ANNUAL REPORT
2011
Grow the
Winhold Group
in a responsible
manner
Continue to
increase value
for all
stakeholders
Continue to
develop and
empower all
employees through
training
& education
.......
......
in order that they
can meet the demands
of the market and
benefit from the
growth of
the group
CONTENTS PAGE
CHAIRMAN’S REPORT
2
FINANCIAL PERFORMANCE AND STATISTICS
3
GROUP STRUCTURE
4
CHIEF EXECUTIVE’S REPORT
5
BUSINESS PROFILES
7
VALUE ADDED STATEMENT
15
GROUP SUSTAINABILITY REPORT
16
KING III INDEX
22
CORPORATE GOVERNANCE REPORT
26
REMUNERATION REPORT
33
STOCK EXCHANGE DATA
37
DIRECTORS AND COMPANY SECRETARY
38
STATEMENT BY THE DIRECTORS AND
CERTIFICATE BY THE COMPANY SECRETARY 41
REPORT OF THE INDEPENDENT AUDITORS
42
REPORT OF THE DIRECTORS
43
AUDIT AND RISK COMMITTEE REPORT
44
ANALYSIS OF SHAREHOLDERS AND STOCK EXCHANGE DATA
47
STATEMENTS OF COMPREHENSIVE INCOME
49
STATEMENTS OF FINANCIAL POSITION
50
STATEMENTS OF CHANGES IN EQUITY
51
STATEMENTS OF CASH FLOWS
52
NOTES TO THE STATEMENTS OF CASH FLOWS
53
ACCOUNTING POLICIES AND PRESENTATION
54
NOTES TO THE FINANCIAL STATEMENTS
62
NOTICE OF THE ANNUAL GENERAL MEETING
90
SHAREHOLDER’S DIARY
96
FORM OF PROXY
97
WINHOLD ANNUAL REPORT 2011
PA G E : 1
CHAIRMAN’S REPORT
The last financial year was disappointing. The first half year’s results showed major upside and it was expected
that this trend would continue. The many public holidays during April and the industrial action during July led to
low demand and underperformance. Preventative action through stock piling was implemented but this was largely
thwarted through the strike spreading to our major customers and the volume losses could not be recouped. Normally
August and September are good months for manufacturing, but demand stayed subdued.
It is imperative that momentum has to be regained, faith and trust rebuilt with our investors. Action driven programs
have to be driven in order to obtain results quicker.
The new management in the value added division will have to adapt to changes in the mining world and more sales
volumes have to be obtained. The business is well positioned and already a new expansion of lined steel pipes was
commissioned and should start contributing positively in the new year. Other products have to be found and new
alliances have to be explored. In the past year, together with abnormal write-offs, this operation had the largest
decline versus last year. Management is paying urgent attention to this.
Changes in the mining division market place will be addressed, however there is no quick fix. More products have to
be found outside the traditional suppliers. Some acquisitions have to be found and the base of the industrial division
will have to be enlarged, as margins are better than in the mining division. Some divisions did extremely well the past
year and hopefully they will expand more on their strengths.
In Gundle the challenge lies in the fact that all the modernisation which took place in the last 3 years, will
have to be driven to higher outputs, efficiencies (not only in product but labour as well) resulting in improved
profitability. Careful attention will be given to enlarge our skilled people complement in order to ensure that the
demand for improved product and output can be met. In Swaziland a new management team will be introduced.
This is easier said than done because of the scarcity of trained people in Swaziland, and the political situation there.
However, management is paying attention to this and they realise the urgency thereof.
Management realises that the investors want continuous improvement and stable in dividends. This was not achieved
during the year under review and clearly calls for the necessary intervention. The future will have to be created by
ourselves even in these trying circumstances and times.
I would like to thank the board of directors, management and all employees, especially those who are continually
improving, for their contributions this year. We are not losers and want to recreate our winning culture.
To all those disappointed shareholders, we will do our utmost to change the past year’s performance. If you
have any positive suggestions they will be gladly considered. We are sorry about the past year’s performance.
Thank you for still supporting us.
To all other stakeholders, including suppliers, we have a good
infrastructure, solid people and together we can strive to give better
support and products to our customers. With satisfied customers we
can grow the future back again to where it should be.
Once again, we have taken our pain, let us learn from this to
act quicker and be more pro-active.
Non-executive chairman
PA G E : 2
WINHOLD ANNUAL REPORT 2011
FINANCIAL PERFORMANCE STATISTICS
2011
2010
2009
2008
2007
2006
FINANCIAL HIGHLIGHTS
Revenue
990 308 1 030 918 994 947 991 915 917 220 863 385 Operating profit
28 045
51 227 50 470 55 411 41 060 37 756 Attributable profit
16 638
24 825 26 934 25 660 26 804 24 365 Earnings per share (cents) 13,3
19,8
21,5 20,4 20,4 19,4 Headline earnings per share (cents) 15,2
20,7
19,4 20,1 25,0 18,5 Dividends per share (cents) 7,0
10,0
10,0 9,0 7,5 7,0 Net asset value per share (cents) 202,2
199,0
188,3 175,8 171,9 157,7 Net tangible asset value per share (cents) 182,9
177,8
167,2 152,9 149,7 135,5 SUMMARISED GROUP
BALANCE SHEETS
Property plant and equipment
159 726
Goodwill 24 041
Investments 141 323
Current assets 371 121
Total assets 696 211
Ordinary shareholders’ funds 253 550
Non controlling interests 18 372
Interest bearing liabilities 232 995
Interest free liabilities 191 294
Total equity and liabilities 696 211
149 490
26 541
168 103
354 444
702 705
249 772
17 620
225 475
209 838
702 705
139 864 26 541 160 788 321 487 648 680 237 703 13 951 235 178 10 686 648 680 134 448 26 541
160 788 360 600 682 377 221 871 10 197 236 175 4 632 682 377 123 394 26 541 160 788 338 491 649 214 217 002 4 862 237 296 190 054 649 214 98 426 26 541 160 788
301 815 587 570
199 033 2 287 221 387 164 863 587 570 10,4
4,6
5,0
51 227
90,3
34,8
2,3
1,6
10,2
4,7
5,1
50 470
98,9
38,3
2,1
1,6 11,3 4,5
5,6
55 411
106,6 39,0
2,1
1,4 12,3 4,6
4,6
41 060
109,4 40,4
2,0
1,5 11,6 4,5
4,3
37 756
111,2 33,3
2,6 1,6 RATIOS*
Return on equity (%) Return on assets (%) Operating income to turnover (%) Operating EBITDA (R000’s) Gearing (%) Operational Gearing (%)
Interest cover (times) Current ratio (times) 7,5
2,5
2,8
28 045
91,9
39,5
1,9
1,6
Productivity
Number of employees (year end)
Revenue per employee (R000) Operating profit per employee (R000) 925
1072,7
30,3
916
851
1 125,4 1 169,1 55,9
59,3
909
1091,2 61,0 976
939,8 43,1 969
891,0 39,0
* Refer to inside back cover
200
70
190
180
60
160
120
20
40
100
15
30
80
60
10
20
40
20
10
0
0
2006
2007
2008
2009
2010
2011
NET ASSET VALUE PER ORDINARY SHARE (cents)
Cents per share
DPS
25
50
140
Cents per share
HEPS
30
5
2006
2007
2008
2009
2010
ebitda (Rand millions)
2011
0
2006
2007
2008
2009
2010
2011
HEADLINE EPS & DIVIDENDS PS
WINHOLD ANNUAL REPORT 2011
PA G E : 3
GROUP STRUCTURE
WINHOLD LIMITED
100%
100%
WINHOLD
MANAGEMENT
COMPANY
100%
(PTY) LTD
GUNDLE
LIMITED
INMINS
LIMITED
INMINS
TRADING
(Pty) LTD
GUNDLE
PLASTICS
GROUP (Pty) LTD
Gundle Plastall
(Germiston, Bloemfontein,
Port Elizabeth, Cape Town,
Durban)
74.9%
Gundle API
100%
GUNDLE
MULTISACK
(Pty) Ltd
• Belting & Sprockets SA
• Chick Henderson
• Conway Johnson
(Burgersfort, Klerksdorp, Kuruman, Rustenburg,
Welkom, Witbank)
• Conveyor Hose (Evander, Witbank)
• Highveld Hose
• Millennium Pipe & Steel
•Valic Mining
& Industrial Supplies
•Vryheid Mining
Supplies
•T&E
74.9%
100%
GUNDLE
WOVEN
(Pty) Ltd
100%
100%
ZENZELE
INDUSTRIAL
SUPPLIES
(Pty) Ltd
(PTY) LTD
100%
GUNDLE
PROPERTIES
(Pty) Ltd
85%
PA G E : 4
NOVARA
PROFILE
EXTRUSIONS
WINHOLD ANNUAL REPORT 2011
Plastics
international
limited
trading as
Swazi Plastic
Industries
GUNDLE
geo
synthetics
(Pty) Ltd
ZENZELE
INDUSTRIAL
SUPPLIES
(MPUMALANGA)
(Pty) Ltd
34%
39%
INMINS
PROPERTIES
(Pty) Ltd
100%
CHIEF EXECUTIVES REPORT
HEADLINE NUMBERS
The revenue declined by 3,8% after a disappointing second half.
The Inmins turnover reduced by 11.3%. A significant, once off, expansion in 2010 at Goldfield’ s South Deep mine
was not repeated this year, negatively affecting the T & E value add division’s revenue by R45m. The effect of a
decision in 2010 of a major pipe supplier to service the platinum mines directly from April 2010 is also reflected in
the revenue reduction. The 15,3% increase in revenue achieved by the industrial consumables division partly offset
the reduction.
Gundle’s revenue reduced by 3,8% in a year of industry wide strikes, erratic raw material availability and price
instability. The Metal Industry wage negotiation strikes had a significant effect on many of our customers. Internally
these strikes were quickly resolved, largely as result of good floor level working relationships, and a new 3 year wage
agreement was secured.
Margins were under pressure in all sectors while transport and energy costs soared. This, together with redundant
stock write-offs and the impairment of goodwill, resulted in the earnings drop of 33%.
MARKET CONDITIONS
The building and construction industry remained subdued. Cement production declined. Sales to these industries by
both Gundle and Inmins were affected. Steel prices increased during the period under review and production problems
at Arcelor Mittal’s Newcastle plant limited availability of some products. The trend of major manufacturers to service
the end users directly continued. Polymer prices and supply were unstable. Environmental issues are becoming ever
more important, especially those relating to water preservation and quality. This contributed to a good performance
at Gundle GeoSynthetics.
PERFORMANCE
Inmins
The attributable earnings of Inmins reduced by R9,564m mainly due to the under-performance of the T & E value
added division. This division experienced a 29% drop in revenue due to stock-outs, contract suspensions and a major
once off contract in the previous year. The SEIFSA steel industry wide strike lead to a loss in production and sales.
It was further necessary to make significant stock and contract write-offs.
The trading operations maintained their profit levels although the mining supplies businesses experienced difficult
trading conditions. Business was lost due to some suppliers deciding to deal directly with the end users. The cross
selling of products to existing customers has commenced and further opportunities in this regard are being pursued.
The process of finding alternative suppliers and products continued.
Gundle
The attributable earnings of Gundle reduced by R4,1m. Raw material prices and availability were unstable leading
to a loss of sales and margin erosion. The SEIFSA industry wide strike resulted in a loss of production which could
not be recouped. Demand was further negatively affected when these strikes were extended to include our customer
base. The building and construction industry remained subdued, with the building of new houses being at especially
low levels.
The dam lining operation improved on its outstanding performance of 2010. It is now one of the leaders in South
Africa with a footprint in sub-Saharan Africa.
The capital expenditure incurred during the financial year replaced three old machines with one modern co-extruder.
The demand for product reached the expected levels by August 2011. Another extruder to service the heavy duty bag
market was commissioned in September 2010 replacing an old inefficient machine that could not produce product
to the standard required by the market. Downstream efficiencies were improved leading to a reduction in overtime
worked and improved customer service.
The Swaziland business was stabilised during the year. Volumes have returned to normal and costs are under control.
The political instability makes trading conditions in Swaziland difficult. Fortunately a major portion of the Swaziland
factory’s revenue is derived from South Africa.
WINHOLD ANNUAL REPORT 2011
PA G E : 5
CHIEF EXECUTIVES REPORT
Novara
The trade in colourants for the plastic bottle industry has been profitable. The principals are developing new products
which, if successful, will further grow this business. The losses and write-offs incurred previously have been curtailed
and the attributable earnings improved by R9,8m.
PROSPECTS
Inmins
The new management team at the T&E value added division have settled in well. The sales and marketing effort has
been significantly improved and should lead to better market penetration. Facilities to fabricate plastic lined steel pipe
have been commissioned and the first orders have been received. Delivery of the first product should be in January
2012. With the old and redundant stock having been provided for in 2011, write-offs in the future should be limited.
This division should achieve an acceptable return on investment in the future.
The sale of the specialist products of the group through the whole network is gaining momentum. It is expected to
increase both the revenue and margins in the year ahead. The efforts to find additional products continue.
Gundle
Gundle has positioned itself as a market leader in certain of the products it provides, or has created niches with
specialised products. Due to the capital expenditure incurred over the last 3 years, new products have and are
being developed to service existing and new markets. It is not expected that the building and construction industry
will recover significantly in 2012. The emphasis internationally on water preservation and quality continues. Gundle
GeoSynthetics should therefore continue to grow.
The Gundle share of the consumer packaging market is small. Investments in new production facilities provide the
opportunity to grow in this market and some success has already been achieved.
APPRECIATION
The success of any business is dependent on its people, suppliers and customers. To each and every one who
contributed, my sincere thanks. Your support and commitment in a difficult year is appreciated. My thanks to the
chairman and colleagues on the board for their support and invaluable contribution during the year.
CHIEF executive OFFICER
PA G E : 6
WINHOLD ANNUAL REPORT 2011
BUSINESS PROFILES
GUNDLE GROUP
Gundle, through its three factories and four distribution centers, is one of the largest manufacturers of a diverse range
of flexible plastics in the sub–Saharan region. Their product lines include agricultural film, construction sheeting,
consumer packaging, dam lining and industrial packaging. Focus is placed on applying the latest technology,
on-going product innovation and development, as well as high quality production standards. Various ISO certifications,
SABS marks and Agreement Certificates have been awarded to Gundle. A 25,1% Black Empowerment Shareholding
has been in place since 2006. The various operations are described below:
GUNDLE API (SPRINGS)
This manufacturing plant extrudes wide width sheeting for the construction,
agricultural and GeoSynthetics membrane markets. Products for the construction
market are used mainly for damp and waterproofing. They are the
market leader and the Gundle brand is widely specified by architects
and quantity surveyors. Gundle is the only manufacturer in South
Africa that can extrude film wider than 9 meters. Wide width
sheeting in agriculture is used for covering greenhouses, silage
and lining farm dams. The Gundle brand name is well known
in the farming community and is associated with quality.
GeoSynthetics applications require a one to two millimeter
membrane in widths in excess of 6 meters for lining of landfill
sites, canals, tailings dams and waste disposal areas.
Gundle API is the only South African manufacturer of these
highly specialised membranes. They are suppliers to all
the major hardware groups. Gundle API has developed
a range of more cost efficient co-extruded SABS mark
bearing building products, and has recently started
manufacturing foil laminated membranes for industrial
and domestic roofing insulation applications.
Hilbert
Schroeder
(MD Gundle
API)
Mike Risely
(MD Gundle
Germiston)
GUNDLE PLASTALL (GERMISTON)
Gundle Plastall is a manufacturer of various forms of low and
linear low density polyethylene flexible films, being heavy duty
sacks, shrink and stretch hoods used for pallet stabilisation and
printed films for the fast moving consumer goods industry. This
division is one of the top three suppliers into the heavy duty sacks
market, supplying the fertiliser and chemical industry. In the shrink and
stretch hood market they have established themselves as market leader, with
their main customers being the cement and glass industries for pallet stabilisation
to secure products for deliveries by their clients. Great strides have been made
into the fast moving consumer goods market, and certain niche
products are being successfully used by some of the larger food
manufacturers throughout the country.
Garth
Remmington
(Sales Director
Gundle Trading
Division)
In an attempt to assist in keeping the environment green,
they have their own on-site recycling facility. This has
enabled Gundle, as a group, to re-use 100% of the
scrap generated in the manufacture of its products.
Jan Jordaan
(Technical Director –
Gundle)
WINHOLD ANNUAL REPORT 2011
PA G E : 7
BUSINESS PROFILES
SWAZI PLASTIC INDUSTRIES (MATSAPHA, SWAZILAND)
Established in 1986, this factory extrudes a wide range of mono and co-extruded low and linear low density
polyethylene films and polypropylene strapping and twine. They provide up to six colours of quality
flexographic printing on a diverse range of packaging, including side, bottom and spine seal bags
punched or micro perforated with side and bottom gussets, sheeting for automatic packaging and
shrink wrap materials in sleeves, sheeting and shrouds. It has access to the experienced Germiston
team with technical know-how who are able to design and advise on all packaging requirements.
Products are manufactured to international standards and distributed in Swaziland,
South Africa and Mozambique, and include mono and multi- layer co-extruded
films, shrink films / release shrink film, specialised films, printed polyethylene
bags, form fill and seal sheeting, liquid packaging, construction sheeting and
agricultural sheeting, polypropylene strapping and twine, packaging tapes,
strapping tools and sealing equipment.
GUNDLE PLASTALL DISTRIBUTION BRANCHES
(BLOEMFONTEIN, CAPE TOWN, DURBAN and
PORT ELIZABETH)
GUNDLE PLASTALL
(BLOEMFONTEIN)
Services regions of the OFS, North West, Northern Cape, and
Lesotho. The main focus of this branch is supplying flexible
packaging material such as pallet wrap and printed bags to
the milling industry, sugar packers, meat packers and brick
manufacturers. Gundle Bloemfontein also services the
construction and agricultural markets through various
national hardware stores and co-operatives.
GUNDLE PLASTALL
(CAPE TOWN)
Mainly distributes for the Gundle factories, with three major areas of
focus being the construction, agricultural and packaging industries,
servicing the Western Cape and West Coast areas. As the regional
market leader in the construction field, the branch focuses on
supplying the local merchant markets. In the agricultural industry
they focus on supplying their Gundle branded products through the
local agricultural co-operative networks in the Southern and West
Coast areas where they enjoy the largest market share. Gundle products
also cover the silage, fodder wrap, and mulch and tunnel markets, and a
comprehensive backup for these agricultural co-operatives is offered directly
to the local farming community. The packaging market is currently a growth
area for Gundle Cape Town, with inroads being made in the bedding, bottling,
food, transport and industrial and medical sectors. In this market focus products
are shrink and stretch films, printed and unprinted bags, wide width sheeting,
shrouds and bubble wrap films.
GUNDLE PLASTALL
(DURBAN)
Primarily distributes products on behalf of Gundle’s factories. Such products include SABS approved
damp proof sheeting, dam lining membranes, roof insulation, printed packaging for food and juice
industries, plus wide width sheeting, shrouds, stretch hoods and stretch wrap to a diverse cross section of
clients. This branch specialises in one-on-one selling and support to the end user and has a proud history of
supplying fertilizer bags, stretch hoods and sheeting to most of KZN’s largest manufacturers. To supplement
these product ranges, the branch also supplies a wide range of tapes, strapping, twine, bubble wrap and
ancillary sealing products.
PA G E : 8
WINHOLD ANNUAL REPORT 2011
BUSINESS PROFILES
GUNDLE PLASTALL
(PORT ELIZABETH)
A distribution point for the various factories in the Gundle Group, the branch supplies an area
stretching from George to East London. They distribute construction film, agricultural membrane
and flexible packaging. The Eastern Cape aquaculture industry has shown strong growth, with
prawn farming and fish hatchery ventures having been recently established. Aquaculture
projects should utilise vast quantities of wide width plastic membranes in the
water storage systems as well as wide width greenhouse membranes to cover
the hatcheries. The PE branch has been involved in several such development
projects and is ideally poised to supply and install membranes utilised in
these projects.
GUNDLE MBOMBELA
(NELSPRUIT)
A new branch has been opened in Nelspruit / Mbombela to
provide the full product range, similar to the other Gundle
branches, from the Swaziland, API Springs and Germiston
factories. The strategic intent is to optimise logistics costs,
increase service levels to regional customers and to expand
into the Mozambique export markets.
GUNDLE GEOSYNTHETICS
(SPRINGS)
Gundle Geosynthetics a specialist supplier and installer
of Geosynthetics mainly in lining applications in the
mining, waste disposal, irrigation, infrastructure and
recreational sectors across Africa and has secured itself
as one of the biggest players on the continent. During
its seven year existence over 2600 successful projects in
West, Central, Northern and Southern Africa have been
completed to date installing over 14.5 million m_ of liner
materials on projects such as irrigation dams, leach pads,
landfills, hazardous waste sites, canal linings, golf courses,
agricultural dams and dump capping.
This ISO accredited company is technically focused and
operates strictly in accordance with all South African and
international standards required. A Strong supply chain, constant
update of technology and expert consultant advice keeps the
company on the leading edge in the market. The company commits
itself to help protect the environment with its services and products.
WINHOLD ANNUAL REPORT 2011
PA G E : 9
P A G E : 10
WINHOLD ANNUAL REPORT 2011
BUSINESS PROFILES
INMINS GROUP
Inmins comprises nineteen operations which during the financial year were divided into 3 divisions, namely, Mining
Supplies, Industrial supplies and the T&E Pipe system Specialist value add division. This has enabled the Group to
present a more focused market orientated approach and to provide better service and delivery to our customers.
Inmins operations are strategically situated across the country to service mainly the mining and industrial sectors on a
decentralised basis. The Group supplies a wide range of consumable products, locally manufactured and imported. The
mining supplies divisions are proud of their ‘one-stop-shop’ concept, which adds enormous value to the procurement of
a number of products by the mines. The industrial divisions specialise in various niche markets on a selected range of
products. The various operations are listed below:
MINING SUPPLIES DIVISION
CONWAY JOHNSON BRANCHES
Paul van
den Heever
(COO –
Inmins Industrial)
(STEELPOORT – KLERKSDORP – WELKOM –
RUSTENBURG – KURUMAN – WITBANK)
As one of the largest mining supply networks
in the Republic of South Africa, the various
branches have successfully implemented
a ‘one stop shop’ concept to the mining
industry for its consumable products which
is very cost effective, adding value to the
procurement of a number of products by the
mines.
The main products supplied to various
coal, gold, platinum, iron ore, chrome,
manganese and other types of mines are
conveyor belting, hose and fittings, pipes
and fittings (steel, pvc and HDPE), valves
and idlers and a wide variety of related
products.
All these operations are operated by
dedicated managers that offer excellent service
to their respective markets. The relationship
between consumers and suppliers is excellent and
contributes to achieving these goals.
Renier Kruger
(COO –
Inmins Mining)
Malcolm Jamie
(Director & GM –
Belting & Sprockets)
VALIC MINING & INDUSTRIAL
SUPPLIES
(PHALABORWA)
Over the years the company has built up an
excellent relationship with Phalaborwa Mining
Company and Foskor. These relationships
contribute to years of success marketing
core products, being protective clothing,
valves, pipes and fittings, pumps and
spares and conveyor idlers.
Valic Mining & Industrial Supplies is
constantly striving to expand its service
offerings to various markets.
Deon Kruger
(Director & GM –
T & E Value Added Division)
WINHOLD ANNUAL REPORT 2011
P A G E : 11
BUSINESS PROFILES
MILLENNIUM PIPE & STEEL
The business was established in 1999 and there are two operations situated in Pretoria West and Pretoria North.
These two operations have established themselves in the retail, DIY and light industrial manufacturing markets. Core
products include tubing, expanded metal, palisade fencing, steel plates and profiles and a variety of hardware items.
The business over the years has built an excellent relationship with suppliers and is continuing with its strategy of
growing its product range. Millennium Pipe & Steel has a unique approach to the steel industry. It provides high
quality products at affordable prices. In the past decade the industry has become more dynamic and consumer
focused.
INDUSTRIAL SUPPLIES DIVISION
BELTING & SPROCKETS (INCORPORATING CONVEYOR RUBBER & HOSE)
(CAPE TOWN)
This company is strategically placed to service the Eastern Cape, Western Cape and the West Coast.
Products and services are supplied to the fruit handling, packaging, beverage filling, industrial/automotive and
engineering industries. The core ranges of products are: roller and transmission chain, sprockets, bearing units,
PVC and rubber conveyor belts and heavy duty automotive drive belts. A very wide range of hose - rubber, PVC,
stainless steel hose and fittings are supplied to the mining, agricultural and general industry.
The operation has identified excellent opportunities for the supply of specialised conveyor chain, bearings, sprockets
and related products of a very high standard to Eskom and the cement industries through the group operations.
Exclusive supply and technical backup agreements are in place with principals in Europe.
Left to Right
Schalk Schutte (Conveyor Hose Witbank), Fanie Broodryk (Conway Johnson Witbank), Renier Kruger (COO Mining Division), Malcolm Jamie
(Belting & Sprockets), Rob Dye (Chick Henderson), Frans Rootman (Conway Johnson Rustenberg), Ronel Lombaard (Conway Johnson Kuruman), Petro
Potgieter (Valic Mining Phalaborwa), Arno Louw (Millennium Pipe & Steel), Philip Els (Vryheid Mining Supplies), Kobus Rautenbach (Conveyor Hose
Evander), Brendon Hoctor (Conveyor Rubber & Hose), Paul van den Heever (COO Industrial Division), Deon Kruger (T&E value add)
CHICK HENDERSON
(JOHANNESBURG, BOKSBURG, PRETORIA AND HIGHVELD HOSE VEREENIGING)
This operation is successfully distributing a large variety of mining and industrial hoses, fittings, valves, clamps and
pumps locally and into Sub-Saharan Africa using 6 major distributors and more than 200 re-sellers. The operation
has built up a very large customer base of end users in Gauteng.
Flexible stainless steel hose, manufactured to stringent engineering specifications, is a fast growing product range.
A range of products is successfully supplied to the rest of the group with in-house technical expertise available. Products
are sourced locally and from overseas manufacturers with exclusive distribution agreements from manufacturers in
Europe, Australia and India.
The company is ISO 9000 approved and all rubber and PVC hoses are produced to international standards.
P A G E : 12
WINHOLD ANNUAL REPORT 2011
BUSINESS PROFILES
CONVEYOR HOSE OPERATIONS (EVANDER AND WITBANK)
AND VRYHEID MINING SUPPLIES
These operations supply conveyor belt and conveyor pulleys. A wide range of hose,
steel and non-ferrous piping, valves and transmission products are also considered core
products.
