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Notes to the Financial Statements for the years ended 31 March



Foschini Limited and its subsidiaries

18.

EMPLOYEE BENEFIT ACCRUALS

                
    Post-retirement
medical aid		   Leave pay   AIDS   Total  
    Rm   Rm   Rm   Rm  
  Balance at 1 April 2005 76,1   22,8   10,0   108,9  
  Accruals made during the year 4,0   –   –   4,0  
  Balance at 1 April 2006 80,1   22,8   10,0   112,9  
  Accruals made (utilised) during the year 4,0   (0,2)   –   3,8  
  Balance at 31 March 2007 84,1   22,6   10,0   116,7  
  Further details in respect of post-retirement medical aid benefits are included in note 29.5.
   

19.

FINANCIAL INSTRUMENTS

  19.1 Foreign currency management
    Operating subsidiaries undertake transactions denominated in foreign currencies and hence exposure to exchange rate fluctuations arise. Exchange rate exposure is hedged through the use of forward exchange contracts. Refer to note 21 for details.
     
  19.2 Credit risk management
    Credit risk arises on cash equivalents, investments, loans, participation in export partnerships, private label card receivables, loan receivables and trade receivables –retail. The risk on cash equivalents and investments is managed through dealing with well-established financial institutions with high credit standing. The risk arising on trade receivables – retail, loans and private label card receivables is managed through a stringent group policy on the granting, continual review and monitoring of credit sales and loan advances. A company listed on the JSE Limited has warranted certain important cash flow aspects of the subsidiary companies’ participation in export partnerships.
    At 31 March 2007 the group did not consider there to be any significant concentration of credit risk in respect of which adequate impairment had not been raised. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.
     
  19.3 Cash flow and liquidity risk management
    The risk is managed through cash flow forecasts and ensuring that adequate borrowing facilities are maintained. In terms of the articles of association, the group’s borrowing powers are unlimited.
     
  19.4 Fair values of financial instruments
    At 31 March 2007 the carrying amounts of cash on hand and in bank, trade receivables – retail and trade and other payables approximate their fair values due to their short-term maturities. The fair value of loans and other receivables approximate their carrying value as disclosed on the balance sheet. The fair value of interest-bearing debt approximates its disclosed carrying value.
    The cash flows from the participation in export partnerships (note 8), to be received by the subsidiary companies have not been discounted. For fair presentation purposes, any impairment to the participation in export partnerships will result in a corresponding reduction in the related deferred taxation liability and thus there would be no impact on the net cash flow statement and the income statement of the subsidiary companies.
     
  19.5 Interest rate management
    The group is exposed to interest rate risk as it both borrows and invests funds. This risk is managed by maintaining an appropriate mix of fixed and floating rate instruments with reputable financial institutions.
    In addition, the RCS financial services division enters into interest rate swap contracts for the purposes of cash flow hedging since the loan receivables largely bear interest at fixed rates whilst borrowings bear interest at variable rates.
    The effective rates on financial instruments at 31 March 2007 are disclosed in the applicable notes to the financial statements. The terms of maturity are set out below:
                     
      1 year   1 year to   Non-interest   2007  
      or less   5 years   bearing   Total  
      Rm   Rm   Rm   Rm  
    Assets                
    Cash 69,1           69,1  
    Trade receivables – retail 865,1       1 370,1   2 235,2  
    Private label card receivables 671,7   155,0       826,7  
    Other receivables and prepayments 0,9       185,7   186,6  
    Participation in export partnerships         111,1   111,1  
    Loans     2,9       2,9  
    Loan receivables 160,2   706,3       866,5  
    Preference share investment     200,0       200,0  
    Total financial assets 1 767,0   1 064,2   1 666,9   4 498,1  
    Liabilities                
    Interest-bearing debt     1 014,6       1 014,6  
    Operating lease liability         121,0   121,0  
    Short-term loans 5,9           5,9  
    Trade and other payables         1 139,1   1 139,1  
    Employee benefit accruals         116,7   116,7  
    Total financial liabilities 5,9   1 014,6   1 376,8   2 397,3  
    Net financial assets 1 761,1   49,6   290,1   2 100,8  
                       
