2019 
Rí000 
        2018 
Rí000 
   
7.   NET OPERATING ASSETS                      
7.1   Property, plant and equipment                     
    Freehold land and buildings  7 555 866        6 357 333     
       Cost  8 891 544        7 709 526     
       Accumulated depreciation and impairments  (1 335 678)       (1 352 193)    
    Leasehold premises  783 753        857 023     
       Cost  1 631 851        1 691 970     
       Accumulated depreciation and impairments  (848 098)       (834 947)    
    Plant and equipment  2 075 962        1 815 142     
       Cost  5 915 386        5 668 530     
       Accumulated depreciation and impairments  (3 839 424)       (3 853 388)    
    Office equipment, furniture and fittings  720 422        659 585     
       Cost  2 296 094        2 191 130     
      Accumulated depreciation and impairments  (1 575 672)       (1 531 545)   
   Vehicles  2 144 817        2 026 120    
      Cost  4 912 778        4 592 306    
      Accumulated depreciation and impairments  (2 767 961)       (2 566 186)   
   Capital work-in-progress  744 293        781 920    
      14 025 113        12 497 123    
 

Property, plant and equipment with an estimated carrying value of R1 146 million (2018: R1 158 million) were pledged as security for borrowings of R794 million (2018: R833 million) (refer note 10.3).

A register of land and buildings is available for inspection by shareholders at the registered office of the company.

Property, plant and equipment are reflected at cost to the group, less accumulated depreciation and accumulated impairment losses.

Land is stated at cost and is not depreciated. The present value of the estimated cost of dismantling and removing items and restoring the site in which they are located is provided for as part of the cost of the asset.

Depreciation is provided for on the straight-line basis over the estimated useful lives of the property, plant and equipment to anticipated residual values.

Estimate useful lives are:  
Freehold buildings Up to 50 years
Leasehold premises Over the period of the lease
Plant and equipment 5 to 20 years
Office equipment, furniture and fittings 3 to 15 years
Vehicles 3 to 15 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Capital work in progress includes the cost of materials and direct labour, any other costs directly attributable to bringing the item of property, plant and equipment to a working condition for its intended use. Land and assets under construction are not depreciated.

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the group.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.

    2019 
Rí000 
        2018 
Rí000 
   
Movement in property, plant and equipment                  
Carrying value at beginning of year  12 497 123          10 705 190    
Capital expenditure  2 958 758        2 328 190    
   Freehold land and buildings  703 572        283 844    
   Leasehold premises  37 336        102 103    
   Plant and equipment  434 542        287 764    
   Office equipment, furniture and fittings  121 328        125 113    
   Vehicles  413 939        491 762    
   Capital work-in-progress  1 248 041        1 037 604    
Acquisition of businesses  88 547        301 443    
   Freehold land and buildings  23 914        48 163    
   Leasehold premises  9 708        22 033    
   Plant and equipment  34 083        49 509    
   Office equipment, furniture and fittings  12 989        35 742    
   Vehicles  7 853        69 930    
   Capital work-in-progress  –        76 066    
Disposals  (125 587)       (140 463)   
   Freehold land and buildings  (75 801)       (108 000)   
   Leasehold premises  (1 008)       (722)   
   Plant and equipment  (7 408)       (12 141)   
   Office equipment, furniture and fittings  (3 574)       (2 662)   
   Vehicles  (23 008)       (16 651)   
   Capital work-in-progress  (14 788)       (287)   
Net transfers  –        –    
   Freehold land and buildings  604 118        314 600    
   Leasehold premises  59 618        28 555    
   Plant and equipment  235 177        171 263    
   Office equipment, furniture and fittings  101 481        28 180    
   Vehicles  268 905        194 690    
   Capital work-in-progress  (1 269 299)       (737 288)   
Transfer to assets classified as held-for-sale  (87 981)       (212 090)   
   Freehold land and buildings  –        (148 480)    
   Leasehold premises  (63 690)       (11 194)    
   Plant and equipment  (16 673)       (31 663)    
   Office equipment, furniture and fittings  (1 776)       (20 208)    
   Vehicles  (5 347)       (130)    
   Capital work-in-progress  (495)       (415)    
Exchange rate adjustments  (79 113)       606 789     
   Freehold land and buildings  (52 257)       297 946     
   Leasehold premises  (6 493)       56 278     
   Plant and equipment  (10 910)       82 918     
   Office equipment, furniture and fittings  (875)       35 030     
   Vehicles  (7 492)       100 249     
   Capital work-in-progress  (1 086)       34 368    
Depreciation (refer note 4.2) (1 198 642)       (1 062 695)   
Impairment losses (refer note 4.2 and note 13) (27 992)       (29 241)   
Carrying value at end of year  14 025 113        12 497 123    
Segmental capital expenditure                
  Bidfood  2 956 353        2 314 702    
    Australasia  1 210 604        618 117    
    United Kingdom  587 614        682 938    
    Europe  813 295        776 796    
    Emerging Markets  344 840        236 851    
Corporate  1 254        814    
Discontinued operations  56 620        12 674    
   PCL  1 151        4 069    
   Best Food Logistics (no capital expenditure is included in the movement schedule for 2019 as disclosed as a discontinued operation in 2018)   55 469          8 605    
   3 014 227        2 328 190    
Segmental depreciation                
Trading division                
  Bidfood  1 182 338        1 023 534    
    Australasia  246 536        224 277    
    United Kingdom  344 242        286 693    
    Europe  410 453        345 522    
    Emerging Markets  181 107        167 042    
Corporate  3 794        3 521    
Discontinued operations  12 510        35 640    
   PCL  12 510        16 284    
   Best Food Logistics (no depreciation is included in the movement schedule for 2019 as disclosed as a discontinued operation in 2018)   –          19 356    
   1 198 642        1 062 695    
           2019 
Rí000 
    2018 
Rí000 
   
