way of a general authority in favour of that
category of recipients as contemplated in section 45(3)(a)(ii) of the Companies Act, on terms and conditions and for amounts
that the Board of Directors may determine from time to time.”
of
The reason for and effect of this special resolution is, in compliance with section 45(3)(a)(ii) of the Companies Act, to permit
the Company to provide direct or indirect financial assistance to entities within the Dorbyl group of companies.
notice
10. OTHER BUSINESS
To transact such other business as may be transacted at an AGM or raised by shareholders with or without advance notice to
the Company.
91
INFORMATION RELATING TO THE SPECIAL RESOLUTIONS
1. The directors of the Company or its subsidiaries will only utilise the general authority to purchase shares of the Company
and/or the subsidiary as set out in special resolution numbers 2 and 3 to the extent that the directors, after considering
the maximum shares to be purchased, are of the opinion that the Company and its subsidiaries’ (“Dorbyl Group”) position
would not be compromised as to the following:
• the Dorbyl Group’s ability in the ordinary course of business to pay its debts for a period of 12 months after the date
of this AGM and for a period of 12 months after the purchase;
• the consolidated assets of the Dorbyl Group will at the time of the AGM and at the time of making such determination
be in excess of the consolidated liabilities of the Dorbyl Group. The assets and liabilities should be recognised and
measured in accordance with the accounting policies used in the latest audited annual financial statements of the
Dorbyl Group;
• the ordinary capital and reserves of the Dorbyl Group after the purchase will remain adequate for the purpose of the
business of the Dorbyl Group for a period of 12 months after the AGM and after the date of the share purchase; and
• the working capital available to the Dorbyl Group after the purchase will be sufficient for the Dorbyl Group’s
requirements for a period of 12 months after the date of the notice of the Annual General Meeting
and the directors have passed a resolution authorising the repurchase, resolving that the Company has satisfied the
solvency and liquidity test as defined in the Companies Act and resolving that since the solvency and liquidity test had
been applied, there have been no material changes to the financial position of the Dorbyl Group.
2. For the purposes of considering special resolution numbers 2 and 3, and in compliance with paragraph 11.26 of the
Listings Requirements, the information listed below has been included in the Integrated Report, in which this notice of
the AGM is included, at the places indicated:
• Directors and management (pages 3 to 4);
• Major shareholders (page 2);
• Directors’ interests in securities (page 17);
• Share capital of the Company (page 40 and 69);
• Contingent liabilities (page 50);
• Responsibility statement (page 13);
• Litigation statement (pages 6 and 50); and
• Material changes – This notice has been distributed together with the financial statements of the Group and no
material changes in the financial or trading position of the Group have occured since the publication thereof.
3. For purposes of special resolution number 4, the Board of Directors of the Company will only utilise the general authority
bestowed upon them to provide direct or indirect financial assistance related to inter-related companies to the extent that
the directors will comply with relevant provisions of the Companies Act and further that after considering the amount of
financial assistance to be granted, are of the opinion that:
• immediately after providing the financial assistance, the Company would satisfy the solvency and liquidity test (as
defined in the Companies Act);
• the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company; and
• all conditions or restrictions regarding the granting of financial assistance as set out in the Company’s Memorandum
of Incorporation have been satisfied.
92
VOTING
s h are h olders
1. The date on which shareholders must be recorded as such in the share register maintained by the transfer secretaries of the
Company (“the Share Register”) for purposes of being entitled to receive this notice is Friday, 23 September 2011.
2. The date on which shareholders must be recorded in the Share Register for purposes of being entitled to attend and vote at
this meeting is Friday, 11 November 2011 with the last day to trade being Friday, 4 November 2011.
3. Meeting participants will be required to provide proof of identification to the reasonable satisfaction of the chairman of the
AGM and must accordingly bring a copy of their identity document, passport or driver’s license. If in doubt as to whether any
document will be regarded as satisfactory proof of identification, meeting participants should contact the transfer secretaries
for guidance.
to
4. Shareholders entitled to attend and vote at the AGM may appoint one or more proxies to attend, speak and vote thereat in
their stead. A proxy need not be a member of the Company. A form of proxy, in which are set out the relevant instructions for
its completion, is enclosed for the use of a certificated shareholder or own name registered dematerialised shareholder who
wishes to be represented at the AGM. Completion of a form of proxy will not preclude such shareholder from attending and
voting (in preference to that shareholder’s proxy) at the AGM.
meeting
5. The instrument appointing a proxy and the authority (if any) under which it is signed must reach the transfer secretaries of
the Company at the address given below by not later than 10:00 on Friday, 18 November 2011.
6. Dematerialised shareholders, other than own name registered dematerialised shareholders, who wish to attend the AGM
in person will need to request their Central Securities Depository Participant (“CSDP”) or broker to provide them with the
necessary authority in terms of the custody agreement entered into between such shareholders and the CSDP or broker.
general
7. Dematerialised shareholders, other than own name registered dematerialised shareholders, who are unable to attend the AGM
and who wish to be represented thereat, must provide their CSDP or broker with their voting instructions in terms of the
custody agreement entered into between themselves and the CSDP or broker in the manner and time stipulated therein.