      1 year   1 year to   Non-interest   2006  
      or less   5 years   bearing   Total  
      Rm   Rm   Rm   Rm  
    Assets                
    Cash 62,5           62,5  
    Trade receivables – retail 650,6       1 466,0   2 116,6  
    Private label card receivables 390,0   90,1       480,1  
    Other receivables and prepayments 1,3       96,3   97,6  
    Participation in export partnerships         117,1   117,1  
    Loans     4,1       4,1  
    Loan receivables 319,9   497,6       817,5  
    Preference share investment 200,0           200,0  
    Total financial assets 1 624,3   591,8   1 679,4   3 895,5  
    Liabilities                
    Interest-bearing debt     797,0       797,0  
    Operating lease liability         113,3   113,3  
    Short-term loans 8,0           8,0  
    Trade and other payables         978,5   978,5  
    Employee benefit accruals         112,9   112,9  
    Total financial liabilities 8,0   797,0   1 204,7   2 009,7  
    Net financial assets (liabilities) 1 616,3   (205,2)   474,7   1 885,8  
   

20.

POST-BALANCE SHEET EVENT

  		 Besides the acquisition by the Standard Bank of South Africa Limited of a further 10% share in RCS Investment Holdings (Pty) Limited on 1 April 2007, no other significant events took place between the end of the financial year under review, and the date of signature of these financial statements. Refer note 15.
    2007 2006
    Rm Rm

21.

COMMITMENTS AND CONTINGENT LIABILITIES

    
  Capital commitments    
  Authorised – 26,5
   
  Forward exchange commitments
  The group had forward exchange contracts in various currencies in respect of future commitments, which do not relate to specific balance sheet items. At 31 March 2007 these amounted to:
      Rand equivalent
    Foreign currency (at forward cover rate)
    000’s R’000
     US Dollar 24 611 181 396
        Euro 190 1 850
     British Pound 130 1 856
      185 102
  Contingent liabilities
  There are no known contingent liabilities requiring disclosure.
    2007   2006  
    Rm   Rm  

22.

REVENUE

        
  Retail turnover 7 230,0   6 432,1  
  Interest received (refer note 23) 873,8   644,1  
  Dividends received – retail 22,8   13,4  
  Merchants’ commission – RCS financial services 36,2   47,9  
  Club income 96,1   87,0  
  Insurance income – retail 35,5   26,7  
  Insurance income – RCS financial services 66,9   55,5  
    8 361,3   7 306,7  

23.

INTEREST RECEIVED

        
  Trade receivables – retail 299,3   253,0  
  Loan receivables 336,5   287,0  
  Private label card receivables 237,0   100,2  
  Sundry – RCS financial services 1,0   3,9  
      873,8   644,1  

24.

OPERATING PROFIT BEFORE FINANCE CHARGES

        
  Operating profit before finance charges has been arrived at after taking account of:        
  Net trading expenses        
    – depreciation and amortisation (174,1)   (148,9)  
    – employee costs: normal (920,9)   (813,9)  
    – employee costs: bonuses and restraint payments (24,4)   (51,9)  
    – employee costs: share-based payments (19,2)   (19,0)  
    – store occupancy costs: normal (512,7)   (459,6)  
    – store occupancy costs: operating        
       lease liability adjustment (7,7)   6,8  
    – other operating costs (620,2)   (545,0)  
    – other income 234,7   217,1  
    (2 044,5)   (1 814,4)  
           
  The following disclosable amounts are included above:        
  Auditors’ remuneration        
    – audit fees 2,8   1,8  
    – fees for other services 0,1   0,3  
  Donations to Foschini Foundation –   10,0  
  Loss on sale of property, plant and equipment (0,1)   (1,6)  
  Retirement fund expenses 79,7   69,4  
  Receivables impairment 297,4   204,7  

25.

