ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2016
Index |The reports and statements set out below comprise the annual consolidated financial statements presented to the shareholders:
Prepared: Russell Dick CA(SA)Position: Financial DirectorAudited: Nexia SAB&TPosition: Registered Auditors
01 Independent Auditor's Report 03 Directors' Responsibilities and Approval 04 Audit Committee Report 07 Directors' Report 09 Statement of Financial Position10 Statement of Profit and Loss10 Statement of Comprehensive Income11 Statement of Changes in Equity13 Statement of Cash Flows14 Accounting Policies31 Notes to the Annual Financial Statements
Certification by Company Secretary
In my capacity as company secretary, I
hereby confirm, in terms of section 88(2)(e)
of the Companies Act of South Africa, that
for the year ended 31 March 2016, the
Group lodged with the Companies and
Intellectual Property Commission all such
returns as are required of a public
company in terms of the Act and that all
such returns are true, correct and up to
date.
Level of AssuranceThese annual consolidated financial
statements have been prepared in
compliance with the applicable require-
ments of the Companies Act of South
Africa.
Ruan ViljoenCompany Secretary
Independent Auditor’s Report To the Shareholders of MICROmega Holdings Limited Report on the Consolidated Annual Financial Statements We have audited the accompanying consolidated annual financial statements of MICROmega Holdings Limited and its subsidiaries, set out on pages 9 to 74, which comprise the consolidated statement of financial position as at 31 March 2016, the consolidated statements of comprehensive income, the consolidated statements of changes in equity and cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information. Directors' Responsibility for the Consolidated Annual Financial Statements The company’s directors are responsible for the preparation and fair presentation of these consolidated annual financial statements in accordance with International Financial Reporting Standards, and requirements of the Companies Act of South Africa and for such internal control as the directors determine is necessary to enable the preparation of consolidated annual financial statements that are free from material misstatement, whether due to fraud or error . Auditor's Responsibility Our responsibility is to express an opinion on these consolidated annual financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated annual financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated annual financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated annual financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated annual financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated annual financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
01
Page | 2
Opinion In our opinion, these consolidated annual financial statements present fairly, in all material respects, the consolidated financial position of the MICROmega Holdings Limited and its subsidiaries as at 31 March 2016, and its consolidated financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa. Other reports required by the Companies Act As part of our audit of the consolidated annual financial statements for the year ended 31 March 2016, we have read the Directors’ Report, the Audit Committee’s Report and Company Secretary’s Certificate for the purpose of identifying whether there are material inconsistencies between these reports and the consolidated annual audited financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports. Report on Other Legal and Regulatory Requirements In terms of the IRBA Rule published in Government Gazette Number 39475 dated 04 December 2015, we report that Nexia SAB&T has been the auditor of MICROmega Holdings Limited and its subsidiaries for 5 years.
Nexia SAB&T Registered Auditor Per: M. F. Sulaman Director Date: 26 May 2016
02
03
Directors' Responsibilities and Approval |
DC King Executive Chairm an
IG Morris CEO
The directors are required by the Companies Act to maintain adequate accounting records and are responsible for the content and integrity
of the annual consolidated financial statements and related financial information included in this report. It is their responsibility to ensure
that the annual consolidated financial statements satisfy the financial reporting standards as to form and content and present fairly the
statement of financial position, results of operations and business of the Group, and explain the transactions and financial position of the
business of the Group at the end of the financial year. The annual consolidated financial statements are based upon appropriate accounting
policies consistently applied throughout the Group and supported by reasonable and prudent judgements and estimates.
The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and
place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the
board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the
proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of
duties to ensure an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to maintain
the highest ethical standards in ensuring the Group's business is conducted in a manner that in all reasonable circumstances is above
reproach.
The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group.
While operating risk cannot be fully eliminated, the Group endeavours to minimise it by ensuring that appropriate infrastructure, controls,
systems and ethical behaviour are applied and managed within predetermined procedures and constraints.
The directors are of the opinion, based on the information and explanations given by management, that the system of internal control
provides reasonable assurance that the financial records may be relied on for the preparation of the annual consolidated financial
statements. However, any system of internal financial control can provide only reasonable and not absolute, assurance against material
misstatement or loss. The going concern basis has been adopted in preparing the annual consolidated financial statements. Based on
forecasts and available cash resources, the directors have no reason to believe that the Group will not be a going concern in the foreseeable
future. The annual consolidated financial statements support the viability of the Group.
The annual consolidated financial statements have been audited by the independent auditing firm, Nexia SAB&T, wh been given ich has
unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the board of directors and
committees of the board. The directors believe that all representations made to the independent auditor during the audit were valid and
appropriate. The external auditors unmodified report is presented on page 2 to 3. The annual consolidated financial statements as set out on
pages 9 to 74, approved by the board on 26 May 2016 and where signed on their behalf by:
In accordance with section 94(7) of the Companies Act and the principles of King III, the Audit Committee hereunder presents its report for
the 2016 financial year.
At the start of the financial year the Audit Committee comprised three non-executive directors all of whom were independent and one,
namely Alan Swan, being the lead independent non-executive director. In compliance with the JSE Listings Requirements and King III, the
chairperson of the Committee is Deborah di Siena. The other member is Grant Jacobs. At the conclusion of the meeting on the 3rd of
September 2015, it was announced that Alan Swan would be leaving the Committee due to his resignation from the board on 9 September
2015. Donald Passmore was appointed to the board of directors as well as the Audit Committee on 17 March 2016.
The executive directors and representatives from the independent external auditor, Nexia SAB&T, are invited to attend all Audit Committee
meetings. The Internal Audit Manager was changed as a result of Ryan Prettirajh leaving the company and being replaced by Yolande
Erasmus.
The Audit Committee is required to meet at least twice a year. During the 2016 financial year the Committee met four times and attendance
thereat is set out below.
Name
DA di Siena (Chairperson)
GE Jacobs
AB Swan*
DC King
IG Morris
DSE Carlisle
RB Dick
PH Duvenhage
TW Hamill
RC Lewin
R Prettirajh
Y Erasmus
Nexia SAB&T
RJ Viljoen (Company Secretary)
Yes
Yes
Yes
Invitee
Invitee
Invitee
Invitee
Invitee
Invitee
Invitee
Invitee
-
Invitee
Yes
Yes
Yes
Yes
Invitee
Invitee
Invitee
Invitee
Invitee
Invitee
Invitee
-
Invitee
Invitee
Yes
Yes
Yes
No
Invitee
Invitee
Invitee
Invitee
Invitee
-
Invitee
-
Invitee
Invitee
Yes
Yes
Yes
No
-
Invitee
Invitee
Invitee
Invitee
Invitee
Invitee
-
Invitee
Invitee
Yes
2015/05/28 2015/09/03 2015/11/05 2015/03/03
Audit Committee Report |
In accordance with the Audit Committee’s approved terms of reference, the Committee discharged, inter alia, the following responsibilities
during the 2016 financial period:
Reviewed the interim results, annual financial statements, trading updates, SENS announcements and other similar documents and
provided comments thereon to the board of directors.
Made submissions to the board on matters concerning MICROmega’s accounting policies, financial controls and reporting.
Generally reviewed the Group’s financial risk management and controls and held discussions with the independent external auditor,
Nexia SAB&T.
Satisfied itself with the appropriateness of the expertise and adequacy of resources of the finance function.
Monitored the Group’s combined assurance model and ensured that significant risks facing the Group were adequately addressed and
passed onto the Risk Committee where applicable.
Ensured that Nexia SAB&T maintained its independence and objectivity at all times.
Assessed the quality and effectiveness of the audit process and approved the fees paid to the independent external auditor for the 2016
financial period.
Reviewed the directors report to be included in the financial statements prior to endorsement by the board.
Evaluated significant judgements and reporting decisions in the annual integrated report and the clarity and completeness of the
proposed financial and sustainability disclosures.
* Resigned on 9 September 2015
04
Audit Committee Report |
At the request of the board, the Committee considers whether the annual report is fair, balanced, understandable and whether it provides
the information necessary for shareholders to assess the Group’s performance, business model and strategy. The Committee reports to the
board on its activities, identifying any matters in respect of which it considers that action or improvement is needed and making
recommendations as to the steps to be taken there upon.
In order to ensure that the Audit Committee performed in accordance with the responsibilities laid out in the Committee’s terms of
reference, a checklist of matters to be considered at each meeting is drafted and circulated to the members. This checklist guides the content
of the agenda for each meeting. It assists Committee members in ensuring that MICROmega complies with required accounting practices
and all relevant matters are timeously brought to the attention of the Audit Committee. Input from the independent external auditors at
Audit Committee meetings provides Committee members with greater insight into the financial management of the Group. The Audit
Committee is therefore satisfied that the financial statements of the Group comply with International Financial Reporting Standards (IFRS)
and are consistent with the previous annual consolidated financial statements and that no matters of significance have been raised during
the 2016 financial year.
The Group has a formal policy on the provision of non-audit services by the independent external auditor that specifies those services that
the auditor is prohibited from providing to the MICROmega Group, as well-as those that require pre-approval by the Audit Committee.
During the year under review Nexia SAB&T did not provide any non-audit services to MICROmega. The Audit Committee duly satisfied itself
that in accordance with section 94(8) of the Companies Act, Nexia SAB&T, the external auditors of the Group, remain independent. Nexia
SAB&T has confirmed to the Committee its continuing independence and compliance with the MICROmega policy on auditor
independence.
The Audit Committee has considered the appropriateness of the expertise and experience of the Group Financial Director, Russell Dick,
together with MICROmega’s finance team, and is satisfied that Russell Dick and the finance team have the necessary knowledge, skills and
expertise to perform the finance function for the Group.
MICROmega’s internal audit department provides the Group with an independent and objective assurance function and continues to
operate in accordance with the internal audit charter and internal audit plan approved by the board. The internal audit department reports
directly to the Audit Committee and has unrestricted access to the Chairman of the Audit Committee.
The internal auditor provides the Audit Committee with updates as to the progress made by the department and brings any significant risks
or issues to the attention of the Audit Committee at every Audit Committee meeting or when required.
MICROmega’s internal audit department has operated successfully in the past financial period in accordance with the internal audit plan. This
plan is a rolling three-year strategic and flexible annual audit plan using appropriate risk-based methodology, including any risks or control
concerns identified by management. As part of this, during the 2016 financial period, internal audit performed planned engagements on
human resources, payroll, learnerships, supply chain management and general internal controls for the Group.
The board is responsible for the internal financial controls and systems in use throughout the Group and the internal audit department has
assisted the board in evaluating the effectiveness of those internal controls. The identification of possible risks and the implementation of
adequate internal financial controls are delegated to the managing directors of each subsidiary, while the board has the ultimate authority
and responsibility for ensuring that systems of internal financial controls are effectively implemented and monitored. The Audit Committee
is satisfied that during the 2016 financial period MICROmega maintained adequate systems of internal control over the financial reporting of
the Group and has ensured that Group assets were adequately safeguarded and nothing has come to the attention of the Committee
members that indicate a material breakdown in the functioning of the Group’s internal control systems.
MICROmega implemented a whistle blowing policy in 2011 in order to demonstrate its commitment to working towards a culture of fairness,
openness and transparency. In conjunction with the whistle blowing policy, the MICROmega Holdings Ethics Hotline, which remains
independently operated by KPMG, provides employees with a mechanism to anonymously bring any unethical business practices to the
attention of management. All reports received from the Ethics Hotline are forwarded to the designated representatives at MICROmega and
to the Audit Committee for review and consideration is made as to whether the action taken by the designated representative was
appropriate or whether further action is required. No incidents were reported during the financial year.
05
Audit Committee Report |
The Audit Committee reviews the going-concern status of the Group by considering the documentation prepared by management and the
assurance provided by the Group Financial Director at each meeting and therefore supports the going-concern statement by the board.
MICROmega’s combined assurance model aims to optimise the assurance coverage obtained on the risks affecting the Group. Within the
Group there is interplay between a number of key assurance providers, which includes the Audit and Risk Committees as well as the internal
and external audit functions. This is supported by the assurance provided on an operational and structural level by the executive
management and the management at an individual subsidiary level.
The management team of each subsidiary in the Group identifies and addresses the risks on the day-to-day operations of that particular
business. Monthly management meetings are held with the Group executives during which these issues are discussed. The internal audit
department examines, evaluates and reports on the activities and appropriateness of the systems of internal control, risk management and
governance processes, while the external auditor performs the annual statutory audit in accordance with international auditing standards
and reports in detail on the results of the audit to the subsidiary management, the Audit Committee and the board of directors. Lastly, the
Risk Committee is responsible for monitoring the appropriateness of the combined assurance model.
The Audit Committee is satisfied that the current combined assurance model utilised by the Group ensures that significant risks facing the
Group are adequately addressed.
In accordance with the principles of King III, the Audit Committee fulfilled its oversight role in respect of MICROmega’s annual integrated
report and the reporting process and considered and assessed the information disclosed in the integrated report against the financial,
operational, governance and other information known to the Committee and is satisfied that the information is reliable and consistent with
the financial results.
DA di Siena
Chairperson
Audit Committee
06
The directors present their report for the year ended 31 March 2016.
1. REPORTING ENTITY
MICROmega Holdings Limited is a Group domiciled in the Republic of South Africa. The address of the Group's registered office is 66 Park
Lane, Sandton. The annual consolidated financial statements of the Group as at and for the year ended 31 March 2016, comprise the Group
and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in associates.
2. REVIEW OF ACTIVITIES
MICROmega is a holding company with controlling interests in a number of operating subsidiaries and is listed on the main board of the
South African Johannesburg Stock Exchange (JSE) under the support services sector. Our businesses are primarily focused on the provision
of information technology, financial services, occupational health and safety and labour supply services.
The operating results and consolidated statement of financial position of the Group are fully set out in the attached annual consolidated
financial statements and do not in our opinion require any further comment.
3. GOING CONCERN
The annual consolidated financial statements have been prepared on the basis of accounting policies applicable to a going concern. This
basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities,
contingent obligations and commitments will occur in the ordinary course of business.
4. EVENTS AFTER REPORTING DATE
All events subsequent to the date of the annual consolidated financial statements and for which the applicable financial reporting
framework require adjustment or disclosure have been adjusted or disclosed.
The directors have declared a dividend of 43 cents per share (2015: 35 cents per share) for the year ended 31 March 2016. The final dividend
has not been included as a liability in these annual consolidated financial statements as it was declared subsequent to the year end.
The directors are not aware of any other matters or circumstances arising since the end of the financial year to the date of this report that
could have a material effect on the financial position of the Group.
5. DIRECTORS' INTEREST IN CONTRACTS
On 1 September 2015 the Group disposed of its interest in GIM Holdings Proprietary Limited to Kamberg Investment Holdings Proprietary
Limited. The entire issued share capital of Kamberg Investment Holdings Proprietary Limited is held by the Greg Morris Family Trust, of which
Mr IG Morris, the chief executive officer of the Group, is the sole beneficiary.
To our knowledge none of the directors, other than those disclosed above, had any interest in contracts entered into during the year under
review.
