Basis of presentation of the condensed interim consolidated financial statements
The condensed interim consolidated financial statements have been prepared in accordance with the JSE Limited Listings Requirements for interim reports, and the requirement of the Companies Act of South Africa applicable for condensed interim consolidated financial statements. The Listings Requirements require interim 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 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. The accounting policies applied in the preparation of the condensed interim consolidated financial statements from which the condensed interim consolidated financial statements were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements.
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.
Acquisitions
The Group made a number of small acquisitions during the period, namely:
- Igartza, S.L. (Spain)
- D&D S.p.A. (Italy) – acquired remaining 30%
- Foodchoice (Chile)
- Six Bar Trading 409 CC (South Africa)
- KBC Foods (Australia)
These acquisitions form part of the Group’s strategic expansion plans in the international foodservice industry. The acquisitions have enabled the Group to expand its range of complementary products and services and, as a consequence, has broadened the Group’s base in the market place. Total investment in acquisitions was R337,5 million, and their contribution to revenue and trading profit for the half-year ended December 31 2018 was R195,2 million and R11,0 million respectively. There were no significant contingent liabilities identified in the businesses acquired.
Financial instruments
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.
| Non-current assets (liabilities) | Current liabilities | |||||||||||||||
| R000s | Puttable non- controlling interests |
Investment | Vendors for acquisition |
Puttable non- controlling interests |
Vendors for acquisition |
Total | ||||||||||
| December 31 2018 | ||||||||||||||||
| Financial assets measured at fair value | – | 78 410 | – | – | – | 78 410 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial liabilities measured at fair value | (305 106) | – | (299 461) | (1 155 977) | (55 469) | (1 816 013) | ||||||||||
| December 31 2017 | ||||||||||||||||
| Financial assets measured at fair value | – | 61 911 | – | – | – | 61 911 | ||||||||||
| Financial liabilities measured at fair value | (411 648) | – | (66 270) | (1 017 736) | (283 911) | (1 779 565) | ||||||||||
| June 30 2018 | ||||||||||||||||
| Financial assets measured at fair value | – | 56 288 | – | – | – | 56 288 | ||||||||||
| Financial liabilities measured at fair value | (356 522) | – | (300 315) | (1 122 068) | (234 709) | (2 013 614) | ||||||||||
| Fair value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| December 31 2018 | ||||||||||||||||
| Financial assets measured at fair value |
– | 6 167 | 72 243 | 78 410 | ||||||||||||
| Financial liabilities measured at fair value | – | – | (1 816 013) | (1 816 013) | ||||||||||||
| December 31 2017 | ||||||||||||||||
| Financial assets measured at fair value | – | 8 163 | 53 748 | 61 911 | ||||||||||||
| Financial liabilities measured at fair value | – | – | (1 779 565) | (1 779 565) | ||||||||||||
| June 30 2018 | ||||||||||||||||
| Financial assets measured at fair value | – | – | 56 288 | 56 288 | ||||||||||||
| Financial liabilities measured at fair value | – | – | (2 013 614) | (2 013 614) | ||||||||||||
| Valuation technique | Significant unobservable inputs | Inter-relationship between significant unobservable inputs and fair value measurement | ||
| 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. |
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The estimated fair value would increase (decrease) if:
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