For the year ended 31 march 2014
The condensed consolidated provisional annual financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and in compliance with the Listings Requirements of the JSE Limited and the South African Companies Act, 2008.
The condensed consolidated provisional annual financial statements are presented in South African Rand, which is the Group's functional currency. All financial information presented in Rand has been rounded off to the nearest million.
The condensed consolidated provisional annual financial statements are prepared on the historical cost basis, with the exception of certain financial instruments initially (and sometimes subsequently) measured at fair value. Details of the Group's significant accounting policies are set out below and are consistent with those applied in the previous financial year except for the following:
In preparing these condensed consolidated provisional annual financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were consistent with those applied to the consolidated financial statements for the year ended 31 March 2013 with the exception of the curtailment to the Post Retirement Medical Aid liability, hedge accounting, taxation, the employee share scheme and government grants.
The condensed consolidated provisional annual financial statements have been prepared in accordance with the accounting policies adopted in the Group's last annual financial statements for the year ended 31 March 2013, except for the adoption of the amendments, new standards described below and the application of fair value hedge accounting.
The amendment clarifies that spare parts and servicing equipment are classified as property, plant and equipment rather than inventory when they meet the definition of property, plant and equipment. Previously the Group classified strategic spare parts, which were not considered as major parts, as inventory.
Following the amendment, the Group reclassified spare parts with a carrying amount of R357 million (31 March 2012: R352 million) from inventory to property, plant and equipment. The useful lives of the spare parts have been estimated to be approximately five years.
IAS 19R Employee benefits prescribes a number of changes to the accounting for employee benefits. As a result of adopting the revised standard, the Group has changed its accounting policy with respect to the basis for determining the income or expense related to the Group's defined benefit plans. These adjustments were made on a retrospective basis.
The standard replaces the interest cost on the defined benefit obligation and the expected return on plan assets with a net interest cost based on the net defined benefit asset or liability and the discount rate, measured at the beginning of the year. This has increased profit or loss charge as the discount rate applied to assets is lower than the expected return on assets. This has no effect on total comprehensive income as the increased charge in profit or loss is offset by a credit in other comprehensive income relating to actuarial gains and losses and asset limitations.
In addition, unvested past service costs can no longer be deferred and recognised over the future vesting period. Instead all past service costs are recognised at the earlier of when the amendment occurs and when the Group recognises related restructuring or termination costs. Until 2013, the Group's unvested past service costs were recognised as an expense on a straight line basis over the average period until the benefits became vested. With the transition to IAS 19R, past service costs are recognised immediately if the benefits have vested immediately following the introduction of, or changes to a pension plan. The effect has been that the profit or loss has increased by R104 million as at 31 March 2013 (2012: R95 million). The effect on the defined benefit obligation was an increase of R3 million as at 31 March 2013 (2012: R5 million).
The Company has changed it's accounting policy with respect to the basis for determining the cost of the investment to fair value basis in line with IFRS 10. As a result the Group has deconsolidated the Cell Captive and the net effect in the Group is zero.
As at |
As at |
|
|---|---|---|
| Rm | Rm | |
| Increase in the defined benefit obligation due to past service cost recognition | (3) | (5) |
| Decrease in deferred tax liabilities | - | 9 |
| Increase in property, plant and equipment due to service equipment restatement | 357* | 352 |
| Decrease in strategic inventory due to service equipment restatement | (406) | (376) |
| Increase in the investment in Cell Captive preference shares | 7 | - |
| Decrease in trade and other receivables | (7) | (5) |
| Decrease in cash and cash equivalents | (3) | (1) |
| decrease in trade and other payables | 3 | 6 |
| Net impact | (52) | (20) |
| *Depreciated amount | ||
Year to |
Year to |
|
|---|---|---|
| Rm | Rm | |
| Profit or loss: | ||
| Increase in employee benefit expenses | (144) | (132) |
| Decrease in tax expenses | 40 | 37 |
| Increase in depreciation due to service equipment restatement | (25) | (24) |
| Decrease in deferred tax liabilities | 7 | 7 |
| Decrease in other income | (16) | (8) |
| Decrease in service fees | 6 | 3 |
| Decrease in investment income | (22) | (23) |
| Increase in fair value gains | 28 | 28 |
| Decrease in taxation | 4 | - |
| Net decrease in profit for the year | (122) | (112) |
| Equity holders of the parent | (122) | (112) |
| Other comprehensive income: | ||
| Increase in remeasurement movement in OCI | 146 | 127 |
| Increase in tax effect on remeasurement movements in OCI | (41) | (35) |
| Net increase in other comprehensive income | 105 | 92 |
| Equity holders of the parent | 105 | 92 |
2.1 Adoption of new standards and amendments
There was no material impact on the Group's consolidated statement of cash flows. The basic and diluted earnings per share moved from a loss of 2,276.2 cents as previously reported to a loss of 2,303.0 cents for the year ended 31 March 2013. The headline earnings and diluted headline earnings per share moved from 87.0 cents as previously reported to 60.1 cents for the year ended 31 March 2013.