7.2   Intangible assets                   
    Patents, trademarks, tradenames and other intangibles     254 155      562 019     
      Cost     749 286      1 106 568     
      Accumulated amortisation and impairments     (495 131)     (544 549)    
   Computer software     360 821      361 585     
      Cost     1 850 279      1 769 779     
      Accumulated amortisation and impairments     (1 489 458)     (1 408 194)    
   Capital work-in-progress     52 596      25 648     
         667 572      949 252     
   Movement in intangible assets                  
   Carrying value at beginning of year     949 252      907 151     
   Additions     156 023      127 383     
      Patents, trademarks, tradenames and other intangibles     650      3 765     
      Computer software     127 597      115 018     
      Capital work-in-progress     27 776      8 600     
         Expenditure     51 289      35 787     
         Transfers to other categories     (23 513)     (27 187)    
   Acquisition of businesses     192 682      26 283     
      Patents, trademarks, tradenames and other intangibles     192 672      22 329     
      Computer software     10      644     
      Capital work-in-progress     –      3 310     
   Disposals     (202)     (5 820)    
      Patents, trademarks, tradenames and other intangibles     –      (5 648)    
      Computer software     (202)     (172)    
   Transfer to assets classified as held-for-sale                  
      Computer software     (337)     (7 437)    
   Exchange rate adjustments     850      59 739     
      Patents, trademarks, tradenames and other intangibles     3 358      41 599     
      Computer software     (1 680)     16 771     
      Capital work-in-progress     (828)     1 369     
   Amortisation (refer note 4.2)    (144 203)     (152 700)    
    Impairment losses (refer note 4.2 and note 13)    (486 493)     (5 347)     
    Carrying value at end of year     667 572      949 252      
    Segmental amortisation                   
      Bidfood    139 373      126 940      
       Australasia     16 625      12 530      
       United Kingdom     32 094      31 593      
       Europe     85 966      79 527      
       Emerging Markets     4 688      3 290      
    Corporate     4 695      2 331      
    Discontinued operations     135      23 429      
       PCL     135      20 353     
       Best Food Logistics (no amortisation is included in the movement schedule for 2019 as disclosed as a discontinued operation in 2018)      –        3 076     
          144 203      152 700     
 

Included in the “acquisition of business” line are separately identifiable intangible assets that were recognised on the acquisition of Punjab Kitchen. The separately identifiable intangible assets recognised on acquisition relate to exclusive “SimplyPuree” and “The Punjab Kitchen” brand names. The group impaired the customer-related contract intangible asset relating to the transportation and warehousing of dairy products for Arla in the United Kingdom. The impairment was due to the business relationship with Arla having broken down and the operation being disclosed as a discontinued operation (refer note 13). The intangibles associated with Arla have been fully impaired at the reporting date.