6. AUTHORISED AND ISSUED SHARE CAPITAL
No changes were approved or made to the authorised or issued share capital of the company during the year under review, other than the
disclosed in note 14.
07
Directors' Report |
08
Directors' Report |
7. BORROWING LIMITATIONS
In terms of the Memorandum of Incorporation of the company, the directors may exercise all the powers of the company to borrow money,
as they consider appropriate.
8. DIVIDENDS
Dividends of R40.2 million (2015 : R21.2 million) were declared and paid to the shareholders during the year.
The directors have declared a dividend of 43 cents per share (2015: 35 cents per share) for the year ended 31 March 2016. The final dividend
has not been included as a liability in these annual consolidated financial statements as it was declared subsequent to the year end.
9. DIRECTORS
The directors of the company during the year and to the date of this report are as follows:
DC King Executive Chairman
IG Morris Chief Executive Officer
DSE Carlisle Executive Director
RB Dick Financial Director
AW Swan (Resigned 9 September 2015) Independent Non-Executive Director
DA Di Siena Independent Non-Executive Director
GE Jacobs Independent Non-Executive Director
RC Lewin Non-Executive Director
PH Duvenhage Non-Executive Director
TW Hamill Non-Executive Director
D Passmore (Appointed 17 March 2016) Lead Independent Non-Executive Director
10. SECRETARY
The designated company secretary is RJ Viljoen.
11. AUDITORS
Nexia SAB&T were the auditors for the year under review.
Other reserves
6 261
Retained earnings 330 218
Non-controlling interest 68 991
LIABILITIES
Non-current liabilities
73 125
Other financial liabilities 11 371
Deferred vendor payments 13 333
Deferred tax liabilities 48 421
Current liabilities
235 410
Trade and other payables 166 674
Other financial liabilities 3 101
Income tax payable 9 688
Deferred vendor payments 55 947
Bank overdraft -
TOTAL LIABILITIES 308 535
TOTAL EQUITY AND LIABILITIES 980 208
Net asset value per share (cents) 540.50
Net tangible asset value per share (cents) 152.86
2015
ASSETS
Non-current assets
540 579
Property, plant and equipment 58 711
Intangible assets 432 242
Investments in associates 12 857
Other investments 283
Other financial assets
-
Deferred tax assets 36 486
Current assets
439 629
Inventories 28 377
Trade and other receivables 239 225
Income tax receivable 8 251
Other financial assets
15 891
Cash and cash equivalents 147 885
TOTAL ASSETS 980 208
EQUITY AND LIABILITIES
EQUITY
671 673
Share capital and share premium 266 203
12 333
411 651
75 672
103 991
4 998
27 343
71 650
261 818
161 646
3 347
11 879
35 409
49 537
365 809
1 132 317
624.20
109.07
2016
691 877
53 558
581 276
13 648
-
5 063
38 332
440 440
41 851
300 563
6 575
2 024
89 427
1 132 317
766 508
266 852
Statement of Financial Position |
09
Figures in R'000 Note(s)
6
7
8
9
10
19
11
21
10
12
13
14
15
16
17
18
19
20
17
18
21
13
Revenue
Cost of sales
Gross profit
Other net income/(expenses)
Distribution expenses
Administration expenses
Operating profit
Finance income
Finance cost
Share of profit of equity accounted associate
Profit before tax
Tax expense
Profit for the year
Profit attributable to
Owners of the parent
Non-controlling interest
Attributable earnings per share (cents)
Diluted Basic
Diluted Headline
Basic
Headline
Statement of Profit and Loss |
1 035 683
(576 068)
459 615
16 590
(4 170)
(306 093)
165 942
5 041
(1 767)
1 978
171 194
(44 823 )
126 371
110 653
15 718
126 371
101.27
99.45
99.47
101.30123.43
1 193 921
(619 783)
574 138
22 773
(7 384)
(374 779)
214 748
3 279
(5 245)
1 811
214 593
(55 856)
158 737
145 433
13 304
158 737
129.64
126.07
120. 03
Profit for the year
Other comprehensive income
Foreign currency translation differences
Items that will be re-classified into profit and loss
Revaluation of property
Reversal of deal difference reserve
Tax on other comprehensive income
Total comprehensive income for the year
Total comprehensive income attributable to
Owners of the parent
Non-controlling interest
126 371
1 461
(2 500)
(1 000)
465
124 797
109 079
15 718
124 797
158 737
3 347
-
-
-
162 084
148 780
13 304
162 084
Statement of Comprehensive Income |
10
2015 2016Figures in R'000
2015 2016Figures in R'000
Note(s)
24
25
26
27
28
8
29
Fig
ure
s in
R'0
00
Sh
are
cap
ital
Sh
are
pre
miu
m
Oth
er
rese
rves
Sh
are
base
d
paym
en
tre
serv
e
Reta
ined
earn
ing
sTo
tal
No
n-
con
tro
llin
g
inte
rest
Tota
l
Bala
nce
at
1 A
pri
l 2
01
4 1
05
2 2
06
61
4 2
79
2 2
79
8 2
40
86
3 4
54
11
9 5
0 1
50
50
4 2
69
Tota
l co
mp
reh
en
sive i
nco
me f
or
the
year
Pro
fit
for
the y
ear
11
0 6
53
11
0 6
53
15
71
8 1
26
37
1
Oth
er c
om
pre
hen
sive
in
com
e
Fore
ign
cu
rren
cy t
ran
slati
on
diff
ere
nce
s 1
46
1 1
46
1 1
46
1
Reva
luati
on
of
pro
pert
y (
2 0
35
) (
2 0
35
) -
-
-
-
-
-
-
-
-
-
-
-
-
-
(2
03
5)
Realis
ati
on
of
deal d
iffere
nce
rese
rve
(1
00
0)
(1
00
0)
(1
00
0)
Realis
ati
on
of
reva
luati
on
rese
rve
thro
ug
h d
ep
reci
ati
on
(3
) 3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1
57
7)
-
-
-
-
-
-
-
-
-
-
11
0 6
56
10
9 0
79
15
71
8 1
24
79
7
Tra
nsa
ctio
ns
wit
h o
wn
ers
reco
rded
dir
ect
ly i
n e
qu
ity
Div
iden
ds
paid
(2
1 1
68
) (
21
16
8)
(2
1 1
68
)
Div
iden
ds
paid
to
no
n-c
on
tro
llin
g
inte
rest
-
-
-
-
-
-
-
-
-
(3
57
6)
(3
57
6)
Sh
are
iss
ue
52
51
41
2 5
1 4
64
51
46
4
Treasu
ry s
hare
s p
urc
hase
d (
14
) (
22
49
2)
(2
2 5
06
) (
22
50
6)
Sh
are
-base
d p
aym
en
t tr
an
sact
ion
s 9
7 1
76
2 2
48
(1
33
) 9
30
0 9
30
0
Acq
uis
itio
n o
f su
bsi
dia
ries
16
22
37
8 -
22
39
4 6
69
9 2
9 0
93
63
58
47
4 2
24
8 (
21
30
1)
39
48
4 3
12
3 4
2 6
07
Bala
nce
at
1 A
pri
l 2
01
5 1
11
5 2
65
08
8 1
21
5 5
04
6 3
30
21
8 6
02
68
2 6
8 9
91
67
1 6
73
11
Sta
tem
en
t o
f C
han
ges
in E
qu
ity |
Sta
tem
en
t o
f C
han
ges
in E
qu
ity |
12
Fig
ure
s in
R'0
00
Sh
are
cap
ital
Sh
are
pre
miu
m
Oth
er
rese
rves
Sh
are
base
d
paym
en
t
rese
rve
Reta
ined
earn
ing
sTo
tal
No
n-
con
tro
llin
g
inte
rest
Tota
l
Bala
nce
at
1 A
pri
l 2
01
5 1
11
5 2
65
08
8 1
21
5 5
04
6 3
30
21
8 6
02
68
2 6
8 9
91
67
1 6
73
Tota
l co
mp
reh
en
sive i
nco
me f
or
the
year
Pro
fit
for
the y
ear
14
5 4
33
14
5 4
33
13
30
4 1
58
73
7
Fore
ign
cu
rren
cy t
ran
slati
on
diff
ere
nce
s 3
34
7 -
-
3 3
47
-
3 3
47
-
-
3 3
47
-
14
5 4
33
14
8 7
80
13
30
4 1
62
08
4
Tra
nsa
ctio
ns
wit
h o
wn
ers
reco
rded
dir
ect
ly i
n e
qu
ity
Div
iden
ds
paid
(4
0 2
20
) (
40
22
0)
-
(4
0 2
20
)
Sh
are
-base
d p
aym
en
t tr
an
sact
ion
s 8
2 2
38
69
2 2
52
9 5
46
7 5
46
7
Div
iden
ds
paid
to
no
n-c
on
tro
llin
g
inte
rest
-
(9
26
6)
(9
26
6)
Acq
uis
itio
n o
f su
bsi
dia
ries
10
15
89
2 -
-
15
90
2 2
77
9 1
8 6
81
Dis
po
sal o
f su
bsi
dia
ries
-
-
2 0
33
-
(1
44
7)
58
6 5
86
1 1
72
Sh
are
iss
ue
1 1
27
9 -
-
1 2
80
1 2
80
Treasu
ry s
hare
s p
urc
hase
d (
6)
(1
8 7
73
)
13
63
62
03
36
92
(39 1
38
)(3
5 7
64
)(5
90
1)
(41 6
65
)
-
-
(1
8 7
79
) (
18
77
9)
Ch
an
ges
in o
wn
ers
hip
in
tere
st w
ith
ou
t
a c
han
ge i
n c
on
tro
l
Acq
uis
itio
ns
on
no
n-c
on
tro
llin
g
inte
rest
wit
ho
ut
a c
han
ge in
co
ntr
ol
(2
4 8
62
) (
24
86
2)
(7
22
) (
25
58
4)
Bala
nce
at
31
Marc
h 2
01
6 1
12
8 2
65
72
4 6
59
5 5
73
8 4
11
65
1 6
90
83
6 7
5 6
72
76
6 5
08
No
tes
14
15
16
Statement of Cash Flow |
13
Cash flows from operating activities
Cash generated from operations 32 133 379
Finance income 5 041
Finance costs (1 767)
Income tax paid 21 (32 957)
N�� ���� ���� ��������� ���������� 103 696
Cash flows from investing activities
Property, plant and equipment acquired 6 (14 966)
Intangible assets acquired 7 (49 997)
Proceeds on disposals of property, plant and equipment 2 655
Acquisition of subsidiaries 33 (9 617)
Acquisition of non-controlling interest without a change
in control -
Proceeds on disposals of subsidiaries 34 -
Loans receivable advanced (6 000)
Loans receivable repaid 6 944
(70 981)
Cash flows from financing activities
Share issue 57 846
Treasury shares repurchased (22 506)
Other financial liabilities repaid (2 228)
Deferred vendor payments repaid (2 044)
Dividends paid to non-controlling interest (3 576)
Dividends paid (21 168)
6 324
(Decrease)/increase in cash and cash equivalents 39 039
Cash and cash equivalents at beginning of the year 108 846
Cash and cash equivalents at end of the year 13 147 885
152 491
3 279
(1 965)
(27 359)
126 446
(16 749)
(106 574)
4 266
(15 117)
(7 793)
2 869
-
8 804
(130 294)
-
(12 029)
(4 161)
(38 471)
(9 266)
(40 220)
(104 147)
(107 995)
147 885
39 890
Figures in R'000 Notes 2016 2015
14
Accounting Policies |
1. STATEMENT OF COMPLIANCE
The annual consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting
Standards (IFRS), and its interpretations adopted by the International Accounting Standards Board (IASB) and financial reporting guides
issued by the accounting practices of the South African Institute of Chartered Accountants and the requirements of the Companies Act of
South Africa.
2. BASIS OF PREPERATION
The annual consolidated financial statements are presented in South African Rand, which is the Group's functional currency. All financial
information presented in South African Rand had been rounded to the nearest thousand, except when otherwise indicated.
The annual consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of land
and buildings and financial assets and financial liabilities at fair value through profit or loss, which are accounted for at fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the annual consolidated financial statements are
disclosed in note 4.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these annual consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated, and have been consistently applied by Group
entities.
3.1 BUSINESS COMBINATIONS
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from
the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially
at their fair values at the acquisition date.
The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, at the non-controlling interest’s
proportionate share of the recognised amounts of acquiree’s identifiable net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of
any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of
consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net
assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive
income.
Accounting Policies |
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the
acquiree is re-measured to fair value at the acquisition date, any gains or losses arising from such re-measurement are recognised in profit or
loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the
fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or
loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its
subsequent settlement is accounted for within equity.
3.1.1 CHANGES IN OWNERSHIP INTEREST IN SUBSIDIARIES WITHOUT CHANGE OF CONTROL
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as
transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share
acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests
are also recorded in equity.
3.1.2 DISPOSAL OF SUBSIDIARIES
When the Group ceases to have control any retained interest in the entity is re- measured to its fair value at the date when control is lost, with
the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This
may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
3.1.3 ASSOCIATES
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between
20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting.
Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the
investor’s share of the profit or loss of the investee after the date of acquisition.
The Group’s investment in associates includes goodwill identified on acquisition.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously
recognised in other comprehensive income is reclassified to profit or loss where appropriate.
The Group’s share of post-acquisition profit or loss is recognised in the statement of comprehensive income, and its share of post-
acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to
the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this
is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its
carrying value and recognises the amount adjacent to share of profit/ (loss) of associates in the statement of comprehensive income.
15
16
Accounting Policies |
Profit and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s
financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the
transaction provides evidence of an impairment of the asset transferred.
3.1.4 TRANSACTIONS ELIMINATED ON CONSOLIDATION
Intergroup balances and transactions, and any unrealised income and expenses arising from intergroup transactions, are eliminated in
preparing the annual consolidated financial statements.
3.1.5 JOINT ARRANGEMENTS
The Group has classified its joint arrangement as a joint operation based on the contractual rights and obligations. The Group recognises
their interest in the joint operations revenue and expenses through profit and loss.
3.2 PROPERTY, PLANT AND EQUIPMENT
Land and buildings comprise owner occupied property. Land and buildings are shown at fair value, based on valuations by external
independent valuers, less subsequent depreciation for buildings. Valuations are performed with sufficient regularity, not exceeding three
years, to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any accumulated depreciation at
the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of
the asset. All other property, plant and equipment is stated at cost less accumulated depreciation and impairment. Cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of profit and loss during the
financial period in which they are incurred.
Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and shown as
other reserves in the statement of changes in equity. Decreases that offset previous increases of the same asset are charged in other
comprehensive income and debited against other reserves directly in equity, all other decreases are charged to the statement of
comprehensive income. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the
statement of comprehensive income, and depreciation based on the asset’s original cost is transferred from other reserves to retained
earnings.
Depreciation methods, residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Useful
lives are affected by technology innovations, maintenance programs and future economic benefits. Residual value assessments consider
issues such as future market conditions, the remaining life of the asset and projected disposal values. Consideration is also given to the
extent of current profits and losses on the disposal of similar assets.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘Other
income’ in the statement of profit and loss. When revalued assets are sold, the amounts included in other reserves are transferred to retained
earnings.
