Notes to the Financial Statements
| 1. |
Basis of accounting
These consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). The group is adopting IFRS for the first time which requires changes in accounting policies and the use of transitional arrangements under IFRS (refer section on International Financial Reporting Standards). |
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| 31 March 2006 | 31 March 2005 | ||
| Rm | Rm | ||
| Audited | Audited | ||
| 2. | Cost of merchandise sales | ||
| Purchases | 1 077.4 | 889.3 | |
| Movement in inventory | (56.8) | (4.3) | |
| Cost of merchandise sales | 1 020.6 | 885.0 | |
| Gross profit | 547.2 | 466.9 | |
| 3. | Bad debts and impairment provision | ||
| Bad debts, bad debt recoveries and repossession losses | 132.9 | 125.3 | |
| Movement in impairment provision | (17.4) | (23.7) | |
| 115.5 | 101.6 | ||
| 4. | Net finance costs | ||
| Interest paid: | 18.7 | 54.8 | |
| – Fellow subsidiary | – | 32.8 | |
| – Bank and loans | 12.7 | 17.8 | |
| – Other | 6.0 | 4.2 | |
| Interest earned: | (5.9) | (12.1) | |
| – Bank | (5.9) | (12.0) | |
| – Other | – | (0.1) | |
| 12.8 | 42.7 | ||
| 5. | Trade and other receivables | ||
| Instalment sale and loan receivables | 2 921.4 | 2 677.1 | |
| Provision for unearned finance charges and unearned | |||
| maintenance income | (508.0) | (414.4) | |
| Provision for impairment | (368.0) | (385.4) | |
| Provision for unearned insurance premiums | (184.8) | (154.4) | |
| Unearned insurance premiums | (300.9) | (254.9) | |
| Less: reinsurer’s share of unearned premiums | 116.1 | 100.5 | |
| Net instalment sale and loan receivables | 1 860.6 | 1 722.9 | |
| Other receivables | 35.9 | 27.7 | |
| 1 896.5 | 1 750.6 | ||
| The credit terms of instalment sale and loan receivables range from 6 to 24 months. Amounts due from instalment sale and loan receivables after one year are reflected as current, as they form part of the normal operating cycle. | |||
| 6. | Material capital commitments | ||
| There were no material capital commitments contracted for or authorised and contracted at the end of the year under review. | |||
| 7. | Cash generated from operations | ||
| Operating profit | 670.2 | 582.7 | |
| Adjusted for: | |||
| Share-based payment | 58.7 | 10.8 | |
| Depreciation and amortisation | 35.0 | 36.9 | |
| Profit on sale of property, plant and equipment | (6.0) | (3.9) | |
| Movement in debtors impairment provision | (17.4) | (23.7) | |
| Movement in retirement benefits provision | 3.4 | (2.8) | |
| Movement in other provisions | 9.8 | 10.7 | |
| Changes in working capital: | |||
| Increase in inventories | (62.0) | (5.5) | |
| (Increase)/decrease in trade and other receivables | (152.2) | 21.9 | |
| Increase/(decrease) in trade and other payables | 53.7 | (1.9) | |
| 593.2 | 625.2 | ||