Specialised conveyor chain, bearings and sprockets, as supplied by Belting & Sprockets
(Cape Town), are products that have recently been added to the standard product range.
Major customers are Eskom, Sasol, coal and gold mines and various
contractors in the local industry.
T & E PIPE SYSTEM SPECIALISTS
(KRUGERSDORP)
The value add T&E Pipe Systems Specialists division located
in Chamdor, west of Johannesburg and specialises in the
mechanical design, manufacture and supply of high pressure
lined and unlined piping systems and related components
into the Mining, Chemical and Industrial sectors of Southern
Africa. The core competencies identified to promote
sustainability are (1) product development, (2) high pressure
and specialised welding capability and (3) after sales service.
T&E offer a wide range of products/services including Backfill
Pipe Systems, Hydropower Pipe Systems, chilled water
pipe systems, HDPE lined steel pipe systems, roll grooved
coated water reticulation systems. T&E have their own
facility to draw HDPE liners into steel pipe and have
supply arrangements with leading overseas producers.
T&E has, over time, developed a number of unique
proprietary products that have become benchmarks
in specific applications .
These products are offered for high pressure, high
abrasion, unique slurry characteristics, high corrosion
applications to customers in Gold, Platinum and Copper
Mining, and the Petro-chemical and general industry sector.
INMINS JOINT VENTURES
As part of a black empowerment initiative, Inmins assisted in
establishing two black owned companies, in which they hold
minority shareholdings. Details of these businesses, which are
performing well, are as follows:
ZENZELE INDUSTRIAL SUPPLIES
(MPUMALANGA)
Zenzele Mpumalanga operates as a BWO – Black Woman Owned
– company, in the Mpumalanga area. They supply a large range of
consumable products, including valves and boiler tubes, to Eskom, coal mines
and municipalities. They are a level 1 supplier to Eskom. Recently a new agency has
been established for electrical sensors and vibration monitors. Zenzele is a vibrant young
company with a strong drive for customer service.
ZENZELE INDUSTRIAL SUPPLIES
(PINETOWN)
This is a dynamic company focusing essentially on ‘niche’ markets such as building
contracting, chemical manufacturing and the fluid transport industry. It is aggressive in
its marketing strategy and technically strong in the sale and promotion of, among others, chemical
and industrial pumps, hoses, valves and related products. The success of Zenzele Pinetown is due
to its product availability, very high service levels and excellent customer relations.
WINHOLD ANNUAL REPORT 2011
P A G E : 13
PHOTOS
P A G E : 14
WINHOLD ANNUAL REPORT 2011
VALUE ADDED STATEMENT
for the year ended 30 september 2011
The amount of ‘value added’ by the group’s manufacturing, distribution and other businesses to the cost of raw
material, products and services purchased, reflects the ‘wealth’ created by the Group.
This statement shows the value created and how it was distributed.
2011
2010
R000
R000
990 308
1 030 918
Revenue
Less: Paid to suppliers for material and services
Value added by operations
Investment income
Total value added
Utilised as follows:
Employee costs
Net finance costs
Government for taxes and levies
Dividends
Re–invested for future growth
– Depreciation (net of surplus on disposal)
– Retained profit *
Total utilisation of value added
(*) Retained profit includes:
Retained profits for the year
Profit attributable to outside shareholders
2011
(802 854) )
(819 086)
187 454
211 832
15 556
15 536
203 010
227 368
144 117
145 618
22 842
29 302
2 481
9 301
12 860
12 756
182 300
196 977
16 181
14 714
4 529
15 677
20 710
30 391
203 010
227 368
3 778
12 069
751
3 608
4 529
15 677
2010
13%
% To Employees
11%
71%
1%
17%
% Re–invested
64%
5%
% To Government
% To Providers of funding
18%
WINHOLD ANNUAL REPORT 2011
P A G E : 15
GROUP SUSTAINABILITY REPORT
inmins
GUNDLE
2011
2010
%
2011
2010
ECONOMIC INDICATORS
Profit for the year R000’s
4 446
14 011
(68,3)
17 529 19 760
Cash Profit
R000’s
6 048
14 799
(56,7)
29 506 29 758
Operating profit margin
%
1,7
5,7
(73,7)
6,4
7,9
Return on operating equity
%
3,8
11,9
(68,0)
11,3
14,7
Interest cover
Times
1,80
3,26
(44,8)
2,06
2,24
SOCIAL INDICATORS
Employees at year end
No.
260
289
(10,0)
639
604
Man hours worked
000’s
677
755
(11,5)
1 311
1 178
S24 disabling injuries
No.
5
1
400
0
20
Disabling injuries
No.
5
–
∞
14
2
Man days lost to injuries
No.
46
–
∞
105
41
SHEQ training (People) No.
25
–
∞
96
57
BEE rating /score
Rating
5
6
20,0
5
6
Strike hours lost
No.
4 438
–
∞
20 454
0
EMPLOYMENT
Average No. of employees
No.
291
294
(14.6)
633
566
Employee departures
%
31
20
55,0
15
20
Staff training cost
R000’s
299
68
339
250
436
Learnerships
No.
–
–
–
1
–
Trade Union Membership
%
26,9
15,9
69,2
59,8
52,5
ENVIRONMENTAL
Water consumed k/l
1 696
1 341
26,5
27 669 31 229
Electricity consumed
mw
844
544
55,1
19 682 18 325
Fuel used company vehicles
k/l
– Petrol 145 511
109 615
32,7 286 798 299 735
– Diesel 244 464
284 950
(14.2) 708 178 593072
Paper utilisation
Kg
4 931
4 502
9,5
5 159
4 856
%
(11,2)
(1,0)
(18,9)
(23,1)
(8,0)
5,8
11,3
(100)
600
156
68
20,0
∞
11,8
(25,0)
(43,6)
100
13.9
(11.4)
7.4
(4.3)
19.4
6,2
Overview
This sustainability report aims to present a balanced, transparent and reasonable account of the Group’s sustainability
performance for the year. The approach of the report is based on the principals of integrated sustainability reporting
and focuses on the three main pillars of economic, social and environmental sustainability.
This report has not been subject to an external assurance process and is therefore a management account of the
sustainability performance and challenges for the year under review.
Informing the Boundaries of this Report
This report is included as part of our annual report and the information provided is based on the information for the
financial year ending 30 September 2011. This follows convention used in previous years and makes the information
contained in the report comparable across the financial years.
Broad-based black economic empowerment (B-BBEE) is regarded as integral to our sustainability, and relates to both
economic and social aspects. Therefore, although our B-BBEE initiatives only concern South African operations, they
have been included as part of this report.
The remainder of the report is inclusive of our Sub-Saharan operations.
P A G E : 16
WINHOLD ANNUAL REPORT 2011
GROUP SUSTAINABILITY REPORT
Report Assurance
We have not obtained independent third party assurance of this sustainability report for this year. The Audit and Risk
Committee review and oversee the sustainability process to provide assurance to the board and shareholders on the
process. The board does not believe it is cost effective to subject the process to external assurance at this time.
Managing Sustainable Development
Creating a sustainable mindset into the way the group does business is more about understanding the links between
our operations, finding new markets and products and less about drastically changing our methods of doing business.
To this end we began a process of formalising our sustainable development performance by measuring our consumption
of environmental resources like water and electricity, fossil fuels and paper and comparing the results to 2010. In the
same vein, we have also measured various social indicators of our staff to get an idea of the man hours worked, any
disabling injuries in terms of Section 24 of the Occupational Health and Safety Act occurring at work or outside of it
and Safety, Health, Environment and Quality training of staff during the period under review. The table on the page
16 shows the results of this survey and the scope of the task we have set for ourselves.
Distribution of Wealth
The table on Page 15 shows that the group created total wealth of R203 million in 2011. Our employees have
consistently shared in over 70% of this wealth through salaries, wages and other benefits over the past two years.
Government has benefitted through taxes paid both directly and indirectly across the markets in which we operate.
We continue to provide returns to our shareholders through dividends paid annually.
Black Economic Empowerment
Winhold regards B-BBEE as a business imperative that is crucial to the future of South Africa and its economy. It is
an essential process required to bring about increasing black participation in the South African economy and reduce
existing income inequalities.
Our B-BBEE imperatives are based on the principles that:
• poverty can only be effectively dealt with in a high-growth environment;
• wealth must be generated and opportunities created to ensure a more equitable society; and
• it is a moral necessity, required to address the legacy of a past in which the majority of South Africa’s citizens were excluded, on the basis of their race, from enjoying the benefits to be derived from being participants in the
mainstream economy.
2011 was the third year in which our transformation process was measured against the Codes of Good Practice for
BBBEE in terms of the BBBEE Act. In 2010 we achieved a Status Level 6 (2009: 8) for Gundle Plastics and Status Level
8(2009: 6) for Inmins Trading. In order to raise the profile of B-BBEE in the Group, Winhold engaged EncoServ to
provide training and guidance on the roll out of an integrated B-BBEE program over the next 12 months. At the time
of writing we were awaiting the results for 2011 and expect both of these figures to have improved.
The operating divisions are also 25,1% owned by various black owned entities. 48% of the BBBEE structure is held
by the staff share incentive trusts which all staff employed by the Group for longer than 5 years(and who are not on
‘profit share’ schemes) and is based on their year’s service with the group. As the trust deeds do not provide for the
distribution of the shares held by the trusts, these are essentially ‘profit (dividend) sharing’ trusts with consequently
longer life BEE status retention. 12% of the BEE structure is controlled by Mr. Zitulele KK Combi (founder of ‘Master
Currency’, chairman of Pioneer Foods, main board director of Massmart and PSG Financial and executive chairman
of Thembeka Capital, BEE partner to Paladin Capital) and 40% by New Capital Investment Holdings (a 100% black
owned company owned by Mr. Zola Fubu, Ms Nomavuso Mnxasana, Mr. Victor Sekese and other Partners of Sizwe
Gebodo Incorporated).
The staff share incentive trusts each have two employer and two employee representative trustees. Gundle employees
are represented by Dawid Mabogwane and Mashudu Radali, Inmins employees are represented by Mokgoba Sono
and Hans Kruger and Winhold is represented by Wietsche Fourie and Grant Scrutton.
WINHOLD ANNUAL REPORT 2011
P A G E : 17
GROUP SUSTAINABILITY REPORT
Our People
Our long term sustainability is dependent on meeting the aspirations and expectations of our employees around
leadership, remuneration, stimulating work and career development, fair employment practices and lifestyle support.
Meeting these expectations we believe is necessary to retain the skills necessary to grow the group organically.
The Group’s transformation goals are to achieve equitable representation of all races and gender and to reflect
the demographic profile of South Africa, in line with the economically active population at all levels. To realise our
transformation and growth strategy, we focus on the attraction, development and retention of skills within the Group
and in the broader South African context.
Employment Equity
At Winhold we believe that a diverse workforce contributes to cross-cultural understanding, broadens perspectives
and helps to enhance our competitive edge. We are therefore committed to transforming the Group’s workplace by
systematically implementing an employment equity plan, which, based on a robust set of principles, guides the actions
and initiatives we take to build a truly representative workforce. These principles include:
•
•
•
•
•
•
offering equal opportunities to all employees, irrespective of race or gender;
providing an enabling environment which allows people to develop to the full extent of their capabilities;
the payment of remuneration packages that take account of individual performance and union agreements;
he provision of a consultative environment for workforce representatives;
fostering a sense of ownership; and
fostering an internal focus of control.
The Group fully subscribes to the rights of the individual as contained in the Constitution. Non-discrimination on
the grounds of race, gender, sexual preference and creed form the essence of Winhold’s employment policies and
practices. Transgression of this policy is provided for in the disciplinary codes and procedures.
The right to non-discrimination is important to the Group and rests on the following principles contained in its statement
of employment practice:
•
•
•
•
•
The company shall not unfairly discriminate, directly or indirectly, against any employee on one or more
grounds, including race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin,
colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture,
language and birth.
The salary structure is based on the principle of equal pay for work of equal value, with due allowance for
market pressures such as geographic location. Appointments, increments and promotions will as far as
possible be made on the basis of merit, performance, qualifications and the availability of positions.
Due cognisance will however be taken of enabling legislation such as the Employment Equity Act.
Appointments, increments and promotions will as far as possible be made on the basis of merit, performance,
qualifications and the availability of positions. Due cognisance will however be taken of enabling legislation such
as the Employment Equity Act.
Upon engagement, employees will conclude legally enforceable agreements in respect of their conditions of
employment.
All personal details of employees will at all times be handled with the utmost integrity and confidentiality.
The Group’s employees freely pursue their work-related rights of equality, dignity, privacy, freedom of religion, belief
and opinion, occupation and profession, fair labour relations, safety and health, language and culture in terms of the
Constitution of South Africa. This is facilitated through a corporate culture well supported by the necessary policies
and procedures, as well as training in a variety of areas such as intercultural diversity, employment equity, safety,
health and the environment, literacy and life skills.
No incidents of discrimination were reported during the year under review.
Part of The Group’s process of developing the employment equity plan was establishing employment equity committees
at plant level across all divisions, employing more than 30 people on the site.
P A G E : 18
WINHOLD ANNUAL REPORT 2011
GROUP SUSTAINABILITY REPORT
MALE
African Coloured
FEMALE
Indian
White
TOTAL
African Coloured
TOTAL
Indian
White
TOTAL
0
1
19
Top Management
0
0
0
18
18
1
0
0
Senior Management
0
0
1
30
31
0
0
0
4
4
35
Professional
5
2
3
37
47
0
2
0
18
20
67
Skilled
63
11
6
26
106
8
5
5
54
72
178
Semi-skilled
296
13
5
11
325
27
1
1
6
35
360
Unskilled
105
5
2
1
113
21
2
0
0
23
136
Total permanent
469
31
17
123
640
57
10
6
82
155
795
Health and HIV
Winhold continues to pursue its policy of awareness of training, voluntary testing and counseling, as well as assisting
with HIV/Aids medication to those employees who cannot afford to belong to any form of medical aid. We recognise
that Winhold has a duty to inform, educate and assist our employees who have been impacted by the pandemic. We
assist through providing access to comprehensive programs, which include:
•
•
•
Providing treatment against the opportunistic diseases to which HIV-positive employees are more susceptible.
They are also encouraged to seek appropriate antiretroviral treatment at state hospitals or through their medical
aid scheme;
Subsidising medical costs for HIV-positive employees who do not belong to a medical aid scheme; and
Educating our workforce through programs offered in conjunction with external health service providers
which are available across the Group’s South African and African operations
The larger (factory) sites have in-house clinics staffed by external health care professionals who provide on-site
medical care and advice and facilitate confidential health care programs such as HIV/Aids and Tuberculosis. These
clinics also seek to reduce absenteeism and ensure sick leave taken is appropriate.
Recognising our People
We recognise that our people, working in teams, are an integral component of our sustainable business model. Our
first organisational structure, led by experienced executives, lead a team of competitive people. The Group has many
awards for achievements where successful businesses, teams and individuals receive floating trophies and certificates
for a wide range of achievements.
Training and people development
Training and developing our workforce has become an increased focus in the Group over the last year. Training
levels and costs are measured and reported to ensure that this strategic focus area is addressed. Ongoing learning
is facilitated through on-the-job training and informal mentoring programs. During 2011 training expenditure
increased by 9 % over the prior year.
During the year Winhold received its full annual 50% grant by submitting its workplace skills development program
to the various SETA’s.
Industrial Relations
Trade Union membership (predominantly in the Gundle Plastics divisions) remained fairly consistent with previous
years at 51% (2010: 43%). Membership is spread over 5 unions with NUMSA being the largest union representing
18% of the workforce. Other unions represented include: GIWUSA, SPRAWU
and CEPPAWU.
WINHOLD ANNUAL REPORT 2011
P A G E : 19
GROUP SUSTAINABILITY REPORT
Gundle is a member of SEIFSA (Steel and Engineering Industries Federation f South Africa), who is a member of
MEIBC (the Metal Industry and Engineering Industry Bargaining Council). Collective wage and other conditions of
service agreements are concluded every 3 years between employer and employee union representatives, effective in
June. These agreements include clauses for annual wage increments and other smaller benefit changes. The last 3 year
agreement was concluded in June 2011.
During this period, the group experienced some industrial action, but less than that experienced in the rest of the
industry, largely we believe because of our good ‘floor level’ relationships.
Socio Economic Review
Procurement
Where possible, the group seeks opportunities to increase its procurement of products and services from accredited
BEE suppliers. Particular focus is put on broad based and black woman owned enterprises.
Enterprise Development
Winhold’s focus has been to develop identified black owned businesses within the Groups value chain. The Inmins
focus has been on spending time and resources on developing the two Zenzele operations in which the Group owns
a minority stake (33%). Zenzele Mpumalanga is a black woman owned business focusing on the Eskom power
stations in the Highveld region. The Groups management and head office support staff provide extensive coaching
and administrative support to develop this business. Zenzele Natal is a black owned business with products similar to
these supplied by Chick Henderson into the Durban market. This well established and well run business accesses the
Groups buying capacity for pricing advantages and has full access to the Groups infrastructure backbone. Zenzele
Natal has been profitable for many years now. Details of the results of these businesses are set out in Note 10 to the
financial statements.
The Gundle focus has been on assisting with the launch and development of ‘Fubu Packaging and Trading (Pty) Ltd’,
a new entrant into the plastic packaging market founded by one of the Groups BEE partners, Mr. Zola Fubu. The
Group provided an initial funding loan to the company and has provided office and infrastructure support and senior
management have provided time and resources to facilitate product knowledge transfer and industry introductions
to this business. Orders are now being received and Mr. Fubu is very positive about the prospects of this business.
The Gundle Group is also involved in enterprise development projects assisting new entrant black owned SMME’s
in the pallet manufacture and brick pallet stabilisation businesses. Mashaba Pallets builds new and reconditions
wooden pallets which Gundle uses to distribute its products on and Gundle API and Apollo bricks have a joint project
developing Selese Plastics, a business focused on packing of bricks using API product and knowhow.
Environmental Impact Assessment
The Winhold Group has always had a very low environmental impact footprint and we continue to roll out operational
action plans to measure and reduce this.
The Inmins Group comprises mainly trading operations which sell products to the mining and industrial sectors. Those
operations are run on low cost budgets which minimise the use of power, water, fuel and paper. Noise, water and air
pollution are negligible.
The Gundle operations manufacture plastic sheeting. While plastic, itself, has a negative reputation in environmental
parlors, Gundle sheeting has many positive environmental aspects which the Group actively seeks to optimise.
Firstly, plastic sheeting is recyclable and Gundle recycles its own scrap and scrap purchased from SMME individuals
who reclaim plastic scrap from waste disposal sites. Gundle API makes extensive use of recycled plastics in its product
range. The one risk to recycle product (an additive put into plastic to speed up bio degradability) was used in bread
bags in the past, but following an advertising investigation this has now been discontinued and all local plastic
sheeting can now be recycled.
P A G E : 20
WINHOLD ANNUAL REPORT 2011
GROUP SUSTAINABILITY REPORT
Gundle API makes almost exclusive use of re-cycled material in its product range, providing a large volume demand
for recycled product within the whole South African market.
Secondly, plastic sheeting is used extensively in environmental protection such as dam linings which dramatically
reduces water loss through seepage and is used to prevent contamination of soil and ground water in hazardous
waste sites. Gundle Geosynthetics is extensively involved in this water preservation and hazardous material and waste
containment sector, often using Gundle API recycled dam lining sheeting.
Corporate Social Investment
Winhold recognises that it is an integrated component of the South African Social structure. Corporate Social Investment
(CSI) investment is focused in our own ‘back yard’ where our products and our people can make a difference to own
neighborhoods. The Group does not make large profits so this spend is very focused on projects where the ‘value
added’ can be seen, measured and recognised.
Gundle Geosynthetics identified a project in Groblersdal where government bought land for the benefit and upliftment
of over 70 previously disadvanged community members . Gundle Geosynthetics undertook the lining and installation
involved on the project to help the group to always have water in the storage /irrigation dam to be used for their crops.
The dam is around 3300 m2 and includes 1.0 mm HDPE liner to the value of approx. R134 000. This will also help
that the community will not rely on the local farming community for water. In addition, Gundle Geosynthetics together
with Square Carrot had spent 3 days at the Emdeni Skills development centre in Soweto as part of the group’s socioeconomic development program. Emdeni is part of the Abraham Kriel children’s home where 30 people per day were
checked and treated by a professional dentist.
Sister Dinah Molakeng at the Gundle Germiston factory clinic treating a patient on site.
The clinic is available free of charge to all staff
WINHOLD ANNUAL REPORT 2011
P A G E : 21
KING III INDEX
Apply
Ethical leadership and corporate citisenship
Effective leadership based on an ethical foundation
Reasonable corporate citisenship
Effective management and company’s ethics
Assurance statement on ethics in integrated annual report
Boards and Directors
The board is the focal point for and custodian of
corporate governance
Strategy risk, performance and sustainability are
inseparable
Directors act in the best interests of the company
The chairman of the Board is an independent
non-executive director
Framework for the delegation of authority has been
established
The Board comprises a balance of power with a majority
of non-executive directors who are independent
Directors are appointed through a formal process
Formal induction and ongoing training of directors is
conducted
The Board assisted by a competent, suitably qualified and
experienced company secretary
Regular performance evaluations of the Board, its
committees and the individual directors
Appointment of well structured committees and oversight
of key functions
An agreed governance framework between the group
and its subsidiary boards is in place
Directors and executives are fairly responsibly
remunerated
Remuneration of directors and senior executives is
disclosed
The company’s remuneration policy is approved by its
shareholders
Internal audit
Effective risk-based internal audit
Written assessment of the effectiveness of the company’s
system of internal controls and risk management
Internal audit is strategically positioned to achieve its
objectives
Audit committee (Audit & Risk committee)
Effective and independent
Suitably skilled and experienced independent
non-executive directors
Chaired by an independent non-executive director
P A G E : 22
WINHOLD ANNUAL REPORT 2011
Partially
Applied
Under review
Do not apply
a
a
a
a
a
a
a
a1
a
a2
a
a3
a
a4
a
a5
a
a
a6
a7
a8
a9
a
a
a2
KING III INDEX
Apply
Audit committee (Audit & Risk committee) – continued.
Oversees integrated reporting
A combined assurance model is applied to improve
efficiency in assurance activities
Satisfied itself of the expertise, resources and experience
of the company’s finance function
Oversees the internal audit
Integral to the risk management process
Reports to the Board and shareholders on how it has
discharged its duties
Oversees the external audit process
Compliance with laws, codes, rules and standards
The Board assures that the company complies with
relevant laws
The Board and directors have a working understanding
of the relevance and implications of non-compliance
‘Compliance risk’ forms an integral part of the company’s
risk management process
The Board has delegated to management the
implementation of an effective compliance framework
and processes
Governing stakeholders’ relationships
Appreciation that stakeholders’ perceptions affect a
company’s reputation
Management proactively deals with stakeholder
relationships
There is an appropriate balance between its various
stakeholder groupings
Equitable treatment of stakeholders
Transparent and effective communication to stakeholders
Disputes are resolved effectively and timeously
The Governance of Information Technology
The Board is responsible for information technology (IT)
governance
IT is aligned with the performance and sustainability
objectives of the company
Management is responsible for the implementation of an
IT governance framework
The Board monitors and evaluates significant IT
investments and expenditure
IT is an integral part of the company’s risk management
IT assets are managed effectively
The audit and risk committee assists the Board in carrying
out its IT responsibilities
Partially
Applied
Under review
Do not apply
a8
a
a
a8
a
a
a
a
a
a
a
a
a
a
a
a11
a
a
a
a10
a
a
a
WINHOLD ANNUAL REPORT 2011
P A G E : 23
KING III INDEX
Apply
The Governance of risk (Audit & Risk Committee)
The Board is responsible for the governance of risk and
setting levels of risk tolerance
The audit and risk committee assists the Board in carrying
out its risk oversight responsibilities
The Board delegates the process of risk management to
management
The Board ensures that risk assessment and monitoring is
performed on a continued basis
Frameworks and methodologies are implemented to
increase the probability of anticipating unpredictable
risks
Management implements appropriate risk responses
The Board receives assurance on the effectiveness of the
risk management process
Sufficient risk disclosure to stakeholders
Integrated reporting and disclosure
Ensures the integrity of the company’s integrated annual
report
Sustainability reporting and disclosure is integrated with
the company’s financial reporting
Sustainability reporting and disclosure is independently
assured
P A G E : 24
WINHOLD ANNUAL REPORT 2011
Partially
Applied
Under review
Do not apply
a
a
a
a
a
a
a
a
a
a
a
a13
KING III INDEX
Note Explanation
1.
Winhold’s chairman, Mr. WAR Wenteler is classed as a non-executive but not as ‘indepedent’,
given his material shareholding in Winhold. As per the recommendations of King III, Winhold
has appointed Mr. D Mostert as deputy chairman and lead independent director to compensate
for the lack of an independent non-executive chairman, as well as ensuring that the composition
of non-executive directors on its board exceeds the number of executive directors.
2.
Mr. D Mostert and Ms NP Mnxasana are independent’ non-executive directors and the board
confirms that they are independent. Mr. WAR Wenteler, and Mr. PC Nash represent a material
shareholding in Winhold and Mr. PJ Kruger was a full time employee in the last 3 years.
The majority of directors on the board are, however, non-executive directors.
3.
New directors will be provided with formal induction training by the Chairman and the Group
CEO. The board believes that the existing directors have sufficient experience and knowledge
to fulfill their obligations as directors and that they all individually participate in sufficient
ongoing self development training and updates to keep up to date with changes to legislation,
sustainability reporting and other industry and regulatory developments.
4.
The Chairman performs an informal annual performance review of the board, its committees and
individual directors.
5.
The subsidiary company boards function primarily as operational boards under the guidance
and management of the Winhold Board. The Group CEO ensures that all Winhold board
governance matters are timeously dealt with at the subsidiary boards. Ms NP Mnxasana is also
a non-executive director on the main subsidiary boards and provides the non-executive directors with
independent assurance in this regard.
6.
Ordinary resolution number 4 proposed at the next AGM proposes a non-binding advisory vote on the
company’s remuneration policy.
7.
Winhold does not have an independent internal audit department. The
oversees a peer review and assessment program which reviews high level
controls and disciplines in each of the business units. In addition, each site
and signs off that the ‘key internal controls’ operated each month and submits
director’ for action (and copies the Group Financial director).
8.