Accounting Policies |
Depreciation is provided on the straight-line basis which, will reduce the carrying amount of the property, plant and equipment to their
residual values at the end of their useful lives. Depreciation is recognised in profit or loss. Leased assets are depreciated over the shorter of
the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Items of
property, plant and equipment are depreciated from the date that they are installed and available for use. Land is not depreciated as it is
deemed to have an indefinite life.
Where an item of property, plant and equipment comprises major components with different useful lives, the components are accounted for
as separate items of property, plant and equipment.
The major categories of property, plant and equipment are depreciated at the following rates:
Building 21 – 50 years
Plant and equipment 5 – 15 years
Motor vehicles 4 – 5 years
Furniture and fittings 5 – 10 years
Office equipment 5 – 10 years
Computer equipment 2 – 5 years
Leasehold improvements Over the period of the lease
3.3 INTANGIBLE ASSETS
3.3.1 GOODWILL
Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. Goodwill is recognised as the excess of the purchase
price over the fair value of the identifiable assets and liabilities assumed in a business combination.
Goodwill is allocated to each of the cash-generating units, or groups of cash-generating units that are expected to benefit from the
synergies of the business combination.
Goodwill is measured at cost less accumulated impairment losses.
3.3.2 COMPUTER SOFTWARE INTERNALLY GENERATED AND COMPUTER SOFTWARE UNDER DEVELOPMENT
Expenditure of research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is
recognised in profit or loss as incurred. Development activities involve a plan or design for the production of new or sustainable improved
products and processes. Development expenditure is capitalised only if development costs can be, measured reliably, the product or
process is technically commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to
complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour, overhead costs
that are directly attributable to preparing the assets for its intended use. Other development expenditure is recognised in profit or loss as
incurred.
Capitalised development expenditure is allocated to computer software under development until such time that the products and
processed are ready for use. The relevant items are then transferred from the computer software under development category to the
computer software internally generated category within intangible assets. Capitalised development expenditure is measured at cost less
accumulated amortisation and accumulated impairment losses.
Work in progress comprises design costs, raw materials, direct labour, other direct costs and related overheads. It excludes borrowing costs.
Work in progress is carried at the lower of cost or net realisable value. Net realisable value is estimated in the ordinary course of business, less
applicable variable selling expenses.
17
18
Accounting Policies |
3.3.3 PATENTS, TRADEMARKS, BRAND NAMES, LICENSES & INTELLECTUAL PROPERTY
Separately acquired licences are shown at historical cost. Licences acquired in a business combination are recognised at fair value at the
acquisition date. Licences have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the
straight-line method to allocate the cost of trademarks and licences over their estimated useful lives. Acquired computer software licences
are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their
estimated useful lives.
3.3.4 AMORTISATION
The estimated useful lives for the current and comparative years are as follows:
Brand names Indefinite
Computer software 3 - 5 years
Customer relationships 2 - 4 years
Patents, trademarks and other rights 10 years to indefinite
Intellectual property Indefinite
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the
period over which the asset is expected to generate net cash inflows. Amortisation is not provided for these intangible assets but they are
tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired,
and it is subsequently carried at cost less accumulated impairment losses.
3.4 IMPAIRMENT OF NON-FINANCIAL ASSETS
The carrying amount of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated.
For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at each
reporting date.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of cash inflows of other assets (the “cash-generating unit”). The goodwill acquired in a business
combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of
the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less cost to sell. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment
losses recognised in respect of cash-generated units are allocated first to reduce the carrying amount of any goodwill allocated to the units
and then to reduce the carrying amount of the other assets in the group on a pro rata basis. Impairment losses are recognised in profit or loss.
Accounting Policies |
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are
assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
3.5 INVENTORIES
Inventories are measured at the lower of cost and net realisable value. The cost of inventories comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their present location and condition and is assigned by using the weighted
average cost formula. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production
overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is
recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in
the period when the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net
realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal
occurs.
Where necessary, provision is made for obsolete, slow-moving and defective inventories.
3.6 FINANCIAL ASSETS
3.6.1 CLASSIFICATION
The Group classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The
classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial
assets at initial recognition.
3.6.2 LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They
are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-
current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’ in the statement of
financial position.
3.6.3 RECOGNITION AND MEASUREMENT
Regular purchases and sales of financial assets are recognised on the trade-date-the date on which the Group commits to purchase or sell
the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit
or loss.
Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the
statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the investments have
expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial
assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently
carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the
statement of comprehensive income within ‘Other net income /(expenses)’ in the period in which they arise. Dividend income from financial
assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of other income when the Group’s
right to receive payments is established.
19
20
Accounting Policies |
3.6.4 IMPAIRMENT OF FINANCIAL ASSETS
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or Group of financial assets
is impaired.
A financial asset or a Group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or Group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a Group of debtors is experiencing significant financial difficulty, default
or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where
observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults.
For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated
statement of comprehensive income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised
impairment loss is recognised in the consolidated statement of comprehensive income.
3.6.5 TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially measured at fair value and, after initial recognition, at amortised cost less impairment losses for bad
and doubtful debts, if any, except for the following receivables:
At each reporting date, the Group assesses whether there is any objective evidence that a receivable or Group of receivables is impaired.
Impairment losses on trade and other receivables are recognised in profit or loss when there is objective evidence that an impairment loss
has been incurred and are measured as the difference between the receivable’s carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not been incurred) discounted at its original effective interest rate, i.e. the effective
interest rate computed at initial recognition. The impairment loss is reversed if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognised.
3.6.6 CASH AND CASH EQUIVALENT
Cash comprises cash on hand and at bank and demand deposits with bank. Cash equivalents are short-term, highly liquid investments that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents
are initially measured at fair value and are subsequently measured at the amortised cost.
Interest-free loans made to related parties without any fixed repayment terms or the effect of discounting being immaterial, that are
measured at cost less impairment losses for bad and doubtful debt, if any; and
Short-term receivables with no stated interest rate and the effect of discounting being immaterial, that are measured at their original
invoice amount less impairment losses for bad and doubtful debt, if any.
Accounting Policies |
For the purpose of statement of cash flows, bank overdrafts which are repayable on demand form an integral part of the Group’s cash
management and are included as a component of cash and cash equivalents.
3.7 FINANCIAL LIABILITIES
3.7.1 TRADE AND OTHER PAYABLES
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business
if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
3.7.2 BORROWINGS
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive
income over the period of the borrowings using the effective interest method.
3.8 SHARE CAPITAL
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction
from equity, net of any tax effects.
3.9 EMPLOYEE BENEFITS
3.9.1 DEFINED CONTRIBUTION PLANS
The Group pays fixed contributions into independent entities in relation to several state plans and insurance for individual employees. The
Group has no legal or constructive obligations to pay contributions in addition to its fixed contributions, which are recognised as an expense
in the period that relevant employee services are received.
3.9.2 TERMINATION BENEFITS
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to
a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an
offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group
has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated
reliably. If benefits are payable more than 12 months after the reporting date, then they are discounted to their present value.
3.9.3 SHORT-TERM EMPLOYEE BENEFITS
The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service on an
undiscounted basis.
Accruals for employee entitlement to annual leave represents the present obligation, which the Group has to pay as a result of employees’
services, provided to the reporting date. The accruals have been calculated at undiscounted amounts based on current salary rates.
A liability is recognised for the amount expected to be paid under short term bonuses in the Group as the Group has a present legal
constructive obligation to pay the amount as a result of past service provided by the employee, and the obligation can be estimated reliably.
21
22
Accounting Policies |
3.9.4 SHARE-BASED PAYMENT TRANSACTIONS
The grant date fair value of share-based payment options granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period in which the employees become unconditionally entitled to the options. The amount
recognised as an expense is adjusted to reflect the number of share options for which the related service and non-market conditions are met,
such that the amount ultimately recognised as an expense is based on the number of options that meet the related service and non-market
performance conditions at the vesting date.
In the event of expiry of vested share options, the applicable amount held in the non-distributable reserve is transferred to retained earnings
3.10 INCOME TAX
Income tax for the year includes current tax and deferred tax. Current tax and deferred tax are recognised in profit or loss, except to the
extent that the tax arises from a transaction or event which is recognised directly in equity in which case current tax and deferred tax are also
recognised directly in equity.
Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax
rates and tax laws that have been enacted or substantively enacted by the statement of financial position date. Current tax is the amount of
income taxes payable or recoverable in respect of the taxable profit or loss for a year, and any adjustments in respect of previous years.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively. Temporary differences are the
differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets
also arise from unused tax losses.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to
income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary
differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
At each statement of financial position date, the Group reviews and assesses the recognised and unrecognised deferred tax assets and the
future taxable profit to determine whether any recognised deferred tax assets should be derecognised and any unrecognised deferred tax
assets should be recognised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the
liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the statement of financial position date.
Deferred tax assets and liabilities are not discounted.
Dividends withholding taxes that arise from the distribution of dividends are recognised when the distributions are made to shareholders
that do not qualify for exemption in terms of the Income Tax Act.
3.11 REVENUE RECOGNITION
3.11.1 SALES OF GOODS
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable,
net of returns, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been
transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated
reliably, and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
Accounting Policies |
If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of
revenue as the sales are recognised.
3.11.2 RENDERING OF SERVICES
Revenue from rendering of services is recognised in profit or loss in proportion to the stage of completion of the transaction at the reporting
date. The stage of completion is assessed by reference to surveys of work performed.
3.12 GOVERNMENT GRANTS
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them
and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises the related costs for
which the grants are intended to compensate.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate
financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.
3.13 FINANCE INCOME AND FINANCE COSTS
Finance income comprises interest income on funds invested, and changes in the fair value of financial assets at fair value through profit or
loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.
Finance expenses comprise interest expense on borrowings, unwinding of discount on provisions, changes in the fair value of financial assets
at fair value through profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method.
3.14 FOREIGN CURRENCY TRANSLATION
3.14.1 FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the annual consolidated financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The annual consolidated financial statements are
presented in ZAR (R), which is the Group’s presentation currency.
3.14.2 FOREIGN OPERATIONS
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to ZAR
(South African Rand) at exchange rates at the reporting date. The income and expenses of foreign operations are translated to ZAR (South
African Rand) at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve in
equity. However, if the foreign operation is a non-wholly owned subsidiary, then the relevant proportion of the translation difference is
allocated to non-controlling interests. When a foreign operation is disposed of, such that control, significant influence or joint control is lost,
the cumulative amount in the foreign currency translation reserve related to that foreign operation is reclassified to profit or loss as part of
the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while
retaining control, the relevant portion of the cumulative amount is reattributed to non-controlling interests.
23
24
Accounting Policies |
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable
future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign
operation and are recognised in other comprehensive income, and are presented within equity in the foreign currency translation reserve.
3.14.3 TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions
or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the
statement of comprehensive income. Foreign exchange gains and losses are presented in the statement of comprehensive income within
‘Other net income/(expences)’.
3.15 EARNINGS PER SHARE
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary
shares outstanding for the effects of all dilutive potential ordinary shares, which comprises share options granted to employees.
The Group calculates headline earnings per share (HEPS) data for its ordinary shares. Headline earnings are determined by excluding certain
items from profit or loss attributable to ordinary shareholders through making use of the table and requirements contained in Circular
02/2015.
3.16 SEGMENT REPORTING
The Group determines and presents operating segments based on the information that is internally provided to the Executive Chairman,
who is the chief operating decision maker. A segment is a distinguishable component of the Group that is engaged either in providing
related products or services (business segment), or in providing products or services within a particular economic environment
(geographical segment), which is subject to risks and returns that are different from those of the other segments. The Group’s primary format
for segment reporting is based on business segments. The business segments are determined based on the reporting business units.
No secondary geographical segment analysis has been included as geographical location does not play a significant role in the Group’s
operations and thus this information will not be beneficial.
3.16.1 SEGMENT REVENUE
Segment revenue represents the gross value of services invoiced and goods sold excluding value added taxation, which is directly
attributable and reasonably allocated to each business segment.
3.16.2 SEGMENT PROFIT AFTER TAX
Segment results equal segment revenue less segment expenses before any adjustment to minority interests.
3.16.3 SEGMENT ASSETS AND LIABILITIES
Segment assets and liabilities include direct and reasonable allocable operating assets, investments in associates and liabilities.
Accounting Policies |
4. CRITICAL ACCOUNTING JUDGEMENTS, KEY SOURCES OF ESTIMATION UNCERTAINTY AND FAIR VALUE DETERMINATION
The Group's management makes assumptions, estimates and judgements in the process of applying the Group's accounting policies that
affect the assets, liabilities, income and expenses in the annual consolidated financial statements prepared in accordance with IFRSs. The
assumptions, estimates and judgements are based on historical experience and other factors that are believed to be reasonable under the
circumstances. While the management reviews their judgements, estimates and assumptions continuously, the actual results will seldom
equal to the estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision policy affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
4.1 RESIDUAL VALUES AND USEFUL LIVES OF PROPERTY, PLANT EQUIPMENT
The useful lives and residual values of items of property, plant and equipment are estimated annually. The actual lives and residual values
may vary depending on a variety of factors such as the nature of item, the condition as result of current usage and the expected physical wear
and tear of each item of property, plant and equipment.
4.2 ESTIMATED IMPAIRMENT OF INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES
The Group tests annually whether intangible assets with indefinite lives have suffered any impairment, in accordance with the accounting
policy stated in note 3.3. The recoverable amounts of certain cash-generating units have been determined based on value-in use calculation.
These calculations require the use of estimates. Refer to note 7 for detail surrounding the estimations utlilised in these calculations.
The Group assesses on an annual basis whether the classification of indefinite life intangible assets is appropriate.
4.3 MEASUREMENT OF THE RECOVERABLE AMOUNT OF TRADE RECEIVABLES
Management has made estimates on the recoverable amount of the Group's trade receivables and the ability of the customer to settle
outstanding debts when it becomes due. Past payment history and financial wellness are considered part of the estimation uncertainty
associated with the measurement of the recoverable amount of trade and other receivables. Refer to note 12.
4.4 SHARE-BASED PAYMENT TRANSACTIONS
The fair value of employee share options is measured using the Black-Scholes formula. Measurement inputs include share price on
measurement date, exercise price of the instrument, expected volatility, weighted average expected life of the instrument, expected
dividends and the risk free rate. Refer to note 15.
4.5 PERCENTAGE OF COMPLETION
Management estimates the costs to complete projects at each reporting period and calculates the percentage of completion based on the
costs incurred at that date as a percentage of the total costs to be incurred. The percentage of completion is applied to the expected revenue
of the project to measure the revenue to be recognised at the end of each reporting period.