8. Shareholders present in person, by proxy or by authorised representative shall, on a show of hands, have one vote each and,
on a poll, will have one vote in respect of each share held.
ann u al
By order of the Board
BD Bhikha
Company Secretary
of
Transfer Secretaries
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown 2107)
notice
Registered Office
13 Lincoln Road, Industrial Sites,
Benoni South, 1501
28 September 2011
93
Shareholders’ diary
Annual general meeting
21 November 2011
Reports
– Interim statement
– Preliminary announcement of results
17 November 2011
23 June 2012
Preference dividends
– Declared 20 May 2011
– To be declared 19 November 2010
Last date to trade
cum dividendPayment
17 June 2011
16 December 2011
27 June 2011
26 December 2011
Note:
The above dates are given as an indication to shareholders. The Company accepts no responsibility should alterations to dates
become necessary.
94
Form of proxy
DORBYL
LIMITED
Incorporated in the Republic of South Africa
Registration number 1911/001510/06
Share code: DLV ISIN: ZAE 000002184
“Dorbyl” or “the Company”
To be completed by certificated shareholders and dematerialised shareholders with “own name” registration only.
I/We
of (address)
being a member/s of Dorbyl Limited and entitled to votes, hereby appoint
of
or, failing him,
of
In favour of
Number of shares
Against
Abstain
of
1. To accept the presentation of the audited annual financial statements.
2. Ordinary resolution number 1: Ratifying the directors’ fees
3. Ordinary resolution number 2: Confirming re-appointment
of the auditors
4. Ordinary resolution number 3: Confirming auditor’s remuneration
5. Ordinary resolution number 4: To re-elect JW Dreyer
6. Ordinary resolution number 5: To re-elect PM Bester
6. Ordinary resolution number 6: To elect PM Bester as member
of the Audit and Risk Committee
7. Ordinary resolution number 7: To elect TA Morkel as member
8. Ordinary resolution number 8: To elect JB Magwaza as member
9. Ordinary resolution number 9: Authority to implement resolutions
10. Special resolution number 1: Approval of non-executive directors’
fees for 2012
11. Special resolution number 2: Authority to repurchase shares
by the Company
12. Special resolution number 3: Authority to repurchase shares
by the subsidiaries of the Company
13. Special resolution number 4: Approval of financial assistance
to subsidiaries and inter-related entities
form
p ro x y
or, failing him, the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the one hundred and first
Annual General Meeting of the Company to be held at the registered office of the Company, being 13 Lincoln Road, Industrial
Sites, Benoni South at 10:00 on 21 November 2011 and at any adjournment thereof, as follows:
Please indicate with an “X” in the appropriate space above how you wish your vote to be cast in respect of the above resolutions.
If you return this form duly signed, without any specific directions, the proxy holder will vote or abstain at his discretion.
Signed this day of 2011
Signature Assisted by (where applicable) (state capacity and full name)
Each Dorbyl shareholder is entitled to appoint one or more proxy(ies) (who need not be a shareholder(s) of the company) to
attend, speak and vote in his stead at the Annual General Meeting.
95
Notes to the form of proxy
1. This form or proxy should only be used by certificated shareholders or shareholders who have dematerialised their shares with
own name registration.
2. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space/s
provided, with or without deleting “the Chairman of the meeting”, but any such deletion must be initialled by the shareholder.
The person whose name stands first on the form of proxy and who is present at the meeting will be entitled to act as proxy to
those whose names follow.
3. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by
that shareholder in the appropriate space provided. Failure to comply with the above will be deemed to authorise the proxy
to vote or to abstain from voting at the meeting as he/she deems fit in respect of all of the shareholder’s votes exercisable
thereat. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder or his/her proxy, but
the total of the votes cast and in respect of which abstention is recorded may not exceed the total of the votes exercisable by
the shareholder or by his/her proxy.
4. Dematerialised shareholders who wish to attend the meeting or to vote by way of proxy, must contact their CSDP or broker
who will furnish them with the necessary authority to attend the meeting or to be represented thereat by proxy. This must be
done in terms of the agreement between the member and his/her CSDP or broker.
5. Forms of proxy must be lodged at the Company’s Transfer Secretaries, Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) so as to be received by not later than 10:00
on Friday, 18 November 2011.
6. The completion and lodging of this form of proxy shall not preclude the relevant shareholder from attending the meeting and
speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.
7. Documentary evidence establishing the authority of the person signing this form of proxy in a representative or other legal
capacity must be attached to this form of proxy unless previously recorded by the Transfer Secretaries of the Company or
waived by the Chairman of the meeting.
8. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.
9. The Chairman shall be entitled to reject the authority of a person signing the form of proxy:
9.1
under a power of attorney, or
9.2
on behalf of a company
unless that person’s power of attorney or authority is deposited at the registered office of the Transfer Secretaries not
less than 24 hours before the meeting.
10. Where shares are held jointly, all joint holders are required to sign the form of proxy.
11. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are
produced or have been registered by the Transfer Secretaries.
12. On a show of hands, every shareholder present in person or represented by proxy shall have only one vote, irrespective of the
number of shares he/she holds or represents.
13. On a poll, every shareholder present in person or represented by proxy shall have one vote for every share held by such
shareholder.
14. A resolution put to the vote shall be decided by a show of hands, unless, before or on the declaration of the results of the
show of hands, a poll shall be demanded by any person entitled to vote at the Annual General Meeting.
Registered Office
13 Lincoln Road, Industrial Sites,
Benoni South, 1501
Transfer Secretaries
Ground Floor, 70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown 2107)
96
98

Dorbyl Limited Integrated Report - Sustainability Disclosure Database

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