Written Financial Discipline Reviews do assess the effectiveness of the high level financial controls
at the individual sites, but the value of this is limited to the skills of the person doing the peer
review. The responsible ‘Line Directors’ oversee this report and ensure corrective action is taken.
9.
Winhold has no independent Internal Audit function as the board believes that the internal Peer Review
program is more cost effective.
10.
The Audit Committee Chairman Ms Nomavuso Mnxasana represents the BEE consortium share
holders which own a significant (25.1%) interest in the operating subsidiaries. Ms. Mnxasana is a
non executive director on several large listed company boards and her personal interest in the Winhold
Group via these BEE shareholdings is not significant to her to personal assets (<5%) and
will not affect her independence. The majority of the Audit and Risk Committee is not Independent
as Messrs Nash and Kruger are not independent (as noted in 1. Above)
11.
Any disputes between stakeholders are resolved by the Group CEO with extensive consultation with the
Group Chairman.
12.
The Board is currently considering processes to assist in determining how ‘information assets’ can
be identified, managed and measured. Once this process is defined, information assets
management will be included in the board reports. IT systems are, however, included in the ‘risk assessment
process’ and are included in the main board ‘Risk Register’.
13.
Winhold is still developing and refining the sustainability structures and report. The Audit and Risk Committee
review and oversee the process to give the Board and shareholders assurance on
this process. The Board does not believe it is cost effective to subject the process to external
assurance at this time.
financial director
financial internal
executive reviews
this to their ‘line
WINHOLD ANNUAL REPORT 2011
P A G E : 25
CORPORATE GOVERNANCE REPORT
Framework
Winhold Limited (‘the Company’) is a public company incorporated in South Africa under the provisions of the
Companies Act No. 71 of 2008, as amended, and the Regulations thereto (‘the Companies Act 2008’) and is listed
on the Johannesburg Stock Exchange (‘the JSE’).
The Company’s Board of directors (‘the Board’) is committed to ensuring that the Company is governed appropriately. The
Board recognises the responsibility of the Company to conduct its affairs with prudence, transparency, accountability,
fairness and in a socially responsible manner. The Company materially complies with the principles of the Code of
Corporate Practices and Conduct as recommended in the King Report on Governance for South Africa 2009 (‘King
III’), as well as with the spirit and form of the obligations that exist in terms of the JSE Listings Requirements.
During the financial year under review a sub-committee was tasked with reviewing the recommendations and
principles of King III. It was established that in substance, the Company already applies most of the principles. Where
appropriate however the governance structures have been amended. The Company will be focusing on certain
initiatives to further strengthen the Group’s application of the principles over the course of the new financial year.
Material aspects of this will be:
•
•
•
The enhancement of the risk management framework, including greater oversight of IT governance
matters;
The establishment of a social and ethics committee; and
Further development of this integrated report for the year ending 30 September 2012.
The New Companies Act 2008 came into effect on 1 May 2011. To be aligned with this new legislation shareholders
will be asked, at the Annual General Meeting on 31 January 2012, to re-appoint the members of the Audit and Risk
Committee, consider special resolutions on directors’ fees, and the provision of s44 and s45 financial assistance, and
approve an amended Memorandum of Incorporation.
Board governance structure
The general powers of the Board and the director’s are contained in the Company’s Memorandum of Incorporation.
Terms of reference for the Board are set out in the Company’s board charter which is reviewed periodically. During the
year under review the charter was amended and updated in line with the recommendations and principles of King III
and the provisions of the Companies Act 2008. The charter covers the powers and authority of the Board and provides
a clear and concise overview of the responsibilities and accountability of the Board members, both collectively and
individually, including the policy and procedures for appointments to the Board as assisted by the Remunerations and
Nominations Committee. The board charter is available on request from the company secretary.
The Board has adopted a unitary structure and no individual member of the Board has unfettered powers of decision
making. The responsibility for running the Board and executive responsibility for the conduct of the business are
differentiated in the board charter. Accordingly the roles of the chairman of the Board and of the chief executive officer
are separated, with Messrs WAR Wenteler and W. Fourie holding these positions respectively.
Directorate
As at 30 September 2011 the Board comprised two executive directors and five non-executive directors. Mr. D
Mostert, the deputy Chairman is, independent as defined by King III, Messrs Wenteler and Nash represent significant
shareholders and Mr. Kruger was a Group employee in the last three years. All have the required knowledge,
skills and independence of thought to pass sound judgment on the various key issues relevant to the Company’s
management. Consideration is given to gender and racial diversity, as well as diversity in business, geographic and
academic backgrounds, when appointing directors. Tailored induction programs are planned to familiarise newly
appointed directors with the Group’s operations. The particulars of the directors are set out in the Board of director’s
section of the annual report.
There were no changes to the Board during the year. Mr. G Scrutton who was appointed in September 2010 was
ratified as a director by shareholders at the annual general meeting on 30 March 2011.
P A G E : 26
WINHOLD ANNUAL REPORT 2011
CORPORATE GOVERNANCE REPORT
At least one-third of the Board’s members retire each year at the annual general meeting in terms of the Company’s
Memorandum of Incorporation. Retiring directors are eligible for re-election.
Board and director assessment
The Board is required to assess its performance against its charter requirements on an annual basis. The assessment
was done by the chairman and it was found that in all material respects the Board complied with these requirements.
The chairman continued to monitor and manage the participation of the Board’s members, and considered the
development requirements, if any, of each director.
In addition, during the year under review, the Remuneration and Nomination Committee (ReNomCo) independently
considered the performance of the chairman and chief executive officer. The chairman and the chief executive officer
did not participate in the Board’s discussions regarding their own performance.
Board meetings
During the year under review the Board met formally on four occasions to conduct the normal business of the Company.
Attendance at these meetings is summarised in the table below:
Name
24/11/2010
22/2/2011
11/5/2011
31/8/2011
WAR Wenteler (chair)
DB Mostert
W Fourie
PJ Kruger
MP Mnxasana
PC Nash
GM Scrutton
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
Key: √ = in attendance: x = not in attendance;
Company secretary
The company secretary for the full period under review was Mr. John O’Connor.
All directors have unlimited access to the advice and services of the company secretary, who is accountable to the
Board for ensuring that Board and JSE rules, policies and procedures are complied with and that sound corporate
governance and ethical principles are adhered to.
The company secretary’s principal responsibilities are to the Board and to the individual directors are to:
•
•
•
Guide them in the discharge of their duties, responsibilities and powers;
Provide information, advice and education on matters of ethics and good governance; and
Ensure that their proceedings and affairs, and those of the Company, are properly administered in compliance
with all relevant legislation, in particular the Companies Act 2008 and the JSE Listings Requirements.
Board committees
The Board is assisted in the discharge of its duties and responsibilities by the ‘Audit and Risk Committee’ and the
‘Remuneration and Nomination Committee’. While the New Companies Act 2008 prescribes some self standing
responsibilities of the Audit Committee to shareholders directly, the ultimate responsibility at all times, however, resides
in the Board and it therefore does not abdicate its responsibilities to these committees.
WINHOLD ANNUAL REPORT 2011
P A G E : 27
CORPORATE GOVERNANCE REPORT
These committees act within formalised terms of reference which have been approved by the Board and which have
been reviewed to reflect the Company’s application, where appropriate, of the principles embodied in King III and the
statutory requirements of the Companies Act 2008. The terms of reference set out the committees’ purpose, membership
requirements, duties, and reporting procedures. Relevant legislative requirements, such as those incorporated in the
Companies Act 2008, are incorporated in the sub-committee charters. Board committees, and the members thereof,
may take independent professional advice at the Company’s expense with the prior approval of the Chairman.
When appropriate, ad hoc committees are formed to facilitate the achievement of specific short-term objectives.
There is full disclosure, transparency and reporting from these committees to the Board at each Board meeting, and
the chairpersons of the committees avail themselves at the annual general meeting to respond to shareholders’ queries.
Audit and Risk Committee (‘Audit Committee’)
During the year under review the Audit Committee comprised Ms. Nomavuso Mnxasana (the chairman), Messrs
Dawid Mostert, Peter Nash and Paul Kruger, all of whom are non-executive directors.
In compliance with the Companies Act 2008, shareholders will be asked at the annual general meeting on 31 January
2012 to re-elect the members of the Audit Committee. The current members will be available for re-election.
The Company’s external auditors, the chairman of the Board, the chief executive officer, the chief financial officer, and
other senior executives attend the Audit Committee meetings by invitation.
Each operating subsidiary has an operational board which monitors risk management and compliance activities.
These committees are chaired by the Company’s Chief Executive Officer and meet at least three times a year with the
relevant operational (line) directors in attendance. The Audit Committee chairman is also a independent non-executive
member of the operational boards and operational directors have full and unrestricted access to her.
The Audit Committee met three times during the year under review. The attendance of the members is reflected in
detail in the table below:
Name
23/11/2010
21/2/2011
22/2/2011
NP Mnxasana (chair)
DB Mostert
PJ Kruger
PC Nash
WAR Wenteler
W Fourie
G Scrutton
√
√
√(1)
√
√(1)
√(1)
√(1)
√
√
√
√
√(1)
√(1)
√(1)
√
√
√
√
√(1)
√(1)
√(1)
Key: √ = in attendance: x = not in attendance (1) by invitation;
The Audit and Risk Committee is responsible for the management of key financial and operating control risks and in
particular assists the Board in the following matters:
•
•
•
•
•
•
P A G E : 28
Monitoring the financial reporting process;
Recommending the appointment of an independent registered auditor and determining the terms of engagement
and approving fees for audit and non-audit work undertaken;
Monitoring the operation and effectiveness of internal control systems, including information
technology controls;
Overseeing the internal audit function, monitoring its effectiveness, and reviewing corrective action;
Overseeing the implementation and effective operation of a structural risk management process that incorporates
insurance, health and safety, and environmental issues;
Implementing sound corporate governance policies;
WINHOLD ANNUAL REPORT 2011
CORPORATE GOVERNANCE REPORT
•
•
Reviewing and recommending to the Board for approval the interim and annual financial statements, the going
concern status of the Company, interim and final dividends and other special payments to shareholders;
and considering and satisfying itself, on an annual basis, of the expertise and experience of the chief financial
officer.
Considering and satisfying itself, on an annual basis, of the expertise and experience of the chief financial officer.
BDO South Africa Inc. was reappointed as the Company’s external auditors by shareholders at the Company’s annual
general meeting on 30 March 2011. With specific reference to the non-audit services provided by the external
auditor, at the recommendation of the Audit Committee, the Board has resolved that the auditors shall not:
• Function in the role of the management;
• Audit their own work; and
• Serve in an advocacy role for the Company.
In accordance with the requirements of the Corporate Laws Amendment Act of 2006 and the Companies Act 2008,
all non-audit specific service engagements with the external auditors were pre-approved by the Audit Committee
Chairman.
The Audit Committee discharged the functions ascribed to it in terms of the Companies Act 2008 and the JSE Listings
Requirements as reported in the directors’ report. It also complied in all material respects with its mandate and
responsibilities prescribed in the applicable charter.
Remuneration and Nomination Committee (‘ReNomCo’)
As at 30 September 2011 the members of ReNomCo were Mr. DB Mostert, Mr. WAR Wenteler, Ms. NP Mnxasana
and Mr. PC Nash. The Company’s Chairman, chief executive officer and human resources executive attend relevant
parts of ReNomCo meetings by invitation.
ReNomCo met twice during the year under review and the attendance detail is reflected in the table below:
Name
24/11/2010
22/2/2011
DB Mostert (chair)
NP Mnxasana
WAR Wenteler PC Nash
√
√
√
√
√
√
√
√
Key: √ = in attendance: x = not in attendance;
ReNomCo assists the Board by overseeing the following activities:
•
•
•
•
•
Ensuring that the Company’s directors and the Group’s senior executives are competitively rewarded
for their individual contributions to the Group’s overall performance. ReNomCo therefore ensures that
the remuneration of the senior executive members of the Group is set by a committee of Board
members who have no personal interest in the outcomes of their decisions and who will give due
regard to the interests of shareholders and the financial and commercial health of the Company;
Succession planning for, and approving the appointment of, senior executives within the Group;
Recommending an appropriate remuneration and reward framework (including salaries, benefits,
share options and incentive schemes) to ensure that the Group’s employees are appropriately engaged
and retained. The framework considers guaranteed remuneration, short-term and long-term incetives,
and benefits;
Reviewing the composition of the Board and its committees with respect to size, diversity, skills and
experience; and
Recommending the appointment of directors to shareholders.
ReNomCo complied in all material respects with its mandate and responsibilities prescribed in the
applicable charter.
WINHOLD ANNUAL REPORT 2011
P A G E : 29
CORPORATE GOVERNANCE REPORT
Dealings in JSE securities
The Company and its directors comply with the JSE Listings Requirements in respect of trading in Company shares. In
terms of the Company’s closed-period policy, all directors and staff are precluded from dealing in Company shares
during closed periods, until the release of the Group’s interim and final results, respectively. The same arrangements
apply for closed periods during other price-sensitive transactions for directors, officers and participants in the share
incentive schemes and staff who may have access to price-sensitive information. A pre-approval policy and process
for all dealings in Company shares by directors and selected key employees is strictly followed. Details of directors’
and the company secretary’s dealings in Company shares are disclosed through the Stock Exchange News Service
(SENS).
The company secretary regularly disseminates written notices to inform the directors, executives, and employees
regarding the insider trading legislation, and advises them of closed periods.
Investor relations and communication with stakeholders
The Company strives to be transparent, open and to have clear communications with all of its relevant stakeholders.
In this regard, the Company seeks to continually improve upon its communication efforts through relevant disclosure
of financial and other information. Reports, announcements and meetings with investment analysts and journalists, as
well as the Company website, are useful conduits for information. No requests for information in terms of the Access
to Information Act, 2000, were received during the period under review. Further detail of the Company’s stakeholder
engagements is set out in the sustainable development report.
The Chairman of the Board and the Board committees are expected to attend the Company’s annual general meeting,
and shareholders can use this opportunity to direct any questions they may have. A summary of the proceedings of
general meetings and the outcome of voting on the items of business is available on request.
Keeping abreast of legislative requirements
The Company’s individual directors keep the Company abreast of generic and industry specific legislative and
regulatory developments, both pending and apparent, and ensure that the Board, management and employees are
informed of and, where necessary, trained on these developments and the implementation thereof.
In the year under review the Company remained focused on the changes brought about by, inter alia, King III and
the Companies Act 2008, as well as changes to consumer and product legislation as addressed more fully in the
sustainable development report and took note of the Consumer Protection Act, the Protection of Personal Information
Act, the Labour Relations Amendment Bill, the Basic Conditions of Employment Amendment Bill, the Employment
Equity Amendment Bill and the Employment Services Bill, published between 2009 and 2011.
Participation in industry forums
The Company and its subsidiaries participate in various forums that represent the interests of an industry or sector
of the economy, including the Plastics Industry Federation of South Africa and SEIFSA. Care is taken to ensure that
proceedings at these forums do not contravene competition regulations.
EMPLOYMENT EQUITY AND SKILLS DEVELOPMENT
The Board is committed to providing equal opportunities to all employees for reward and progress based on merit and
ability, regardless of their ethnic origin or gender. Employment equity plans / reports are submitted to the Department
of Labour as required.
The Group is aware of the historical imbalance in respect of previously disadvantaged persons, and accordingly
affirmative action strategies have been and continue to be implemented to achieve employee profiles more in line with
the demographics in country. Emphasis is being placed on the provision of training either through in-house facilities,
accredited training providers, or external courses over a wide range of subjects.
P A G E : 30
WINHOLD ANNUAL REPORT 2011
CORPORATE GOVERNANCE REPORT
ETHICAL STANDARDS AND SOCIAL RESPONSIBILITIES
A prime duty of the board, its committees, directors, officers and managers of the Group is to ensure our ethics policy,
code of conduct, code of ethics and corporate values are honoured.
ETHICAL LEADERSHIP
At Winhold, good corporate governance is a way of life rather than a set of rules. Stakeholders can only derive full,
sustained value from a business founded on honesty, integrity accountability and transparency. Winhold is committed
to applying good corporate governance principles in a manner that compliments its entrepreneurial flair.
CORPORATE VALUES
Our value system promotes:
• Accountability to customers, employees and stakeholders
• Business growth
• Decentralisation
• Entrepreneurship and innovation
• Non-discrimination and equal opportunity
• Fairness and honesty in stakeholder interaction
• Respect for human dignity, human rights, social justice and environment
• Service excellence, creating as exceptional place in which to work and do business
• Transparency and open lines of communications
CODE OF CONDUCT
A prime duty of the Board, its committees, directors, officers of the Group and managers is to ensure our code of
conduct is honoured.
The code demands:
• he highest standards of integrity and behaviour in dealings with stakeholders and wider society;
• business conduct based on fair commercial practice;
• non-discriminatory employment practices and promotion;
• proactive engagement on environmental, social and sustainability matters.
• development and empowerment of all employees through training and education in order to meet the
demands of the market and benefit from the growth of the Group.
CODE OF ETHICS
Our code fosters Group-wide business practice and requires:
• regular and formal identification of ethical risk areas;
• development and strengthening of monitoring and compliance policies, procedures and systems;
• easily accessible, confidential and non-discriminatory reporting (whistle-blowing);
• alignment of the Group’s disciplinary code with its code of ethics;
• integration of integrity assessment with selection and promotion;
• induction of new appointees;
• training in ethical principles, standards and decision making;
• regular internal audit monitoring of compliance with ethical principles and standards;
• reporting to stakeholders on compliance.
The Board of directors supports the King III recommendations relating to integrated sustainability including such
areas as ethics, safety and health. The Group recognises the potential adverse impact of HIV / AIDS on the group, its
employees and providing counseling services.
WINHOLD ANNUAL REPORT 2011
P A G E : 31
CORPORATE GOVERNANCE REPORT
DIRECTORS’ REMUNERATION
Details of the directors’ remuneration are set out on page 34.
DIRECTORS’ SHARE OPTIONS
There are no existing share options as at the date of this report.
DIRECTORS’ INTERESTS IN SECURITIES
Details of the directors’ interests in the shares of the company as at 30 September 2011 are set out on pages 47
and 48.
P A G E : 32
WINHOLD ANNUAL REPORT 2011
REMUNERATION REPORT
King III sets out principles and recommendations regarding executive remuneration, including disclosure in the
Company’s annual report of remuneration paid to directors and certain other senior employees within the Group.
This report on remuneration and other related matters covers the issues dealt with by the Remuneration Committee
(RENOMCO). Further details regarding the committee and its duties can be found on page 29 in the ‘Governance’
section of this annual report.
Remuneration policy
Winhold’s remuneration policies are formulated to attract and retain the correct quality of executive and to give
recognition to superior individual and team performance. The attraction and retention of these executives requires
remuneration structures that are seen as fair, transparent and competitive when benchmarked against the market
and are reviewed annually through internal mechanisms including the remuneration committee as well as industry
bargaining unit forums.
In addition to competitive structures and benefits, we offer short term incentives such as performance based
commissions, target orientated bonuses and branch profit share schemes.
Incentive schemes are used as mechanisms to align the goals of management with those of shareholders. These
schemes are designed to ensure sustainable growth in earnings through the setting of demanding performance targets.
Remuneration: Executive directors
Executive directors’ remuneration packages consist of two elements namely:
• Fixed remuneration
• Flexible remuneration
Fixed remuneration: Guaranteed remuneration
Fixed remuneration includes guaranteed cash packages and the value of benefit contributions, such as pension or
provident fund and medical aid. These are benchmarked annually against similar industries and positions of similar
responsibility. The benchmarking process, therefore, takes into account the size and complexity of the executive’s
position as well as giving due consideration to the relative size and performance of the businesses for which the
executive assumes responsibility.
The RENOMCO is satisfied that fair and transparent remuneration procedures and practices are applied and that all
executives are appropriately remunerated.
The fixed remuneration earned by the executive directors and the next three key managers of management is reflected
in Tables 1 and 2 on pages 34–35 of this annual report.
Flexible remuneration: Incentive bonus scheme
A portion of the executives’ earnings is provided in the form of an annual incentive bonus, which is introduced to
motivate the executives to deliver sustainable growth.
For the year under review the incentive bonus target was primarily based on the achievement of specified financial
performance targets. A portion of the incentive bonus was linked to individual performance targets or key performance
areas.
The goals of the incentive scheme are:
• To align the expectations of management and shareholders
• To make management think and act like shareholders and by doing so create a value-based culture
within the Company
• To create a sense of ownership and pride
• To further assist in driving the methodology of capital rationing.
WINHOLD ANNUAL REPORT 2011
P A G E : 33
REMUNERATION REPORT
The Renomco reviews and approves the design of the incentive bonus scheme, which includes the approval of
appropriate targets at the commencement of the period covered by the scheme. The Renomco ensures that these
targets are fair to both the executives and the shareholders. The Renomco is also responsible for the approval of
authorisation of any payments under the incentive bonus scheme.
The flexible remuneration earned by the executive directors and the next three key members of management is
reflected in Tables 1 and 2 on pages 34–35 of this annual report
Share option scheme
The company does not have a share option or share appreciation incentive scheme.
Remuneration: Non-executive directors
Non-executive directors are remunerated on a fixed fee basis. The Chief Executive Officer recommends the proposed
non-executive director fee structures to the RENOMCO after obtaining input from external consultants regarding
market trends and current pay practices.
Non-executive directors’ remuneration is pre-approved by shareholders by a special resolution in a general meeting.
The remuneration earned by the non-executives is reflected in Table 3 on page 35 of this report.
Interest of directors in contracts
The directors did not have any material interest in any transaction of any significance with the Company or any of its
subsidiaries during the year under review.
TABLE 1: Executive directors remuneration 2011 (Rand)
Total
Total fixed
Basic
Car
Benefit fund
Total Fixed
flexible
and flexible
Salary Allowance contributions remuneration remuneration remuneration
W Fourie
1 928 400
169 076
330 376
2 427 852
459 300
2 887 152
G Scrutton
1 263 000
166 280
205 944
1 635 224
305 954
1 941 178
Total
3 191 400
335 356
536 320
4 063 076
765 254
4 828 330
TABLE 1: Executive directors remuneration 2010 (Rand)
Total
Total fixed
Basic
Car
Benefit fund
Total Fixed
flexible
and flexible
Salary Allowance contributions remuneration remuneration remuneration
W Fourie
1 611 747
177 449
266 388
2 055 584
951 669
3 007 253
WAR Wenteler (*) 1 425 600
166 446
312 016
1 904 062
910 409
2 814 471
P J Kruger (*)
756 000
129 051
112 519
997 570
344 265
1 341 835
3 793 347
472 946
690 923
4 957 216
2 206 343
7 163 559
Total
(*) for 6 months to 30 March 2010
P A G E : 34
WINHOLD ANNUAL REPORT 2011
REMUNERATION REPORT
TABLE 2: Key management’s remuneration 2011 (Rand)
Total
Total fixed
Basic
Car
Benefit fund
Total Fixed
flexible
and flexible
Salary Allowance contributions remuneration remuneration remuneration
Key manager A
1 405 329
190 580
204 133
1 800 043
–
1 800 043
Key manager B
1 223 075
144 423
169 340
1 536 878
146 840
1 683 718
Key manager C
9 86 859
110 070
146 849
1 243 778
312 620
1 556 398
3 615 263
445 073
520 362
4 580 699
459 460
5 040 159
Total
TABLE 2: Key management’s remuneration 2010 (Rand)
Total
Total fixed
Basic
Car
Benefit fund
Total Fixed
flexible
and flexible
Salary Allowance contributions remuneration remuneration remuneration
Key manager A
1 108 008
187 241
165 644
1 460 893
380 557
1 841 450
Key manager B
1 014 098
130 488
142 121
1 286 707
325 135
1 611 842
Key manager C
902 996
113 243
134 265
1 150 504
333 945
1 484 449
3 025 102
430 972
442 030
3 898 104
1039 637
4 937 741
Total
TABLE 3: Non -executive directors’ remuneration 2011 (Rand)
Directors
Fees
Committee
Fees
Expenses
Total
remuneration
WAR Wenteler (!)
972 000
–
16 038
988 038
D B Mostert
103 680
96 620
–
200 300
PC Nash
64 800
90 140
–
154 940
NP Mnxasana
64 800
115 740
–
180 540
P J Kruger (*)
265 393
38 250
–
303 643
1 470 673
340 750
16 038
1 827 461
Total
(!) The Chairman committed to additional duties and responsibilities of at least 5 days per month.
(*)Non-executive fees only paid from 1 January 2011
TABLE 1: Non -executive directors’ remuneration 2010 (Rand)
WAR Wenteler (!)
Directors
Fees
Committee
Fees
Expenses
Total
remuneration
450 000
–
216 821
666 821
D B Mostert
92 000
54 000
–
146 000
PC Nash
57 500
51 000
–
108 500
NP Mnxasana
57 500
33 000
–
90 500
P J Kruger (*)
Total
392 549
–
–
392 549
1 049 549
138 000
216 821
1 404 370
(!) The Chairman committed to additional duties and responsibilities of at least 5 days per month.
(*) Non-executive fees only paid from 1 January 2011
WINHOLD ANNUAL REPORT 2011
P A G E : 35
REMUNERATION REPORT
Stakeholders’ relations
Winhold subscribes to the principles of objective, honest, timeous, balanced, relevant, and understandable
communication of financial and non-financial information to stakeholders.
The group acknowledges the task and responsibility of regulators, and our relationships with them are maintained in
a businesslike manner – frank, open and with mutual respect.
Safety, health and environment
Winhold is committed to ensuring that employees work in a safe, healthy an=d clean environment.
The Group recognises that South Africa is facing an HIV / AIDS epidemic of considerable proportions. Although
our healthcare system will bear (and is already bearing) the initial brunt of the epidemic, there is little doubt that it is
affecting every aspect of our society. We encourage all people to act responsibly at all times.
Social Responsibility
Winhold’s social responsibility area of endeavor are socio-economic, the youth and education in a wide sense. The
long-term aim is to make a contribution to the advancement of stability in South Africa. Education is one of the most
basic needs of society. We thoroughly believe that an educated community will sustainably improve the long-term well
being of society. Winhold has therefore directed its Corporate Social Investment efforts at supporting education on
various levels. Winhold also subscribes to social up-liftment through Black Economic Empowerment (BEE) and supports
this by having invested in various BEE initiatives. Winhold furthermore pays all its taxes regularly and encourages
government to spend its receipts responsibly.
Ethics
Winhold’s Group code of ethics commits the group to maintaining high ethical and moral codes of conduct in its
professional and social dealings. This is ingrained in the culture of the group.