25
26
Accounting Policies |
The amendments as set out below are considered not to have a material impact on the financial statements:
Standards Details of amendment Annual periods beginning on or after
IFRS 7 Financial Instruments:
Disclosures
IFRS 9 Financial Instruments
1 January 2016
1 January 2016
1 January 2018
Annual Improvements 2012-2014 Cycle:
Amendment clarifying under what circumstances
an entity will have continuing involvement in a
transferred financial asset as a result of servicing
contracts
Annual Improvements 2012-2014 Cycle:
Amendment clarifying the applicability of
previous amendments to IFRS 7 issued in
December 2011 with regard to offsetting financial
assets and financial liabilities in relation to interim
financial statements prepared under IAS 34.
A final version of IFRS 9 has been issued which
replaces IAS 39 F inancia l Inst ruments :
Recognition and Measurement. The completed
standard comprises guidance on Classification
and Measurement , Impa i rment Hedge
Accounting and Derecognition: IFRS 9 introduces
a new approach to the classification of financial
assets, which is driven by the business model in
which the asset is held and their cash flow
characteristics. A new business model was
introduced which does allow certain financial
assets to be categorised as “fair value through
other comprehensive income” in certain
circumstances. The requirements for financial
liabilities are mostly carried forward unchanged
from IAS 39. However, some changes were made
to the fair value option for financial liabilities to
address the issue of own credit risk.
The new model introduces a single impairment
model being applied to all financial instruments,
as well as an “expected credit loss” model for the
measurement of financial assets.
IFRS 9 contains a new model for hedge
accounting that aligns the accounting treatment
with the risk management activities of an entity, in
addition enhanced disclosures will provide better
information about risk management and the
effect of hedge accounting on the financial
statements.
IFRS 9 carries forward the derecognition
requirements of financial assets and liabilities
from IAS 39.
5. NEW STANDARDS AND INTERPRETATIONS
The Group has chosen not to early adopt the following standards and interpretations, and will do so in future financial periods.
Accounting Policies |
27
IFRS 10 Consolidated Financial
Statements
1 January 2016
The effective date of this amendment
has been deferred indefinitely until
further notice
IFRS 11 Joint Arrangements 1 January 2016
IFRS 12 Disclosure of Interests
in Other Entities
1 January 2016
IFRS 15 Revenue from
Contracts from Customers
1 January 2018
Investment Entities: Applying the Consolidation
Exception: Narrow-scope amendments to IFRS 10,
IFRS 12 and IAS 28 introduce clarifications to the
requirements when accounting for investment
entities. The amendments also provide relief in
particular circumstances, which will reduce the costs
of applying the Standards.
Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture (Amendments to
IFRS 10 and IAS 28): Narrow scope amendment
address an acknowledged inconsistency between
the requirements in IFRS 10 and those in IAS
28 (2011), in dealing with the sale or contribution
of assets between an investor and its associate or
joint venture.
Amendments adding new guidance on how to
account for the acquisition of an interest in a
joint operation that constitutes a business which
specify the appropriate accounting treatment
for such acquisitions.
Investment Entities: Applying the Consolidation
Exception: Narrow-scope amendments to IFRS 10,
IFRS 12 and IAS 28 introduce clarifications to the
requirements when accounting for investment
entities. The amendments also provide relief in
particular circumstances, which will reduce the costs
of applying the Standards.
New standard that requires entities to recognise
revenue to depict the transfer of promised goods or
services to customers in an amount that reflects
the consideration to which the entity expects to
be entitled in exchange for those goods or
services. This core principle is achieved through a
five step methodology that is required to be
applied to all contracts with customers.
The new standard will also result in enhanced
disclosures about revenue, provide guidance
for transactions that were not previously
addressed comprehensively and improve guidance
for multiple-element arrangements. The new
standard supersedes:
(a) IAS 11 Construction Contracts;
(b) IAS 18 Revenue;
(c) IFRIC 13 Customer Loyalty Programmes;
(d) IFRIC 15 Agreements for the Construction of
Real Estate;
(e) IFRIC 18 Transfers of Assets from Customers; and
(f) SIC-31 Revenue-Barter Transactions Involving
Advertising Services.
Standards Details of amendment Annual periods beginning on or after
28
Accounting Policies |
IFRS 16 Leases 1 January 2019New standard that introduces a single lessee accounting
model and requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12
months, unless the underlying asset is of low value. A
lessee is required to recognise a right-of-use asset
representing its right to use the underlying leased asset
and a lease liability representing its obligation to make
lease payments. A lessee measures right-of-use assets
similarly to other non-financial assets (such as property,
plant and equipment) and lease liabilities similarly to
other financial liabilities. As a consequence, a lessee
recognises depreciation of the right-of-use asset and
interest on the lease liability, and also classifies cash
repayments of the lease liability into a principal portion
and an interest portion and presents them in the
statement of cash flows applying IAS 7 Statement of Cash
Flows.
IFRS 16 contains expanded disclosure requirements for
lessees. Lessees will need to apply judgement in deciding
upon the information to disclose to meet the objective of
providing a basis for users of financial statements to
assess the effect that leases have on the financial
position, financial performance and cash flows of the
lessee.
IFRS 16 substantially carries forward the lessor
accounting requirements in IAS 17. Accordingly, a lessor
continues to classify its leases as operating leases or
finance leases, and to account for those two types of
leases differently.
IFRS 16 also requires enhanced disclosures to be
provided by lessors that will improve information
disclosed about a lessor’s risk exposure, particularly to
residual value risk.
IFRS 16 supersedes the following Standards and
Interpretations:
(a) IAS 17 Leases;
(b) IFRIC 4 Determining whether an Arrangement con-
tains a Lease;
(c) SIC-15 Operating Leases-Incentives; and
(d) SIC-27 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease.
Standards Details of amendment Annual periods beginning on or after
Accounting Policies |
29
IAS 1, Presentation of Financial
Statements
1 January 2016
IAS 7 Statement of Cash Flows 1 January 2017
IAS 12 Income Taxes 1 January 2017
IAS 16 Property, Plant and
Equipment
1 January 2016
IAS 27 Consolidated and
Separate Financial Statements
1 January 2016
IAS 28 Investments in
Associates and Joint Ventures
1 January 2016
Disclosure Initiative: Amendments designed to
encourage entities to apply professional judgement in
determining what information to disclose in their
financial statements. For example, the amendments
make clear that materiality applies to the whole of
financial statements and that the inclusion of immaterial
information can inhibit the usefulness of financial
disclosures. Furthermore, the amendments clarify that
entities should use professional judgement in
determining where and in what order information is
presented in the financial disclosures.
Disclosure Initiative: Amendments requiring entities to
disclose information about changes in their financing
liabilities. The additional disclosures will help investors to
evaluate changes in liabilities arising from financing
activities, including changes from cash flows and non-
cash changes (such as foreign exchange gains or losses).
Recognition of Deferred Tax Assets for Unrealised Losses
(Amendments to IAS 12): Narrow-scope amendment to
clarify the requirements on recognition of deferred tax
assets for unrealised losses on debt instruments
measured at fair value.
Amendment to both IAS 16 and IAS 38 establishing the
principle for the basis of depreciation and amortisation
as being the expected pattern of consumption of the
future economic benefits of an asset. Clarifying that
revenue is generally presumed to be an inappropriate
basis for measuring the consumption of economic
benefits in such assets.
Amendment to IAS 16 and IAS 41 which defines bearer
plants and includes bearer plants in the scope of IAS 16
Property, plant and Equipment, rather than IAS 41,
allowing such assets to be accounted for after initial
recognition in accordance with IAS 16.
Amendments to IAS 27 will allow entities to use the
equity method to account for investments in
subsidiaries, joint ventures and associates in their
separate financial statements.
Investment Entities: Applying the Consolidation
Exception: Narrow-scope amendments to IFRS 10, IFRS
12 and IAS 28 introduce clarifications to the
requirements when accounting for investment entities.
The amendments also provide relief in particular
circumstances, which will reduce the costs of applying
the Standards
Standards Details of amendment Annual periods beginning on or after
30
Accounting Policies |
The effective date of this amendment
has been deferred indefinitely until
further notice
IAS 38 Intangible Assets 1 January 2016
There were no new standards adopted in the current financial year.
Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture (Amendments to IFRS 10
and IAS 28): Narrow scope amendment to address an
acknowledged inconsistency between the requirements
in IFRS 10 and those in IAS 28 (2011), in dealing with the
sale or contribution of assets between an investor and its
associate or joint venture.
Amendments to IAS 16 and IAS 38 to clarify the basis for
the calculation of depreciation and amortisation, as
being the expected pattern of consumption of the future
economic benefits of an asset.
Amendment to both IAS 16 and IAS 38 establishing the
principle for the basis of depreciation and amortisation
as being the expected pattern of consumption of the
future economic benefits of an asset. Clarifying that
revenue is generally presumed to be an inappropriate
basis for measuring the consumption of economic
benefits in such assets.
Standards Details of amendment Annual periods beginning on or after
Notes to the Annual Financial Statements |
31
6. PROPERTY, PLANT AND EQUIPMENT
Cost
2016
Accumulated
depreciation
Carrying
value Cost
2015
Accumulated
depreciation
Carrying
value
Owned assets
Land and buildings - - - 11 973 (351) 11 622
Plant and equipment 19 377 (7 487) 11 890 16 402 (4 873) 11 529
Motor vehicles 25 290 (12 717) 12 573 20 505 (10 388) 10 117
Furniture and fittings 19 449 (9 725) 9 724 17 161 (7 298) 9 863
Office equipment 10 794 (6 494) 4 300 8 543 (4 805) 3 738
IT equipment 29 040 (19 175) 9 865 20 334 (13 123) 7 211
Capitalised leased assets
Land and buildings 10 015 (4 809) 5 206 8 484 (3 853) 4 631
113 965 (60 407) 53 558 103 402 (44 691) 58 711
The carrying amounts of property, plant and equipment can be reconciled as follows
2016 Carrying
value at
beginning of
year Additions
Additions
through
business
combinations Disposals
Owned assets
Land and
buildings 11 622 - - (2 832)
Plant and
equipment 11 529 2 539 157 (9)
Motor
vehicles 10 117 7 342 188 (1 277)
Furniture and
fittings 9 863 1 266 549 (23)
Office
equipment 3 738 2 004 126 (32)
IT equipment 7 211 6 066 1 024 (254)
Capitalised
leased assets
Land and
buildings 4 631 1 975 217 -
58 711 21 192 2 261 (4 427)
Disposal of
subsidiaries
(8 765)
-
-
(100)
-
(7)
(541)
(9 413)
Depreciation
(25)
(2 326)
(3 797)
(1 831)
(1 536)
(4 175)
(1 076)
(14 766)
Carrying
value at end
of year
-
11 890
12 573
9 724
4 300
9 865
-
5 206
53 558
Figures in R'000
32
Notes to the Annual Financial Statements |
2015 Carrying
value at
beginning of
year
Owned assets
Land and
buildings 14 592
Plant and
equipment 3 844
Motor
vehicles 9 520
Furniture and
fittings 7 102
Office
equipment 2 031
IT equipment 5 254
Capitalised
leased assets
Land and
buildings 5 375
47 718
Additions
-
542
3 922
3 203
2 621
4 450
228
14 966
Additions
through
business
combinations
- -
8 251
2 152
778
73
945
-
12 199
Disposals
(2)
(2 192)
(233)
(22)
(112)
-
(2 561)
Revaluation
(2 500)
-
-
-
-
-
-
(2 500)
Depreciation
(470)
(1 106)
(3 285)
(987)
(965)
(3 326)
(972)
(11 111)
Carrying
value at end
of year
11 622
11 529
10 117
9 863
3 738
7 211
4 631
58 711
Revalued land and buildings
Residentail land and buildings situated on Erf 278, Hyde Park 2016 2015
Original cost price - 11 496
Additions at cost - 511
Accumulated depreciation - (385)
- 11 622
Revalued asset (2015) Fair value Valuation
technique
Unobservable
input (Level 3)
Land and buildings 9 500 Discounted
cash flow 9 500
Figures in R'000
Assets acquired under mortgage bonds and instalment sale liabilities are encumbered as security for repayment of these
borrowings (refer note 17).
The effective date of the revaluation was 20 November 2014. The valuation was performed by an independent valuer,
J.D. Malakou, valuer M.I.V.S.A. The market value was estimated to be R9.5 million.
The principal assumptions underlying estimation of fair value are those related to the receipt of contractual rentals, expected
future market rentals, vacancy factor and saleability of the property. These valuations are regularly compared to actual
market yield data, actual transactions by the entity and those reported by the market.
Notes to the Annual Financial Statements |
33
7. INTANGIBLE ASSETS
2016
CostAccumulated
amortisation
Patents and trademarks and
other rights 191 587 (1 440)
Brandnames 2 397 -
Licences, franchises and
customer relationships 446 (446)
Computer software,
internally generated 210 784 (20 647)
Computer software, under
development 15 077 -
Goodwill 177 219 (301)
608 906 (27 630)
Carrying
value
190 147
2 397
-
190 137
15 077
176 918
581 276
Cost
191 394
4 124
1 049
114 623
13 703
143 158
468 301
2015
Accumulated
amortisation
(1 042)
(1 727)
(1 049)
(20 124)
-
(12 117)
(36 059)
Carrying
value
190 352
2 397
-
94 499
13 703
Intellectual property 985 (710) 275 250 - 250
externally purchased 6 325 - Computer software, 10 411 (4 086) - -
131 041
432 242
Figures in R'000
The carrying amounts of intangible assets can be reconciled as follows:
2016 Carrying
value at
beginning of
year Additions
Additions
through
business
combinations Transfers
Disposal of
subsidiaries Amortisation
Carrying
value at end
of year
Patents and
trademarks
and other
rights
190 352 193 - - - (398) 190 147
Brandnames 2 397 - - - - - 2 397
Computer
software,
internally
generated
94 499 88 782 - 7 136 (280) 190 137
Computer
software,
under
development
13 703 8 555 - (7 136) - (45) 15 077
Intellectual
property 250 - 25 - - 275
Computer
software,
externally
purchased
- 9 044 54 (1 580) (1 193) 6 325
Goodwill 131 041 - 45 955 - - (78) 176 918
432 242 106 574 46 034 - (1 580) (1 994) 581 276
34
Notes to the Annual Financial Statements |
2015Carrying
value at end
of year
Patents and
trademarks
and other
rights
190 352
Brandnames 2 397
Licences,
franchises
and customer
relationships
-
Computer
software,
internally
generated
94 499
Computer
software,
under
development
13 703
Intellectual
property 250
Computer
software,
externally
purchased
-
Goodwill 131 041
Carrying
value at
beginning of
year
189 318
2 048
345
59 095
1 320
250
-
53 384
305 760
Additions
466
349
-
30 228
18 954
-
-
-
49 997
Additions
through
business
combinations
-
-
-
-
-
-
-
77 657
77 657
Transfers
-
-
-
6 122
(6 122)
-
-
-
-
Reversal of
impairment/
(Impairment)
568
-
(345)
(355)
-
-
-
-
(132)
Amortisation
-
-
-
(591)
(449)
-
-
-
(1 040) 432 242
GoodwillPatents, trade marks and other
rights
2016 2015 2016 2015
Occupational health and safety 91 759 49 677 190 147 190 352
Labour supply 6 570 6 570 - -
Information technology 81 136 74 794 - -
179 465 131 041 190 147 190 352
Intangible assets are allocated to their respective underlying cash-generating units, which support the valuation of the
intangible asset.
