Integrated Reports Senwes Financial Review 2018 - Page 28

28 FINANCIAL REVIEW 4.2.2 CURRENT INTEREST-BEARING LOANS 4.2.4 GROUP Short-term loans Commodity finance Total COMPANY 2018 R’m 2017 R’m 2018 R’m 2017 R’m 1 836 149 1 572 2 1 836 149 1 572 1 1 985 1 574 BANK OVERDRAFT 1 985 1 573 Movement in financial liabilities only consist of cash flow items. GROUP Bank overdraft 4.2.5 2017 R’m 2018 R’m 2017 R’m 3 - 19 - GROUP Absa Bank: As continuing security for Senwes’ current facilities with Absa Bank Ltd (“Absa”), all rights and interest to producer debtors and their underlying security have been ceded and pledged to Absa Bank. The loan is renewable annually and the current facilities bear interest at a sub-prime-linked rate, capitalised on a monthly basis. Senwes has an Absa facility of R3 billion available and at year-end only R1,8 billion (2017: R1,6 billion) was utilised. Nedbank: A short-term loan of R125 million was granted from Nedbank during April 2018. The loan bears interest at a sub-prime-linked rate. The loan is additional to the R1 billion long term facility with Nedbank and is secured by the same assets. Refer no note 4.2.3 below. Commodity finance: The carrying value of the finance approximates the fair value of the underlying commodities. Com- modities which are pledged as security are reflected in note 9. Commodity finance bears interest at a sub-prime-linked rate and is capitalised monthly. 1 GROUP 2017 R’m 2018 R’m 2017 R’m 1 002 1 002 1 000 1 000 Movement in financial liabilities only consist of cash flow items. The group has the following non-current interest-bearing loans: A facility of R650 million with Nedbank, effective from 29 May 2015. The facility was fully utilised on 29 May 2015. This loan is repayable as a balloon payment on 1 June 2020 and bears interest at a sub-prime-linked rate. Interest is paid on a monthly basis, therefore only the capital amount will be repayable at the end of the term. A facility of R350 million with Nedbank, effective from 30 April 2015. The facility was fully utilised on 30 April 2015. This loan is repayable as a balloon payment on 1 May 2020 and bears interest at a sub-prime-linked rate. Interest is paid on a monthly basis, therefore only the capital amount will be repayable at the end of the term. Assets (silos) with a market value of R1,8 billion, set as the value of security at the bank, and carrying amount of R42 million serve as security for the above-mentioned long-term loans. The loan of R2 million is payable by JD Implemente (Pty) Ltd to the Tomlinson Family Trust. This loan is interest free, has no fixed repayment terms and is unsecured. 2018 R’m 2017 R’m 2018 R’m 2017 R’m Agri Rewards 1 37 - 37 - Creditors guarantee 2 28 - 28 - Total other financial liabilities 65 - 65 - AgriRewards is a deferred bonus scheme in terms of which Senwes will allocate a portion of its profits on an annual basis to customers to reward them for their loyalty during the year. For the 2018 financial year all grain deliveries, procurement and interest-bearing transactions at Senwes Credit qualified for the scheme. During April 2018 the board approved a reward of R50/ton (2017: R54/ton) for grain deliveries, R5/ton (2017: Rnil) for grain procurement and 0,75% of interest bearing transactions (2017: Nil%). COMPANY 2018 R’m COMPANY The AgriRewards scheme was launched during August 2016. The scheme is not automatic and customers have to register to participate. 4.2.3 NON-CURRENT INTEREST-BEARING LOANS FINANCIAL REVIEW 2018 R’m OTHER FINANCIAL LIABILITIES Short-term loans Interest-bearing loans COMPANY The accumulated AgriRewards expense was reclassified from provisions to other financial liabilities. Refer to note 16.2 for the detail on the 2017 AgriRewards provision. 2 During the year a guarantee was issued to the creditors of Prodist (Pty) Ltd. Senwes will be liable for 50% of the creditors, limited to R35 million, should Prodist default on its payment to the creditors. The risk of default was evaluated and a provision of R27,8 million was accounted for.