Products, Product Development and Group Support
The Winhold Group acts as investor for own account, as financier and finance conduit for the Winhold Group. Group
companies develop their own specialist product ranges. The Group also provides strategic, information technology
(IT), legal, HR, taxation, accounting, secretarial, financial and regulatory support and advice to its subsidiaries.
Distribution
In the main, each company has its own distribution channel. These channels are based on one-to-one, one-to-many,
product sale networks according to its product and client profile.
A limited volume of cross-selling into the various client bases is already taking place and continues to be a priority
for future growth.
P A G E : 36
WINHOLD ANNUAL REPORT 2011
STOCK EXCHANGE DATA
2011
2010
2009
2008
2007
2006
Share price (cents)
High
185
149
125
165
195
195
Low
130
118
70
92
130
112
Closing
139
140
122
107
156
130
Other data
Market capitalisation
(Rm) at year end
175,4
176,7
154,8
135,1
196,9
164,1
9,5
7,1
4,6
4,6
7,9
9,8
Price earnings ratio
at year end
Shares traded
Volume (000)
22 794
26 280
44 309
26 760
26 746
23 761
Value (R000)
36 551
34 511
41 203
333 353
41 535
31 268
Number of transactions
1 183
884
969
1 129
1 803
1 283
Ordinary shares in issue
at year end
126 215 131 126 215 131 126 215 131 126 215 131 126 215 131 126 215 131
200
190
50 000
180
40 000
160
30 000
140
25 000
120
20 000
100
15 000
80
10 000
60
5000
40
0
20
0
2006
2007
2008
2009
2010
2006
2011
NET ASSET VALUE PER ORDINARY SHARE (cents)
2007
2008
2009
2010
2011
Volumes of shares traded (volume in 000s)
270
240
210
180
Year high – cents
150
Year low – cents
120
90
Year end close – cents
60
30
0
2006
2007
2008
2009
2010
2011
share prices (cents)
WINHOLD ANNUAL REPORT 2011
P A G E : 37
DIRECTORS AND COMPANY SECRETARY
WAR Wenteler ≈
(67) Non-Executive Chairman, B.Sc., B.Sc.(Ind.Chem.) MBA.
Bob has 24 years with the Group. Extensive experience in technical,
operational, marketing, financial and corporate management in
different sectors of the market, namely chemical, engineering,
packaging, rubber and consumer markets.
DB Mostert*≈
(75) Independent Non–executive Deputy Chairman,
B.Sc(Mech)Eng, MBA.
Dawid has 9 years service with the Group as
a Non-Executive Director. Chairman of the
Winhold Remuneration Committee. Past NonExecutive Director of Inmins Limited, prior
to its de-listing. Experience and achievements
include Group Chief Executive of Dorbyl Limited
for 9 years, Honorary President of SA Institute of
Mechanical Engineers for 2 years and past
President of SEIFSA.
W Fourie
(56) CEO, B.Compt (Hon), CA(SA).
Wietsche has 22 years’ service with the Group and previously
the Group financial director for 12 years until September 2010.
He is a Director of Inmins Limited and Gundle Limited. Extensive
experience in financial management as well as experience in
operational management having served as CEO of Chick
Henderson for 9 years.
PJ Kruger *
(69) Non-executive Director.
Paul has 16 years service with the Group.
He was also Group Managing Director of Inmins
Limited and a Director of Gundle Limited. Extensive
experience in operational and executive management.
P A G E : 38
WINHOLD ANNUAL REPORT 2011
DIRECTORS AND COMPANY SECRETARY
NP Mnxasana*≈
(55) Independent Non–Executive Director, B. Compt (Hon), CA (SA).
Nomavuso has 4 years service with the Group. Chairperson of the
Winhold Audit and Risk committee. She held the position of group
audit and risk executive with Imperial Holdings Limited. Other
directorships include Nedbank Limited, Imperial Bank Limited, the
Land Bank, AIH, and Optimum Coal Holdings Ltd, Schindler (Pty) Ltd
and Downtown Music Hub, a Section 21 company.
PC Nash *≈
(45) Non–Executive Director, M.BusScience
Peter was appointed to the Board in January 2009.
Completed his articles with Deloitte and Touche
where he served on their Financial Institutions
and Services Team. Served as a director of
Standard Corporate and Merchant Bank for
8 years, where he was involved in all aspects
of corporate finance. Thereafter, he joined the
Astra Group, where he holds various directorships
and is responsible for the financial and operational
performance of the group.
GM SCRUTTON
(49) Financial Director, B Com (Hons), (Wits) CA (SA)
Grant was appointed to the Board on 1 September
2010 and has extensive experience in the listed and
large corporate environment, being previously the
financial director of the listed Voltex Holdings (now part
of Bidvest), Powertech (Altron Group) and South African
Coal Mine Holdings (SACMH). Grant was also the Chief
Executive Officer responsible for turning around SACMH
for the Royal Bafokeng Holdings.
* Member of Audit and Risk Committee.
≈ Member of Remuneration Committee
G J O’Connor
(55), Company Secretary, ACIBM.
John was appointed as company secretary in June
2009. He has extensive experience in company
administration and company secretarial practice.
Address:
884 Linton Jones Street, Industries East, Germiston, 1401.
PO Box 5324, Johannesburg, 2000
[email protected]
WINHOLD ANNUAL REPORT 2011
P A G E : 39
ANNUAL FINANCIAL STATEMENTS
Statement by the Directors 41
Statements of cash flows
52
Report of the Independent Auditors
42
Accounting policies and presentation
54
Report of the Directors
43
Notes to the financial statements
62
Audit & Risk Committee report
45
Risk management
80
Analysis of Shareholders
47
Related parties
83
Statements of Comprehensive Income
49
Accounting estimates and judgments
84
Statements of Financial Position
50
Changes in accounting policies / disclosure
86
Statements of Changes in Equity
51
Notice of Annual General Meeting
90
LEVEL OF ASSURANCE, PREPARATION AND POWER TO AMEND
These financial statements have been audited in compliance with the new Companies Act (2008)
These financial statements have been prepared under the supervision of the CFO : GM Scrutton.
The entities owners do not have the power to amend these financial statements after issue
P A G E : 40
WINHOLD ANNUAL REPORT 2011
STATEMENT BY THE DIRECTORS
& certificate by the company secretary
STATEMENT BY THE DIRECTORS
The directors are responsible for the preparation of financial statements and ensuring that they fairly present the state of
affairs of the Group at the end of the financial year and the income and cash flow for that year, and other information
contained in this annual report. The financial statements have been audited by BDO South Africa Incorporated who
were given unrestricted access to all records of the Group.
The directors responsibility includes designing, implementing and maintaining internal controls relevant to the
preparation and fair presentation of these financial statements that are free from material misstatement, whether
due to fraud or error, selecting and applying appropriate accounting policies; and making accounting estimates that
are reasonable in the circumstances. The financial statements are prepared in accordance with the requirements of
the South African Companies Act as well as with International Financial Reporting Standards (‘IFRS’) and AC500 as
issued by the Accounting Practice Board.
The directors have made an assessment of the Group and Company’s ability to continue as a going concern and the
directors believe that the Group will be a going concern in the year ahead, and accordingly, the financial statements
have been prepared on a ‘going concern’ basis.
The directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk
control. The annual financial statements and group annual financial statements set out on pages 43 to 89 were
approved by the board of directors on 28 November 2011 and are signed on its behalf.
WAR Wenteler
DB Mostert
W fourie
Executive Chairman
Deputy Chairman
Chief Executive Officer
Certificate by the Company Secretary
In terms of Section 88 (2)(e) of the Companies Act of 2008, as amended, I certify that the company has lodged with
the Registrar all such returns as are required of a public company in terms of the Companies Act, and all such returns,
to the best of my knowledge and belief, are true, correct and up to date.
G J O’Connor, Company Secretary
Germiston, Johannesburg, 28 November 2011
WINHOLD ANNUAL REPORT 2011
P A G E : 41
REPORT OF THE INDEPENDANT AUDITORS
REPORT ON THE FINANCIAL STATEMENTS
We have audited the Group annual financial statements and annual financial statements of Winhold Limited, which
comprise the Consolidated and Separate Statements of Consolidated Income, the Consolidated and Separate
Statements of Other Comprehensive Income, the Consolidated and Separate Statements of Financial Position, the
Consolidated and Separate Statements of Changes in Equity and the Consolidated and Separate Statements of Cash
Flows for the year then ended, a summary of significant accounting policies and other explanatory notes, as set out
on pages 43 to 89.
Directors’ Responsibility for the Financial Statements
The company’s directors are responsible for the preparation of these financial statements in accordance with International
Financial Reporting Standards , South African interpretations of statements of Generally Accepted Accounting Practices
and the requirements of the Companies Act of South Africa. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and
making accounting estimates that are reasonable in the circumstances.
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 that 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 auditors’ judgment, 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
principles 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, the financial statements present fairly, in all material respects, the consolidated and separate financial
position of Winhold Limited as at 30 September 2011, and its consolidated and separate financial performance and
consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting
Standards, AC500 as issued by the Accounting Practice Board or its successor and the requirements of the Companies
Act of South Africa.
Per Johann Lemmer – Director and Registered Auditor
BDO South Africa Incorporated
Chartered Accountants (SA)
Registered Auditors
(Registration Number 1995/002310/21)
(Practice Number: 905526E)
Riverwalk Office Park
141 Matroosberg Road
Ashlea Gardens
Pretoria
0081
Johannesburg
28 November 2011
Executive: OA Barbeau, AR Edge, GE Levick, JFK Munnik, JHM Spencer (Chief Executive), ME Stewart, A van der
Hoek.
A full list of partners and directors is available for inspection at the registered offices.
A part of the international BDO network of independent member firms.
P A G E : 42
WINHOLD ANNUAL REPORT 2011
REPORT OF THE DIRECTORS
The directors have pleasure in presenting the annual financial statements of the Company and Group for the year
ended 30 September 2011.
Group Structure and Nature of Business
The Company is a holding company with its main investments being 100% stake in both Inmins Limited (‘Inmins’) and
Gundle Limited (‘Gundle’), which respectively own 74.9% in Inmins Trading (Pty) Ltd and Gundle Plastics Group (Pty)
Ltd.
The natures of the businesses of these subsidiaries are:
1. Inmins supplies capital and consumer goods to the mining, petrochemical and general industries.
2. Gundle manufactures and distributes polyethylene bags, sheeting and packaging to the agricultural, chemical,
construction, food processing, industrial, and consumer markets.
Financial Results
The results of the Company and its subsidiaries for the year under review and the state of their affairs are fully detailed
in the financial statements starting on page 49. Further details on the activities and the performance of the Group
are contained in the statistics given on page 3 and in the Chairman’s and Chief Executive Officer’s reports starting on
page 2. A segmental analysis of the Group is shown in note 23, page 77.
Group Borrowings
The borrowings in the Company and its subsidiaries are within the authorised level per the relevant Memorandum
of Incorporation. Interest bearing borrowings have increased slightly to R232 995 000 (2010: R225 475 000). The
high borrowings are due to loans obtained by the subsidiaries in 2006 to fund the restructuring, which facilitated the
introduction of BEE shareholders in the subsidiaries.
Subsidiaries and Associate Companies
Details of the Company’s holdings in material subsidiaries and the holding company’s interest in the aggregate income
earned and losses incurred after tax and extraordinary items by subsidiaries and associates are set out on in notes 9
and 10.
Authorised and Issued Share Capital
Details of the share capital of the Company at 30 September 2011 are set out in note 16 to the annual financial
statements.
There were no changes to the authorised and issued share capital.
Members will be asked at the forthcoming Annual General Meeting to:
1. Place a portion of the unissued shares of the company under the control of the directors; and
2. Give the directors authority for the repurchase of shares.
Ordinary and special resolutions for these purposes are included in the notice of the meeting.
WINHOLD ANNUAL REPORT 2011
P A G E : 43
REPORT OF THE DIRECTORS
Employee Share Incentive Trusts
Two employee share trusts exist which indirectly own respectively 12% in the two main operating companies in the
group, namely Inmins Trading (Proprietary) Limited and Gundle Plastics Group (Proprietary) Limited. As the trust
deeds do not provide for the distribution of the shares held by the trusts, these are essentially profit (dividend) sharing
arrangements.
Dividends
A dividend of 7,0 cents (2010: 10.0 cents) per ordinary share for the year ended 30 September 2011 was declared
on 24 November 2011. Payment was made on 20 February 2011.
Post Balance Sheet Events
The directors are not aware of any post balance sheet events since the financial year end and the date of this report.
DIRECTORS AND SECRETARY
The details of the directors and the company secretary appear on pages 38 and 39. The individual directors
emoluments paid in respect of the financial period under review are contained in the remuneration report on pages
34 to 35 of this integrated annual report. No changes in directors have occurred since the previous financial year end.
In terms of the Memorandum of Incorporation, Messrs WAR Wenteler, PC Nash and W Fourie retire at the forthcoming
Annual General Meeting, and being eligible, have offered themselves for re-election.
In terms of the South African Company’s Act, the appointment of Mrs.NP Mnxasana and Messrs D Mostert, PC Nash
and PJ Kruger to the Audit and Risk Committee are to be approved at the forthcoming Annual General Meeting.
SPECIAL RESOLUTIONS
The following special resolutions were passed by the company or its subsidiaries since the last directors’ report.
Winhold Limited
• General authority for the Company or any subsidiary of the company to acquire shares of the company.
• s45 (of the Company’s Act) approval of financial assistance to interrelated companies including its subsidiaries.
Subsidiaries in the group
• s45 approval of financial assistance to interrelated companys’.
AUDITORS
BDO South Africa Inc. expressed their willingness to continue in office. A resolution for their re-appointment of and
to grant the directors authority to agree upon their remuneration is proposed at the forthcoming Annual General
Meeting.
P A G E : 44
WINHOLD ANNUAL REPORT 2011
AUDIT & RISK COMMIT TEE REPORT
The Audit and Risk audit Committee is pleased to present its report for the financial year ended 30 September 2011
in terms of Section 94 (f) of the Companies Act.
The Audit Committee has adopted formal terms of reference, delegated to it by the Board of Directors, as its Audit
and Risk Committee charter. The charter is in line with the Companies Act, the King Report on Corporate Governance
for South Africa 2009 (‘King III’) and the JSE Listings Requirements. The committee has discharged the functions
delegated to it in terms of its charter. This process is supported by each operating subsidiary that has an operational
board which monitors risk management and compliance activities. There is a formal reporting line from the various
operational boards into the Audit Committee via the Audit Committee Chairman who is also an independant nonexecutive director on the operational boards.
During the year under review the committee performed the following statutory duties:
1. Review and recommended for adoption by the Board such financial information that is publicly diclosed,
which for the year included:
• The interim results for the six months ended 31 March 2011.
• The annual financial statements for the year ended 30 September 2011
2. Considered and satisfied itself that the external auditors BDO South Africa Inc, are independent.
3. Approved the external auditor’s budgeted fees and terms of engagement for the 2011 financial year.
4. Determined the non-audit-related services which the external auditors were permitted to provide to Winhold
and reviewed the policy for the use of the external auditors for non-audit-related services. All non-audit-related
service agreements between Winhold and the external auditors were pre-approved.
5. Nominated BDO South Africa Inc. for appointment as the Group auditors for the 2012 financial year.
6. Resolved to continue to use the Audit Committee chairman who is also an independant non-executive director
on the operational boards.
7. Reviewed the Audit Committee charter in line with King III recommendations.
8. Confirmed the internal combined assurance plan for the 2011 financial year.
9. Reviewed the IT Governance structure for Winhold.
10.Confirmed adequate whistle-blowing facilities were in place throughout the Group and reviewed and
considered action taken with regard to incident reports.
11. Held separate meetings with management and the external Auditees to discuss any problems and reservations
arising from the year-end audit and other matters that they wished to discuss.
12.Noted that it had not received any complaints, either from within or outside the Company, relating
either to the accounting practices, the peer review audits, the content or auditing of the financial statements,
the internal financial controls or any other related matter.
13.Conducted a self-evaluation exercise into the effectiveness of the Audit Committee.
14.Recommended to the Board the re-appointment of BDO South Africa Inc. as the Group auditors and
Mr. Johann Lemmer as the registered auditor responsible for the audit for the year ending 30
September 2012, which will be considered at the forthcoming annual general meeting.
WINHOLD ANNUAL REPORT 2011
P A G E : 45
AUDIT & RISK COMMIT TEE REPORT
15.Evaluated and satisfied itself as to the appropriateness of the expertise and experience of the
Company’s financial director.
16. Satisfied itself with the expertise, resources and experience of the Company’s finance function.
17. Considered the Group sustainability information as disclosed in this integrated annual report.
Based on the information produced to the Audit Committee by the external auditor and management, the committee is
of the opinion that the Group’s system of internal financial controls is effective and forms a basis for the presentation
of reliable financial statements.
For further details regarding the Audit Committee, shareholders are referred to the corporate governance report on
page 28.
On behalf of the Audit Committee
Ms NP Mnxasana
Audit Committee Chairman
28 November 2011
P A G E : 46
WINHOLD ANNUAL REPORT 2011
ANALYSIS OF SHAREHOLDERS AND STOCK EXCHANGE DATA
AS AT SEPTEMBER 2011
Number of %
share holders
Shareholding
2 514
1 – 500
671
501 – 2 500
252
2 501 – 5 000
522
5 001 – 50 000
59
50 001 – 100 000
94
100 001 and over
4 112
Total
Shareholder type
Banks
Close corporations
Endowment funds
Individuals
Insurance companies
Investment companies
Mutual funds
Nominees and trusts
Other corporations
Private companies
Public companies
Retirement Fund
Treasury Stock
Total
Number of
shares
%
61.14
255 259
0.20
16.32
834 910
0.66
6.13
955 471
0.76
12.69
8 776 694
6.95
1.43
4 522 832
3.58
2.29
110 869 965
87.84
100.00
126 215 131
100.00
18
0.44
678 916
0.54
56
1.36
1 822 324
1.44
7
0.17
22 893
0.02
3 722
90.47
36 239 131
28.71
9
0.22
1 484 449
1.18
10
0.24
1 036 361
0.82
9
0.22
12 899 947
10.22
187
4.60
23 756 898
18.82
12
0.29
112 888
0.09
77
1.87
47 451 756
37.60
4
0.10
223
0.00
–
–
–
–
1
0.02
709 345
0.56
4 112
100.00
126 215 131
100.00
Non–public shareholders
15
– Directors of the company
1
– Associates of the company
1
– Strategic Holdings (more than 10%)
1
– Treasury Stock
4 094
Public shareholders
4 112
Total
0.36
17 896 051
14.18
0.02
93 333
0.07
0.02
39 665 956
31.43
0.02
709 345
0.56
99.58
67 850 446
53.76
100.00
126 215 131
100.00
Number of %
Shares
Beneficial Shareholders holding 2,5% or more
2011
Astra Group Holdings (Pty) Limited
Number of
Shares
2010
%
39 665 965
31.43
39 665 965
31.43
17 232 145
Brits Engineering Industries (Proprietary) Limited4 885 441
13.65
17 232 145
13.65
WAR Wenteler
3.87
5 839 286
4.63
Kendase Trust
3 507 151
2.78
4 247 000
3.36
Heynen Family Trust
4 000 000
3.17
3 810 306
3.02
69 290 702
54.90
70 794 702
56.09
Total
WINHOLD ANNUAL REPORT 2011
P A G E : 47
ANALYSIS OF SHAREHOLDERS AND STOCK EXCHANGE DATA
AS AT SEPTEMBER 2011
The directors’ beneficial interests in the shares of the company as at 30 September 2011 were:
Direct
2011
Indirect
2011
2010
2010
Total
2011
2010
W Fourie
60 674
60 674
–
–
60 674
60 674
PJ Kruger
50 574
574
–
50 000
50 574
50 574
452 658
452 658
210
210
452 448
452 448
7 347 895
7 347 895
9 884 250
9 884 250
17 232 145 17 232 145
P Nash
–
–
39 665 965 39 665 965
39 665 965 39 665 965
NP Mnxasana
–
–
–
–
–
–
100 000
–
–
–
100 000
–
7 559 353
7 409 353
DB Mostert
WAR Wenteler
GM Scrutton
Total
50 002 663 50 052 663
57 562 016 57 462 016
None of the directors have non-beneficial interests. There have been no changes in directors shareholding since the
financial year end. An analysis of shareholders is shown on the previous page.
GENERAL INFORMATION
Winhold Limited is incorporated in the Republic of South Africa and its registered address is:
884 Linton Jones Street
P O Box 5324
Industries East
Johannesburg
Germiston, 1401
2000
Winhold’s PrinCipal Business partners are:
Commercial Bankers
Commercial Bankers
ABSA
First National Bank
Block D, Eastgate Office Park
c/o Pritchard & Simmonds Streets
South Boulevard
Johannesburg, 2001
Bruma, 2198
Auditors
Sponsor
BDO South Africa Inc.
Arcay Moela Sponsors (Pty) Ltd
Registered Auditors
Registered Sponsors
Riverwalk Office Park
Arcay House
141 Matroosberg Road
3 Anerley Road
Ashlea Gardens, Parktown, 2193
Pretoria 0081
Transfer Secretaries
Attorneys
Computershare Investor Services Fluxmans Inc.
9th Floor
11 Bierman Street
70 Marshall Street
Rosebank, 2196
Johannesburg, 2001
P A G E : 48
WINHOLD ANNUAL REPORT 2011
STATEMENTS OF COMPREHENSIVE INCOME
for the year ended 30 SEPTEMBER 2011
GroupCompany
Notes
Revenue
Operating profit for the year
1
Investment income
Profit on sale of investment property
2011
R000
990 308
1 030 918
28 046
51 227
15 556
15 556
–
Impairments
2010
R000
427
(2 500)
(2 000 )
(30 145 )
2011
R000
–
(197 )
25 387
–
1 366
2010
R000
–
(231 )
15 000
–
(8 888 )
Financing costs
2
(25 725)
(972 )
(1 021 )
Financing income
2
2 883
844
68
1 798
18 260
35 909
25 652
6 658
(1 301)
(8 233 )
Profit before taxation
Taxation
Share of after tax profit of associates
3
10
Net profit after taxation
Other comprehensive income
Total comprehensive income for the year
Attributable to non controlling interests
(365 )
431
757
–
–
17 390
28 433
25 652
6 293
–
–
–
–
17 390
28 433
25 652
6 293
(752)
Attributable to equity holders of the parent
–
(3 608 )
16 638
24 825
Basic and diluted earnings per share (cents)
4
13,3
19,8
Dividends per share (cents)
5
7,0
10,0
–
–
25 652
6 293
WINHOLD ANNUAL REPORT 2011
P A G E : 49
STATEMENTS OF FINANCIAL POSITION
as at 30 SEPTEMBER 2011
GroupCompany
2011
2010
2011
2010
Notes
R000
R000
R000 R000
ASSETS
Non-current assets
149 441
–
–
23
29
–
–
24 041
26 541
–
–
87 494
87 494
–
–
168 103
–
–
1 882
–
–
348 261
87 494
87 494
–
–
Property, plant and equipment
7
Intangible assets
8
Goodwill
8
Investments in subsidiaries
9
Investments in associates
10
2 318
2 265
Unlisted Investments
11
138 467
Deferred taxation
3
538
325 090
Total non-current assets
159 703
Current assets
Loans to subsidiaries
9
Inventories
13
155 047
148 247
–
–
Trade and other receivables
14
170 032
186 256
60
47
Unlisted Investments
11
32 158
–
–
–
Taxation overpaid
3
2 704
1 425
–
44
Cash and cash equivalents
Pg 53
8 565
12 815
278
104
Non-current assets held for sale
12
2 615
5 701
–
–
Total current assets
371 121
354 444
338
195
Total assets
696 211
702 705
87 832
87 689
EQUITY AND LIABILITIES
Capital and reserves
Stated capital account
15
122 793
122 793
123 627
123 627
Retained earnings /(accumulated deficit)
Pg 51
130 757
126 979
(43 155 )
(56 190)
Attributable to shareholders of the company Pg 51
253 550
249 772
80 472
67 437
18 372
17 620
–
–
271 922
267 392
80 472
67 437
164 269
187 976
–
–
Attributable to non controlling interests
Total equity
Non-current liabilities
Interest bearing borrowings
17
Other liabilities
18
1 181
1 083
–
–
Deferred investment revenue
19
19 562
14 824
–
–
Deferred taxation
3
Total non-current liabilities
4 461
6 895
–
–
189 473
210 778
–
–
Current liabilities
P A G E : 50
Trade and other payables
16
162 563
183 401
2 126
1 040
Provisions
20
3 527
3 635
–
–
Interest bearing borrowings
17
68 726
37 499
Loans from subsidiaries
9
–
–
5 234
19 212
Total current liabilities
234 816
224 535
7 360
20 252
Total equity and liabilities
696 211
702 705
87 832
87 689
WINHOLD ANNUAL REPORT 2011
STATEMENT OF CHANGES IN EQUIT Y
for the year ended 30 SEPTEMBER 2011
GroupCompany
2011
2010
2011
2010
Notes
R000
R000
R000 R000
Stated capital
Balance at beginning and end of the year 15
123 627
– Gross
123 627
(834 )
123 627
123 627
(834)
–
–
122 793
122 793
123 627
123 627
126 979
114 910
(56 190 )
(49 861 )
16 638
24 825
25 652
6 293
17 390
28 433
25 652
6 293
– (Less) treasury stock
Distributable reserves
Retained earnings / (accumulated deficit)
Balance at beginning of the year
Pg 49
Comprehensive income
- Total comprehensive income
(752 )
(3 608)
(12 860 )
(12 756)
(12 617 )
(12 622 )
Pg 50
130 757
126 979
(43 155 )
(56 190 )
Pg 50
253 550
249 772
80 472
67 437
- Attributable to non controlling interests
Ordinary dividends
Balance at the end of the year
revenue
operating profit
(Rand Millions)
30
50
900
45
800
25
40
700
35
600
30
500
25
400
20
300
15
200
10
100
5
0
0
–
ordinary shareholders profit before
divIdends (Rand Millions)
(Rand Millions)
55
1000
–
20
15
10
5
0
2006
2007
NET ASSET VALUE
2008
2009
2010
2006
2011
2007
CURRENT RATIO
(Rand Millions)
2008
2009
2010
2011
2006
1,60
1,40
1,20
150
1,00
0,80
100
0,60
0,40
50
0,20
0
0
2006
2007
2008
2009
2010
2011
2009
2010
2011
ordinary shareholder funds and interest
bearinG debt (Rand Millions)
1,80
200
2008
(Times)
2,00
250
2007
2006
2007
2008
2009
2010
2011
250
240
220
200
180
160
140
120
100
80
60
40
20
0
2005
2006
2007
2008
2009
2010
WINHOLD ANNUAL REPORT 2011
P A G E : 51
STATEMENTS OF CASH FLOWS (direct method)
for the year ended 30 SEPTEMBER 2011
Notes
(page)
Group
Company
2011
2010
2011 2010
R000
R000
R000 R000
Cash flow from operating activities
1 023 968
Cash receipts from customers
Cash paid to suppliers and employees
Cash flow from operations
pg 53 (A)
1 026 268
(976 486 )
(922 521 )
47 482
103 747
25 374
889
26 263
14 995
(16 )
14 979
(26 142 )
Finance costs paid
Finance income received
Dividends from associates
Taxation (paid) / refunded
pg 53 (B)
(30 596 )
(972 )
(1 021 )
2 883
844
68
1 798
378
471
–
–
(3 670 )
(13 798 )
44
20 931
25 403
60 668
Dividends paid
pg 53 (C)
Net cash flow from operating activities
(390 )
15 366
(12 860 )
(12 756 )
(12 617 )
(12 622 )
8 071
47 912
12 786
2 744
Cash flow from investing activities
Investment in property, plant and equipment,
trademarks and patents
(24 594 )
(36 326 )
3 735
2 492
(20 859 )
(33 834 )
Proceeds on disposal of property,
plant and equipment
Net cash outflow from investing activities
–
–
–
–
–
–
Cash flow from financing activities
Interest bearing loans repaid
(24 575 )
(19 960 )
–
Long–term loans raised
11 926
26 545
–
4 738
5 331
Defered investment revenue received
–
(12 612 )
Intergroup indebtedness
Investment in loans receivable / inflow
(2 000 )
–
–
(729 )
(2 522 )
(7 315 )
(10 433 )
4 601
(23 221 )
18 679
174
15
(5 662 )
(24 341 )
104
89
(28 883 )
(5 662 )
278
104
–
–
Net cash (outflow) from financing activities
(12 612 )
(2 729 )
Net increase / (decrease) in cash
and cash equivalents
Cash and cash equivalents
– At beginning of the year
– At end of the year
P A G E : 52
WINHOLD ANNUAL REPORT 2011
pg 53 (E)
NOTES TO THE STATEMENTS OF CASH FLOWS
for the year ended 30 SEPTEMBER 2011
Group
Company
Notes
2011
2010
2011
2010
(pages)
R000
R000
R000 R000
Reconciliation of net profit before tax to
cash flow from operations
Profit before tax
pg 49
18 260
35 909
25 652
6 658
Depreciation and other non–cash items
15 870
14 213
(1 366 )
8 888
Finance costs/(income)
23 259
29 752
904
39 129
43 965
(462 )
Adjustments
(777 )
8 111
Changes in working capital
Changes in inventories
(6 800 )
Changes in trade and other receivables
17 422
(22 907 )
Changes in trade and other payables
(20 529 )
47 313
1 086
226
(9 907 )
23 873
1 073
210
103 747
26 263
14 979
A. Cash flow from operations
47 482
(533 )
–
–
(13 )
(16 )
Reconciliation of taxation (paid)/
received during the year
Income statement charge
(1 301 )
(8 233 )
Adjustment for deferred taxation
(1 090 )
(941 )
Movement in taxation liability
(1 279 )
(4 624 )
44
(25 )
B. Payments made
(3 670 )
(13 798 )
44
(390 )
(12 617 )
(12 622 )
–
–
(365 )
–
Reconciliation of dividends paid
during the year
Dividends paid
Dividends paid to subsidiary minorities
C. Payments made
(243 )
(134 )
(12 860 )
(12 756 )
(12 617 )
–
(12 617 )
(12 622 )
–
(12 622 )
Cash and Cash Equivalents
Short–term deposits
–
3 000
–
–
Cash at bank and on hand
8 565
9 815
278
104
D.Cash and cash equivalents
8 565
12 815
278
104
The effective interest rate received is that applicable to deposits with commercial banks for this category of
instrument.