Software development costs are capitalised and are stated at cost less accumulated amortisation and accumulated impairment losses. Other intangible assets acquired by the group are stated at cost less accumulated amortisation and accumulated impairment losses. Expenditure on research, internally generated goodwill and brands is recognised in the statement of profit or loss as an expense when incurred. Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. Amortisation is charged to the statement of profit or loss on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life are systematically tested for impairment at the reporting date. Other intangible assets are amortised from the date they are available for use.

The estimated useful lives are:

Patents, trademarks, tradenames and other intangibles 3 to 10 years
Computer software 3 to 10 years

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

All patents/tradenames/trademarks/brands that have an indefinite life are assessed at the reporting date with the below criteria when considering if the intangible asset has an indefinite life:

  • The intangible assets can be managed effectively by another management team and are therefore not linked to the tenure of current management.
  • Management does not intend to change the intangible asset’s identity or discontinue the product line.
  • The group’s ongoing investment ensures that the indefinite life intangible assets remain up to date, fashionable and relevant.

The directors evaluated the impairment of indefinite life intangible assets together with goodwill at the reporting date and concluded that no impairment loss was recognised as the recoverable amount exceeded the carrying amount of the related cash-generating unit (refer note 8.3).

      2019 
R’000 
   2018 
R’000 
  
7.3  Inventories         
   Raw materials 479 570    487 258    
  Work-in-progress 15 222    10 882   
  Finished goods 9 106 009    8 491 142   
  Roll cages 103 078    91 774   
    9 703 879    9 081 056   
  Provision for stock obsolescence included in inventories 168 099    168 008   
  Provision for stock obsolescence credited to the statement of profit or loss (7 198)   (37 228)  
 

Inventories are stated at the lower of cost and estimated net realisable value. Estimated net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost of raw materials and finished goods is determined on a weighted average cost basis. The cost of manufactured inventory and work-in-progress includes materials, direct labour, other direct costs and an appropriate portion of overheads, but excludes interest expense.

      2019
R’000
   2018
R’000
  
7.4  Trade and other receivables         
   Trade receivables 14 566 646   13 966 819   
  Impairment allowances (656 630)   (576 073)  
  Net trade receivables 13 910 016   13 390 746  
  Forward exchange contracts asset 3 638   5 890  
  Prepayments 671 524   619 389  
  Deposits 150 089   153 016  
  Value added taxation receivable 104 893   141 833  
  Signing and listing fees 114 409   95 259  
  Other receivables 259 029   176 953  
    15 213 598   14 583 086  
 

Trade receivables are measured initially at fair value, and are subsequently measured at amortised cost using the effective interest method, less an expected credit loss allowance.

Forward exchange contracts (FEC) are initially measured at fair value on the contract date, and are remeasured to fair value at subsequent reporting dates. The resulting gain or loss is recognised in profit or loss as it arises, unless the FEC is designated and effective as a hedging instrument. Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised in other comprehensive income. The ineffective portion is recognised immediately in profit or loss.

The group does not have any significant contract assets.

Trade receivables consist of a large number of customers spread across diverse markets and geographical areas. Ongoing credit evaluation is performed by operational management on the financial condition of the operation’s customers.

The group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. It was noted that the group’s largest exposure to a single customer group, across multiple geographies is R358 million (2018: R523 million). The group had 328 238 individual trade debtors at June 30 2019 (2018: 340 401). The total number of debtors per reporting division was obtained and the average net revenue per trade debtor was calculated for each reporting division. Based on the average net revenue per trade debtor in comparison to the group’s total net revenue for the year, there was no significant concentration of credit risk to any single trade debtor. The concentration of credit risk is therefore limited due to the customer base being large and independent.

