Integrated Reports Senwes Financial Review 2018 - Page 41

FINANCIAL REVIEW 18. 19. NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME CAPITAL OBLIGATIONS AND CONTINGENT LIABILITIES 18.1 Contingent liabilities 19.1 Distribution, sales and administrative expenses and disclosable items On 24 August 2017 the Competition Commission served an application on Senwes and Tradevantage as to refer alleged contraventions of the consent order between the Competition Commission and Senwes issued by the Tribunal in 2013 to the Tribunal for prosecution with a request to levy an administrative penal­ ty of 10% of Senwes’ turnover. S enwes denies any contraventions and is opposing the application. The matter is to proceed on trial which in all probability will be heard by the Tribunal in February 2019. GROUP GROUP 2018 R’m 2017 R’m 2018 R’m 2017 R’m 19.4; 23.5 (452) (374) (416) (337) 8.5 3 4 3 4 (12) (3) (13) (2) (43) (47) (43) (47) (42) (41) (40) (39) Maintenance costs (45) (41) (44) (39) Operating lease expenses (11) (10) (26) (24) Property (6) (6) (22) (20) Plant and equipment (5) (4) (4) (4) (1) (1) (1) (1) 1 1 Profit from operations is stated after the following: Decrease in provision for bad debt COMPANY 2018 R’m 2017 R’m 2018 R’m 2017 R’m 37 17 37 17 Authorised by the board but not yet contracted 149 25 149 25 Total future capital projects 186 42 186 42 18.3 Operating leases – minimum lease payments The group has certain non-cancellable operating lease obligations (fixed rental contracts) in respect of equipment and properties with an average period of between three and five years. GROUP COMPANY 2018 R’m 2017 R’m 2018 R’m 2017 R’m Within one year 2 2 2 2 More than one year and within five years 3 6 3 6 Operating lease obligation 5 8 5 8 The capital commitments and operating leases will be financed by net cash flow from operations and/or loans from financial institutions. COMPANY Notes Employee costs (including directors' costs) 18.2 Commitments in respect of capital projects Already contracted 41 Bad debt written off Water and electricity Depreciation 2 Foreign exchange loss Profit on disposal of property, plant and equipment 1 Reversal/(impairment) of property, plant and equipment (Increase)/decrease in provision for grain risk Impairment of investment Merchandise inventory provision part of cost of sales Cost of inventory recognised as an expense 1 (6) 1 1 (6) 16 (3) 14 (3) 14 5.1.4 (8) (11) (11) (56) 12 (54) (56) 14 (8 106) (8 833) (6 798) (6 096) The impairment provision was calculated based on the unrecoverable amount (Senwes’ exposure less recoverable amount of Prodist’s assets). Also included in the company total is an impairment of the loan to Thobo Trust to the value of R1 million. FINANCIAL REVIEW The investment in Hinterland Group and direct loans to Prodist are assessed annually for impairment provi- sions. Impairment provisions on these investments and loans were already recognised at group level in the previous years and therefore impairment was done only on company level of R45 million based on previous years' impairments at group level, while a further R8 million was recognised, both on company and group, due to increase in exposure since April 2017.