For purposes of the statements of cash flow,
the year end cash and cash equivalents
comprised the following:
Cash and cash equivalents (refer D above)
Bank overdraft
note 17
8 565
12 815
278
104
(37 448 )
(18 477 )
–
–
(28 883 )
(5 662 )
278
104
E. Cash and cash equivalents at the
year end
WINHOLD ANNUAL REPORT 2011
P A G E : 53
ACCOUNTING POLICIES AND PRESENTATION
The annual consolidated financial statements are prepared in accordance with International Financial Reporting
Standards (‘IFRS’) and the AC500 standards issued by the Accounting Practices Board. The consolidated financial
statements are prepared under the historical cost convention, except for certain financial instruments at fair value.
This basis is consistent with that of the previous year, except for the adoption of new and amended IFRS and IFRIC
interpretations effective 1 October 2010 which are set out in note 31. Note 32 sets out new and / or amended
accounting standards and interpretations applicable to the Winhold Group which were issued before 30 September
2011, but were not effective at that date. The Group does not intend to adopt any of these standards or interpretations
early. Management is of the opinion that the adoption of these standards and interpretations would not have a
material impact on the consolidated financial results, but may result in additional disclosures.
Accounting Estimates and Critical Judgments’
In preparing the group financial statements, management is required to make estimates and assumptions that affect
the amounts represented in the group annual financial statements and related disclosures. Use of available information
and the application of judgment is inherent in the formation of estimates. Actual results in the future could differ from
these estimates which may be material to the group annual financial statements. Accounting estimates and areas of
critical judgment are set out in note 30.
Basis Of Consolidation
The group annual financial statements incorporate the financial position and operating results of the holding company
and its subsidiaries. Subsidiaries are those companies in which the group, directly or indirectly, have an interest of
more than one half of the voting rights or otherwise has power to exercise control over the operations. Intergroup
transactions, unrealised surpluses, deficits and balances are eliminated. The results of subsidiaries are included from
the effective dates of acquisition up to the effective dates of sale. At date of acquisition, the assets, liabilities and
contingent liabilities of the relevant subsidiaries are valued at fair value. A listing of principal subsidiaries is set out
in the notes to the financial statements.
Comparative Figures
When an accounting policy is changed, comparative figures for the previous period are restated in accordance with
the new policy. Where necessary, comparative figures are restated to conform with changes in presentation in the
current year. No changes in comparatives were made in the current year.
Property, Plant and Equipment
Property, plant and equipment is reflected at historical cost less accumulated depreciation and accumulated
impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Buildings
are not depreciated as the estimated residual values exceed the cost. Buildings are impaired if there is a permanent
diminution in value.
Depreciation is charged on the straight-line basis over the estimated useful lives of the assets after taking into
consideration the assets’ residual values. Land is not depreciated. The estimated maximum useful lives of items of
property, plant and equipment are:
• Plant and equipment 7 – 15 years
• Furniture, fittings and office equipment
7 – 10 years
• Electronic equipment 3 – 5 years
• Motor vehicles 3 – 5 years
• Capitalised leased assets
7 – 15 years
• Leasehold improvements
period of the lease
The useful lives and residual values are assessed annually and adjusted if necessary.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the group and the cost of the
item can be measured reliably. All other maintenance and repairs are recognised in the income statement during the
financial period in which they are incurred.
P A G E : 54
WINHOLD ANNUAL REPORT 2011
ACCOUNTING POLICIES AND PRESENTATION
Profits and losses on the disposal of property, plant and equipment are determined by comparing the proceeds with
the carrying amount. These are recognised in the income statement.
Carrying amounts of all items of property, plant and equipment are impaired to their recoverable amount, where this
is lower than the carrying amount.
Where material components of an item of property, plant and equipment have materially different useful lives they are
accounted for as separate items.
Specific software, which is an integral part of the related hardware, is treated as property, plant and equipment.
Leased Assets
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. Assets acquired in terms of finance leases are recognised as assets of the group at their fair
value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The capital element
of future obligations under the lease is included as a liability in the balance sheet. Each lease payment is allocated
between the liability and the finance charges so as to achieve a constant rate of interest on the remaining balance of
the liability. The interest element of the finance charge is charged against income over the period of the lease.
When a finance lease is terminated before the lease period has expired, any payment that is required to be made to
the lessor by way of penalty is recognised as an expense in the period in which termination takes place.
Leases of assets to the group under which the lessor effectively retains all the risks and rewards of ownership are
classified as operating leases. Payments made under operating leases are charged against income on a straight-line
basis over the period of the lease. Benefits received and receivable as an incentive to enter into an operating lease
are also spread on a straight-line basis over the lease term. The difference between the amounts recognised as an
expense and the contractual payments are recognised as an operating lease asset or liability. This asset or liability is
not discounted.
Intangible Assets
An intangible asset is recognised when it is probable that the expected future economic benefits that are attributable
to the asset will flow to the entity and the cost, less any accumulated amortisation and impairment losses.
Development costs that are directly attributable to the design and testing of identifiable and unique products controlled
by the group are recognised as intangible assets when the following criteria are met:
• it is technically feasible to complete the product so that it will be available for use;
• management intends to complete the product and use or sell it;
• there is an ability to use or sell the product;
• it can be demonstrated how the product will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the product are
available; and
• the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the product include the material costs, outsourced costs,
development employee costs and an appropriate portion of relevant overheads. Other development expenditures that
do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period.
Amortisation is provided to write down intangible assets, on a straight line basis, to their residual values as follows:
Trademarks and patents Development costs
5 years
5 years
WINHOLD ANNUAL REPORT 2011
P A G E : 55
ACCOUNTING POLICIES AND PRESENTATION
Goodwill
Goodwill may arise on the acquisition or change in the shareholding in a subsidiary company or the acquisition
of a business. It represents the excess of the cost of an acquisition or adjustment over the group’s share of the fair
value of the net identifiable assets and contingent liabilities of the subsidiary or business at the date of acquisition or
adjustment.
For impairment purposes the carrying amount of goodwill is allocated to cash generating units, reviewed annually
for impairment and written down where this is considered necessary. Impairment losses in respect of goodwill are not
reversed. Where a number of related businesses are acquired in the same business combination, these businesses
are combined for purposes of determining the recoverable amount of the related goodwill. The gain or loss on the
disposal of a subsidiary or business includes the carrying amount of goodwill attributable to the entity or business
sold.
Impairment of Assets
The group assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any
such indication exists, the group estimates the recoverable amount of the asset. Irrespective of whether there is any
indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not
possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating
unit to which the asset belongs is determined. The recoverable amount of an asset or a cash-generating unit is the
higher of its ‘fair value’ less costs to sell and its ‘value in use’.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the income statement. Goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the cash-generating units, or groups of cash-generating
units, that are expected to benefit from the synergies of the combination.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of
any goodwill allocated to cash generating units (group of units) and then, to reduce the carrying amount of the other
assets in the unit (group of units) on a pro rata basis.
An impairment losses recognised in respect of goodwill is not reversed. In respect of other assets, an impairment loss
is reversed if there has been a change in the estimate used to determine the recoverable amount.
Investments in Subsidiaries
Investments in subsidiaries are carried at cost less any accumulated impairment. The cost of an acquisition is
measured as the fair value of consideration transferred, equity instruments issued and liabilities assumed at the date
of exchange. Costs directly attributable to an acquisition are included in the cost of acquisition. Identifiable assets
(including intangible assets) and liabilities acquired and contingent liabilities assumed are recognised at fair value at
acquisition date. The excess of the cost of an acquisition over the Group’s share of the fair value of the net identifiable
assets and contingent liabilities represents goodwill and is accounted for in terms of the accounting policy note for
goodwill. If the cost of an acquisition is less that the fair value of the net identifiable assets and contingent liabilities,
the difference is recognised in the income statement.
Investments in Associates
Associates are those entities in which the group has significant influence, but not control, over the financial and
operating policies. The consolidated financial statements include the group’s share of the total recognised gains and
losses of associates on an equity accounted basis, from the date that the significant influence commences until the
date that significant influence ceases. When the group’s share of losses exceeds its interest in an associate, the group’s
carrying amount is reduced to nil and recognition of further losses are discontinued except to the extent that the group
has incurred legal or constructive obligations or made payments on behalf of an associate.
P A G E : 56
WINHOLD ANNUAL REPORT 2011
ACCOUNTING POLICIES AND PRESENTATION
Inventories
Inventories are measured at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale. The cost of inventories comprises of all costs of purchase, costs
of conversion and other costs incurred in bringing the inventories to their present location and condition. The cost of
inventories is assigned using the first-in first-out or weighted-average cost methods. The same cost method is used for
all inventories having a similar nature and use to the group.
When inventories are sold, the carrying amounts of those inventories are recognised as an expense in the period
in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and
all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of
any reversal of any write-down of inventories, arising from an increase in net realisable value, are recognised as a
reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.
Revenue Recognition
Revenue is predominantely from sale of goods and is recognised when delivery is made and significant risks and
rewards of ownership are transferred to the buyer. Revenue is measured at the fair value of the consideration received
or receivable and represents the amounts receivable for goods and services provided in the normal course of business,
net of trade discounts and volume rebates, and value added tax. Interest income is recognised on a time proportion
basis that takes into account the effective yield on the asset and the principal outstanding. Dividend income is
recognised where the shareholder’s right to receive payment is established.
Cost of Sales
Cost of sales includes the historical cost of merchandise and overheads appropriate to the distribution thereof.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profits differ from profit as reported in the
income statement because it excludes items of income or expense that are taxable or deductable in other years and it
further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the
balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
WINHOLD ANNUAL REPORT 2011
P A G E : 57
ACCOUNTING POLICIES AND PRESENTATION
Provisions
Provisions are recognised when the group has a present legal or constructive obligation as a result of past events, and
it is probable that it will be required to settle the obligation, and a reliable estimate of the amount of the obligation
can be made. Where the effect of discounting to present value is material, provisions are adjusted to reflect the time
value of money.
EMPLOYEE BENEFITS
Retirement Funds
The group’s policy is to provide retirement benefits for employees. For those employees not belonging to statutory
or union retirement plan the group operates a separate trustee administered defined benefit fund. Payments to this
defined benefit fund are made by employees and the company based on recommendations of independent qualified
actuaries.
The contributions by group companies to fund obligations for the payment of retirement benefits are charged against
income in the year using the projected unit credit method. Under this method the cost of providing retirement benefits
is charged to the income statement to spread the regular cost over the service levels of employees, in accordance
with the advice of qualified actuaries. In the event of the actuarial valuation revealing a deficit, past service costs are
recognised immediately to the extent that benefits have already vested on a straight line basis over the period until
the benefits become vested.
To the extent that, at the beginning of the financial year, any cumulative unrecognised actuarial gain or loss exceeds
ten percent of the greater of the present value of the projected benefit obligation and the fair value of the plan assets
(corridor), that portion is recognised in the income statement over the expected average remaining service lives of the
participating employees. Actuarial gains or losses within the corridor are not recognised.
The amount recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted
for unrecognised actuarial gains and losses and unrecognised past service costs, and reduces by the fair value of
plan assets.
Any asset is limited to unrecognised actuarial losses, plus the present value of available refunds and reduction in
future contributions to the plan.
Other Post-Retirement Obligations
The group’s policy is not to provide post-retirement health benefits to retirees. Where, due to acquisitions, such
obligations do arise in respect of existing employees, the expected costs of these benefits are accrued over the period
in a similar fashion to pension fund benefits. Valuations of these obligations are carried out by independent qualified
actuaries. Any deficit on valuation is charged to the income statement in the year that the valuation is received.
Annual leave
Employee entitlement to annual leave is recognised when it accrues to the employees. An accrual is made for the
estimated liability for leave as a result of services rendered by the employees up to the balance sheet date.
Foreign Currencies
A foreign currency transaction is recorded, on initial recognition in Rands, by applying to the foreign currency amount
the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
At each balance sheet date:
• Foreign currency monetary items are translated using the closing rate;
• Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and
P A G E : 58
WINHOLD ANNUAL REPORT 2011
ACCOUNTING POLICIES AND PRESENTATION
• Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items at rates different from those at which they were
translated on initial recognition during the period or in previous annual financial statements are recognised in profit
or loss in the period in which they arise.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to
the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment
income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss
in the period in which they are incurred.
Financial Instruments
The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a
financial liability or an equity instrument in accordance with the substance of the contractual arrangement.
Financial assets and financial liabilities are recognised on the group’s balance sheet when the group becomes party
to the contractual provisions of the instrument. Financial assets and liabilities are initially recognised at fair value plus,
in the case of financial assets or liabilities not classified at fair value through profit and loss, transaction costs that are
directly attributable to the acquisition or issue of the financial instrument.
An asset that is subsequently measured at cost or amortised is recognised initially at its fair value on the trade date.
Subsequent to initial recognition these instruments are measured as set out below.
(i) Held-to-maturity investments
Investments with determinable returns and fixed maturity dates that the group has the positive intent and ability to hold
to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost
using the effective interest rate method, less impairment.
(ii) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks and investment in money market
instruments, net of bank overdraft where right set-off exists, that are readily convertible (within 3 months) to a known
amount of cash and are subject to an insignificant risk of change in value and bank overdrafts. Cash and cash
equivalents are subsequently measured at amortised cost, and are treated as loans and receivables.
(iii) Trade and other receivables
Trade and other receivables originated by the enterprise are treated as loans and receivables. Trade and other
receivables, less provision for doubtful debts, are carried at amortised cost using the effective interest rate method.
(iv) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is
recognised in the income statement over the period of the borrowings using the effective interest method.
(v) Trade and other payables
Trade and other payables are measured at amortised cost using the effective interest rate method.
(vi) Non -current receivables
Non -current receivables are measured at amortised cost using the effective interest rate method.
WINHOLD ANNUAL REPORT 2011
P A G E : 59
ACCOUNTING POLICIES AND PRESENTATION
(vii) Foreign currency contracts
The company and group uses derivative financial instruments such as foreign currency contracts to hedge its risks
associated with foreign currency transactions. Such derivative financial instruments are stated at fair value. The fair
value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with
similar maturity profiles. The movement in the fair values is accounted for through the income statement.
A gain or loss arising from a change in a financial asset or financial liability is recognised as follows:
• Financial assets and financial liabilities carried at amortised cost a gain or loss is recognised in profit or loss when
the financial asset or financial liability is derecognised or impaired, and
• Where a legally enforceable right of set-off exists for recognised financial assets and financial liabilities, and there
is an intention to settle the liability and realise the asset simultaneously or to settle on a net basis, all related
financial effects are offset.
Fair Value Measurement Hierarchy
IFRS 7 requires certain disclosures which require the classification of financial assets and financial liabilities measured
at fair value using a fair value measurement hierarchy that reflects the significance of the inputs used in making their
the fair value measurement. (See note 24).
The fair value hierarchy has the following levels:
1. Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)(Level 2); and
3. Inputs for the asset or liability that are not based on observable market data (unobservable inputs)(Level 3).
The level in the fair value hierarchy within which the financial asset or financial liability is
categorised is determined on the basis of the lowest level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their entirety into one of the three levels.
Non-Current Assets Held For Sale and Disposal Groups
Non-current assets and disposal groups are classified as held for sale when:
• they are available for immediate sale;
• management is committed to a plan to sell;
• it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;
• an active program to locate a buyer has been initiated;
• the asset or disposal group is being marketed at a reasonable price in relation to its fair value; and
• a sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at the lower of:
• their carrying amount immediately prior to being classified as held for sale in accordance with the group’s
accounting policy; and
• fair value less costs to sell.
Following their classification as held for sale, non-current assets (including those in a disposal group) are not
depreciated.
The results of operations disposed during the year are included in the consolidated statement of comprehensive
income up to the date of disposal.
A discontinued operation is a component of the Group’s business that represents a separate major line of business or
geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed
of, has been abandoned or that meets the criteria to be classified as ‘held for sale’.
P A G E : 60
WINHOLD ANNUAL REPORT 2011
ACCOUNTING POLICIES AND PRESENTATION
Discontinued operations are presented in the consolidated statement of comprehensive income (including the
comparative period) as a single line which comprises the post tax profit or loss of the discontinued operation and
the post-tax gain or lossrecognised on the re-measurement to fair value less costs to sell or on disposal of the assets/
disposal groups constituting discontinued operations.
Related Parties
Related parties are considered to be related if one party has the ability to control or jointly control the other party
or exercise significant influence over the party in making financial and operational decisions. Key management
personnel are also regarded as related parties. Key management personnel are those persons having authority and
responsibility for planning.
Earnings per Share
The company presents basic earnings per share (EPS) for its ordinary shares. Basic earnings per share 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.
Headline Earnings per Share
Headline earnings per ordinary share are calculated using the weighted average number of ordinary shares in issue
during the period and are based on the earnings attributable to ordinary shareholders, after excluding those items as
required by Circular 3/2009 issued by the South African Institute of Chartered Accountants (‘SAICA’).
Segmental Reporting
Segment information is determined on the same basis as the information used by the chief operating decision maker for
the purposes of allocating resources to segments and assessing segments’ performance. The chief operating decision
maker has been identified as the chief executive officer in conjunction with the board of directors that makes strategic
decisions. All intersegment transactions are eliminated.
Dividends
Dividend distribution to the Group’s shareholders is recognised as a liability in the Group’s financial statements in the
period in which the dividends are approved by the Company’s shareholders.
WINHOLD ANNUAL REPORT 2011
P A G E : 61
NOTES TO THE FINANCIAL STATEMENTS
1. OPERATING PROFIT FOR THE YEAR
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Operating profit is stated after taking into
account the items detailed below:
Revenue
Sale of goods
Resale and service income
983 069
1 023 855
–
–
7 239
7 063
–
–
990 308
1 030 918
–
–
25 387
15 000
Income
Income from subsidiaries
- Dividends received
Net profit on disposal of fixed assets
55
498
–
–
Profit on sale of investment property
–
427
–
–
681
2 701
–
11
15 556
15 556
–
–
Auditor’s remuneration
2 040
2 534
73
73
- Current year audit fees
1 800
2 194
73
73
- Additional payment for prior years
95
230
–
–
- Other services
95
–
–
–
Other operating income
Investment income
Expenditure
50
110
–
–
13 736
13 638
–
–
8 611
8 329
–
–
839
875
–
–
- Motor vehicles
2 227
2 173
–
–
- Capitalised leased assets
1 795
1 889
–
–
- Leasehold improvements
259
248
–
–
5
124
–
–
2 500
–
–
–
–
2 000
–
–
771 079
731 465
–
–
734
–
–
- Travel and disbursement
Depreciation and amortisation
- Plant and equipment
- Furniture, fittings and equipment
- Trademarks
Impairment of Goodwill
Impairment of assets held for sale
Inventory costs expenses
Foreign exchange income / (losses)
(37 )
Operating leases
5 066
6 661
–
–
- Minimum lease payments
5 066
7 026
–
–
- Sub-lease income
Management, technical and consultancy fees
–
462
–
–
767
20
19
(365 )
871
718
170
170
Director’s remuneration (*)
6 720
8 899
–
–
- Executive directors
4 828
7 812
–
–
- Non executive directors
1 892
1 087
–
–
Total listing costs (JSE)
Staff costs (see note 6)
Provision for subsidiary loan accounts
(1 366 )
8 888
(*) Full details of directors’ emoluments and the emoluments of the next 3 highest paid executives are set out in
the ‘Remuneration report’ on pages 34 to 35.
P A G E : 62
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
2. Net financing (costs) / income
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
(25 725 )
Finance costs paid *
(30 145)
2 883
Less: Finance income received
(22 842 )
(972)
(1 021)
68
1 798
844
(29 301)
(904)
777
(*) Includes R 10 721 000 (2010: R11 138 000) accrued and paid after year end.
No borrowing costs were capitalized during the year (2010: R nil)
3. INCOME TAXES
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Group:
Deferred taxation liability
Accelerated tax depreciation
Prepayments and provisions
Tax loss carried forward
(11 538 )
(10 633 )
–
–
809
1 994
–
–
6 268
1 744
–
–
(4 461 )
(6 895 )
–
–
Deferred taxation assets
1 882
–
–
Net deferred taxation
(3 923 )
(5 013 )
–
–
Balance at 1 October
(5 013 )
(5 954 )
–
–
Tax losses carried forward
538
Income statement charge
1 090
–
–
Balance at 30 September
(3 923 )
(5 013 )
–
–
4 283
8 599
–
8 599
2 312
9 494
941
Deferred taxation assets for assessed
losses not provided
Income Statement credit / (charge)
–
365
(82 )
(344 )
–
–
Deferred taxation – current year
(2 109 )
(941 )
–
–
Deferred taxation – prior year adjustment
1 019
(66 )
–
–
161
90
–
–
1 301
8 233
–
365
SA normal tax – current year
SA normal tax – prior year adjustment
Secondary tax on companies
Taxation (Receivable) / Payable /
Taxation (overpaid) / due on 1 October
(1 425 )
3 199
(44)
(19 )
Taxation paid
3 670
(9 150 )
44
(390 )
Current year/charge
(2 391 )
4 526
–
Taxation (overpaid) / due 30 September
(2 704 )
(1 425 )
–
365
(44 )
WINHOLD ANNUAL REPORT 2011
P A G E : 63
NOTES TO THE FINANCIAL STATEMENTS
3. INCOME TAXES (continued)
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Tax Rate Reconciliation
18 260
35 909
Tax at 28%: (2010 :28% )
5 113
10 055
7 182
1 864
Income not subject to tax
(4 207 )
(4 265 )
(7 103 )
(4 200 )
Expenses not deductable for tax
1 076
Profit before tax
Difference in tax rates
Tax losses not utilised
Secondary tax on companies (STC)
Prior periods normal tax adjustments
(23 )
(1 756 )
161
(82 )
Prior periods deferred tax adjustments
1 019
Tax charge per income statement
1 301
791
(75 )
2 047
25 652
6 658
382
2 701
–
–
(461 )
–
90
–
–
(344 )
–
–
(66 )
–
–
–
365
8 233
Deferred income tax assets and liabilities are offset when the income taxes relate to the same fiscal authority and
legal entity. Deferred taxes are calculated on all temporary differences under the liability method using a principal tax
rate of 28% for South African operations and the relevant tax jurisdiction for non-South African operations. Material
deferred income tax assets are recognised when the realisation of the related tax benefit is probable.
Deferred tax liabilities have not been established for unrealised withholding taxes on such unremitted reserves which
are considered to be permanently reinvested.