Management, in the various geographies have assessed the recoverability of these amounts due in their geographies and believe that the amounts due and not impaired are recoverable in full. In addition, broad principles of credit risk management are observed across all business segments, such as the use of credit rating agencies, credit guarantee insurance where appropriate and the maintenance of a credit control function. An operation’s average credit period depends on local trends as well as the creditworthiness of their customers. The majority of the customers are given credit terms ranging from cash on delivery to 60 days from statement.

IFRS 9 introduced an “expected credit loss” or ECL model for the measurement of the impairment of financial assets. This model focuses on the risk that a debtor will default rather than whether a loss has or will be incurred. Credit losses are recognised earlier under IFRS 9 compared to IAS 39 because every loan and receivable “has a risk of defaulting in the future” and has an “expected” credit loss associated with it. Before the adoption of IFRS 9, as a function of the decentralised structure, each operation established an impairment allowance that represented its estimate incurred loss in respect of trade and other receivables.

The group applies the IFRS 9 simplified approach to measuring expected credit losses (ECLs) which uses a lifetime expected loss allowance for all trade receivables and contract assets. ECLs are calculated, as a function of the decentralised structure, by each operation by applying the historic loss ratios to trade receivables. In determining the ECL, each operation splits the trade receivables into groups based on shared credit risk characteristics and the days past due, namely by splitting customers into the type of customer (Independent, Chain, Logistics, and Retail), geographical regions, product types, customer ratings and trade credit insurances. In instances where there was no evidence of historical impairment, each operation’s management used their knowledge of their business to determine the potential loss rate. The historical loss rates are adjusted, when necessary, to reflect current and forward-looking information on macro-economic factors affecting the ability of the customers to settle the trade receivables. The group has identified GDP, food inflation and levels of consumer confidence in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.

The review of the expected impairment allowances and loss ratios in respect of trade and other receivables is monitored under the oversight of the divisional audit and risk committees, and ultimately the Bidcorp Group audit and risk committee.

   Gross
debtor
R’000
    Loss rate
%
    Expected
credit loss
R’000
  
2019                 
Not past due   11 367 822       0,23       25 614  
   Independent 5 945 782     0,18     10 663   
   Chain 4 068 331     0,04     1 652  
   Logistics 532 863     0,13     679  
   Retail and other 820 846     1,54     12 620  
Past due 0 – 30 days 1 504 136     0,93     13 935  
   Independent 886 048     1,08     9 540  
   Chain 377 375     0,32     1 199  
   Logistics 18 875     1,26     237  
   Retail and other 221 838     1,33     2 959  
Past due 31 – 180 days 1 044 322     15,83     165 285  
   Independent 682 165     19,24     131 219  
   Chain 278 358     9,18     25 546  
   Logistics 6 963     43,10     3 001  
   Retail and other 76 836     7,18     5 519  
181 + days 650 366     69,47     451 796  
   Independent 395 296     74,72     295 367  
   Chain 195 436     50,69     99 066  
   Logistics 1 684     69,71     1 174  
   Retail and other 57 950     96,96     56 189  
  14 566 646     4,51     656 630  
  2019 
R’000 
     2018 
R’000 
  
Movement in the impairment allowance in respect of trade receivables           
Balance at July 1    576 073          531 077    
Impairment allowance adjusted on adoption of IFRS 9*  60 447        –     
Allowances raised during the year  265 663        188 074    
   Australasia  30 636        30 431    
   United Kingdom  33 074        28 772    
   Europe  129 867        89 028    
   Emerging Markets  72 086        39 843    
Bad debts written off during the year  (184 360)       (169 778)   
   Australasia  (43 788)       (20 896)   
   United Kingdom  (35 548)       (28 136)   
   Europe  (93 371)       (109 196)   
   Emerging Markets  (11 653)       (11 550)   
Acquisition of businesses  4 863        46 277    
   Australasia  –        541    
   Europe  4 468        45 348    
   Emerging Markets  395        388    
Transfer to assets classified as held-for-sale  (1 445)       –    
Allowances reversed during the year  (63 381)       (51 711)   
   Australasia  (436)       –    
   United Kingdom  (7 677)       (705)   
   Europe  (15 324)       (21 409)   
   Emerging Markets  (39 944)       (29 597)   
Exchange rate adjustments  (1 230)       32 134    
Balance at June 30  656 630        576 073    
* IFRS 9 Financial Instruments transitional application