Intangible assets are recognised as indefinite useful life intangible assets when an analysis of the relevant underlying factors
confirm there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity.
Goodwill and indefinite life intangible assets are allocated to the following groups of cash-generating units:
Figures in R'000
Notes to the Annual Financial Statements |
35
Growth rate
for 5 year
period
Growth rate
into
perpetuity
Discount rate
2016 % % %
Occupational health and safety 8.00 - 12.50 3.00 10.60 - 14.84
Labour supply 8.00 - 10.00 2.00 11.27 - 12.03
Information technology 8.50 - 17.00 5.00 9.12 - 14.95
2015
Occupational health and safety 8.00 - 10.00 2.00 10.60 - 14.42
Labour supply 8.50 - 14.00 2.00 11.27 -14.62
Information technology 9.00 - 15.50 2.00 8.62 - 14.81
Impairment testing based on value-in use
Value-in use calculations use pre-tax cash flow projections based on financial forecasts, approved by management, and
cover a five year period. The estimated growth rates applied are in line with that of the industry in which the cash- generating unit
operates and are materially similar to assumptions of external market sources. The cash-generating units' recoverable amount is
most sensitive to the growth rate assumptions applied. Assumptions were based on management's past experience and best
estimates regarding forecasts. Management determined forecasted gross margin based on past performance and its expectations
of market developments. The discount rates used are pre-tax and reflect the appropriate risk associated with the industry and
respective businesses.
A segment level summary of the key assumptions used for the value-in use calculations are as follows:
The impairment calculations were tested for sensitivity to significant changes in the key assumptions used. The basis for the
sensitivity analysis was a reduction of up to 20% in the forecasted operating profit used in the value-in use calculation
which resulted in a R17.7 million reduction in the present value. A reduction of 5% of the weighted average cost of capital resulted in
a R8.6 million reduction in the present value.
The sensitivity analysis did not result in any impairment.
Intangible assets with defined useful lives are tested for impairment if conditions are identified which might be indicative
of a potential reduction in the value in use or net realisable value compared to its carrying value.
Figures in R'000
36
Notes to the Annual Financial Statements |
Figures in R'000
8. INVESTMENTS AND ASSOCIATES
Carrying value of investment in associate 13 648 12 857
Balance at the beginning of the year 12 857 10 879
Share of profit/(loss) in investments accounted for using
the equity method 1 811 1 978
Change in control of equity accounted investment (1 020) -
13 648 12 857
Total non-current assets 84 000 84 000
Total current assets 16 053 14 331
Total non-current liabilities (72 812) (76 947)
Total current liabilities (14 265) (14 442)
Net assets 12 976 6 942
Revenue 14 320 13 525
Profit for the year 6 035 5 550
2016 2015
Kyostax Proprietary Limited
The group owns 30% of an associate whose shares are not publicly traded. Summarised financial information of the
associate is set out below
Notes to the Annual Financial Statements |
9. INVESTMENTS
Listed shares at fair value - 283
- 283
Number of
ordinary
shares 2016
Number of
ordinary
shares 2015
LISTED SHARES
Sanlam Limited - 3 610
The fair value of investments in listed shares is obtained with reference to the closing value of shares as at the period end on the
JSE Limited. The balance of listed shares represents funds held in the trading margin account. A sensitivity analysis has not been
disclosed as the effect of changes in economic conditions on listed investments held is not considered material to Group results.
The shares are classified as level 1 fair value as their values are derived from prices quoted in the active market.
The Group held investments in the following companies:
Figures in R'000 2016 2015
37
Notes to the Annual Financial Statements |
10.OTHER FINANCIAL ASSETS
Instalment sale assets 1 105 3 909
ARDA Durban Proprietary Limited 342 342
Kyostax Proprietary Limited 5 640 5 640
Aurora University Proprietary Limited - 6 000
7 087 15 891
Current 2 024 15 891
Non-current 5 063 -
7 087 15 891
No later than one year 556 4 454
Later than one year no later than five years 676 -
1 232 4 454
Future finance charges (127) (545)
Present value of instalment sale assets 1 105 3 909
All loans receivable are denominated in South African Rand. The loans are carried at their amortised cost, which is the same as
the fair value based on interest rates applicable on non- current loans receivables.
Instalment sale assets
Assets under instalment sale agreements are repayable over two to five years at effective interest rates ranging from prime
lending plus 3% per annum to prime lending plus 4.5% per annum. The loans are secured by the assets subject to the
agreements.
Minimum payments under instalment sale assets:
ARDA Durban Proprietary Limited
The loan is secured by the full issued share capital of the loanee and personal suretyships provided by its directors.
The loan is interest free and repayable in equal instalments over 12 months.
Kyostax Proprietary Limited
The loan is unsecured, interest free and is repayable in the normal course of business.
Aurora University Proprietary Limited
The loan was fully settled on 1 August 2015. MICROmega held surety over the loan through cession of a 100% of the shares in
Aurora until payment has been made in full. Additionally, MICROmega had the option, at any time prior to 1 August 2015, to
acquire a 50.1% controlling interest in Aurora for a nominal value of R50.16, while simultaneously extending the loan to
an indefinite payment shareholder loan. The loan was interest free.
Figures in R'000 2016 2015
38
39
Notes to the Annual Financial Statements |
11. INVENTORIES
Raw materials 13 530 8 278
Work in progress 5 344 1 007
Finished goods 23 032 19 092
41 906 28 377
Provision for stock obsolescence (55) -
41 851 28 377
The amount of inventories recognised as an expense
during the year:
Carrying amount of inventories sold 95 964 151 501
Write-down of inventories 55 -
12.TRADE AND OTHER RECEIVEBLES
Trade debtors 296 025 234 769
Prepaid expenses and deposits 17 521 15 919
Other 11 682 10 827
325 228 261 515
Allowance for doubtful debt (24 665) (22 290)
300 563 239 225
Items included in trade and other receivables not classified as financial instruments
Prepaid expenses and deposits 17 521 15 919
17 521 15 919
Trade and other receivables net of non-financial instruments (refer note 33) 283 042 223 306
The average credit period is less than 60 days with no interest charged on late payment. The amounts presented above include
amounts that are past due at the end of the reporting period for which the Group has not recognised an allowance for doubtful
debts because there has not been significant change in the credit quality of the receivables and the amounts are considered to
still be recoverable. The credit quality of trade and other receivables that are neither past due nor impaired can be assessed by
reference to external credit ratings (if available) or to historical information about counterparty default rates.
Figures in R'000 2016 2015
The reversal of write-down of inventories made in previous years arose due to an increase in the estimated net realisable
value of certain garment goods as a result of the fact that the goods had been disposed of.
Notes to the Annual Financial Statements |
40
Performance categories
Fully performing 192 897 170 851
Past due and not impaired 94 192 51 338
Impaired and provided for 8 936 12 580
296 025 234 769
The aging of amounts past due but not impaired is as follows:
1 month past due 36 555 13 970
2 months past due 57 637 13 982
3 months past due - 13 075
More than 3 months past due - 10 311
94 192 51 338
The aging of amounts impaired and provided for is as follows:
2 months past due - 4 403
3 months past due 2 520 488
More than 3 months past due 6 416 7 689
8 936 12 580
TRADE AND OTHER RECEIVABLES IMPAIRED
Movement on the doubtful debt allowance is as follows:
Balance at the beginning of the year 22 290 10 585
Impairment loss made during the year 8 851 14 465
Reversal of impairment loss from prior year (6 560) (3 174)
Balance written off 84 414
Balance at the end of the year 24 665 22 290
The carrying amount of trade and other receivables approximates their fair value.
PERFORMANCE CATEGORIES OF TRADE AND OTHER RECEIVEBLES
Trade receivables that are within the prescribed trading terms are considered to be fully performing. Past due and not impaired
trade receivables relate to a number of independent customers for whom there is no history of default. Trade receivables
impaired and provided for mainly relate to independent customers, which are in difficult economic situations. The risk
component of this category has been provided for.
Figures in R'000 2016 2015
41
Notes to the Annual Financial Statements |
CURRENCIES
The carrying amounts of trade and other receivables are denominated in the following currencies (all balances are disclosed
in South African Rand):
South African Rand 228 616 193 577
Australian Dollar 1 007 758
British Pound 409 3 030
Chinese Yan Renminbi 14 783 15 442
Euro 106 860
-Hong Kong Dollar 279
Namibian Dollar 1 428 975
New Zealand Dollar 168 176
US Dollar 36 054 8 347
Other currencies 192 141
283 042 223 306
Figures in R'000 2016 2015
13.CASH AND CASH EQUIVALENTS
Favourable cash balances
Cash on hand
Current accounts
Call accounts
Deposit accounts
Overdraft
Bank overdraft
Current assets
Current liabilities
The following facilities are available:
Working capital financing
Asset financing
Guarantees
220
37 352
40 278
11 577
89 427
49 537
89 427
(49 537)
39 890
50 000
10 000
3 270
149
72 350
35 377
40 009
147 885
-
147 885
-
147 885
14 500
9 069
3 270
Cash and cash equivalents comprise cash held. The carrying amount of these assets approximates their fair value. Interest at
variable rates linked to the prime lending rate is earned on these balances.
The credit quality of cash at bank, excluding cash on hand, that are neither past due nor impaired can be assessed by
reference to external credit ratings (if available) or to historical information about counterparty default rates.
42
Notes to the Annual Financial Statements |
The carrying amounts of cash and cash equivalents are denominated in the following currencies (all balances are disclosed
in South African Rand):
South African Rand 19 828 116 347
Australian Dollar 763 315
Bri�sh Pound 64 -
Chinese Yan Renminbi 16 353 3 847
Euro 47 41
Hong Kong Dollar 1 080 6 893
Namibian Dollar 980 872
New Zealand Dollar 213 467
US Dollar 426 18 831
Other currencies 136 272
39 890 147 885
CURRENCIES
Figures in R'000 2016 2015
43
Notes to the Annual Financial Statements |
14.SHARE CAPITAL
Authorised
200 000 000 Ordinary shares of R0.01 each 2 000 2 000
Issued
112 832 661 Ordinary shares of R0.01 each 1 128 1 115
Share premium 265 724 265 088
266 852 266 203
Share reconciliation Number of shares
Shares outstanding - beginning of the period 111 503 571 105 184 415
Treasury shares purchased during the year (491 863) (1 385 516)
Shares issued 70 000 5 205 760
Share-based payment transactions 788 832 925 998
Acquisition of subsidiaries 962 121 1 572 914
Shares outstanding - end of the period 112 832 661 111 503 571
The directors are authorised, until the forthcoming annual general meeting, to dispose of the unissued shares for any purpose and
upon such terms and conditions as they deem fit, subject to the provision of Section 38 and 41 of the Companies Act of South Africa
and Johannesburg Stock Exchange requirements.
During the year the Group repurchased 491,863 (2015:1,385,516) treasury shares on the open market at an average price of 1,536
(2015: 1,624) cents to be utilised to settle future vendor payments and vested share options. An amount of 788,832 (2015: 925,998)
treasury shares were issued to employees during the year for vested and exercised options at an average price of 1,793 (2015: 1,447)
cents and 962,121 (2015: 1,572,914) shares were issued at an average price of 1,652 (2015: 1,424) cents in the acquisition of various
subsidiaries.
15. OTHER RESERVES
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations.
Revaluation reserve
The revaluation reserve comprise all revaluation surpluses to the revaluation of owner-occupied properties. The revaluation reserve
has been recycled as part of the disposal of GIM Holdings Proprietary Limited. Refer to note 34.
Deal difference reserve
The deal difference reserve comprises a retention amount to cover any unmatched trades that may occur in the broking business.
The reserve has been re-assessed in the prior year and, as a result, the reserve has been recycled.
Figures in R'000 2016 2015
44
Notes to the Annual Financial Statements |
Number of ordinary share op�ons
Options granted at the beginning of the year 5 408 868 2 976 668
Movement during the year: -
New options granted during the year 733 166 2 981 199
Options exercised during the year (788 832) (475 999)
Options lapsed during the year (423 328) (73 000)
4 929 874 5 408 868
The foreign currency translation reserve, revaluation reserve and the deal difference reserve have not been disclosed separately as
they are not indivually material.
Share-based payment reserve
MICROmega Holdings Limited established the MICROmega Share Incentive Trust in 2001 together with a detailed share incentive
scheme. The purpose of this scheme is to provide employees of the MICROmega Group with the opportunity to acquire an interest
in equity of MICROmega Holdings Limited, thereby providing such employees with a further incentive to advance the
Group's interests, and promoting an identity of interests between such employees and the shareholders of the Group.
The scheme is equity settled and in terms of the scheme, share options may not be exercised until after the period,
provided that the employee remains in the employment of the MICROmega Group, calculated from the acceptance date, of:
more than three years shall have elapsed, in which event not more than one third thereof;
more than four years shall have elapsed, in which event not more than a further one third thereof, representing two thirds
thereof cumulatively;
more than five years shall have elapsed, in which event not more than a further one third thereof, representing 100% thereof
cumulatively.
The share options lapse if employment terminates before share options have vested.
The share options expire on the expiry of the option period, being eight years from grant date.
Outstanding options
The following options have been granted in terms of the MICROmega Share Incentive Trust to employees and are still
outstanding.
Figures in R'000 2016 2015Figures in R'000 2016 2015Figures in R'000 2016 2015
45
Notes to the Annual Financial Statements |
Comprising:
Grant Date Remaining
contractual
useful life
Number of ordinary share options
Share options at an issue price of R 1.00 per share March 2009 1 years 513 333 663 335
Share options at an issue price of R 1.45 per share March 2010 2 years 150 003 383 334
Share options at an issue price of R 2.00 per share May 2008 0.2 years 404 966 454 000
Share options at an issue price of R 2.35 per share September-2015 5.5 years 661 335 927 000
Share options at an issue price of R 8.00 per share April 2014 6 years 200 000 300 000
Share options at an issue price of R 20.00 per share Jan 2015 7 years 2 334 546 2 681 199
Share options at an issue price of R 20.00 per share Aug 2015 8 years 485 691 -
Share options at an issue price of R 20.00 per share Dec 2015 8 years 180 000 -
4 929 874 5 408 868
Share-based reserve recognised in equity 5 738 5 046
Share-based expenditure recognised in profit and loss 2 585 2 707
Options issued were valued using the following inputs to the Black-Scholes model:
Grant date December
2015August 2015
Number of options granted 180 000 553 166
Expected life 8 years 8 years
Risk-free rate 9.19% 9.19%
Volatility 16.12% 16.12%
Dividend yield 2.85% 2.16%
Exercise price 20 20
16.NON-CONTROLING ASSETS
Non-controlling interest
2016
On 1 April 2016, the Group acquired the remaining 40% interest in Turrito Networks Proprietary Limited for a consideration of R25.7 million,
which resulted in R0.7 million being recycled from non-controlling interest and R24.9 million being recognised in retained earnings. The
balance of the purchase consideration owing, which is dependant on certain profits being met, has been included in the acquisition vendor
liability note. Refer to note 18.