4. Earnings per Share and headline earnings per share
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Reconciliation of headline earnings
Comprehensive income for the year
Impairment of Goodwill (Assets)
Net profit on disposal of fixed assets
Taxation effect on disposal of fixed assets
Headline earnings
Headline earnings per share (cents)
16 638
24 825
25 652
6 293
2 500
2 000
–
–
(55)
(925)
–
–
15
139
–
–
19 098
26 039
25 652
6 293
15,2
20,7
No diluted earnings per share are presented as there are no current obligations or commitments to issue shares in
the future.
The calculation of headline earnings per ordinary share is based on the earnings attributable to ordinary shareholders
after exceptional items, minority share and preference dividend but before capital items and impairments and a
weighted average number of shares in issue during the year of 125 505 786 (2010: 125 505 786), after deducting
Treasury stock of 709 345 (2010: 709 345) shares. Headline earnings per share as detailed above is based on
earnings adjusted for capital items together with goodwill impaired, net profit on sale of assets adjusted for any
taxation effect thereon and any income attributable to non controlling interests. Where acquisitions are financed by
share issues, such shares are weighted from the date on which the attributable earnings are brought to account.
P A G E : 64
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
5. dividends PROPOSED
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Declared after the year end
8 835
Ordinary dividends of 7.0 (2010: 10.0) cents per share
12 622
8 835
12 622
The ordinary dividends as set out above were declared on 24 November 2011 and notice was given to shareholders
in respect thereof on 28 November 2011. These will be recorded in the 2012 Annual Financial Statements and
payment will be made on 20 February 2012 to shareholders registered on 17 February 2012.
No Secondary tax on companies is payable as the company has received more dividend income than the amount
of the dividend declared.
6. Employee Costs
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
136 087
132 335
–
–
5 174
4 563
–
–
– Defined benefits
6 606
6 299
–
–
– Defined Contribution
3 653
2 421
–
–
152
2 275
–
–
– full time (number)
883
836
–
–
– part time (number)
49
47
–
–
Wages, salaries and reimbursive amounts
Social security costs
Pension, provident fund contributions
Termination benefits paid
Average number of persons employed by the group
during the year
The above costs have been included in either manufacturing or other operating expenses.
7. PROPERTY PLANT AND EQUIPMENT
Group 2011
Net Book
Cost/Book value
Cost at
Additions for
Disposals for Cost at
value
R000
30 Sept 10
the year
Reclassification the year 30 Sept ‘11 30 Sept ‘11
Land
Buildings
4 064
–
–
–
4 064
4 064
36 931
4 711
–
–
41 642
41 642
137 369
15 216
(38)
(1 498)
151 049
86 944
Furniture fittings & office equipment
13 480
1 187
67
(670)
14 064
2 301
Motor vehicles
21 430
3 103
(29)
(1 668)
22 836
8 700
Capitalised leased assets
19 945
-
–
–
19 945
15 010
1 990
377
–
–
2 367
1 041
235 209
24 594
–
(3 836)
Plant and equipment
Leasehold improvements
255 966 159 703
WINHOLD ANNUAL REPORT 2011
P A G E : 65
NOTES TO THE FINANCIAL STATEMENTS
7. PROPERTY PLANT AND EQUIPMENT (continued)
Group 2010
Net Book
Cost/Book value
Cost at
Additions for
Disposals for Cost at
value
R000
30 Sept 10
the year
Reclassification the year 30 Sept ‘10 30 Sept ‘10
–
4 064
Land
–
–
4 064
4 064
34 600
2 895
–
(563)
36 931
36 931
117 434
29 089
(7 875)
(1 279)
137 369
80 721
Furniture fittings & office equipment
12 821
1 128
(61)
(408)
13 480
2 020
Motor vehicles
21 659
2 620
(615)
(2 234)
21 430
7 986
Capitalised leased assets
22 900
36
(2 992)
-
19 944
16 805
Leasehold improvements
1 761
558
-
(329)
1990
923
215 239
36 326
(11 543)
(4 813)
Buildings
Plant and equipment
Group 2011
Depreciation
R000
235 209 149 441
Accumulated
Depreciation
Charge for Impairments
Re-
Disposals for
30 Sept 10
the year
classification
the year
Accumulated
Amortisation
30 Sept ‘11
–
–
–
–
–
–
56 648
8 611
–
(41)
(1 113)
64 105
11 470
839
–
67
(613)
11 763
13 444
2 227
–
(26)
(1 508)
14 136
Capitalised leased assets
3 139
1 795
–
–
–
4 934
Leasehold improvements
1 067
259
–
–
–
1 326
85 768
13 731
–
–
(3 234)
96 264
Land and Buildings
Plant and equipment
Furniture fittings and
office equipment
Motor vehicles
Group 2010
Depreciation
R000
Accumulated
Depreciation
Charge for Impairments
Re-
Disposals for
30 Sept 10
the year
classification
the year
Accumulated
Amortisation
30 Sept ‘10
–
–
–
–
–
–
50 713
8 239
2 000
(3 826)
(568)
56 648
office equipment
10 987
875
–
(49)
(343)
11 470
Motor vehicles
13 656
2 173
–
(379)
(2 006)
13 444
2 838
1 889
–
(1 588)
–
3 139
Land and Buildings
Plant and equipment
Furniture fittings and
Capitalised leased assets
Leasehold improvements
1 148
248
–
–
(329)
1 067
79 342
13 514
2 000
(5 842)
(3 246)
85 768
Certain property, plant and equipment with a net book value of R86 034 000 (2010: R76 297 000) are encumbered
as set out in note 17. Property comprises land and buildings. Land is not depreciated. Buildings have not been
depreciated as the estimated residual value exceeds its carrying value. Prior year net reclassifications of R5 701 000
were transferred to ‘non-current assets held for sale’.
A register of properties is open for inspection at the registered office of the company.
The company had no property, plant and equipment during the year under review.
P A G E : 66
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
8. INTANGIBLE ASSETS
Cost/Book value
R000
Trademarks and patents
Development costs
Net Book
value Cost at
Additions
Disposals
Cost at
30 Sept ‘10 30 Sept ‘10 for the year for the year
30 Sept ‘11
29
775
–
(152)
623
23
–
2 820
–
(2 820)
–
–
29
3 595
–
(2 972)
623
23
Amortisation
R000
Trademarks and patents
Development costs
Accumulated
Amortisation
Charge for
Disposals
at 30 Sept ‘10
the year for the year
600
(152)
2 820
–
(2 820)
-
3 566
6
(2 972)
600
30 872
Impairment
R000
Goodwill
Accumulated
Amortisation
at 30 Sept ‘11
6
746
Cost/Book value
Cost at R000
30 Sept ‘10
Goodwill
Net Book
value
30 Sept ‘11
Net Book
value Cost at
30 Sept ‘10 30 Sept ‘11
26 541
Impairment
as at
30 Sept ‘10
4 331
30 872
Impairment
in 2011
2 500
Net Book
value
30 Sept ‘11
24 041
Impairment
as at
30 Sept ‘11
6 831
Goodwill
The goodwill arose as a result of the acquisition of the minorities of Inmins Limited in 2002 and is allocated to the
cash generating units (CGU’s) according to their performance at the time. This goodwill represents the CGU’s ability
to generate ‘above benchmark’ future cash flows as a result of the quality of the workforce acquired, possible future
synergies and customer and supplier relationships.
The recoverable amount of a CGU is determined based on ‘value in use’ calculations. The actual performance of
the CGU for the year under review is compared to the benchmark ‘required return’ (R157 Government bond plus
a market premium of 5%) with due cognisance for specific known unusual trading conditions believed not to be
sustainable and once off items. The budgeted results for the next financial year are also considered.
The group tests annually whether goodwill has suffered any impairment, in accordance with the Group’s accounting
policies. The recoverable amounts of the CGU’s have been determined based on value in use calculations. These
calculations require the use of estimates.
If the Risk Free rate (R157) were to be increased from 6.88% to 8.88%, the impairment would have increased by
R1 000 000. If the Market premium were increased from 5% to 7%, the impairment would have increased by
R1 000 000.
WINHOLD ANNUAL REPORT 2011
P A G E : 67
NOTES TO THE FINANCIAL STATEMENTS
9. interest in Subsidiaries
Company
2011
2010
R000 R000
Investment in subsidiaries
Shares at cost
87 495
87 495
Less: Amounts written off
(1)
Investment in subsidiaries
87 494
87 494
Loans to subsidiaries
24 001
25 368
(Less) amounts provided for
(24 001)
(25 368 )
(1 )
Loans to / (from) subsidiaries
–
Net loans to subsidiaries
–
–
–
Loans from subsidiaries
(5 234)
(19 212 )
(5 234)
(19 212 )
Aggregate profits of Subsidiaries
25 845
47 180
Aggregate losses of Subsidiaries
(9 582)
(13 649 )
Refer to detailed analysis of interest in subsidiaries in note 25. Loans to subsidiaries are unsecured, bear interest at
prime and have no fixed repayment terms. Loans from subsidiaries bear interest at prime and have no fixed repayment
terms.
10. investmentS and loans in associates
Zenzele 1
Zenzele 2
Beginning of the year
1 703
562
Total
2011
2 265
1 979
Equity Income
296
(243)
53
286
Share of after tax profits
599
(168)
431
757
Dividends received
(378 )
End of the year
1 999
319
2 318
(471)
2 265
Directors’ valuation
1 999
319
2 318
2 265
(303 )
(75)
Zenzele 1 – Zenzele Industrial Supplies (Pty) Limited: 34% shareholding
Zenzele 2 – Zenzele Industrial Supplies (Mpumalanga) (Pty) Limited: 39% shareholding
Transactions with associated companies are disclosed in note 29 (related parties).
Loans to the associates (R121 000) are unsecured, interest free and have no fixed terms of repayment.
P A G E : 68
Total
2010
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
SUMMARISED INFORMATION OF ASSOCIATES
Zenzele 1
Zenzele 2
Revenue
Profit before tax
Retained income for year
Total
2011
Total
2010
14 900
23 125
38 025
31 666
2 581
307
2 888
3 268
854
868
869
Fixed assets
(15)
–
64
64
106
160
12
172
129
Current assets
9 354
1 207
10 561
12 950
Current liabilities
(3 684 )
(490)
(4 174 )
(6 819)
5 830
793
6 623
6 366
5 721
638
6 359
6 113
109
154
263
253
5 830
793
6 623
6 366
Deferred taxation
Shareholders’ funds
Long term liabilities
11. UNLISTED investments
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Held to maturity investments
Preference shares
Sinking fund deposit
(Less) short term portion
160 788
160 788
–
–
9 837
7 315
–
–
170 625
168 103
–
–
–
–
–
168 103
–
–
(32 158 )
138 467
Directors’ valuation of these investments is R 170,6 million (2010 : R168,1 million). The compulsory redeemable
preference shares (‘Prefs’) with an effective average yield of 9,6% per annum, secured by designated notes issued
by the Standard Bank of South Africa Limited. These preference shares are redeemable over periods from 2012 to
2016, see note 26.3 for repayment terms. These prefs can be ‘called’ if the subsidiaries commit an act of insolvency,
encumber or try to sell the whole or a substantial part of its assets or there is a material adverse change (in the opinion
of the lender’s auditors). Break fees also apply on a sliding scale from R662 000 (2010 : 689 000) at year end to R
nil in September 2016. The sinking fund deposits are pledged as security for loans granted by a financial institution to
operating subsidiaries.
12. ASSETS HELD FOR SALE
In the previous year, the Group discontinued its PET fabrication division of Novara Profile Extrusions. A portion of this
business unit was sold during the year under review and the remaining assets are being actively marketed. The results
of this business for the year are not material and are set out on the next page:
WINHOLD ANNUAL REPORT 2011
P A G E : 69
NOTES TO THE FINANCIAL STATEMENTS
12. ASSETS HELD FOR SALE (continued..)
Group
2011
2010
R000 R000
Non-current assets held for sale
2 616
Property, plant and equipment
5 701
Summarised results of discontinued operations during the year
9 747
Turnover
Operating profit/( loss)
(3 802 )
–
(2 000 )
Impairments
Net interest paid
8 713
302
(254 )
(2 602 )
80
(8 404 )
–
(1 359 )
80
(9 763 )
Net Profit / (loss) before taxation
Deferred taxation
Net Profit / (loss) after taxation
13. inventories
Group
Company
2011 2010
2011
2010
R000 R000
R000 R000
Inventories comprise:
Raw materials and components
18 356
16 739
–
–
Work in progress
15 743
16 270
–
–
120 948
115 238
–
–
155 047
148 247
–
–
Finished goods and merchandise
Finished goods include an impairment provision of R13 770 000 (2010: R10 101 000) for inventory that has
been fully impaired.
14. trade and other receivables
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Trade receivables
Deposits and advances
Rebates
Value added tax
Other
P A G E : 70
WINHOLD ANNUAL REPORT 2011
151 407
176 642
–
–
2 424
924
–
–
732
1 374
–
–
6 549
2 930
50
–
8 920
4 386
10
47
170 032
186 256
60
47
NOTES TO THE FINANCIAL STATEMENTS
14. trade and other receivables
The table below illustrates the aging analysis of trade receivables, impaired and provided for and net trade
receivables due and past due and not provided for:
2011
2010
Gross
Provision
Gross
Provision
trade
for Net trade
trade
for Net trade
receivables impairment receivables receivables impairment receivables
Group
R’000
R’000
R’000
R’000
R’000
R’000
Current
97 312
–
97 312
107 230
–
107 230
30 days
37 967
(454)
37 513
39 359
–
39 359
60 days
6 684
(235)
6 449
8 610
(437)
8 173
90 days
9 150
(2 620)
6 530
4 380
(203)
4 177
6 342
(2 739)
3 603
23 447
(5 744)
17 703
157 455
(6 048)
151 407
183 026
(6 384)
176 642
120 days and over
Total
The table below reconciles the movement in the provisions for impairment of trade receivables
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Balance at beginning of year
Provision for impairment
Amounts written off as uncollectable
Balance at end of year
•
6 384
5 154
–
–
4 261
3 029
–
–
(4 597)
(1 799)
–
–
6 048
6 384
–
–
Credit quality of trade and other receivables
The credit quality is assessed by reference to external credit ratings (if available) or to historical information.
The group does not hold collateral security against any trade receivables. Debtors amounting to R 49,7 million
(2010 R 28,7 million) are covered by CGIC credit insurance where the Group has only a 20-25% co-insurance
exposure, refer Note 26.2 for further detail on Credit Risk.
• Trade receivables past due and not impaired
Normal credit terms extended from 30 – 60 days. Trade receivables which exceed 60 days are considered past
due. Those considered impaired have been provided as detailed in the table above.
• Fair value of trade receivables
The fair value of trade receivables approximates their carrying value due to their current nature.
•
Cession of book debt as security for bank overdraft facilities
Receivables amounting to R58,8 million (2010: R74,7 million) have been ceded as security for banking and long
term facilities. At year end the utilisation of the bank facility amounted to R19,88 million (2010: R3,1 million), after
the set off of positive bank balances of R nil (2010: R29,5 million).
• Exposure to major customers
The group exposure to major customers is limited to listed South African Mining groups and the largest 3 exposures
at the yearend were R11,5 million. (2010: R36,6 million).
• Currency denomination
There are no material individual receivables denominated in foreign currency. Refer to note 26.4 for analysis of
exposure to foreign debtors.
WINHOLD ANNUAL REPORT 2011
P A G E : 71
NOTES TO THE FINANCIAL STATEMENTS
15. Stated CAPITAL acCount
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Authorised Share Capital
Ordinary
202 847 596 (2010: 202 847 596) ordinary shares of
no par value
Preference
75 000 (2010: 75 000). 5% redeemable
cumulative preference shares of R 2 each
4 288 101 (2010: 4 288 101) variable rate redeemable
cumulative preference shares of 1 cent each
Issued Ordinary Share Capital
126 215 131 (2009: 126 215 131) ordinary shares of
no par value in issue at year end
Less: Adjustments for 709 345 shares held by the group
Stated capital account
150
150
150
150
43
43
43
43
123 627
123 627
123 627
123 627
(834)
–
–
122 793
123 627
123 627
(834)
122 793
The unissued ordinary shares are under the control of the directors subject to the provisions of the Companies Act, until
the forthcoming Annual General Meeting. Members will be asked at the forthcoming Annual General Meeting to place
a general resolution to approve the unissued shares under the control of the directors and a special resolution to give
the directors the authority for the buy–back of ordinary shares.
16. TRADE AND OTHER PAYABLES
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Trade payables
Accrued bonuses
Accrued leave pay
116 719
133 047
–
–
5 502
9 296
–
–
6 877
6 402
–
–
Interest payable
10 721
11 138
–
–
Value added tax
1 870
3 403
–
–
20 874
20 115
2 126
1 040
162 563
183 401
2 126
1 040
Receipts in advance, and accrued operating
and other expenses
P A G E : 72
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
17. INTEREST BEARING BORROWINGS
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Non–current borrowings
Fixed interest rates
Long term bank loans
111 659
132 873
–
–
111 659
132 873
–
–
Mortgage bonds
13 592
13 993
–
–
Suspensive sale contracts
35 335
34 166
–
–
3 683
6 944
–
–
Variable interest rates
Finance lease contracts
Total non–current
52 610
55 103
–
–
164 269
187 976
–
–
21 214
5 583
–
–
21 214
5 583
–
–
Current
Fixed interest rates
Current portion of: long term bank loans
Variable interest rates
Current portion of: Mortgage bonds
1 760
1 768
–
–
Suspensive sale contracts
5 000
8 567
–
–
Finance lease contracts
3 304
3 104
–
–
37 448
18 477
–
–
47 512
31 916
–
–
68 726
37 499
–
–
232 995
225 475
–
–
Bank overdraft and cash reserve offset (net)
Total current
Total interest bearing borrowings
The borrowings disclosed above include secured liabilities as follows:
•
The long term bank loans, bear interest at a fixed rate of 10,55% per annum, are secured by unlisted held-to-maturity
investments and are repayable in increasing annual installments until February 2016. Further details of the repayment
profile are set out below and in the ‘liquidity risk’ note (note 26.3). Refer also to the note on Investments (note 11).
The amount paid in 2011 was R5 583 000 (2010: R5 583 000). Further details with respect to these bank loans are available
at the registered office of the company.
• Mortgage bonds are secured by land and buildings with a book value of R 33 911 000 (2010: R29 118 886),
bear interest at rates linked within 1% of prime, repayable in present monthly installments of R246 000 (2010: R249 188).
• Suspensive sale contracts are secured by plant, equipment and vehicles with a book value of R 20 247 000 (2010:
R47 178 000), bear interest at rates generally linked within 1% of prime, and are repayable in monthly installments of
R585 000 (2010: R844 000), inclusive of interest.
• Finance lease contracts are secured by equipment with a book value of R15 009 000 (2010: R16 577 000), are repayable
in monthly installments of R310 000 (2010: R 275 000) inclusive of interest at rates linked within 1% of prime.
• Bank overdrafts bear interest at commercial bank prime rates.
Some of these overdrafts are secured by a cession of book debts as set out in note 14.
• In terms of the articles of association the borrowing powers of the directors are unlimited.
WINHOLD ANNUAL REPORT 2011
P A G E : 73
NOTES TO THE FINANCIAL STATEMENTS
17. INTEREST BEARING BORROWINGS (continued)
The capital portion of the interest bearing borrowings are repayable as follows:
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Banking facilities (demand)
37 448
18 477
–
–
Between 0 to 6 months
26 432
12 672
–
–
Between 6 – 12 months
4 845
6 350
–
–
Between 1 and 2 years
34 193
33 724
–
–
Between 2 and 5 years
122 011
117 203
–
–
8 066
37 049
–
–
232 995
225 475
–
–
Over 5 years
18. other liabilities
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Post retirement medical aid obligations
1 181
1 083
–
–
Post retirement medical aid obligations represent the present value of amounts payable to 3 pensioners and their
dependants as a result of a past business acquisition. Where employees do exist with post-retirement medical aid benefits
these are identified and actuarially valued on a regular basis. Liabilities based on these evaluations are recognised in
the balance sheets and are not funded. Expenses relating to employee services rendered during the subsequent periods
are expensed in the income statement, and the balance sheet liabilities are increased correspondingly.
Due to the application of the group policy (not to provide such post-retirement medical aid benefits), attrition of time
will eventually expunge the liabilities for such benefits. Current group policy is not to provide post-retirement medical
aid benefits, except in limited cases where a group of employees with such conditions of employment exist in new
businesses acquired. In future acquisitions where post-retirement medical aid benefits exist, adequate provision will
be made for the existing liability in the transaction. In such cases new employees in the relevant operations will not be
employed with such post-retirement medical aid benefits.
19. DEFFERED INVESTMENT REVENUE
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Preference dividends received in advance
19 562
14 824
–
–
20. Provisions
Opening
balance
R000
Additional
Used
Closing
provision during yearbalance
R000
R000
R000
2011
Provisions for audit and other expenses
3 635
2 719
(2 827)
3 527
3 991
4 053
(4 409)
3 635
2010
Provisions for audit and other expenses
The majority of the provisions will be paid out in the first 6 months of the new year.
P A G E : 74
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
21. pension FUND
The group provides retirement benefits through pension and / or provident funds. Post-retirement benefits for
permanent employees are provided as follows: 34% (2010: 34%) of group employees are members of the Winhold
Group Pension Fund and remaining employees belong to statutory or union retirement plans being the Industrial
Council Pension / Provident Funds or the Chemical Industries National Provident Fund. In respect of remaining
employees the group has no further material liability after payment of the required contributions to these funds. The
Winhold Group Pension Fund is a defined benefit plan on an average of highest 3 years salary basis which is subject
to the Pensions Funds Act. The assets of the fund are held separately from the group’s assets in a dedicated trustee
administered fund which is valued by independent professionally qualified actuaries.The actuarial valuation for the
year ended 30 September 2011, reflects the following:
2011
2010
Actuarial Assumptions Used
Discount rate per annum
8,60%
7,98%
Expected return on plan assets per annum
8,60%
7,98%
6,15 – 14,9%
5,37 – 14,10%
Future pension increases per annum
2,74%
2,28%
Consumer price inflation rate
6,15%
5,37%
306
304
(based on R186 Government Bond)
Future salary increases (varies, age related)
Membership
Active members
• Number
• Average age in years
Total annual pensionable salaries (R000)
48,3
48,6
56 825
50 707
94
96
66,4
65,22
2 754
2 523
Beneficiaries of pensions (*)
• Number
• Average age in years
Total annual pensions (R000)
(*) The total number of beneficiaries includes spouses and children which reduces the average age by 5 years
2011
R000
2010
R000
2009
R000
2008
R000
Defined benefit retirement plan reconciliation
Present value of obligations
Fair value of plan assets
Contingency reserve
Surplus value of the plan
Adjustment for unrecognised actuarial loss included in the
surplus value of the plan
Unrecognised past service costs
Benefit asset per actuarial valuation
Benefit asset recognised
(118 139 ) (105 868 ) (114 227 ) (97 023 )
133 597
121 970 130 384 121 762
(15 458 )
(16 102 ) (16 157 ) (18 008 )
6 731
–
–
–
23 350
–
23 350
–
22 665
–
22 665
–
19 282
–
19 282
–
12 162
–
18 893
–
WINHOLD ANNUAL REPORT 2011
P A G E : 75
NOTES TO THE FINANCIAL STATEMENTS
21. pension FUND (continued)
2011
R000
2010
R000
2009
R000
2008
R000
Movement in the benefit asset over the year is as follows:
Balance at beginning of the year
Total contributions
Current service costs
Cost of risk benefits, expenses, actuarial adjustment
Benefit payments made
Interest cost on benefit obligation
Assumed return on plan assets
Transition asset recognised
Balance at end of the year
22 665
10 099
(6 975 )
(8 279 )
7 166
(8 441 )
7 251
(136 )
23 350
19 282
9 839
(6 679 )
(32 240 )
30 946
(9 007 )
10 524
–
22 665
18 893 12 715
9 162
9 696
(6 265 ) (8 385 )
–
(5 385 )
–
–
(9 589 ) (7 831 )
11 932 11 592
1 640
–
19 282 18 893
Roll forward of accumulated actuarial loss
Balance at beginning of year
Actuarial loss / (gain) on return on plan assets
Actuarial (gain) / loss on pension obligations
Adjustment experience gain on contingency reserve
Balance at End of Year
Employers’ best estimate of next year contributions
22 665
2 711
(2 026 )
–
23 350
10 100
19 282
(3 123 )
6 901
(395 )
22 665
10 330
(446 )
12 162
4 485
6 952
8 123
2 020
–
(1 852 )
19 282 12 162
9 700
9 800
The fund is fully funded. The actuarial (loss) / gain on return on plan assets was calculated as the difference between
the actual net investment return and the assumed investment return. During the valuation period, the investment
gain was R7 251 000, (2010: R13 647 000) compared to the assumed investment return of R9 962 000 (2010:
R10 524 000). The R2 026 000 (2010: R6 901 000) actuarial loss on pension obligations is the effect of the change
in actuarial valuation assumptions over the previous valuation report. The combination of these resulted in a net
actuarial loss of R685 000 which has been taken into consideration in the determination of the surplus value of the
plan at 30 September 2011.
Analysis of the actuarial value assets making up the fund investments
2011
2010
Cash and cash equivalents
12 472
13 578
Equity securities
81 027
69 421
Bonds
28 239
31 352
Property
Fund of hedge funds
Actuarial loss carried forward
Fair value of plan assets
–
–
13 828
12 143
(1 969)
(4 524)
133 597
121 970
Regulation 28 of the Pensions Fund Act (1956 as amended) regulates the maximum allocation of assets to any asset
category. The Pensions fund is in compliance with this regulation
22. Commitments and Contingent Liabilities
Operating lease commitments comprise mainly property rentals of the Inmins branches and rentals of photocopiers,
faxes and office equipment. No material ‘contingent’ lease obligations exist and no material lease restrictions have
been agreed to and no contingent lease obligations exist.
P A G E : 76
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
22. Commitments and Contingent Liabilities (continued)
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
0 to 6 months 2 446
2 997
–
–
6 to 12 months
2 390
2 843
–
–
Between 1 and 2 years
3 963
3 905
–
–
Between 2 and 5 years
3 905
4 187
–
–
–
–
–
–
12 704
13 932
–
–
Greater than 5 years
Total operating lease commitments
Contingent liabilities and other commitments
As reported in the previous year, The Commissioner of Taxes in Swaziland issued ‘estimated assessments’ in March
2010 against Swazi Plastics Industries (Pty) Ltd of R8,1 million as a result of tax returns not being submitted and
extensions not being applied for. Interest is being charged on these ‘estimated assessments’ at the statutory (non
deductable) rate of 18% since this date. The business of this company was sold to a new company as part of the 2006 BEE transaction
and management is negotiating with the Commissioner to have these estimated assessments reversed. The timing of the resolution
of this is uncertain.
