Notes to the financial information
for the period ended 2 March 2014
1. |
Basis of preparation and accounting policies |
| The summary consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports, and the requirements of the Companies Act applicable to summary financial statements. The listings requirements require preliminary reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the consolidated financial statements from which the summary consolidated financial statements were derived are in terms of International Financial Reporting Standards and are consistent with those accounting policies applied in the preparation of the previous consolidated financial statements, except for the change in financial period cut-off date as disclosed in note 2 together with standards and amendments that became effective on 1 January 2013 namely: IFRS 10 Consolidated Financial Statements; IFRS 12 Disclosure of Interest in Other entities; IFRS 13 Fair Value Measurement; IAS 19 Employee Benefits; IAS 1 Presentation of Financial Instruments (effective 1 July 2012); IAS 28 Investments in Associates and Joint Ventures; and IAS 36 Impairment of Assets (effective 1 January 2014 - early adopted) and those listed in note 7. The standards and amendments have been applied for the first time in the Group’s financial year commencing 4 March 2013 and, other than those listed in note 7, had no material impact on the financial results. The summary consolidated financial statements have been audited by KPMG Inc., whose unqualified report is available for inspection at the registered office of the Company. The auditor's report does not cover the commentary (review of operations) and the corporate information, including the number of stores. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s work, they should obtain a copy of that report together with the accompanying financial information from the registered office of the Company. The financial information included in this report has been prepared by the Finance Division under the supervision of the Chief Finance Officer, Mr Bakar Jakoet CA(SA). |
2. |
CHANGE IN FINANCIAL PERIOD CUT OFF |
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The Group implemented a 52-week financial reporting calendar in February 2013. The 52-week financial reporting calendar reflects that turnover and gross profit is managed on a daily basis and is aggregated into 52 trading weeks of 364 days. All other items included in profit before tax (other than those included in gross profit) are managed on a calendar month basis and are not pro-rated to days or weeks. The profit for the year consists of 52 weeks of gross profit and 12 calendar months of other income and trading expenses. As a result of this change, the 2014 annual financial period began on 4 March 2013 and ended on 2 March 2014 (364 trading days). This compares to the 2013 financial period which ran from 1 March 2012 to 3 March 2013 (368 trading days). The 2013 financial period therefore included four extra days of turnover and related gross profit. Other income and expenditure between the two years is comparable, with both the 2014 and 2013 financial years reporting a full 12 calendar months of other income and trading expenses. The details and impact of the additional four days included in the comparative period is set out below. The normalised 2013 result presented below excludes four days of turnover and gross profit relating to items sold during 1 to 4 March 2012. The accounting policies applied in calculating the impact of the additional trading days are consistent with those applied in the Group’s consolidated financial statements. The tax rate applied is the effective tax rate relating to the relevant entities within the Group. The information below has been prepared for illustrative purposes only and is the responsibility of the directors and because of its nature, may not fairly present the financial position, changes in equity, results of operations or cash flows.
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| Statement of financial position In the 52-week trading calendar the reporting period will always end on a Sunday. The current and comparative period ended on similar days (2 March 2014 versus 3 March 2013) and therefore had no impact on the statement of financial position. |
3. |
RELATED PARTIES |
| During the year, certain companies within the Group entered into transactions with each other. These intra-group transactions are eliminated on consolidation. For further information please refer to the 2014 integrated annual report. |
4. |
SHARE CAPITAL
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In accordance with the memorandum of incorporation and under general authority, 92.3 million unissued shares (17.5% of the issued shares) remain under the control of the directors to implement the terms and provisions of the employee share schemes. The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at meetings of the Company. Directors’ interest in shares
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| The directors’ interest in shares is their effective direct shareholding in the Company (excluding treasury shares). | |||
5. |
OPERATING SEGMENTS
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| * | Direct deliveries are issues to franchisees directly by Group suppliers facilitated through the Group’s supply chain, these are not included in revenue on the statement of comprehensive income. |
6. |
HEADLINE EARNINGS RECONCILIATION
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7. |
RECLASSIFICATIONS |
| Other trading income | |
During the period under review, trading income previously included under cost of merchandise sold has been reclassified and disclosed separately. This has been done to improve visibility of all other trading income, specifically commissions received. The prior year has been restated to align with the current year disclosures. |
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| Provisions | |
| In order to improve disclosure, provisions previously included under trade and other payables are now presented separately. |
8. |
FINANCIAL INSTRUMENTS |
| All financial instruments held by the Group are measured at amortised cost, with the exception of derivative financial instruments and certain items included in trade and other payables. The latter is measured at fair value through profit or loss, are categorised into level 2 of the fair value hierarchy and are considered to be immaterial. Level 2 is defined as using inputs other than quoted prices that are observable for the asset or liability either directly (as prices) or indirectly (derived from prices). The carrying value of all financial instruments approximate their fair value. |