The volatility was calculated using standard deviation based on the historical share price for the past 12 months. This has been adjusted for
any trades relating to our treasury share movements as it is not representative of normalised trading activity.
Figures in R'000 2016 2015
75 672 68 991
46
Notes to the Annual Financial Statements |
17.OTHER FINANCIAL LABILITIES
Non-current liabilities
Mortgage bond
Mortgage bond
- 7 860
Instalment sale liabilities 4 998 3 511
4 998 11 371
Current liabilities
- 719
Instalment sale liabilities 3 347 2 382
3 347 3 101
8 345 14 472
Interest bearing borrowings 8 345 14 472
8 345 14 472
No later than one year
Later than one year no later than five years
Future finance charges
Present value of instalment sale liabili�es
3 947 2 493
5 507 3 660
9 454 6 153
(1 109) (260)
8 345 5 893
Other financial liabilities are denominated in South African Rand.
The fair value of other financial liabilities have been assessed taking into account their respective interest rates and maturity
periods. None of the fair values differ materially from the corresponding carrying values.
Mortgage bonds
Mortgage bonds were de-recognised as part of the disposal of GIM Holdings Proprietary Limited. Refer to note 33.
Instalment sale liabilities
Liabilities under instalment sale agreements are repayable over periods between two and five years, at an average effective rate
of 8.5%. These liabilities are secured by motor vehicles and plant and equipment with a carrying value of R5.2 million (2015:
R5.7 million).
Minimum payments under instalment sale liabilities:
Figures in R'000 2016 2015
47
Notes to the Annual Financial Statements |
18.DEFERED VENDOR PAYMENTS
Reconciliation of deferred vendor payment
Balance at the beginning of the year 69 280 7 333
Acquisition of subsidiaries (refer to note 33) 34 000 65 669
Repayment of vendors through the issue of shares (7 400) (1 861)
Repayment of vendors through the ditribution of cash resources (31 376) (1 861)
Interest accrued 3 241 -
Adjustments due to change in estimate (4 993) -
Balance at the end of the year 62 752 69 280
Non-current liabilities 27 343 13 333
Current liabilities 35 409 55 947
62 752 69 280
The deferred vendor payments will be settled as follows:
Through the issue of shares 33 795 24 661
Through the distribution of cash resources 28 957 44 619
62 752 69 280
Figures in R'000 2016 2015
The amount due to vendors represents the balance of the purchase consideration owing in respect of acquisitions. The loans are settled
through the issue of shares and cash resources on achievement of profit warranties. Deferred vendor payments are recognised when
there is a reasonable expectation that the predetermined profit warranties will be achieved.
48
Notes to the Annual Financial Statements |
Figures in R'000
The settlement dates for the respective business acquisitions are as follows:
Net profit
after tax not
less than Shares
Cash
resources
Aspirata Auditing Testing and Certification
June 2016 7 600 1 446 -
March 2017 8 360 1 580 1 800
March 2018 9 196 1 738 2 000
March 2019 10 115 4 112 -
March 2020 11 127 2 103 -
Nerdworks
August 2016 2 600 6 773 -
Profit Reform
July 2016 3 500 - 392
The Training Room Online
September 2016 8 115 - 12 785
September 2017 12 173 - 12 785
Turrito Networks
June 2016 11 000 14 580 -
March 2017 11 517 136 136
March 2018 12 058 296 296
March 2019 12 625 493 493
Yonke Education and Training Solutions
August 2016 1 000 1 300 418
34 557 31 105
Future finance charges @ 9.25% per annum (762) (2 148)
33 795 28 957
49
Notes to the Annual Financial Statements |
19.DEFERRED TAX ASSETS AND LIABILITIES
Reconciliation of deferred tax
Balance at beginning of year (11 935) (1 903)
Movements consisting of
Temporary differences recognised in profit and loss (17 097) (11 043)
Change in rate of tax (5 447) -
Temporary differences recognised in equity - 465
Foreign currency translation differences (205) -
Acquisition of businesses 542 546
Disposal of businesses 824 -
Balance at end of year (33 318) (11 935)
The deferred tax asset and liability arises from the following temporary differences
Property, plant and equipment (49) (7 973)
Intangible assets (82 451) (38 279)
Investments 100 100
Income received in advance 438 2 387
Provisions 14 123 8 716
Lease straightlining accrual 3 955 3 530
Assessed loss 30 566 19 584
(33 318) (11 935)
Deferred tax assets 38 332 36 486
Deferred tax liabilities (71 650) (48 421)
(33 318) (11 935)
The directors assessed that the deferred tax assets will be recovered based on profitability forecasts.
20.TRADE AND OTHER PAYABLES
Trade creditors
Unallocated deposits
Accrued expenses
Leave pay accrual
Income received in advance
Lease straightlining accrual
Payroll accruals
Value Added Tax
Sundry creditors
56 101 82 645
6 727 11 265
12 982 12 238
7 242 9 048
30 009 7 692
14 146 12 607
20 043 20 155
6 625 6 878
7 771 4 146
161 646 166 674
Figures in R'000 2016 2015
48
Notes to the Annual Financial Statements |
Items included in trade and other payables not classified as financial instruments
Value Added Tax 6 625 6 878
Lease smoothing accrual 14 146 12 607
Leave pay accrual 7 242 9 048
28 013 28 533
Trade and other payables net of non-financial instruments (refer note 33) 133 633 138 141
Figures in R'000 2016 2015
Creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period
taken is less than 60 days. The carrying amounts approximate fair value.
Employees' entitlement to annual leave is recognised when it accrues to employees. An accrual is made for the estimated liability for
annual leave due as a result of services rendered by employees up to statement of financial position date.
49
Notes to the Annual Financial Statements |
CURRENCIES
The carrying amounts of trade and other payables are denominated in the following currencies (all balances are disclosed
in South African Rand):
South African Rand 115 435 126 293
Australian Dollar 339 210
British Pound 10 -
Chinese Yan Renminbi 1 012 -
Hong Kong Dollar 116 459
Namibian Dollar 686 410
New Zealand Dollar 799 183
US Dollar 14 998 10 073
Other currencies 238 513
133 633 138 141
21.CURRENT TAX RECEIVABLE/(PAYABLE)
Current tax in the Statement of Financial Position represents
Current year
Provision for tax for the year
Provisional tax paid
Prior years
Provision for tax relating to previous years
Final tax payments/(refunds) during the year relating to previous years
Under/(over) provision in prior years accounted for in current year
Interest and penalties received/(incurred)
Other
Withholding tax
Acquisition of businesses
Tax receivable
Tax payable
Total tax payments
(34 508) (35 541)
26 116 30 283
(1 437) (2 059)
1 243 2 674
1 196 1 761
(39) -
1 994 2 651
131 (1 206)
(5 304) (1 437)
6 575 8 251
(11 879) (9 688)
(5 304) (1 437)
27 359 32 957
Figures in R'000 2016 2015
50
Notes to the Annual Financial Statements |
22.COMMITMENTS
Not later than one year 27 286 21 408
Later than one year and not later than five years 89 294 73 547
Later than five years 374 9 203
116 954 104 158
23.CONTINGENCIES
24.REVENUE
Sale of goods
Services rendered
25.OTHER NET INCOME/(EXPENCES)
(Loss)/profit on sale of property, plant and equipment
Bad debts recovered
Government grants on learnerships
Loss on sale of other investments
Profit on foreign exchange
Profit on sale of subsidiaries
Re-measurement of deferred vendor payments
Rent received
Revaluation of shares
Sundry income
181 437 185 173
1 012 484 850 510
1 193 921 1 035 683
(161) 94
169 359
2 305 7 753
(283) -
4 671 1 331
7 481 -
4 993 -
- 129
- 75
3 598 6 849
22 773 16 590
Figures in R'000 2016 2015
Operating lease commitments
The Group leases various assets under non-cancellable operating lease agreements. The leases have varying terms and escalation
clauses. The lease expenditure charged to profit and loss is disclosed in note 26.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows
The Group has contingent liabilities in respect of bank and other guarantees and other matters arising in the ordinary course of
business. It is not anticipated that any material liabilities will arise from contingent liabilities.
51
Notes to the Annual Financial Statements |
26.EXPENDITURE BY NATURE
Auditors' remuneration
Fees for the current year audit 3 591 2 915
Over/(under) provision for prior year fees 184 (184)
Tax and secretarial services 181 53
3 956 2 784
Depreciation and amortisation
Depreciation of property, plant and equipment 14 766 11 111
Amortisation of intangible assets 1 994 1 040
Impairment of intangible assets - 132
16 760 12 283
Operating lease charges
Premises 40 721 33 184
Equipment 1 919 1 605
Other 2 223 1 523
44 863 36 312
Figures in R'000 2016 2015
52
Notes to the Annual Financial Statements |
Other expenses
Employee compensation and benefit expense 215 598 163 043
Motor vehicle expenses 7 384 4 170
Repairs and maintenance 2 800 1 973
Telephone and fax 8 878 8 531
Security 991 1 004
Insurance 2 071 2 878
Computer expense 5 629 3 485
Advertising expense 9 737 10 161
Commissions to third parties 136 -
Courier and postage 1 058 1 053
Printing and stationary 4 396 3 780
Travel - Local 13 262 11 511
Travel - International 1 833 2 175
Consulting fees 2 509 3 485
Electricity 6 552 5 870
Bank charges 2 456 2 280
Legal fees 1 287 2 132
Administration and management fee 177 2 296
Bad debts written off and provided 8 844 12 231
Cleaning 2 336 1 700
Sponsorship, enterprise development and donations 4 953 4 923
Entertainment 2 717 2 866
Fines and penalties 99 20
Other 10 881 7 317
316 584 258 884
Total opera�ng expenses 382 163 310 263
Admin expenses 374 779 306 093
Distribu�on expenses 7 384 4 170
382 163 310 263
Figures in R'000 2016 2015
53
Notes to the Annual Financial Statements |
27.FINANCE INCOME
Bank 1 760 4 650
Instalment sale assets 207 169
Trade receivables 329 -
Tax Receivable 325 71
Other 658 151
3 279 5 041
28.FINANCE COSTS
Other financial liabilities 1 045 1 402
Bank overdrafts and acceptances 732 241
Deferred vendor payments 3 241 -
Other 227 124
5 245 1 767
Figures in R'000 2016 2015
54
Notes to the Annual Financial Statements |
29. INCOME TAX EXPENCE
Current tax
Current year 34 508 35 541
Prior year (1 196) (1 761)
Deferred taxation
Current year 19 191 9 184
Prior year (2 094) 1 859
Rate adjustment 5 447 -
55 856 44 823
Reconciliation of rate of taxation % %
South African normal taxation rate 28.00 28.00
Adjusted for
Income not subject to tax (6.00) (1.60)
Expenses not deductible for tax 1.10 0.60
Current tax - prior year adjustment (0.70) (1.00)
Deferred tax - prior year adjustment (0.90) 1.00
Tax rate adjustment on capital gains tax 2.60 0.00
Foreign taxation 1.80 (0.70)
Capital gains tax 0.10 0.00
Net reduction (2.00) (1.70)
Effective rate of taxation 26.00 26.30
The increase in the income not subject to tax mainly relates to the section 12H learnership allowances.
Figures in R'000 2016 2015
55
Notes to the Annual Financial Statements |
30.DIRECTORS’ EMOLUMENTS
Name
Number of
share
options
available -
2016
Number of
share options
available -
2015 Salary
Bonuses and
performance
related
payments Directors fees Total 2016 Total 2015
DC King - - 2 502 - - 2 502 2 365
IG Morris - - 2 281 - - 2 281 2 266
DSE Carlisle - 280 000 1 966 - - 1 966 1 835
RB Dick 416 667 625 000 1 992 1 000 - 2 992 1 963
AW Swan - - - - 160 160 137
DA Di Siena - - - - 156 156 143
GE Jacobs - - - - 156 156 116
RC Lewin - - - - 160 160 106
PH Duvenhage - - - - 156 156 95
TW Hamill - - - - 156 156 37
Members of
key
management
646 667 763 333 20 918 3 660 - 24 578 16 166
1 063 334 1 668 333 29 659 4 660 944 35 263 25 229
31.EARNINGS PER SHARE
Weighted average ordinary shares
Share op�ons
Weighted average diluted ordinary shares
Figures in R'000
The calculation of earnings per ordinary share of 129.64 cents (2015: 101.27 cents) is based on the earnings attributable to
ordinary shareholders of R145.4 million (2015: R110.7 million) and a weighted average of 112,184,529 (2015: 109,264,751)
ordinary shares in issue throughout the year.
The calculation of diluted earnings per ordinary share of 126.07 cents (2015: 99.45 cents) is based on earnings attributable to
ordinary shareholders of R145.4 million (2015: R110.7 million) and a diluted weighted average of 115,360,076 (2015:
111,269,924) ordinary shares in issue throughout the year.
Reconciliation between weighted average number of ordinary shares and diluted weighted average number of ordinary shares
The shares to be issued as part of the business acquisitions did not have an impact on the weighted average diluted ordinary
shares.
112 184 529 109 264 751
3 175 547 2 005 173
115 360 076 111 269 924
2016 2015
56
Notes to the Annual Financial Statements |
Profit before
tax Taxation
Non-
controlling
interest
Net Profit
2016 2015
Profit attributable to owners of the parent 214 593 (55 856) (13 304) 145 433 110 653
Loss/(profit) on disposal of property,
plant and equipment 161 (45) - 116 (68)
Impairment of intangible assets - - - - 95
Loss on disposal of other investments 283 - - 283 -
Profit on disposal of investments in
subsidiaries and businesses (7 481) 116 - (7 365) -
207 556 (55 785) (13 304) 138 467 110 680
Figures in R'000
The weighted average number of shares is the number of shares outstanding at the beginning of the period, adjusted for any
additional shares issued during the period, appropriately weighted for the time the shares are outstanding. Furthermore, any
treasury shares held by the group are deducted from this amount.
The calculation of headline earnings per share of 123.43 cents (2015: 101.30 cents) is based on earnings of R138.5 million (2015:
R110.7 million) and a weighted average of 112,184,529 (2015: 109,264,751) ordinary shares in issue throughout the year.
The calculation of diluted headline earnings per share of 120.03 cents (2015: 99.47 cents) is based on earnings of R138.5 million
(2015: R110.7 million) and a weighted average of 115,184,529 (2015: 111,269,924) ordinary shares in issue throughout the year.