Group capital commitments at year end amounted to R 1 241 000 (2010: R4 700 000) and relates to plant upgrades and
vehicles (2010: building upgrades and vehicles) for existing operations. The group has distributable reserves of R130 757 000
(2010: R126 979 000)) which, if declared, as a dividend, would attract secondary tax on companies (excluding any STC credits
available) of R16 335 000 (2010: R15 872 000) at current enacted rates.
The company has contingent liabilities in respect of sureties signed respect of specific asset based funding to one
of the company’s subsidiaries. Amounts outstanding at the year end onthese banking facilities amounted to
R6 986 000 (2010: R10 327 000). No cash outflows are currently expected on these guarantees.
23. segmental information
Business segments
R000
Revenue
Operating profit
Investment income
Mining
consumables
Industrial
consumables
Flexible
plastics
Property
and other
2011
2010
2011
2010
2011
2010
2011
2010
280 913
327 835
133 965
140 167
567 625
554 203
7 805
8 713
12 197
2 867
4 813
27 091
34 427
1 732
–
–
–
–
–
15 556
(3 644 )
–
(210 )
15 556
Total
2011
2010
990 308 1 030 918
28 046
51 227
15 556
15 556
Depreciation and
amortisation
(981 )
Impairments
2 500
Taxation
(1 804 )
Capital expenditure
Total assets
Total liabilities
(919)
(621)
(686)
(11 983)
–
–
–
–
1 524
(845)
(815)
(2 154)
(10 641)
–
(2 993)
(152 )
–
(106 )
(1 392 ) (13 737 )
(13 638 )
2 000
2 500
2 000
(2 901 )
(1 301 )
(8 233 )
1 330
800
513
449
22 641
34 783
294
24 594
36 326
110 866
125 471
49 480
45 047
328 569
313 010
207 296 219 177
696 211
702 705
67 758
54 251
26 577
17 174
194 418
201 007
135 536 162 178
424 289
435 313
110
The business segments of the Winhold Group are split as follows, based on the nature of the market being serviced and, therefore
the risks associated with the business segment:
Mining consumables – predominantly consumable goods supplied mainly to the gold/coal/platinum mining industry,
by the Inmins Group.
Industrial consumables – consumable goods supplied to general industry by the Inmins Group.
Flexible plastics – consists of polyethylene bags, sheeting and packaging, manufactured and distributed by the
Gundle Group to the agricultural, chemical, construction, food processing, industrial and
consumer markets.
Other – includes property companies and group related items.
Impairments comprise goodwill refer note 8 (2010: Fixed assets impairments, refer note 7).
Geographical analysis has not been included as the group’s activities outside Southern Africa are not material.
No material intersegment transactions occured between reportable segments.
WINHOLD ANNUAL REPORT 2011
P A G E : 77
NOTES TO THE FINANCIAL STATEMENTS
24. Financial Instruments
There have been no substantial changes in the group’s exposure to financial instrument risks, its objectives, policies
and processes for managing these risks or the methods used to measure them from the prior period.The accounting
policies for financial instruments have been applied to the line items below:
Financial Instrument Assets
Loans and
(R000)
Receivables
Fair value
Fair value
through
through
profit and
profit and
loss held for loss
Held to Available
trading
designated maturity for sale
Total
Group 2011
Investments
170 625
–
–
–
–
170 625
Trade and other receivables
170 032
–
–
–
–
170 032
8 565
–
–
–
–
8 565
349 222
–
–
–
–
349 222
Cash and cash equivalents
Group 2010
Investments
168 103
–
–
–
–
168 103
Trade and other receivables
186 256
–
–
–
–
186 256
Cash and cash equivalents
12 815
–
–
–
–
12 815
367 174
–
–
–
–
367 174
60
–
–
–
–
60
278
–
–
–
–
278
338
–
–
–
–
338
47
–
–
–
–
47
104
–
–
–
–
104
151
–
–
–
–
151
Company 2011
Trade and other receivables
Cash and cash equivalents
Company 2010
Trade and other receivables
Cash and cash equivalents
Financial Instrument Liabilities
Fair value
Fair value
through
through
Liabilities at
profit and
profit and
R000
amortised cost loss – held for trading loss designated
Total
Group 2011
Interest bearing borrowings
(excluding bank overdraft)
Other Liabilities
Trade and other payables
Bank overdraft
195 507
–
–
195 507
1 181
162 563
37 488
396 739
–
–
–
–
–
–
–
–
1 181
162 563
37 488
396 739
206 998
–
–
206 998
1 083
183 441
18 477
409 999
–
–
–
–
–
–
–
–
1 083
183 441
18 477
409 999
Group 2010
Interest bearing borrowings
(excluding bank overdraft)
Other liabilities
Trade and other payables
Bank overdraft
P A G E : 78
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
Financial Instrument Liabilities (continued)
R000
Fair value
through
Liabilities at
amortised
cost
Fair value
through
profit and
loss – held for trading
profit and
loss
designated
Total
Company 2011
Interest bearing borrowings
Loans from subsidiaries
Trade and other payables
–
5 234
2 126
7 360
–
–
–
–
–
–
–
–
–
5 234
2 126
7 360
–
19 212
1 040
20 252
–
–
–
–
–
–
–
–
19 212
1 040
20 252
Company 2010
Interest bearing borrowings
Loans from subsidiaries
Trade and other payables
Fair value
There is no material difference between the carrying value and the fair value of financial instruments.
The fair value of the above assets and liabilities all fall within category 3 “not based on observable market data”.
25. ANALYSIS OF INTEREST IN Subsidiaries
Issued
share capital
Shares
at cost
2011
2010
2011
R000
Amounts owing
by/(to) subsidiaries
2010
R000
2011
R000
2010
R000
Held by Company
Inmins Limited
20 056 071
20 056 071
68 642
68 642
–
(6 729)
Gundle Limited
45 389 983
45 389 983
18 850
18 850
(2 032)
(8 754)
1 000
1 000
–
–
–
100
100
2
2
–
5 000
5 000
–
–
(3 202)
(3 729)
87 494
87 494
(5 234)
(19 212)
4
4
1 136
1 136
22 614
Novara Profile Extrusions
Secotrade 5
Winhold Management Company
Total all Subsidiaries
–
–
Held by Subsidiaries
Inmins Properties
4 000
4 000
Inmins Trading (74.9%)
1 000
1 000
–
–
19 449
100
100
17
17
1 849
Gundle Properties
2 800
2 800
1 505
1 505
(3 624)
(3 624)
Gundle Plastics Group (74.9%)
1 000
1 000
1
1
25 658
19 991
Gundle Woven
120
120
–
–
–
Gundle Multi–Sack
100
100
2 161
2 161
(1 594)
(1 594)
Plastics International Limited #
100
100
–
–
17 236
17 236
Gundle Geo–Synthetics (85%)
(1 993)
–
Unless otherwise stated all companies above are unlisted, (Proprietary) Limited and 100% held.
# Incorporated in Swaziland.
Only details of those subsidiaries which are material in terms of the financial position or results of the company are disclosed.
Dormant companies are excluded. Full details of all companies in the group may be obtained at the registered office.
WINHOLD ANNUAL REPORT 2011
P A G E : 79
NOTES TO THE FINANCIAL STATEMENTS
25. ANALYSIS OF INTEREST IN Subsidiaries
2011
R000
2010
R000
Group profit attributable to equity holders of the parent includes:
– Aggregate profits of subsidiaries
25 845
47 180
– Aggregate losses of subsidiaries
(9 582 )
(13 649 )
26. RISK MANAGEMENT
The group’s activities expose it to a variety of risks, including interest rate riks, credit risk, liquidity risk, foreign exchange risk
and supplier risk.
26.1) Interest Rate Risk
The group’s interest rate risk arises from borrowings and bank overdrafts. Due to the fact that certain borrowings are
linked to the prime overdraft rate, changes in the interest rate could have a material effect. The group manages its
interest rate exposure by ensuring all interest bearing borrowings are at or below market rates, or by fixing the rates at
favorable terms. If interest rates on variable rate borrowings changed by 1% at the applicable rate at year end, with all
other variables held constant, the impact on post tax profits would be R726 000 (2010: R627 000). Details and capital
maturity profiles of the interest borrowings are detailed in note 17.
26.2) Credit Risk
Credit risk arises on amounts receivable from trade and other debtors, investments, and cash equivalents deposited with
banks. Credit facilities are given to a large number of customers, resulting in a spread of credit risk. Although in the Inmins
Trading (Pty) Limited subsidiary the majority of debtors are in the mining industry, management is of the opinion that no
material concentration of risk exists. Management evaluates credit risk relating to customers on an on-going basis, and if
customers are independently rated, these ratings are used. If there is no independent rating, group businesses assess the
credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits
are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit is regularly
monitored, and, in certain cases, credit guarantee policies are purchased.
Exposure to three largest customers
Sales to customer Outstanding at
2011
2010
2011
2010
R000
R000
R000 R000
Mining Group 1
66 012
78 651
3 507
9 828
Mining Group 2
30 710
29 071
3 475
3 542
Mining Group 3
Total
29 233
73 203
4 522
23 238
125 955
180 925
11 504
36 608
The group only deposits funds with major banks with high quality credit standing and limits its exposure to any one
bank. Investments compromise compulsory redeemable preference shares secured by designated notes issued by the
Standard Bank of South Africa Limited, and is considered by management to be risk free. (refer to note 11).
Financial Assets exposed to credit risk at year end were as follows:
Group
Company
2011
2010
2011
2010
R000
R000
R000 R000
Cash and cash equivalents
Trade and other receivables
8 565
12 815
170 032
186 256
60
47
178 597
199 071
338
151
278
104
26.3) Liquidity Risk
Liquidity risk is where the group has insufficient funds available to settle its liabilities and borrowings on due date.
The group manages liquidity risk through an on-going review of its future commitments and of the facilities available
from banking institutions. The following table analyses the group financial liabilities (including unearned finance charges)
into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date.
P A G E : 80
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
26. RISK MANAGEMENT (continued)
0 – 6
6 – 12
Between 1 & Between 2 &
Over
months
months
2 years
5 years
5 years
R000 R000
R000
R000
R000
Group 2011
Long term bank loans
37 824
–
38 522
109 425
–
Mortgage bonds
1 476
1 477
4 503
7 223
6 456
Suspensive sale contracts
3 136
2 867
4 826
31 570
2 763
Finance lease contracts
1 857
1 858
2 940
927
–
37 488
–
–
–
–
162 563
–
–
–
–
Bank overdrafts
Trade and other payables
Provisions
3 527
–
–
–
–
Gross liquidity risk
247 873
6 202
50 791
149 145
9 219
Preference Share Investment
(35 333 )
(36 429 )
(106 075 )
–
(9 837 )
–
Sinking Fund deposits
–
–
–
-
212 540
6 202
14 362
33 233
9 219
22 890
–
37 824
112 775
35 172
Mortgage bonds
1 495
1 495
2 991
8 736
8 716
Suspensive sale contracts
4 887
4 670
8 206
37 410
–
Group 2010
Long term bank loans
Finance lease contracts
1 871
1 871
3 742
3 897
–
18 477
–
–
–
–
183 441
–
–
–
–
3 595
–
–
–
–
Gross liquidity risk
236 656
8 036
Preference share investment
(20 294 )
Bank overdrafts
Trade and other payables
Provisions
Sinking Fund deposits
–
52 762
162 818
43 888
(35 333 )
(107 818 )
(34 586 )
–
–
–
216 362
8 036
17 429
47 685
9 302
(7 315 )
–
Company 2011
Borrowings (Capital and Interest)
–
–
–
–
–
Trade and other payables
2 126
–
–
–
–
Loans from subsidiaries
5 234
–
–
–
–
7 360
–
–
–
–
Company 2010
Borrowings (Capital and Interest)
Trade and other payables
Loans from subsidiaries
–
–
–
–
–
1 040
–
–
–
–
19 212
–
–
–
–
20 252
–
–
–
–
26.4 Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity input prices,
will 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 optimizing the return.
WINHOLD ANNUAL REPORT 2011
P A G E : 81
NOTES TO THE FINANCIAL STATEMENTS
26.4 Market Risk (continued)
The Group does not enter into interest rate and fuel oil swaps to manage its exposure to fluctuations in interest rates and the
oil price on diesel fuels. The Group does not enter into commodity contracts other than to meet the Group’s expected usage
requirements; such contracts are not settled net.
Foreign Exchange Risk
The group is exposed to foreign exchange risk in purchases that are denominated in foreign currencies, mainly US
Dollars and Euros, and associated liabilities to be settled at year end in one of these foreign currencies and a US
Dollar denominated bank account.
Foreign currency denominated sales and receivables are not material. Management has set up policies and procedures
to manage its foreign exchange risk. The Group has engaged an outsource Currency Risk Manager Alain Jaques Renard
(“AJR”) to manage its foreign exchange exposures on a risk versus time basis. AJR buys foreign currency derivatives in order
to manage foreign exchange risks when pre-set trigger levels are hit. Such transactions are carried out within the guidelines
set by the group treasury. Generally the group seeks to, when preset trigger levels are hit, apply hedge accounting in order
to manage volatility in profit or loss.
At 30 September, the group had the following foreign currency denominated liabilities/assets:
Trade Receivables Trade Payables
2011
2010
2011
2010
000
000
000 000
US Dollar
Euro
262
1 863
483
486
–
–
39
1 353
The group’s commitment to open forward exchange contracts as at 30 September 2011, was as follows :
Amount
US Dollar
Euro
751
7
Settlement dates
Average exchange rates
1 to 3 months
1 to 3 months
7.15
10.20
Excess forward cover relates to fixed and firm orders in foreign currencies, not yet a liability to the group. If foreign
exchange rates change by 10% and were applied to the outstanding balances as at 30 September 2011, with all
other variables held constant, the impact on post tax profits would be:
Strengthening
of the Rand by 10%
R000
Increase / (decrease) in post tax profits
1 053
Foreign currency exchange rates
The following exchange rates were used in the conversion of
foreign transactions at 30 September
Rand / dollar
– Closing rate
– Average rate
Rand / Euro
– Closing rate
– Average rate
P A G E : 82
WINHOLD ANNUAL REPORT 2011
Weakening
of the Rand by 10%
R000
(1 053)
2011
2010
8,02
7,10
7,00
7,44
10,86
10,10
9,44
10,10
NOTES TO THE FINANCIAL STATEMENTS
26.5. Supplier Risk
Certain large local suppliers are of strategic importance, but can be replaced in the medium term if necessary. Sasol
Limited is the only local supplier of key raw materials in the manufacture of plastic sheeting and are preferred because
of short delivery turnarounds, but the product is available from many overseas manufacturers as well.
27. CAPITAL MANAGEMENT
The board of directors’ policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence while also being able to sustain future development of the businesses. The board of directors monitors both
the demographic spread of shareholders, as well as the return capital, which the Group defines as total shareholders’
equity, excluding minority interests. The Group’s objective is to maintain a distribution cover of approximately two
times headline earnings for the foreseeable future. The methods of distribution take into account prevailing market
conditions, future cash requirements of the businesses, Group liquidity requirements, as well as capital adequacy
ratios.
The board seeks to maintain a balance between the higher returns that might be possible with higher levels of gearing
and the advantages and security afforded by a sound equity position. The Group’s target is to achieve a return on
shareholders’ interest of between 12% and 20%. In 2011 the return was 7,5% (2010: 10,4%).
From time to time the Group purchases its own shares on the market.
There were no changes in the Group’s approach to capital management during the year. Neither the company nor
any of its subsidiaries are subject to externally imposed capital requirements. The Group has principally maintained
a debt / equity ratio of 90,3%, however in a trading and services business, the debt / equity ratio is a poor measure
of the funding capacity of the Group. In order to ensure a more reflective measure of debt capacity is utilised, the
Group has adopted an interest cover target of three times. Interest cover for the year to 30 September 2011 was 1,9
times (2010 : 2,3 times).
28. RELATED PARTIES
Identity of related parties
The Group has a related party relationship with its subsidiaries, associates, joint ventures and key management.
Key management personnel have been identified as the executive and non-executive directors of the company.
The definition of key management includes the close family members of key management personnel and any other
entity over which key management exercises control. Close family members are those family members who may
be expected to influence, or be influenced by that individual in their dealings with the Group. This may include the
individual’s domestic partner and children, the children of the individual’s domestic partner, and dependents of the
individual or the individual’s domestic partner.
Transactions with key management personnel
Directors of the company and their immediate relatives beneficially control 45,9% (2010:45,5%) of the voting shares
of the company.
Independent non-executive directors do not participate in the Group’s profits. The Group has no share option, share
purchase schemes or conditional share awards schemes.
Details pertaining to executive directors’ remuneration are set out in the Remuneration Report on pages 34 to 35.
The Group encourages its employees to purchase goods and services from Group companies. These transactions
are generally conducted on terms no more favorable than those entered into with third parties on an arm’s length
basis, although in some cases nominal discounts are granted. Transactions with key management personnel are
conducted on similar terms. No abnormal or non-commercial credit terms are allowed, and no impairments were
recognised in relation to any transactions with key management personnel during the year, nor have they resulted in
any non-performing debts at year-end.
Similar policies are applied to key management personnel at subsidiary level who are not defined as key management
personnel at Group level.
Certain of the directors of the Group are also non-executive directors of other public companies which may transact
with the Group. The relevant directors do not believe they have significant influence over the financial or operational
policies of those companies. Those companies are thus not regarded as related parties.
The following transactions were made on terms equivalent to those that prevail in arm’s-length transactions between
subsidiaries of the Group and key management personnel (as defined above) and / or organisations in which key
management personnel have significant influence. Balances between related parties are disclosed in note 25.
WINHOLD ANNUAL REPORT 2011
P A G E : 83
NOTES TO THE FINANCIAL STATEMENTS
28. RELATED PARTIES (continued)
GROUP
2011
2010
R000
R000
Transactions with key management personnel
Sales and services provided by the Group
–
–
Outstanding amounts due to the Group at year-end included in trade receivables
–
–
Outstanding amounts due by the Group at year-end included in trade payables
–
–
Guarantees issued
–
–
3 628
7 581
–
–
121
121
–
–
Transactions with associates
The following transactions were made on terms equivalent to those that prevail
in arm’s-length transactions between subsidiaries and associates of the Group:
• Sales and services provided by the Group
• Purchases
• Outstanding amounts due to the Group at year end included in advances to associates
• Guarantees issued
Details of effective interest, investments and loans to associates are disclosed in
note 10.
company
2011
2010
R000
R000
Related party transactions in the company during the year were:
Interest paid to:
Winhold Management Company (Pty) Limited
361
386
Gundle Limited
304
410
Gundle Plastics Group (Pty) Ltd
406
Interest received from: Novara Profile Extrusions (Pty) Limited
–
211
(1 713 )
29. ACCOUNTING ESTIMATES & JUDGEMENTS
The boards of directors has considered the Group’s critical accounting policies, key sources of uncertainty and where
critical accounting judgments were required in applying the Group’s accounting policies.
Critical accounting policies
The audit committee is satisfied that the critical accounting policies are appropriate to the Group.
Accounting policies
Estimates made in the application of IFRS that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below:
Trade receivables and loans receivable
The Group assesses its trade receivables and loan receivable for impairment at each balance sheet date. In determining
whether an impairment loss should be recorded in the income statement, the Group makes a judgment as to whether
there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.
Management identifies impairment of trade receivables on an ongoing basis.
P A G E : 84
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
An impairment allowance in respect of doubtful debts is raised against trade receivables when their collectability is
specifically considered to be irrecoverable.
Management believes that the impairment adjustment is conservative and there are no significant trade receivables
that are doubtful and have not been impaired or allowance provided for. In determining whether a particular
receivable could be doubtful, the age, customer’s current financial status and disputes with the customer are taken into
consideration. (Refer to note 14)
Allowance for slow moving, damaged and obsolete inventories
Inventories are assessed on a continuous bass in order to ensure that it is correctly valued at the lower cost and
net realisable value. A provision is made against inventories when it is determined to be incorrectly valued as a
consequence of changes in market conditions or it is considered to be damaged or un-useable. Write downs are
included in cost of sales. (Refer to note 13)
Impairment testing
Management used their judgment and applied the internal and external impairment indicators to investments and
property, plant and equipment. No impairment indicators were identified and as such the recoverable amounts of the
aforementioned assets were not calculated. The recoverable amounts of cash-generating units and individual assets
have been determined based on the higher of value-in-use calculations and fair values. These calculations require the
use of estimates and assumptions.
The Group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the
carrying amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets
are Grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets
and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected cash
flows for each Group of assets. Expected future cash flows used to determine the value-in-use of goodwill and tangible
assets are inherently uncertain and could materially change over time. They are significantly affected by a number of
factors including, but not limited to, entity specific variables, i.e. Production estimates, supply and demand, together
with economic factors such as exchange rates, inflation, interest and commodity prices.
Property, plant and equipment
The Group depreciates its assets over their estimated useful lives taking into account residual values, where appropriate.
In terms of IAS 16 – Property, Plant and equipment, the appropriateness of the Group’s assets estimated useful lives
is reassessed annually. The actual lives of these assets and their respective residual values may vary depending
on a variety of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and
maintenance programs are taken into account. Future reviews of estimated useful lives are not expected to result in a
significant adjustment to future depreciation charges and are limited to the extent of changes to the abovementioned
factors, namely technological innovation, product life cycles and maintenance programs. (Refer to note 7).
Deferred taxation
Deferred tax is provided for on a basis that is reflective of management’s intention at year end relating to the expected
manner of recovery of the carrying amount of the asset, i.e. sale or use. This manner of recovery affects the rate used
to determine the deferred tax liability. (Refer to note 3).
Income taxes
Judgment is required in determining the provision for income taxes. There are many transactions and calculations
for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises
liabilities for anticipated tax audit issues based on estimates of whether and when additional taxes will be due. Where
the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will
impact the income tax and deferred tax provisions in the period in which such determination is made. (Refer to note 3).
Impairment of goodwill
The Group has assessed the carrying value of goodwill to determine whether any of the amounts should have been
impaired. The carrying values were assessed using price earnings methods, the forecasts for future years. (Refer to
note 8).
WINHOLD ANNUAL REPORT 2011
P A G E : 85
NOTES TO THE FINANCIAL STATEMENTS
Investments
The Group reflects its held-for-trade and available-for-sale investments at fair value. The directors’ value of unlisted
investments was determined using a combination of discounted cash flow, net asset value and price earnings methods.
(Refer to note 11).
Post-retirement obligations
The Group provides retirement benefits for certain of its permanent employees through pension’s funds with defined
benefit and defined contribution categories. Actuarial valuations are based on assumptions which include the discount
rate, inflation rate, salary increase rate, expected return on plan assets and the pension increase allowance rate.
(Refer to note 20). A fully provided Post Retirement Health Care provision is maintained and updated annually by
external actuaries (Refer note 18).
30. DETERMINATION OF FAIR VALUE
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial
and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure
purposes based on the following methods. Where applicable, further information about the assumptions made in
determining fair values is disclosed in the notes specific to that asset or liability.
Intangible assets
The fair value of intangible assets is based on the above expectation earnings multiples of current earnings adjusted
for non recurring items . (Refer to note 8).
Investments
Fair value of listed investments is calculated by reference to stock exchange quoted selling process at the close of
business on the balance sheet date. Fair value of unlisted investments is determined by using appropriate valuation
models. (Refer to note 11).
Forward exchange contracts
The fair value of forward exchange contracts is based on their listed market prices. (Refer to note 26.4).
Borrowings
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal
and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market
rate of interest is determined by reference to similar lease agreements. The carrying value of the bank overdrafts is
the fair value. (Refer to note 17).
31. CHANGES IN ACCOUNTING POLICY AND DISCLOSURE
The accounting policies adopted are consistent with those of the previous financial year, except as follows:
Standard / interpretation
Description
Effective date
IFRS 2
Amendments to IFRS 2 Share-based Payment –
vesting conditions and cancellations
July 1 2010
IAS 24 (revised)
Related party: Disclosure
July 1 2010
IAS 32 (revised)
Financial Instruments
July 1 2010
IFRIC 14
The limit on a Defined Benefit Asset, Minimum Funding
Requirements and their interaction
July 1 2010
IFRIC 19Extinguishing Financial Liabilities
with Equity Instruments
July 1 2010
IASB 2009
Annual Improvement Project
September 30 2010
P A G E : 86
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
IFRS 2
The amendment requires an entity that receives the goods or services (receiving entity) in either equity or cash settled
share-based payment transaction to account for the transaction in its separate or individual financial statements. This
applies even if another Group entity or shareholder settles the transaction (settling entity) and the receiving entity
has no obligation to settle the payment. The entity that has the obligation to settle the transaction will account for the
arrangement as equity-settled if it has to settle with its own equity instruments. Any other settlement arrangement will
be accounted for as cash settled. The amendment did not impact the Group’s results significantly; no restatement of
comparatives is required.
IAS 24 (revised)
IAS 24 addresses the disclosure requirements in respect of related parties, with the main changes relating to the
definition of a related party. The definition of a related party has been amended with the result that a number of new
related-party relationships have been identified. This amendment did not affect the Groups results significantly.
IAS 32 (revised)
The amendment clarifies that rights, options, or warrants to acquire a fixed number of the entity’s own equity instruments
for a fixed amount of any currency are equity instruments (and not financial liabilities) if the entity offers the rights,
options, or warrants pro rata to all of its existing owners of the same class of its own non-derivative equity instruments.
This amendment did not affect the Groups results significantly.
IFRIC 14
The amendment applies in limited circumstances when an entity is subject to minimum funding requirements and
makes an early payment of contributions to cover those requirements. The amendment permits such entity to treat the
benefit of such early payment as an asset. This amendment did not affect the Groups results significantly.
IFRIC 19
IFRIC 19 addresses the accounting treatment for the extinguishment of financial liabilities with equity instruments.
Equity instruments issued to a creditor to extinguish all or part of a financial liability would represent ‘consideration
paid’. The equity instruments will be measured on initial measurement at their fair value, unless such fair value cannot
be reliably measured, in which case the fair value of the financial liability will be used. The difference between the
carrying amount of the financial liability (or part thereof) extinguished and the initial measurement amount of the
amount of the equity instruments shall be recognised in profit or loss. The interpretation is not expected to impact the
Group’s results significantly.
IASB 2009 annual improvements project
The amendments embodied in the IASB 2009 improvement project are effective for the Group for the year ending 30
September 2011.
