Basis of presentation of condensed consolidated financial statements
These interim condensed consolidated financial statements have been 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 Reporting Pronouncements as issued by Financial Reporting Standards Council, and include disclosure as required by IAS 34 Interim Financial Reporting and the Companies Act of South Africa. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding to the changes in the Group’s financial position and performance since the last annual consolidated financial statements as at and for the year ended June 30 2016.
In preparing these interim condensed consolidated financial statements, management make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended June 30 2016.
Certain segments were reclassified during the year. The comparative year’s segmental information has been represented to reflect these insignificant changes.
Significant accounting policies
The accounting policies applied in these interim condensed consolidated financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended June 30 2016.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques categorised as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
|R000s||Puttable non- controlling interests||Invest-
|Total||Level 1||Level 2||Level 3|
|December 31 2016|
|Financial assets measured at fair value||–||8 405||–||8 405||–||1 801||6 604|
|Financial liabilities measured at fair value||(1 043 023)||–||(446 910)||(1 489 933)||–||–||(1 489 933)|
|December 31 2015|
|Financial assets measured at fair value||–||15 574||–||15 574||–||1 877||13 697|
|Financial liabilities measured at fair value||(1 058 611)||–||(631 646)||(1 690 257)||–||–||(1 690 257)|
|June 30 2016|
|Financial assets measured at fair value||–||511 122||–||–||501 293||2 054||7 775|
|Financial liabilities measured at fair value||(1 168 921)||–||(513 308)||(1 682 229)||–||–||(1 682 229)|
The expected payments are determined by considering the possible scenarios of forecast EBITDAs, the amount to be paid under each scenario and the probability of each scenario. The valuation models consider the present value of expected payment, discounted using a risk-adjusted discount rate.Significant unobservable inputs
|– EBITDA growth rates:||10% – 23% (2015: 10% – 23%)|
|– EBITDA multiples:||4,8x – 7x (2015: 4,8x – 7x)|
|– Risk-adjusted discount rate:||1,99% – 5,00% (2015: 1,99% – 5,00%)|
|The estimated fair value would increase (decrease) if:|
|– The EBITDA was higher (lower); or|
|– The risk-adjusted discount rate was lower (higher).|
The identification of related parties and transactions with key management personnel as of and for the period ended December 31 2016 have been the same as those applied in the Group’s consolidated financial statements as at and for the year ended June 30 2016.
These results have not been audited or reviewed by the Group’s auditors. The interim condensed consolidated financial statements have been prepared by CAM Bishop (CA)SA, under the supervision of DE Cleasby CA(SA), and were approved by the board of directors on February 22 2017.
The following exchange rates were used in the conversion of foreign interests and foreign transactions during the periods:
Supplementary pro forma information regarding the currency effects of the translation of foreign operations on the Group
The pro forma financial information has been compiled for illustrative purposes only and is the responsibility of the board. Due to the nature of this information, it may not fairly present the Group’s financial position, changes in equity and results of operations or cash flows. The pro forma information has been compiled in terms of the JSE Listings Requirements and the Revised Guide on Pro Forma Information by SAICA.
The Group underwent an internal restructuring with effect from April 1 2016 in anticipation of the listing and unbundling of Bidcorp on May 30 2016. The illustrative information, detailed in the statement of profit or loss, has been prepared on the basis that the internal restructuring had been effective July 1 2015 and includes pro forma adjustments on a basis consistent with those of the pre-listing statement of Bidcorp, dated April 14 2016.
The average rand exchange rate weakened against most of the significant currencies in which the Group’s foreign operations trade, namely the euro (15,01 in 2015 to 15,40 in 2016) and the Australian dollar (9,84 in 2015 to 10,57 in 2016), however, this was offset by an appreciation in the rand against sterling (20,86 in 2015 to 17,94 in 2016) following the UK referendum to leave the EU in June 2016 (Brexit). The illustrative information, detailed below, has been prepared on the basis of applying the 2015 average rand exchange rates to the 2016 foreign subsidiary income statements and recalculating the reported income of the Group for the period.
|For the half year ended
|Illustrative 2016 at 2015
average exchange rates
|Revenue (Rm)||67 821 938||68 168 588||70 259 912||3,1|
|Trading profit (Rm)||2 825 913||2 441 784||2 847 814||16,6|
|Headline earnings (Rm)||1 993 020||1 644 593||2 023 194||23,0|