Reconciliation between earnings and headline earnings
57
Notes to the Annual Financial Statements |
32.CASH GENERATED FROM OPERATIONS
Profit before tax 214 593 171 194
Adjusted for
Share of profit from equity accounted associates (1 811) (1 978)
Depreciation and amortisation 16 760 12 151
Loss/(profit) on disposal of property, plant and equipment 161 (94)
Impairment of intangible assets - 132
Profit on disposal of subsidiaries (7 481) -
Loss on disposal of investment 283 -
Revaluation of shares - (75)
Adjustment to acquisition vendors (4 993) -
Share-based payment expense 5 467 2 707
Movement in deal difference reserve - (1 000)
Movement in foreign currency translation reserve 3 550 1 461
Finance income (3 279) (5 041)
Finance costs 5 245 1 767
Movement in working capital
Increase in inventories (12 870) (15 085)
Increase in trade and other receivables (42 984) (70 815)
(Decrease)/Increase in trade and other payables (20 151) 38 055
152 490 133 379
33.BUSINESS COMBINATIONS
2016
Figures in R'000 2016 2015
Profit Reform Proprietary Limited Trading as "COID Support"
On 1 August 2015, the Group acquired a 51% interest in COID Support for a consideration of R4.6 million. Goodwill to the value
of R4.3 million was accounted for. The amount of net assets acquired amounted to R0.7 million and a non-controlling interest of
R0.3 million was recognised.
COID contributed revenue of R3.6 million and profit after tax of R1.0 million since the acquisition date. If the acquisition had
occurred on 1 April 2015, Group revenue would have been R8.2 million more, and profit after tax
would have increased by R0.9 million.
Nerdworks Proprietary Limited Trading as "Dial a Nerd"
On 1 September 2015, the Group acquired a 51% interest in Dial a Nerd for a consideration of R7.4 million. Goodwill to the value
of R6.2 million was accounted for. The amount of net assets acquired amounted to R2.3 million and a non-controlling
interest of R1.1 million was recognised.
58The supplementary information presented does not form part of the annual financial statements and is unaudited
Notes to the Annual Financial Statements |
Figures in R'000
Dial a Nerd contributed revenue of R18.7 million and profit after tax of R1.6 million since the acquisition date. If the
acquisition had occurred on 1 April 2015, Group revenue would have been R33.6 million more, and profit after tax
would have increased by R2.1 million.
Yonke Education and Training Solutions Proprietary Limited “Yonke”
On 1 September 2015, the Group acquired 50% interest in Yonke Education and Training Solutions Proprietary Limited for a
consideration of R3.1 million. Goodwill to the value of R1.8 million was accounted for. The amount of net assets acquired
amounted to R2.6 million and non-controlling interest of R1.3 million was raised.
Yonke Education and Training Solutions contributed revenue of R9.3 million and profit after tax of R1.8 million since
the acquisition date. If the acquisition had occurred on 1 April 2015, Group revenue would have been R15.2 million
more, and profit after tax would have increased by R1.5 million.
The Group has effective control of the board of directors of Yonke Education and Training Solutions Proprietary Limited by
means of an additional deciding vote.
The Training Room Online Proprietary Limited ”TTRO”
On 1 October 2015, the Group acquired a 100% interest in The Training Room Online Proprietary Limited for a
consideration of R36.8 million. Goodwill to the value of R33.4 million was accounted for. The amount of net assets
acquired amounted to R3.4 million.
The Training Room Online contributed revenue of R16.4 million and profit after tax of R2.7 million since the
acquisition date. If the acquisition had occurred on 1 April 2015, Group revenue would have been R23.1 million more, and
profit after tax would have decreased by R0.1 million.
The fair value of assets acquired and liabilities assumed relating to the above business combinations is subject to
change should additional information become available within the 12 month re-measurement period from date of
acquisition.
59
Notes to the Annual Financial Statements |
Net cash flows from acquisitions
The carrying value of trade and other receivables recognised on date of acquisition equals the fair value thereof.
The goodwill is attributable to the workforce acquired and the significant synergies expected to arise after the Group's acquisition
of the acquired subsidiaries
The amount due to vendors represents the balance of the purchase consideration owing in respect of acquisitions, refer to note 18.
2015
Mubesko Africa Proprietary Limited “Mubesko”
On 1 June 2014, the Group acquired a 50% interest in Mubesko Africa (Pty) Ltd for a consideration of R27.4 million. Goodwill to the
value of R20.7 million was accounted for. The amount of net assets acquired amounted to R13.4 million and a non-controlling
interest of R6.7 million was recognised.
The Group has effective control of the board of directors of Mubesko (Pty) Ltd by means of an additional deciding vote.
Figures in R'000
COID Support Dial a Nerd Yonke TTRO Total
Property, plant and equipment 29 625 211 1 396 2 261
Intangible assets 50 279 - - 329
Inventories - 560 - 44 604
Trade and other receivables 650 1 981 2 654 5 621 10 906
Cash and cash equivalents 423 142 1 133 1 082 2 780
Trade and other payables (412) (1 348) (1 667) (5 041) (8 468)
Other financial liabilities - - - (114) (114)
Deferred tax - 49 - 493 542
Tax receivable/(payable) 7 32 222 (130) 131
Total net assets acquired 747 2 320 2 553 3 351 8 971
Goodwill 4 259 6 199 1 828 33 419 45 705
Non-controlling interest (366) (1 137) (1 276) - (2 779)
Purchase consideration 4 640 7 382 3 105 36 770 51 897
Deferred vendor payments (3 890) (6 199) (1 573) (22 338) (34 000)
Cash acquired (423) (142) (1 133) (1 082) (2 780)
Net cash flow from acquisitions 327 1 041 399 13 350 15 117
60
Notes to the Annual Financial Statements |
Net cash flows from acquisitions
Mubesko ATA & ATC R-Data Aspirata Total
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Other financial liabilities
Deferred tax
Tax payable
Total net assets acquired
Goodwill
Non-controlling interest
Purchase consideration
Shares issued
Deferred vendor payments
Cash acquired
Net cash flow from acquisitions
198 1 131 934 9 936 12 199
8 396 4 112 3 003 10 318 25 829
9 033 1 134 2 628 2 203 14 998
(3 395) (2 753) (2 721) (2 597) (11 466)
- (655) (203) - (858)
53 106 39 348 546
(885) 187 (620) 112 (1 206)
13 400 3 262 3 060 20 320 40 042
20 722 25 600 9 886 21 449 77 657
(6 699) - - - (6 699)
27 423 28 862 12 946 41 769 111 000
(6 750) (6 000) (7 966) - (20 716)
(13 500) (10 400) - (41 769) (65 669)
(9 033) (1 134) (2 628) (2 203) (14 998)
(1 860) 11 328 2 352 (2 203) 9 617
Action Training Academy Proprietary Limited and Action Training Consulting Proprietary Limited “ATA & ATC”
On 1 September 2014, the Group acquired 100% interest in Action Training Academy (Pty) Ltd and Action Training Consulting (Pty) Ltd for a
consideration of R28.9 million. Goodwill to the value of R25.6 million was accounted for. The amount of net assets acquired amounted to
R3.3 million.
R-Data Proprietary Limited ”R-DATA”
On 1 October 2014, the Group acquired a 100% interest in R-Data (Pty) Ltd for a consideration of R12.9 million. Goodwill to the value of R9.9
million was accounted for. The amount of net assets acquired amounted to R3.1 million.
Aspirata Auditing Testing and Certification Proprietary Limited “Aspirata”
On 1 March 2015, the Group acquired 100% interest in Aspirata Auditing Testing and Certification (Pty) Ltd for a consideration of R41.8
million. Goodwill to the value of R21.4million was accounted for. The amount of net assets acquired amounted to R20.3 million.
The fair value of assets acquired and liabilities assumed relating to the above business combinations is subject to change should additional
information become available within the 12 month re-measurement period from date of acquisition.
Figures in R'000
61
Notes to the Annual Financial Statements |
Property, plant and equipment
Intangible assets
Goodwill
Trade and other receivables
Trade and other payables
Other financial liabilities
Deferred tax
Total net assets disposed
Profit on disposal
Consideration
Shares to be transferred
Net cash flow from disposals
GIM GoMobile Total
9 406 7 9 413
- 1 580 1 580
- - -
1 241 96 1 337
(12) (84) (96)
(6 523) - (6 523)
(966) 142 (824)
3 146 1 741 4 887
6 353 1 128 7 481
9 499 2 869 12 368
(9 499) - (9 499)
- 2 869 2 869
The carrying value of trade and other receivables recognised on date of acquisition equals the fair value thereof.
The goodwill is attributable to the workforce acquired and the significant synergies expected to arise after the Gourp's acquisition
of the acquired subsidiaries.
The amount due to vendors represents the balance of the purchase consideration owing in respect of acquisitions refer to note 18.
34. DISPOSAL OF SUBSIDIARIES
GIM Holdings Proprietary Limited “GIM”
On 1 September 2015 the Group disposed of its 100% interest in GIM Holdings Proprietary Limited for a consideration of R9.5
million, which resulted in a loss of control of GIM Holdings Proprietary Limited. This event resulted in a profit of R6.4 million
recorded in profit and loss and the re-cycling of R2.0 million to the revaluation reserve in equity. The consideration receivable will
be settled through the receipt of MICROmega shares.
GoMobile Proprietary Limited “GoMobile”
On 2 March 2016 the Group disposed of its 50% interest in GoMobile Proprietary Limited for a consideration of R2.9 million, which
resulted in a loss of control of GoMobile. This event resulted in a profit of R1.1 million recorded in profit and loss and the re-cycling
of R0.6 million to non-controlling interest in equity.
Net cash flows from disposals
Figures in R'000
62
Notes to the Annual Financial Statements |
35.FINANCIAL INSTRUMENTS
The Group has classified its financial assets in the following categories
Loans and
receivables
held at
amortised
cost Total
2016
Other financial assets 7 087 7 087
Trade and other receivables 283 042 283 042
Cash and cash equivalents 89 427 89 427
379 556 393 204
2015
Investments - 283
Other financial assets 15 891 15 891
Trade and other receivables 223 306 223 306
Trade and other receivables 147 885 147 885
387 082 400 222
The Group has classified its financial liabilities in the following categories
2016
Other financial liabilities
Deferred vendor payments
Trade and other payables
Bank overdraft
2015
Other financial liabilities
Deferred vendor payments
Trade and other payables
Loans
payable at
amortised
cost Total
8 345 8 345
62 752 62 752
133 633 133 633
49 537 49 537
254 267 254 267
14 472 14 472
69 280 69 280
166 674 166 674
250 426 250 426
Figures in R'000
63
Notes to the Annual Financial Statements |
The estimated fair values of financial assets and financial liabilities as at 31 March 2016 have been determined using available market
information and appropriate valuation methodologies. The fair value of all financial instruments equals their carrying value, either
because of the short term nature and normal trade terms thereof, or the market related interest rates attached to it.
36. RISK MANAGEMENT
Overview
The Group has exposure to the following risks from its use of financial instruments:
credit risk
liquidity risk
currency risk
interest rate risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes
for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout
these financials.
The directors have overall responsibility for the establishment and oversight for the Group’s risk management framework. The
directors are responsible for developing and monitoring the Group’s risk management policies.
The Group’s risk management policies are established to identify and analyse the risk faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly.
The Board oversees how management monitors compliance with the Group’s risk management policies and procedures and
reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
36.1 CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s trade receivables from customers and deposits with banks.
Trade and other receivables
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other
receivables and investments. The main components of this allowance are a specific loss component that relates to individually
significant exposures, and a collective loss component established for Groups of similar assets in respect of losses that have been
incurred but not yet identified.
64
Notes to the Annual Financial Statements |
Figures in R'000 2016 2015
Credit quality of trade and other receivables can be analysed as follows
Group 1 92 114 22 400
Group 2 144 236 137 939
Group 3 52 313 71 195
Group 4 7 362 3 235
Total 296 025 234 769
Group 1 - new customers (less than six months)
Group 2 - existing customers (more than six months) with no defaults (no bad debt write-off/hand-overs) in the past
Group 3 - existing customers (more than six months) with some defaults
Group 4 - customers with defaults, no trading and hand over. This category of trade receivables related mainly to contractors and sub-
contractors exposed to government and parastatal bodies. Appropriate security policies are in place to limit this category.
Management does not expect any losses from non-performance by these counter parties as the disclosure above is the maximum
exposure due from credit risk.
Deposits with banks
The credit risk policy for financial institutions and service providers has the objective to minimise losses that could result from
counter party failure. All such counter parties are assessed on an annual basis to ensure credit worthiness and the evaluations will be
based on the financial strength of the counter party as published by a recognised rating agency.
Short term credit ratings with banks where balances are held
31 March
2016
31 March
2016
31 March
2015
31 March
2015
Moody's Fitch Moody's Fitch
ABSA Bank Limited P - 2 F3 P - 2 F3
First National (a division of FirstRand Bank Limited) P - 2 F3 P - 2 F3
HSBC Bank Plc P - 1 F1 P - 1 F1
Nedbank Limited P - 2 F3 P - 2 F3
Standard Chartered Bank P - 1 F1 P - 1 F1
Moody's Rating Scale
P - 1: Issuers have a superior ability to repay short-term debt obligations
P - 2: Issuers have a strong ability to repay short-term debt obligations
Fitch Rating Scale
F1: Best quality grade, indicating exceptionally strong capacity of oblior to meet its financial commitments
F3: Fair quality grade with adequate capacity of obligor to meet its financial commitment but near term adverse conditions could
impact the obligor's commitments
Figures in R'000
65
Notes to the Annual Financial Statements |
Management does not expect any losses from non-performance by these counterparties.
36.2 LIQUIDITY RISK
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient cash/ liquid assets to meet its liabilities when due,
under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation.
Typically the group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days,
including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably
be predicted, such as natural disasters. In addition, the group’s statement of financial position remains lowly geared and thus the
directors are comfortable with the ability to receive lines of credit.
The table below analyses the group's financial liabilities that will be expected to be settled on a net basis into relevant maturity
groups based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are
the contractual undiscounted cash flows:
2016
Other financial liabilities
Deferred vendor payments
Trade and other payables
Bank overdraft
2015
Other financial liabilities
Deferred vendor payments
Trade and other payables
Less than 1
year
Between 1
and 5 years Over 5 years Total
3 947 5 507 - 9 454
37 695 27 967 - 65 662
133 633 - - 133 633
49 537 - - 49 537
224 812 33 474 - 258 286
3 101 7 078 4 293 14 472
55 947 13 333 - 69 280
138 141 - - 138 141
197 189 20 411 4 293 221 893
66
Notes to the Annual Financial Statements |
Figures in R'000 2016 2015
Sensitivity analysis based on balances at reporting date
Other financial assets 7 087 15 891
Cash and cash equivalents 89 427 147 885
Bank overdraft (49 537) -
Other financial liabilities (8 345) (14 472)
Deferred vendor payments (62 752) (69 280)
Less: Non-interest bearing financial assets (5 982) (11 982)
Less: Non-interest bearing deferred vendor payments 14 779 69 280
Net interest-bearing assets/(liabilities) (15 323) 137 322
Interest rate change 2 % 2 %
Potential after tax impact on earnings (221) 1 977
36.3 INTEREST RATE RISK
The Group exposure on fair value interest rate risk mainly arises from its fixed deposits with banks. It also has exposure on cash flow
interest rate risk which is mainly arising from its deposits with banks and interest-bearing borrowings with the banks. It is a common
practice in South Africa to have floating rate borrowings with the banks. In order to manage the cash flow interest rate risk, the Group
will repay the corresponding borrowings when it has surplus funds.