As part of its annual improvements project, the International Accounting Standards Board (IASB) made amendments
to a number of accounting standards. These amendments were primarily made to resolve conflicts and remove
inconsistencies between standards, clarify the status of application guidance in standards, clarify existing IFRS
requirements, as well as confirming that the terminology used in standards with that used in other standards and to
those more widely used. This amendment did not affect the Groups results significantly.
WINHOLD ANNUAL REPORT 2011
P A G E : 87
NOTES TO THE FINANCIAL STATEMENTS
32. ACCOUNTING STANDARDS AND INTERPRETATIONS NOT EFFECTIVE AT 30 SEPTEMBER 2011
At the date of the annual financial statements, the following new standards and interpretations that apply to the Group
were in issue but not yet effective:
Standard / interpretation
Description
IFRS 9
IFRS10
IFRS11
IFRS12
IFRS13
IAS12
IAS19
IAS24
IAS14
Financial Instruments
Consolidated Financial Statements
Joint Arrangement
Disclosure of Interests in Other Entities
Fair Value Measurement
Income Taxes: Recovery of Underlying Assets
Employee Benefits
Related Party Disclosures
The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their interaction
Effective date
January 1 2013
January 1 2013
January 1 2013
January 1 2013
January 1 2013
January 1 2012
January 1 2013
January 1 2011
January 1 2011
IFRS 9
IFRS9 addresses the initial measurement and classification of financial assets and will replace the relevant sections
of IAS39. Under IFRS9 there are two options in respect of classification of financial assets, namely, financial assets
measured at amortised cost or at fair value. Financial assets are measured at amortised cost when the business
model is to hold assets in order to collect contractual cash flows and when they give rise to cash flows that are solely
payments of principal and interest on the principal outstanding. All other financial assets are measured at fair value.
Management does not expect any significant impact on the financial results.
IFRS 10
IFRS 10 addresses the divergence arising from the control based principles in IAS27 and the risk and rewards based
approach in SIC 12, an in addition, provides greater guidance on ‘de facto’ control. Management does not expect
any significant impact on the financial results.
IFRS 11
IFRS 11 identifies two types of joint arrangements, joint operations and joint ventures, and prohibits the use of
proportionate consolidation for joint ventures. Management does not expect any significant impact on the financial
results.
IFRS 12
In order to provide greater transparency, IFRS 12 requires disclosure of the nature, risks and financial impact of
consolidated and unconsolidated entities. Management does not expect any significant impact on the financial results.
IFRS 13
IFRS 13 is a single cohesive standard consolidating the principles of fair value measurement and disclosures for
financial reporting. Fair value measurements of a non-financial asset will take into account a market participant’s
ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use. Management does not expect any significant impact
on the financial results.
IAS 12
For the purpose of measuring deferred tax, the amendments introduce a rebuttable presumption that the carrying
amount of investment property measured using the fair value model in terms of IAS 40, will be recovered entirely
through sales and thus deferred tax is raised at the capital gains tax rate.
The presumption can be rebutted if the investment property is depreciable and is held within a business model whose
objective is to consume substantially all of the economic benefits over time, rather than through sale, and where
investment property acquired in a business combination is measured using the fair value model subsequent to the
business combination. In these circumstances, deferred tax is raised at the corporate tax rate. Management does not
expect any significant impact on the financial results.
P A G E : 88
WINHOLD ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
IAS 19
The elimination of the corridor method will require entities to recognise changes in defined obligations and plan assets
immediately through other comprehensive Income. The amendments in Comprehensive Income presentation result
in the consistent treatment of changes in the defined obligation and plan assets. Management does not expect any
significant impact on the financial results.
IAS 24
IAS 24 has simplified the definition of a related party to a person or entity that is related to the entity that is preparing
its financial statements, eliminating inconsistencies which existed in the previous definition. Management does not
expect any significant impact on the financial results.
IFRIC 14
The amendment applies in limited circumstances when an entity is subject to minimum funding requirements and
makes an early payment of contributions to cover those requirements. The amendments permit such an entity to treat
the benefit of such early payment as an asset. Management does not expect any significant impact on the financial
results.
IASB 2009 and 2010 annual improvements project
The amendments embodied in the IFRS 2009 improvement project were effective for the Group for the year ending
30 September 2011.
The amendments embodied in the IFRS 2010 improvement project are effective for the Group for the year ending 30
September 2012.
As part of its annual improvements project, the International Accounting Standards (IASB) made amendments
to a number of accounting standards. These amendments were primarily made to resolve conflicts and remove
inconsistencies between standards, clarify the status of application guidance in standards, clarify existing IFRS
requirements, as well as conforming that the terminology used in standards with that used in other standards and to
those more widely used.
WINHOLD ANNUAL REPORT 2011
P A G E : 89
NOTICE OF THE ANNUAL GENERAL MEETING
WINHOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1945/019679/06)
(“the company”)
JSE code: WNH ISIN number: ZAE000033916
Notice is hereby given to shareholders that the Annual General Meeting of the shareholders of Winhold Limited will
be held in the Gundle Plastics Building, 884 Linton Jones Street, Industries East, Germiston, on 31 January 2012 at
10h00, to (1) deal with such business as may lawfully be dealt with at the meeting and (2) consider and, if deemed
fit, pass, with or without modification, the ordinary and special resolutions set out hereunder in the manner required
by the Companies Act No. 71 of 2008, as amended (‘the Companies Act’), as read with the Listings Requirements of
the Johannesburg Stock Exchange (‘JSE Listings Requirements’) on which exchange the company’s ordinary are listed,
which meeting is to be participated in and voted at by shareholders as at the record date of Tuesday, 3 January 2012.
Kindly note that meeting participants (including shareholders and proxies) are required to provide reasonably
satisfactory identification before being entitled to attend or participate in a shareholder’s meeting. Forms of
identification include valid identity documents, South African driver’s licenses and passports.
When reading the resolutions below, please refer to the explanatory notes for the resolutions on pages 90 to 94.
1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTS
The consolidated audited annual financial statements of the company and its subsidiaries (as approved by the
board of directors of the company), incorporating the report of the independent external auditors, audit
committee and directors’ reports for the year ended 30 September 2011, have been distributed as required and
will be presented.
The complete annual financial statements are set out on pages 42 to 89 of the integrated annual report.
2. ORDINARY RESOLUTION NUMBER 1–
APPOINTMENT OF AUDIT AND RISK COMMITTEE
To elect directors, by separate resolutions, to the group audit and risk committee.
ORDINARY RESOLUTION NUMBER 1.1
To re-elect Ms NP Mnxasana who is eligible and is offering herself for re-election.
ORDINARY RESOLUTION NUMBER 1.2
To re-elect Mr. PJ Kruger who is eligible and is offering himself for re-election.
ORDINARY RESOLUTION NUMBER 1.3
To re-elect Mr. DB Mostert who is eligible and is offering himself for re-election.
ORDINARY RESOLUTION NUMBER 1.4
To re-elect Mr. PC Nash who is eligible and is offering himself for re-election.
3. ORDINARY RESOLUTION NUMBER 2–
ELECTION OF DIRECTORS
To re-elect directors by separate resolutions in place of the following directors, who retire in terms of the Memorandum of Incorporation. All retiring directors are eligible and available for re-election.
P A G E : 90
WINHOLD ANNUAL REPORT 2011
NOTICE OF THE ANNUAL GENERAL MEETING
ORDINARY RESOLUTION 2.1:
To re-elect Mr. WAR Wenteler, who being eligible, is offering himself for re-election.
ORDINARY RESOLUTION 2.2:
To re-elect Mr. W Fourie who, being eligible, is offering himself for re-election.
ORDINARY RESOLUTION 2.3:
To re-elect Mr. PC Nash who, being eligible, is offering himself for re-election.
Summarised CV’s of the above directors can be seen on pages 38 and 39 of the integrated report.
4. ORDINARY RESOLUTION NUMBER 3 –
APPOINTMENT OF AUDITORS AND APPROVAL OF REMUNERATION
To confirm the re-appointment of BDO South Africa Inc., as auditors, until the conclusion of the next annual
general meeting, and to authorise the directors to approve their remuneration.
5. ORDINARY RESOLUTION NUMBER 4 –
ENDORSEMENT OF the WINHOLD REMUNERATION POLICY
That shareholders endorse, by way of a non-binding advisory vote, the company’s remuneration policy (excluding
the remuneration of the non-executive directors and the members of board committees for their services as
directors and members of committees), as set out in the integrated annual report on pages 34 to 35.
6. ORDINARY RESOLUTION NUMBER 5 – GENERAL AUTHORITY TO DIRECTORS TO
ALLOT AND ISSUE AUTHORISED BUT UNISSUED ORDINARY SHARES
That the directors be authorised as they in their discretion think fit and subject to the Memorandum of Incorporation
and the requirements of the Companies Act and the JSE listing requirements, to allot and issue the unissued
ordinary shares of the company, subject to the following:
•
•
the authority shall be valid until the date of the next annual general meeting of the company, provided it shall
not extend beyond 15 months from the date of this annual general meeting;
issues in terms of this authority will not, in any financial year, in aggregate, exceed 5% of the number of
ordinary shares in the company’s issued ordinary share capital as at 30 September 2011.
The reason for this resolution is to give the directors the ability to fund small acquisitions by the issue of shares up
to the limit indicated.
7. SPECIAL RESOLUTION NUMBER 1 –
PROPOSED REMUNERATION FOR NON EXECUTIVE DIRECTORS
To approve the proposed remuneration payable to non-executive directors from 1 April 2012, until the next
AGM, as set out in the table below:
Chairman
Deputy Chairman
Board Director
Board Director
Audit and Risk Committee Chair
Audit and Risk Committee Member
Remuneration and Nomination Committee Chairman
Remuneration and Nomination Committee Member
R 972 000 per annum (retainer)
R 103 680 per annum (retainer)
R 64 800 per annum (retainer)
R 7 650 per meeting
R 10 800 per meeting
R 7 650 per meeting
R 10 800 per meeting
R 7 650 per meeting
WINHOLD ANNUAL REPORT 2011
P A G E : 91
NOTICE OF THE ANNUAL GENERAL MEETING
The Chairman has committed to additional duties and responsibilities of at least 5 days per month over and above
board meetings and the traditional Chairman’s duties, and does not receive meeting fees.
8. SPECIAL RESOLUTION NUMBER 2 –
GENERAL AUTHORITY TO REPURCHASE SHARES
That the directors be and are hereby authorised by way of a general authority, to acquire on behalf of the
company or any subsidiary of the company, shares in the company, subject to the Rules and Listings Requirements
and the relevant provisions of the Companies Act, which general authority is subject to the following limitations:
•
Such authority is to be exercised in accordance with the Memorandum of Incorporation of the company,
•
Such authority shall not extend beyond the earlier of the date of the next annual general meeting of the
company and fifteen (15) months from the date of passing this resolution;
•
Any such acquisitions, by the company or any subsidiary of the company, shall in any one financial year not
exceed, in the aggregate, 5% of the company’s issued share capital of that class;
•
Such acquisitions shall be effected through the order book operated by the JSE trading system, and done
without prior understanding or arrangement between the company and the counterparty (reported trades
are prohibited);
•
Such acquisitions shall not be made at a price greater than 10% above the weighted average price at which
the shares were traded on the JSE for five business days preceding the transaction’s agreement date;
•
At any point in time, the company may only appoint one agent to effect any repurchase(s) on the company’s
behalf
•
The company or any subsidiary may not repurchase securities during a prohibited period as defined in the
JSE Listings Requirements save for the exemption that may be granted in terms of a published repurchase
program; and
•
A paid press announcement is to be published as soon as the company has cumulatively acquired an
aggregate of 3% of the initial number of relevant class of shares at the time of passing of this special
resolution, and for each 3% in aggregate thereafter, which announcements shall contain full details of such
acquisitions.
CONFIRMATION BY DIRECTORS
At the date of publication the directors have no specific intention to utilise this authority, which authority, if granted
will only be used if circumstances arise whereby a repurchase of own shares would be of benefit to the company.
Assuming the general authority is granted and it is decided to repurchase its own shares, the company will ensure
that its sponsor, in terms of Section 2.12 of the JSE Listings Requirements, will provide to the JSE the necessary
letter on adequacy of the working capital in terms of the JSE Listings Requirements, prior to the commencement of
any such purchase.
The directors are of the opinion that, based on the current market price of the shares, after a repurchase to the
maximum number allowed, the company and the group would for 12 months after the date of this notice be
able in the ordinary course of business to repay its debts, the assets will exceed the liabilities, and that share
capital, reserves and working capital will be adequate for ordinary business purposes.
P A G E : 92
WINHOLD ANNUAL REPORT 2011
NOTICE OF THE ANNUAL GENERAL MEETING
The reason for the abovementioned special resolution is that it may, from time to time, be in the interest of the company
or its subsidiaries to repurchase shares in the company.
The effect of the above special resolution is to grant to directors a general authority to repurchase ordinary shares of
the company subject to the limitations set out above.
As per Section 11.26(b) of the JSE Listings Requirements, shareholders are referred to the following sections in the
integrated annual report:
• details of directors on pages 38 and 39;
• directors’ interests in securities on page 48;
• major shareholders on page 47; and
• the share capital note on page 72.
There have been no material changes in the nature of the company’s trading or financial position since 30 September
2011.
9. SPECIAL RESOLUTION NUMBER 3 –
FINANCIAL ASSISTANCE TO RELATED OR INTER-RELATED ENTITIES TO THE
COMPANY
That the board of directors is authorised, in terms of and subject to the provisions of Section 45 of the Companies Act,
to cause the Company to provide financial assistance to any company or corporation that is related or inter-related
to the Company.
Reason for and effect of this Resolution
Special resolution number 3 is required in terms of Section 45 of the Companies Act to grant the directors of the
Company the authority to cause the Company to provide financial assistance to any entity which is related or
inter-related to the Company, and it will have this effect. This special resolution does not authorise the provision of
financial assistance to a director or prescribed officer of the Company.
Voting Rights
In order for this special resolution number 3 to be adopted, the support of at least 75% (seventy five percent) of the
total number of votes, which the shareholders present or represented by proxy at this meeting are entitled to cast, is
required. The quorum for the meeting is 25% (twenty five percent) of the issued share capital of the Company.
10. SPECIAL RESOLUTION NUMBER 4 –
FINANCIAL ASSISTANCE FOR SUBSCRIPTION OF SECURITIES TO RELATED OR INTER-RALATED ENTITIES TO THE COMPANY
That the board of directors is authorised, in terms of and subject to the provisions of Section 44 of the Companies Act,
to cause the Company to provide financial assistance to any subsidiary company of the Company for the subscription
or purchase of securities.
Reason for and effect of this Resolution
Special resolution number 4 is required in terms of Section 44 of the Companies Act to grant the directors of the
Company the authority to cause the Company to provide financial assistance for the subscriptions of securities to any
entity which is related or inter-related to the Company, and it will have this effect. This special resolution does not
authorise the provision of financial assistance to a director or prescribed officer of the Company.
WINHOLD ANNUAL REPORT 2011
P A G E : 93
NOTICE OF THE ANNUAL GENERAL MEETING
Voting Rights
In order for this special resolution number 4 to be adopted, the support of at least 75% (seventy five percent) of the
total number of votes, which the shareholders present or represented by proxy at this meeting are entitled to cast, is
required. The quorum for the meeting is 25% (twenty five percent) of the issued share capital of the Company.
11.SPECIAL RESOLUTION NUMBER 5 –
ADOPTION OF MEMORANDUM OF INCORPORATION
That the Articles of Association of the Company adopted by shareholders on 16 March 2000 be substituted by
the adoption of a Memorandum of Incorporation. Certain corporate governance requirements and market related
conditions have emerged which have warranted the company adopting the submitted Memorandum of Incorporation,
which has been initialed, by the Chairman of the annual general meeting for purposes of identification.
The salient features of the Memorandum of Incorporation are:
Odd-lot offers:
This clause is to provide a mechanism to facilitate the reduction in the number of registered shareholders holding in
aggregate less than 1000 shares (or such higher number as determined and/or agreed by the JSE as amounting to an
odd lot) in the company, in an equitable manner.
Dividend cheques: In recent years, Winhold has noted a significant increase in attempted cheque fraud relating to
the payment of low-value dividend cheques. This is particularly so regarding dividend cheques drawn in favour of
shareholders who have not yet dematerialised their script.
This article is accordingly aimed at limiting and/or preventing the fraudulent dealing in low-value cheques. In future,
all entitlements payable to shareholders who hold shares in certificated form or who have not yet complied with
the applicable requirements to effect payment electronically, will not be paid their dividends by way of a cheques
(unless otherwise requested in writing), but will have their dividends suppressed and retained in the company’s
unclaimed dividend account, where after it may be claimed by the shareholder in accordance with the Memorandum
of Incorporation and by submitting a written claim in the form prescribed by the directors.
The complete Memorandum of Incorporation, as amended, will lie for inspection at the company’s registered office
from 3 January 2012 to 11 February 2012.
Voting Rights
In order for this special resolution number 5 to be adopted, the support of at least 75% (seventy five percent) of the
total number of votes, which the shareholders present or represented by proxy at this meeting are entitled to cast, is
required. The quorum for the meeting is 25% (twenty five percent) of the issued share capital of the Company.
INTERPRETATION OF THIS NOTICE
All references in this notice of general meeting of shareholders to the ‘JSE Listings Requirements’ means the Listings
Requirements of the Johannesburg Stock Exchange, as amended from time to time and as interpreted and applied or
disapplied by the Johannesburg Stock Exchange.
All references in this notice of general meeting of shareholders to the ‘Company’s Act’ means the Company’s Act, No.
71 of 2008, as amended.
ANNUAL GENERAL MEETING NOTICE
The company is not party to any material litigation nor is it aware of any pending material litigation against it.
P A G E : 94
WINHOLD ANNUAL REPORT 2011
NOTICE OF THE ANNUAL GENERAL MEETING
The directors, whose names are given on pages 39 and 40 of the integrated annual report, collectively and individually
accept full responsibility for the accuracy of the information given, certify that to the best of their knowledge and belief
there are no facts that have been omitted which would make any statement false or misleading and that all reasonable
enquiries to ascertain such facts have been made and that the annual report contains all information required by the
JSE Listings Requirements, have considered the general authority to repurchase securities resolution and are of the
opinion that the shareholders should vote in favour of the resolutions.
GENERAL
To transact such other business as may be transacted at an Annual General Meeting.
VOTING AND PROXIES
Every shareholder present in person or by proxy at the Annual General Meeting is entitled to appoint a proxy (who
need not be a shareholder of the company), to attend, speak and vote in his / her stead.
Shareholders which are companies or other bodies corporate may, in terms of Section 58 (1) of the Act, by resolution of
its directors or other governing body, authorise any person to act as its representative at the Annual General Meeting.
Certificated shareholders and own name dematerialised shareholders who are unable to attend the Annual General
Meeting but wish to be represented thereat must complete and return the attached form of proxy in accordance with
the instructions contained therein so as to be received by the transfer secretaries at least 48 hours, excluding Saturdays,
Sundays and public holidays, before the Annual General Meeting.
Dematerialised shareholders, other than those with own name registration, who wish to attend the Annual General
Meeting must request their CSDP or broker to provide them with a letter of representation or must instruct their CSDP
or broker to vote by proxy on their behalf in terms of the agreement entered into between the shareholder and their
CSDP or broker.
Please note that the company intends to make provision for shareholders of the company, or their proxies, who
are entitled to attend thereat, to participate in the annual general meeting by way of electronic communication. In
this regard, the company intends making telephonic conferencing facilities available at the following South African
telephone number: 0862 000 000 using ‘pin number’ 3101#.
Should you wish to participate in the annual general meeting by way of the aforesaid teleconference, you or your
proxy, will be required to call the above mentioned telephone number 5 (five) minutes before commencement of the
meeting. The cost of the telephone conferencing described above will be for the account of the shareholder.
As identification of telephone conference participants are difficult to prove, shareholders wishing to ulitise this facility
are required to vote by proxy.
By the order of the board
GJ O’Connor
Company Secretary
28 November 2011
WINHOLD ANNUAL REPORT 2011
P A G E : 95
SHAREHOLDERS DIARY
31 January 2012
28 May 2012
26 November 2012 December 2012 February 2013
Annual General Meeting
Interim group results
Preliminary group results
Annual report Annual Report
for the period ending and dividend announcement
31 March 2012
NOTES
P A G E : 96
WINHOLD ANNUAL REPORT 2011
for the year ending
30 September 2012
Dividend payment
FORM OF PROXY
WINHOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1945/019679/06)
(“the company”)
JSE code: WNH ISIN number: ZAE000033916
For use by certificated shareholders and dematerialised shareholders with own name registration at the Annual
General Meeting of the company to be held at the Gundle Plastall Building, 884 Linton Jones Street, Industries East,
Germiston, on Tuesday 31 January 2012 at 10h00 (“the Annual General Meeting”).
I/We __________________________________________________________________________________________
of______________________________________________________________________________________________
being the holder of __________________________ ordinary shares in the company, do hereby appoint (see note 1):
1. _________________________________________________________________________________ or failing him,
2. _________________________________________________________________________________ or failing him,
3. the chairman of the Annual General Meeting
• as my/our proxy to act for me/us and on my/our behalf at the Annual General Meeting which will be held on
31 January 2012 for the purpose of considering, and, if deemed fit, passing with or without modification, the
resolutions to be proposed thereat and at any adjournment thereof; and
• to vote for and/or against the resolutions and/or abstain from voting in respect of the shares registered in my/our
name/s, in accordance with the following instructions (see note 2 overleaf):
Number of shares
One vote per share
1. 1. Election of Audit and Risk Committee by separate resolutions
1.1 NP Mnxasana
1.2 PJ Kruger
1.3 DB Mostert
1.4 PC Nash
2. 2. Election of Directors by separate resolution
2.1 WAR Wenteler
2.2 W Fourie
2.3 PC Nash
3. Re-appointment of BDO South Africa Inc., as auditors and authority to directors
to approve their remuneration
4. Approve endorsement of Winhold Remuneration Policy
5. General authority to allot and issue authorised but unissued ordinary shares
6. Special resolution 1:
To approve non-executive directors remuneration from 1 April 2011 to
the next AGM.
7. Special resolution number 2:
Authorise the repurchase of own shares by the company or its subsidiaries
8. Special resolution number 3:
s45 Financial assistance to related and inter-related entities to the Company
9. Special resolution number 4:
s44 Financial assistance for the subscription of securities to related and
inter-related entities to the Company.
10. Special resolution number 5:
Adoption of Memorandum of Incorporation.
FOR
AGAINST ABSTAIN
Please read notes overleaf.
Signed at _______________________________________________on __________________________________2012
Signature/s ______________________________________________________________________________________
Assisted by me (where applicable) ___________________________________________________________________
WINHOLD ANNUAL REPORT 2011
P A G E : 97
NOTES
1. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s
choice in the spaces provided, with or without deleting “the chairman of the Annual General Meeting”.
The person whose name stands first on the form of proxy and who is present at the Annual General Meeting
will be entitled to act as proxy to the exclusion of those whose names that follow. Only registered
certificated shareholders recorded in the main register of member of the company or under
their own name in the dematerialised register may complete a proxy or alternatively attend the
general meeting.
Those dematerialised shareholders, who are not registered under their own name, who wish to attend or
vote by proxy must contact their CSDP or broker who will furnish them with the necessary authority
to do so. This must be done in terms of the agreement between the member and his/her CSDP or broker.
2. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number
of shares to be voted on, on behalf of that shareholder, in the appropriate boxes provided.
Failure to comply with the above will be deemed to be authority to the chairman of the Annual
General Meeting, if he is the authorised proxy, to vote in favour of the resolutions at the Annual
General Meeting, or any other proxy to vote or to abstain from voting at the general meeting as he deems fit, in
respect of all the shares concerned.
3. Forms of proxy must be lodged at or posted to Computershare Investor Services (Proprietary) Limited,
Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
to be received not later than 11h00 on Wednesday 25 January, 2012.
4. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending
the Annual General Meeting and speaking and voting in person thereat to the exclusion of any proxy
appointed in terms thereof, should such shareholder wish to do so.
5. Each shareholder is entitled to appoint one or more proxies (none of whom need be a member of the company)
to attend, speak, and on a poll, vote in his stead at the general meeting.
6. The chairman of the meeting may reject or accept any form of proxy which is completed and/or
received otherwise than in accordance with these notes.
7. Documentary evidence establishing the authority of a person signing this form of proxy in a
representative capacity must be attachedtothis form of proxy unless previously recorded by the company’s
transfer secretaries or waived by the chairman of the general meeting.
8. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.
P A G E : 98
WINHOLD ANNUAL REPORT 2011
corporate information:
Incorporated in the Republic of South Africa
Registration number 1945/019679/06
Share code: WNH
Sponsor
ISIN number: ZAE000033916
Arcay Moela Sponsors (Pty) Limited
Arcay House, 3 Anerley Road Registered Office
Parktown, 2193
Winhold Limited
PO Box 62397, Marshalltown, 2107
884 Linton Jones Street
Telephone +27 11 532 4105
Industries East, Germiston, 1401
Fax +27 086 627 9056
PO Box 5324, Johannesburg, 2000
[email protected]
Telephone +27 11 345 9800
Fax +27 11 345 9881/3
Auditors
[email protected]
BDO South Africa Inc.
Riverwalk Office Park
Website
141 Matroosberg Road
www.winhold.co.za
Ashlea Gardens
Pretoria
Share Transfer
0081
Registrars
Telephone +27 11 488 1700
Computershare Investor Services
Fax +27 11 488 1701
(Pty) Limited
[email protected]
9th Floor, 70 Marshall Street
Johannesburg, 2001
Attorneys
PO Box 61051, Marshalltown, 2107
Fluxmans Inc.
Telephone +27 11 370 5000
11 Bierman Avenue
Fax +27 11 688 5248
Rosebank, 2196
www.computershare.com
Private Bag X41,
Saxonwold, 2132
Telephone +27 11 328 1700
Fax +27 11 880 2261
[email protected]
definitions:
Return on equity:
Headline earnings as a percentage of shareholders’ funds at year end.
Return on assets:
Profit after tax before associates and minorities as a percentage of total assets.
EBITDA:
Earnings before interest, tax, depreciation and amortisation.
Gearing ratio:
Interest bearing debt as a percentage of total shareholders’ funds.
Interest cover:
Number of times interest is covered by operating income.
Current ratio:
Number of times current liabilities are covered by current assets.
EMPLOYEES:
Employees include temporary employees and contract workers
www.winhold.co.za