Pronouncement |
Title |
Effective date |
|---|---|---|
| IFRS 1 First-time Adoption of IFRS | Exception to the retrospective application of IAS 20 to existing government loans at the date of transaction. | 1 January 2013 |
| IFRS 1 First-time Adoption of IFRS | Amendments permits the repeated application of IFRS 1, borrowing costs on certain qualifying assets. | 1 January 2013 |
| IFRS 1 First-time Adoption of IFRS | Amendment to the Basis of Conclusion to clarify the meaning of 'effective IFRSs'. | Immediately |
| IFRS 2 Share-based Payments | Amendments of the definition of 'vesting conditions' and 'market conditions' and the addition of the definitions of 'performance condition' and 'service condition'. | 1 July 2014 |
| IFRS 3 Business Combinations | Accounting for contingent consideration that is classified as an asset or liability. The contingent consideration shall be measured at fair value at each reporting date. | 1 July 2014 |
| IFRS 7 Financial Instruments Disclosures | Amendments enhancing disclosures about offsetting of financial assets and financial liabilities. | 1 January 2013 |
| IFRS 13 Fair Value Measurement | Amendment to clarify the measurement of short-term receivables and payables with no stated interest rate, at invoice amount without discounting, when the effect of not discounting is immaterial. | Immediately |
| IAS 32 Financial Instruments: Presentation | Amendments to clarify tax effects of distribution to holders of equity instruments. | 1 January 2013 |
| IAS 34 Interim Financial Reporting | Amendments to clarify interim financial reporting segment information for total assets and total liabilities to enhance consistency with the requirements of IFRS 8. | 1 January 2013 |
| IAS 36 Impairment of Assets | Amendment to disclosures of the recoverable amount of impaired non-financial assets as a consequence of issuing IFRS 13 Fair Value Measurement. | 1 January 2014 |
| IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine | Recognition, classification and measurement of the production Stripping Costs as an asset. | 1 January 2013 |
Pronouncement |
Title |
Effective date |
|---|---|---|
| IFRS 3 Business Combinations | Amendment to scope exception of joint ventures in paragraph 2(a). | 1 July 2014 |
| IFRS 7 Financial Instruments Disclosures | Amendments requiring disclosures about the initial application of IFRS 9. | 1 January 2018* |
| IFRS 7 Financial Instruments Disclosures | Additional hedge accounting disclosures resulting from the introduction of a hedge accounting chapter in IFRS 9. | 1 January 2018* |
| IFRS 9 Financial Instruments | Classification and measurement of financial assets and financial liabilities and derecognition requirements. | 1 January 2018* |
| IFRS 8 Operating Segments | Amendment relating to aggregation of segments and reconciliation of the total reportable segments' assets to the entity's assets if segment assets are reported regularly. | 1 July 2014 |
| IFRS 13 Fair Value Measurement | Amendment of scope exclusion in IFRS 13.52 to include all contracts accounted for within the scope of IAS 39 and IFRS 9, regardless of whether they meet the definition of financial asset or financial liability as defined in IAS 32. | 1 July 2014 |
| IFRS 14 Regulatory Deferral Accounts | The new standard describes the financial reporting requirements for 'regulatory deferral account balances' that arise when an entity provides goods or services to customers at a price or rate that is subject to rate regulation. | 1 January 2016 |
| IFRS 15 Revenue from contracts with customers | Revenue from contracts with customers | 1 January 2017 |
| IAS 16 Property, Plant and Equipment | Revaluation method: proportionate restatement of accumulated depreciation of an item of property, plant and equipment. | 1 July 2014 |
| IAS 19 Employee Benefits | Defined Benefit Plans: Employee Contributions. The amendment clarifies the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service. | 1 July 2014 |
| IAS 24 Related Party Disclosures | Amendment requires disclosure of key management personnel services, provided to the reporting entity or to the parent of the reporting entity, as a related party in the reporting entity. | 1 July 2014 |
| IAS 38 Intangible Assets | Revaluation method: proportionate restatement of accumulated amortisation of an intangible asset. | 1 July 2014 |
| IAS 32 Financial Instruments: Presentation | Amendments to application guidance on the offsetting of financial assets and financial liabilities and the related net credit exposure. | 1 January 2014 |
| IAS 39 Financial instruments: Recognition and Measurement | Amendments for novation of Derivatives and the continuation of Hedge Accounting. | 1 January 2014 |
| IAS 40 Investment Property | Interrelationship between IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property. | 1 July 2014 |
| IFRIC 21 Levies | Interpretation on the accounting for levies imposed by governments. | 1 January 2014 |
*The International Accounting Standards Board (IASB) has announced the amendments tentatively.