The groupís impairment allowance of trade receivables using the incurred loss method under IAS 39 for the year ended June 30 2018 was R576,1 million. The ECLs at this date under IFRS 9 were calculated to be R636,5 million. An additional R60,4 million ECLs was recorded as a reduction to retained earnings at July 1 2019 according to the modified retrospective approach.

  2018
R’000
  
The total impact on net trade receivables at July 1 2018:     
Trade receivables at July 1 2018 13 966 819   
Impairment allowance under IAS 39 (576 073)  
Impairment allowance adjusted on adoption of IFRS 9* (60 447)  
Net trade receivables at July 1 2018 13 330 299  
* In line with the groupís assessment of the adoption of IFRS 9, the group reported that there was no significant impact from the adoption of IFRS 9. Therefore, no transitional adjustments were processed to retained earnings in the interim consolidation financial statements.
  2019     2018  
  Loss
rate
%
    Gross
trade
receivables
R’000
    Expected
credit loss
R’000
    Net trade
receivables
R’000
    Gross trade
receivables
R’000
    Impairment
allowance
R’000
    Net trade
receivables
R’000
 
Ageing of trade receivables at June 30                                        
Not past due 0,23     11 367 822     (25 614)     11 342 208     11 233 937     (30 104)     11 203 833  
   Australasia 0,49     2 074 210     (10 112)     2 064 098     2 069 160     (13 025)     2 056 135  
   United Kingdom 0,07     3 066 239     (2 115)     3 064 124     3 119 592     (1 853)     3 117 739  
   Europe 0,29     4 168 004     (12 256)     4 155 748     4 102 311     (15 222)     4 087 089  
   Emerging Markets 0,05     2 059 369     (1 131)     2 058 238     1 942 874     (4)     1 942 870  
Past due 0 – 30 days 0,93     1 504 136     (13 935)     1 490 201     1 448 983     (12 276)     1 436 707  
   Australasia 3,79     216 168     (8 199)     207 969     205 311     (7 630)     197 681  
   United Kingdom 0,93     131 268     (1 225)     130 043     86 828         86 828  
   Europe 0,44     617 839     (2 728)     615 111     675 365     (3 812)     671 553  
   Emerging Markets 0,33     538 861     (1 783)     537 078     481 479     (834)     480 645  
31 – 180 days 15,83     1 044 322     (165 285)     879 037     837 153     (151 363)     685 790  
   Australasia 23,33     106 798     (24 921)     81 877     58 176     (27 053)     31 123  
   United Kingdom 11,57     173 004     (20 008)     152 996     71 189     (31 263)     39 926  
   Europe 23,31     355 743     (82 933)     272 810     383 908     (49 844)     334 064  
   Emerging Markets 9,15     408 777     (37 423)     371 354     323 880     (43 203)     280 677  
181 + days 69,47     650 366     (451 796)     198 570     446 746     (382 330)     64 416  
   Australasia 96,10     18 269     (17 557)     712     36 509     (30 464)     6 045  
   United Kingdom 63,26     26 732     (16 911)     9 821     30 489     (15 763)     14 726  
   Europe 68,77     505 102     (347 348)     157 754     326 488     (289 901)     36 587  
   Emerging Markets 69,80     100 263     (69 980)     30 283     53 260     (46 202)     7 058  
Total 4,51     14 566 646     (656 630)     13 910 016     13 966 819     (576 073)     13 390 746  
  2019   2018  
  Fair value
of collateral
held
R’000
Trade
receivables
net of
impairment
allowance
R’000
  Fair value
of collateral
held
R’000
Trade
receivables
net of
impairment
allowance
R’000
 
Collateral held on past due amounts            
Cover by credit insurance            
   Australasia 171 283 168 075   104 836 104 836  
   United Kingdom 189 593 189 593   49 638 49 638  
   Europe 358 180 358 180   257 476 257 476  
   Emerging Markets 111 755 121 355   128 842 128 842  
Total 830 811 837 203   540 792 540 792  

In certain instances the group’s operations reserve the right to collect inventory sold when the outstanding debt is not settled by the customer. The collateral detailed above is in addition to these aforementioned measures taken to reduce credit risk in respect of trade receivables.'