The sensitivity analysis has been prepared with the assumption that the change in interest rates had occurred at the balance sheet
date and had been applied to the exposure to interest rate risk for the relevant financial instruments in existence at that date. The
changes in interest rate represent management’s assessment of a reasonably possible change in interest rates at that date over the
period until the next annual balance sheet date.
36.4 CURRENCY RISK
The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective
functional currency of the Group.
The exposure to currency risk as at year end is disclosed in note 12 trade and other receivables, note 13 cash and cash equivalents
and note 20 trade and other payables.
In respect of purchases and payables, the Group controls its volume of purchase orders to a tolerable level and avoids concentrating
the purchases in a single foreign currency by diversifying such foreign currency risk exposure.
In respect of sales and receivables, the Group sets a prudent credit limit to individual customers who transact with it in other foreign
currencies. The directors’ approval is required on the exposure to an individual customer or transaction that exceeds the limit.
Figures in R'000
67
Notes to the Annual Financial Statements |
2016
2016
2015
2015
Average rate Closing rate Average rate Closing rate
10.1054 11.3646 9.64871 9.26715
20.6996 21.2941 17.8017 17.9926
2.1683 2.29751 1.7965 1.98244
15.2003 16.8338 13.9841 13.0924
1.7745 1.9111 1.4262 1.56749
9.3073 10.2484 8.92937 9.09383
Summary of the average and closing rates
Australian Dollar
British Pound
Chinese Yan Renminbi
Euro
Hong Kong Dollar
New Zealand Dollar
US Dollar 13.767 14.8208 11.0591 12.1548
Australian Dollar 1 431 863
British Pound 463 3 030
Chinese Yan Renminbi 30 124 19 289
Euro 153 901
Hong Kong Dollar 1 243 6 434
New Zealand Dollar (418) 460
US Dollar 21 482 17 105
Other currencies 90 (100)
Net foreign currency exposure 54 568 47 982
Potential after tax impact on earnings 3 929 3 455
Sensitivity analysis
The sensitivity analysis has been prepared with the assumption that the change in foreign exchange rates had occurred at the
balance sheet date and had been applied to the exposure to currency risk for the relevant financial instruments in existence at that
date. The changes in foreign exchange rates represent management’s assessment of a reasonably possible change in foreign
exchange rates at that date over the period until the next annual balance sheet date.
A 10% weakening of the Rand against the currencies referred in the trade and other receivables, cash and cash equivalents and trade
and other payables notes would have increased/(decreased) equity and post-tax profit by:
A 10% strengthening of the Rand against the above currencies as at 31 March would have had the equal but opposite effect on the
above currencies to the amounts shown, on the basis that all variables remain constant.
37. CAPITAL MANAGEMENT
The boards policy is to maintain a strong capital base to maintain creditor and shareholder confidence and to sustain future
development of the business. The board monitors return on capital, which the Group defines as net operating income divided by
total shareholders equity. The board also monitors the level of dividends to ordinary shareholders. There were no changes in the
Groups approach to capital management during the year. The Group is not subject to externally imposed capital requirements.
68
Notes to the Annual Financial Statements |
Figures in R'000
38.SEGMENTAL ANALISYS
2016 Occupational
health and
safety
Labour
supply
Information
technologies
Financial
services
Holding and
consolidationeliminations
Total
Statement of profit and loss
Revenue 452 594 217 726 494 221 46 821 (17 441) 1 193 921
Depreciation,
amortisation
and
impairments
7 838 202 4 562 132 4 026 16 760
Employee
costs 69 777 13 712 114 378 5 173 12 558 215 598
Operating
profit 102 536 2 411 133 323 11 155 (34 677) 214 748
Finance
income/
(expenses)
59 (10) 1 404 255 (3 674) (1 966)
Share of
profit of
equity
accounted
associates
- - - - 1 811 1 811
Net profit
before tax 102 595 2 401 134 727 11 410 (36 540) 214 593
Tax expense (27 574) 1 656 (36 678) (3 234) 9 974 (55 856)
Net profit
after tax 75 021 4 057 98 049 8 176 (26 566) 158 737
Statement of financial
position
Assets 406 843 59 535 421 999 52 048 191 892 1 132 317
Liabilities 129 661 27 651 236 525 4 860 (39 638) 359 059
69
Notes to the Annual Financial Statements |
2015
Statement of profit and loss
Revenue
Depreciation,
amortisation
and
impairments
Employee
costs
Operating
profit
Finance
income/
(expenses)
Share of
profit of
equity
accounted
associatesNet profit
before tax
Tax expense
Net profit
after tax
Statement of financial
position
Assets
Liabilities
Figures in R'000
Holdings and consolidation elimination entries is not considered a reportable segment and reconcile the segmented information to
the Group financial results.
Occupational
health and
safety
Labour
supply
Information
technologies
Financial
services
Holding and
consolidationeliminations
Total
333 253 264 071 399 605 38 378 376 1 035 683
(4 487) (236) (4 768) (103) (3 257) (12 851)
58 771 14 581 69 206 5 702 14 783 163 043
67 410 2 679 88 992 4 418 2 443 165 942
465 (46) 1 212 315 1 328 3 274
- - - - 1 978 1 978
67 875 2 633 90 204 4 733 5 749 171 194
(18 063) (507) (23 273) (1 254) (1 726) (44 823)
49 812 2 126 66 931 3 479 4 023 126 371
409 512 60 566 283 969 71 914 154 217 980 178
71 745 23 710 141 563 15 084 56 433 308 535
70
Notes to the Annual Financial Statements |
Figures in R'000 2016 2015
Refer to note 30 for the detailed directors emoluments.
A lis�ng of the group's principal and fellow subsidiaries, joint ventures and associates is set out in note 40.
The following transac�ons were carried out with related par�es
Revenue (Sale of goods and services rendered)
Associates
Kyostax Proprietary Limited 14 320 13 525
Joint operations
GFI Securities Nyon SARL 13 046 10 586
27 366 24 111
Balances with related parties were as follows
Trade receivables
Joint operations
GFI Securities Nyon SARL 9 236 5 973
Other -
Kamberg Investment Holdings Proprietary Limited 5 176 -
14 412 5 973
Other financial assets
Associates
Kyostax Proprietary Limited 5 640 5 640
5 640 5 640
On 1 September 2015 the Group disposed of its interest in GIM Holdings Proprietary Limited to Kamberg Investment Holdings
Proprietary Limited. The entire issued share capital of Kamberg Investment Holdings Proprietary Limited is held by the Greg Morris
Family Trust, of which Mr IG Morris, the Chief executive officer of the Group, is the sole beneficiary. Refer to note 34 for details on the
disposal of GIM Holdings Proprietary Limited.
The Group has a joint arrangement, classified as a joint operation with GFI Securities Nyon SARL ("GFI"), whereby the MICROmega
Securities Group and GFI has a 50% participating interest in the specified profit and loss for the MICROmega Securities Group and
GFI. GFI is eligible to receive 50% of the profit generated by the MICROmega Securities Group and the MICROmega Securities Group
is eligible to receive 50% of the profit generated by GFI.
39. RELATED PARTY TRANSACTIONS AND BALANCES
The Group entered into transactions and had balances with related parties as listed below. These include associates, joint
operations, directors and members of key management. The transactions that are eliminated on consolidation are not included.
Transactions with related parties are effected on a commercial basis and related party debts are repayable on a commercial basis.
71
Notes to the Annual Financial Statements |
40.LIST OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Interest held Interest held Issued
capitalCountry
2016 2015 2016
100% 100% 100 RSA
100% 100% 100 RSA
51% 51% 200 RSA
100% 100% 1 000 RSA
100% 100% 1 RSA
100% 100% 100 RSA
50% 50% 120 RSA
50% 50% 1 000 RSA
100% 100% 100 RSA
55% 55% 100 RSA
0% 100% 100 RSA
0% 50% 100 RSA
100% 100% 1 000 RSA
100% 100% 1 992 310 RSA
100% 100% 200 RSA
100% 100% 16 RSA
100% 100% 100 RSA
100% 100% 100 RSA
100% 0% 100 RSA
51% 51% 100 RSA
100% 100% 100 RSA
100% 100% 2 005 501 RSA
100% 100% 69 282 DRC
100% 100% 100 RSA
100% 100% 8 404 751 RSA
100% 100% 100 RSA
50% 50% 100 RSA
100% 100% 100 RSA
Name
Subsidiaries - direct and indirect interest
Action Training Academy Proprietary Limited
Action Training Consulting Proprietary Limited
Amanzi Proprietary Limited
Arbez Advanced Solutions Proprietary Limited
Aspirata Auditing Testing and Certification Proprietary Limited
Cloudware Proprietary Limited
Empowerisk Management Services Proprietary Limited
Empowerisk Proprietary Limited
ESGA Proprietary Limited
Freshmark Systems Proprietary Limited
GIM Holdings Proprietary Limited
GoMobile Proprietary Limited
Intermap Proprietary Limited
MECS Africa Proprietary Limited
MECS Growth Proprietary Limited
MICROmega Accounting and Professional Services
Proprietary Limited
MICROmega Africa Money Brokers Proprietary Limited
MICROmega Financial Services Proprietary Limited
MICROmega H2O Proprietary Limited
MICROmega Publications Proprietary Limited
MICROmega Revenue Management Solutions Proprietary
Limited
MICROmega Securities Proprietary Limited
MICROmega Services and Support DRC
MICROmega Technologies Proprietary Limited
MICROmega Treasury Solutions Proprietary Limited
MIS Consulting Proprietary Limited
Mubesko Africa Proprietary Limited
National Quality Assurance Proprietary Limited
Nerdworks Proprietary Limited 50% 0% 954 878 RSA
72
Notes to the Annual Financial Statements |
The Group has effective control of the board of directors of Empowerisk Proprietary Limited, Empowerisk Management Services
Proprietary Limited, Mubesko Africa Proprietary Limited, NOSA Agricultural Proprietary Limited, Ocneblok Proprietary Limited and
Yonke Proprietary Limited by means of an additional deciding vote.
NOSA Agricultural Services Proprietary Limited 50% 50% 100
NOSA Auditing and Inspection Services Proprietary Limited 100% 100% 120
NOSA Certification Authority Proprietary Limited 100% 100% 120 000
NOSA Global Holdings Proprietary Limited 100% 100% 16 220
NOSA Investment Holdings Proprietary Limited (Hong Kong) 100% 100% 1
NOSA Investment Holdings Proprietary Limited (South Africa) 100% 100% 100
NOSA Mozambique Proprietary Limited 100% 100% 7 418
NOSA Namibia Proprietary Limited 100% 100% 1
NOSA New Zealand Proprietary Limited 100% 100% 5 542
NOSA Proprietary Limited 100% 100% 120
NOSA Technologies Proprietary Limited 84% 84% 100
NOSA Travel Agency Proprietary Limited 100% 100% 1
NOSA Zambia Proprietary Limited 100% 100% 6 955
Ocneblok Proprietary Limited 50% 50% 200
Profit Reform Proprietary Limited 100% 0% 100
R-Data Proprietary Limited 100% 100% 1 000
Riskworks Proprietary Limited 60% 60% 200
SA International and Capital Market Brokers Proprietary
Limited100% 100% 100
SAICMB Proprietary Limited (Australia) 70% 70% 279 653
Sciam Professional Solutions Proprietary Limited 100% 100% 100
Sebata Municipal Solutions Proprietary Limited 100% 100% 7 931 095
Sebata Municipal Solutions Proprietary Limited (Namibia) 100% 100% 100
Shenzhen Proprietary Limited 70% 70% 1 733 948
Stable-Net Proprietary Limited 100% 100% 120
Swazi Occupational Safety and Health Proprietary Limited 100% 100% 100
Symphony Trade and Invest Proprietary Limited 83% 83% 120
The Training Room Online Proprietary Limited 100% 0% 1 000
TTSA Securities Proprietary Limited 100% 100% 100
Turrito Networks Proprietary Limited 100% 60% 100
USC Manufacturing Proprietary Limited 100% 100% 100
USC Metering Proprietary Limited 100% 83% 120
Yonke Proprietary Limited 50% 0% 100
Associates - direct and indirect interest
Kyostax Proprietary Limited 30% 30% 100
Cloudware Investment Holdings Proprietary Limited 0% 33% 100
Mozambique
New Zealand
RSA
RSA
RSA
Hong Kong
Hong Kong
RSA
Namibia
RSA
RSA
RSA
Zambia
RSA
RSA
RSA
RSA
RSA
Australia
Swaziland
RSA
Namibia
China
RSA
Swaziland
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
73
Notes to the Annual Financial Statements |
41.SHAREHOLDERS' INFORMATION
Analysis of Share Register at 31 March 2016
Portfolio size
1 to 50 000
50 001 to 250 000
Over 250 000
Non-public and public shareholders
Non-public shareholders
Friedshelf 1382 (Pty) Ltd
Kamberg Investment Holdings (Pty) Ltd
Seratrix (Pty) Ltd
Subsidiary Companies
Directors (direct and indirect beneficial
interest)
Directors (Subsidiary companies - direct
and indirect beneficial interest)
Total public shareholders
Major shareholders
Friedshelf 1382 (Pty) Ltd
Kamberg Investment Holdings (Pty) Ltd
Seratrix (Pty) Ltd
Enigma Investment Holdings (Pty) Ltd
TTSA Securities (Pty) Ltd
Mr Leon van Heerden
Peregrine Equities (Pty) Ltd
Deutsche Securities (Pty) Ltd
Six Sis (Pty) Ltd
Mr Rene Daubinet
Number of
shareholders
Percentage of
shareholders
Number of
shares
Percentage of
share capital
1 387 95 4 906 680 4
42 3 4 719 905 4
29 2 105 288 504 92
1 458 100 114 915 089 100
Number of
shareholders
Number of
shares
Percentage of
share capital
1 72 534 683 63
1 12 000 800 10
1 3 375 200 3
1 2 077 428 2
4 1 004 596 1
1 233 577 -
9 91 226 284 79
1 354 22 905 488 21
1 363 114 131 772 100
Number of
shares
Percentage of
share capital
72 534 683 63
12 000 800 10
3 375 200 3
3 050 603 3
2 077 428 2
1 419 710 1
1 084 729 1
910 454 1
816 157 1
663 424 1
2016 2015
Direct Indirect Direct Indirect
- 72 534 683 - 72 126 920
- 12 000 800 - 12 000 800
- 641 342 - 641 342
- 3 375 200 - 3 375 200
263 254 - 54 921 -
98 500 - 28 500 -
- - - -
- - - -
- - - -
Directors interest in securities
DC King (Executive Chairman)
IG Morris
RC Lewin
DSE Carlisle
RB Dick
AB Swan
PH Duvenhage
GE Jacobs
DA di Siena
TW Hamill 1 500 - 1 000 -
363 254 88 552 025 84 421 88 144 262
726 508 177 104 050 168 842 176 288 524
74
Notes to the Annual Financial Statements |
There were no changes in these shareholdings from the date of the financial year end to the date of approval of the annual
consolidated financial statements.