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| 1. |
Basis of accounting |
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The results for the 12 months to 31 March 2010 are prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards, including IAS 34 (Interim Financial Reporting), and in accordance with the Listings Requirements of the JSE Limited. The accounting policies are consistent with those applied in the annual financial statements for the prior year except for: |
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| 1.1 |
Change in accounting for deferred costs on initiation fees |
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The group previously deferred costs on the basis that the costs were directly related to the initiation fee earned. An amendment to IAS 18 (Revenue Recognition) replaced the term “direct costs” with “transaction costs” as defined in paragraph 9 of IAS 39. This later definition requires costs to be incremental ie costs that would not have been incurred, had the financial asset not been acquired.
In accordance with the amendment to IAS 18, the group’s accounting policy for deferred costs on initiation fees has been changed. In terms of IAS 8 (Accounting Policies), the relevant comparative information has been restated and the effect on the financial statements is as follows: |
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31 March |
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31 March |
2009 |
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2010 |
Rm |
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Rm |
Audited |
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Audited |
Restated |
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Decrease in profit before taxation |
8.8 |
8.0 |
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Decrease in taxation |
(2.5) |
(2.2) |
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Effect on net profit after taxation |
6.3 |
5.8 |
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Decrease in earnings per share (cents) |
7.2 |
6.6 |
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Decrease in diluted earnings per share (cents) |
7.1 |
6.5 |
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Decrease in opening retained earnings |
39.6 |
33.8 |
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Decrease in property, plant and equipment |
6.1 |
4.6 |
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Decrease in trade and other receivables |
57.6 |
50.3 |
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Decrease in deferred taxation |
17.8 |
15.3 |
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| 1.2 |
Adoption of Revised IAS 1 (Presentation of Financial Statements)
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The presentation of the financial statements has been amended in line with the revised
IAS 1 to include a Statement of Comprehensive Income. In addition to net profit, the Statement of Comprehensive Income includes fair value adjustments on insurance investments and movements in foreign currency translation reserve.
These were previously reflected in the Statement of Changes in Equity. |
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| 1.3 |
Adoption of IFRS 8 (Operating Segments) |
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In terms of IFRS 8 which replaced IAS 14 (Segment Reporting), operating segments are components of the group about which separate financial information is available and evaluated regularly by the chief operating decision makers (identified as the Chief Executive Officer and the Chief Financial Officer) for the purpose of allocating resources and evaluating performance. Accordingly, the group now discloses segmental information for the three brands, namely Lewis, Best Home and Electric and Lifestyle Living. Previously, the segmental information was presented on the basis of retail, finance and risk segments.
In addition, an amendment to IFRS 8 has been adopted which permits disclosure of the assets regularly reported to the chief operating decision makers.
Accordingly, segment assets reflect net trade receivables and inventory for each of the brands.
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| 2 |
Debtor costs |
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Bad debts, repossession losses and bad debt recoveries |
331.5 |
201.9 |
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Movement in impairment provision (doubtful
debts) |
102.7 |
136.9 |
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434.2 |
338.8 |
| 3 |
Net finance costs |
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Interest paid |
94.7 |
108.5 |
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Interest earned |
(6.0) |
(11.5) |
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Losses/(Gains) on forward exchange contracts |
32.5 |
(10.5) |
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121.2 |
86.5 |
| 4 |
Trade and other receivables |
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Instalment sale and loan receivables |
4 705.2 |
4 007.2 |
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Provision for unearned finance charges and unearned maintenance income |
(207.5) |
(181.1) |
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Provision for unearned initiation fees |
(88.5) |
(78.3) |
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Provision for unearned insurance premiums |
(438.2) |
(360.0) |
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Net instalment sale and loan receivables |
3 971.0 |
3 387.8 |
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Provision for impairment (doubtful debts) |
(635.4) |
(532.7) |
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3 335.6 |
2 855.1 |
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Other receivables |
92.0 |
38.3 |
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3 427.6 |
2 893.4 |
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The credit terms of instalment sale and loan receivables range from 6 to 36 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. |
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| 5 |
Trade and other payables |
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Trade payables |
64.1 |
84.8 |
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Accruals and other payables |
134.4 |
142.9 |
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Due to reinsurers |
121.1 |
105.3 |
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Insurance provisions |
130.4 |
71.1 |
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450.0 |
404.1 |
| 6 |
Cash generated from operations |
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Operating profit |
907.2 |
832.3 |
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Adjusted for: |
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Share-based payment |
10.9 |
10.6 |
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Depreciation |
46.3 |
47.3 |
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Surplus on disposal of property, plant and equipment |
(6.5) |
(3.6) |
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Movement in debtors’ impairment provision |
102.7 |
136.9 |
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Movement in retirement benefits provision |
(2.1) |
(3.8) |
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Movement in other provisions |
71.5 |
30.4 |
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1 130.0 |
1 050.1 |
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Changes in working capital: |
(651.9) |
(380.4) |
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Decrease in inventories |
17.0 |
4.1 |
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Increase in trade and other receivables |
(644.3) |
(454.1) |
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(Decrease)/Increase in trade and other payables |
(24.6) |
69.6 |
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478.1 |
669.7 |
| 7 |
Net cash outflow from financing activities |
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Purchase of own shares |
(4.3) |
(51.3) |
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Distribution to shareholders |
(284.4) |
(284.3) |
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Proceeds on sale of own shares |
1.4 |
1.1 |
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Increase in long-term interest-bearing borrowings |
250.0 |
100.0 |
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(37.3) |
(234.5) |