The majority of trade and other receivables are fixed in the subsidiaries’ local currency. As trade and other receivables have limited exposure to exchange rate fluctuations, a currency analysis has not been included.

      2019 
R’000 
    2018 
R’000 
 
7.5  Operating leases          
   Operating lease liabilities  83 579      145 082   
   Less short-term portion included in trade and other payables  (6 492)     (27 981)  
   Long-term portion  77 087      117 101   
   Operating lease commitments             
   Land and buildings    4 636 033        5 842 637   
      Due in one year  714 660      825 190   
      Due after one year but within five years  2 285 775      2 653 023   
      Due after five years  1 635 598      2 364 424   
   Equipment and vehicles  757 164      1 087 001   
      Due in one year  233 175      347 505   
      Due after one year but within five years  510 762      668 228   
      Due after five years  13 227      71 268   
      5 393 197      6 929 638   
   Less amounts raised in trade and other payables  (83 579)     (145 082)  
      5 309 618      6 784 556   
 

Leases which have fixed determinable escalations are charged to the statement of profit or loss on a straight-line basis and liabilities are raised for the difference between the actual lease expense and the charge recognised in the statement of profit or loss.

The liabilities are classified based on the timing of the reversal which will occur when the actual cash flow exceeds the statement of profit or loss amounts.

Leases that transfer substantially all the risks and rewards of ownership of the underlying asset to the group are classified as finance leases. Assets acquired in terms of finance leases are capitalised at the lower of fair value and the present value of the minimum lease payments at inception of the lease, and depreciated over the estimated useful life of the asset. The capital element of future obligations under the leases is included as a liability in the statement of financial position. Lease payments are allocated using the effective interest method to determine the lease finance cost, which is charged against income over the lease period, and the capital repayment, which reduces the liability to the lessor. Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Operating leases, which have a fixed determinable escalation, are charged against income on a straight-line basis. Leases with contingent escalations are expensed as and when incurred.

With effect from July 1 2019 the group will adopt IFRS 16 Leases (IFRS 16). IFRS 16 replaces IAS 17 Leases which requires that all operating leases, other than short-term and low-value leases, be recorded on the statement of financial position in a similar manner to finance leases under IAS 17. As a result approximately 1 835 operating leases of the group’s lease portfolio will, from July 1 2019, be brought onto the statement of financial position. Refer to note 14 for further details.

     2019
R’000
    2018
R’000
 
7.6 Trade and other payables          
  Trade payables 15 294 945     15 573 094  
  Forward exchange contracts liability 9 851     10  
  Salary and wage related creditors 2 065 134     1 996 534  
  Value added taxation liability 151 933     194 731  
  Other payables and accrued expenses 1 176 632     1 104 242  
    18 698 495     18 868 611  
  Trade payables by segment          
  Trade payables          
     Bidfood  15 267 964      15 552 332  
     Australasia 3 093 833     3 092 063  
     United Kingdom 4 032 748     4 672 818  
     Europe 6 222 815     6 021 602  
     Emerging markets 1 918 568     1 765 849  
  Corporate 26 981     20 762  
    15 294 945     15 573 094
 

Trade payables and accruals mainly consist of amounts outstanding for trade purchases and ongoing costs.

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. The group has contract liabilities disclosed in other payables and accrued expenses in the form of deferred income which arises from consideration received in advance of the satisfaction of performance obligations. The deferred income at June 30 2019 was R10,0 million (2018: R0,7 million).

The directors consider that the carrying amounts of trade payables and other current liabilities approximate their fair values.

      2019
R’000
    2018
R’000
 
7.7  Provisions          
   Long-term portion 430 462     534 655  
  Short-term portion 313 892     243 397  
    744 354     778 052  
 
  Onerous
contracts
R’000
Dismantling
and site
restoration
R’000
Customer
loyalty
programme
R’000
Other
R’000
Total
R’000
 
Balance at July 1 2017 37 460 437 136 122 093 141 048 737 737  
Created 443 67 746 33 262 69 731 171 182  
Utilised (1 872) (62 950) (27 453) (90 890) (183 165)  
On acquisition of businesses 502 6 462 29 311 36 275  
Exchange rate adjustments 2 930 21 175 2 769 10 795 37 669  
Transfer to liabilities classified as held-for-sale (30 013) (30 013)  
Effect of discounting 1 098 7 269 8 367  
Balance at June 30 2018 40 561 446 825 130 671 159 995 778 052  
Created 1 958 59 412 58 207 81 175 200 752  
Utilised (25 745) (64 634) (62 202) (57 754) (210 335)  
On acquisition of businesses 8 617 8 617  
Exchange rate adjustments 332 (6 686) (3 434) (198) (9 986)  
Transfer to liabilities classified as held-for-sale (29 340) (29 340)  
Effect of discounting 973 5 621 6 594  
Balance at June 30 2019 18 079 411 198 123 242 191 835 744 354  

Provisions are recognised when the group has a legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will occur, and where a reliable estimate can be made of the amount of the obligation. Where the effect of discounting is material, provisions are discounted. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Onerous contracts

Onerous contracts are identified through regular reviews of the terms and conditions of contracts as well as on the acquisition of businesses. A provision for onerous contracts is calculated as the present value of the portion which management deem to be onerous in light of the current market conditions, discounted using market-related rates. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net costs of continuing the contract. Before a provision is established, the group recognises any impairment loss on the assets associated with that contract.

Dismantling and site restoration

A provision is raised for the estimated costs of dismantling and removing items, and restoring the property on which they are located. The change in the liability arising as a result of unwinding the discount is recognised in the statement of profit or loss as a finance charge. The dismantling of the plant and recommissioning of buildings is expected to coincide with the end of the useful life of the plant and lease periods.

Customer loyalty programme

Customer loyalty points are accounted for at fair value of the consideration received or receivable in respect of the initial sale, and are allocated between the loyalty points and the other components of the sale. The consideration allocated to the customer loyalty points is measured by reference to their fair value, which is the amount for which the loyalty points could be sold at, multiplied by the probability of their redemption. This amount is recognised as a provision until such time as the customer loyalty points are redeemed. Once the loyalty points are redeemed, the amount will be recognised as revenue. Customer loyalty programmes have been introduced by certain operations within the group, whereby customers can earn points for redemption in the form of gift certificates and products of the operations. The provision is calculated based on the points outstanding at year-end.

Other

Consists of provision for restructuring and various other individually insignificant provisions. A provision for restructuring is recognised when the group has approved a detailed and formal restructuring plan and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.

7.8 Continuing segmental assets and liabilities
 

Segment operating assets and liabilities include property, plant and equipment, intangible assets, investments and loans, inventories, trade and other receivables, trade and other payables, provisions, operating lease liabilities, but exclude cash, borrowings, current taxation, post-retirement obligations and defined benefit pension assets and deferred taxation.

   2019
R’000
    2018
R’000
 
Continuing segmental operating assets          
Trading division          
   Bidfood 39 514 425     36 980 378  
     Australasia 8 902 038     7 816 095  
     United Kingdom 9 289 118     9 310 496  
     Europe 13 515 711     12 782 632  
     Emerging Markets 7 807 558     7 071 155  
   Corporate 287 983     278 884  
  39 802 408     37 259 262  
Continuing segmental operating liabilities          
Trading division          
   Bidfood   19 392 773       19 665 093  
     Australasia 4 476 748     4 353 549  
     United Kingdom 4 715 800     5 600 002  
     Europe 7 494 583     7 291 209  
     Emerging Markets 2 705 642     2 420 333  
   Corporate 127 163     98 671  
  19 519 936     19 763 764