INCOME TAX EXPENSE

        
  South African current taxation        
    – current year 550,7   427,4  
    – prior year under (over) provision 6,6   (4,0)  
    – secondary tax on companies 59,3   58,3  
    – capital gains tax 0,4   –  
  South African deferred taxation        
    – current year (34,4)   (3,7)  
    – prior year (under) over provision (7,0)   4,0  
    – secondary tax on companies 6,6   (9,8)  
  Non-South African current taxation        
    – current year 7,9   5,8  
    – prior year under provision 0,1   0,1  
  Non-South African deferred taxation        
    – current year 0,1   1,1  
    590,3   479,2  
    %   %  
  Reconciliation of tax rate        
  Effective tax rate 33,1   32,2  
  Exempt income 0,4   0,6  
  Non-deductible expenditure (0,7)   (0,5)  
  Non-South African tax rate (0,1)   (0,1)  
  Secondary tax on companies and withholding tax on dividends (3,7)   (3,2)  
  South African statutory rate 29,0   29,0  

26.

EARNINGS PER SHARE

        
  26.1 Basic and headline earnings per share          
    The calculation of basic earnings per share at 31 March 2007 was based on profit for the year attributable to ordinary shareholders of Foschini Limited of R1 119,2 (2006:R986,9) million divided by the weighted average number of ordinary shares as follows:          
    Profit attributable to equity holders of Foschini Limited   1 119,2   986,9  
    Headline earnings   1 119,2   986,9  
               
    Weighted average number of ordinary shares in issue   209 493 784   213 134 827  
               
    Earnings per ordinary share (cents)   534,2   463,0  
    Headline earnings per ordinary share (cents)   534,2   463,0  
  26.2 Diluted earnings per share          
    The calculations of diluted earnings per share and diluted headline earnings per share at 31 March 2007 was based on profit for the year attributable to ordinary shareholders of Foschini Limited of R1 119,2 (2006: R986,9) million divided by the fully diluted weighted average number of ordinary shares as follows:          
    Weighted average number of ordinary shares as above   209 493 784   213 134 827  
    Number of shares that would have been issued for no consideration   7 895 952   6 362 895  
    Weighted average number of ordinary shares used for dilution   217 389 736   219 497 722  
               

27.

OPERATING LEASE OBLIGATION

        
  The group leases most of its trading premises under operating leases.        
  Leases on trading premises are contracted for periods of between five and ten years, with renewal options for a further five years, wherever possible. The lease agreements for certain stores provide for a minimum annual rental payment and additional payments determined on the basis of turnover. Turnover rentals, where applicable, average approximately 4,5% of turnover. Rental escalations vary, but average at a rate of approximately 8% per annum.        
  At 31 March, future non-cancellable minimum lease rentals are as follows:        
  Less than 1 year 534,1   471,8  
  More than 1 year and less than 5 years 1 253,9   1 338,0  
  More than 5 years 255,2   114,1  
           

28.

OPERATING LEASE ADJUSTMENT

        

  		 During the course of the year, the straight-line model used to calculate the operating lease liability was reassessed. This resulted in an adjustment of R145 million (net of deferred taxation) to retained earnings as at 31 March 2005. The effect of the reassessment on the prior year income statement is insignificant and accordingly, comparatives have not been restated.
        
                 
          2007   2006  

29.

EMPLOYEE BENEFITS

  29.1 Share incentive scheme
    Certain employees of the group participate in the share incentive scheme. The scheme rules provide that delivery and payment for the shares take place in three equal tranches on the second, fourth and sixth anniversary of the date on which the options were exercised.
    The fair value of options granted and exercised after 7 November 2002 was determined using a binomial option-pricing model. The assumptions used in determining the fair value are as follows:
    Options granted and exercised during the financial year ending 31 March
    Exercise price R43,59 to R69,01   R36,36 to R52,41  
    Expected volatility 29,0% to 32,9%   27,0% to 32,7%  
    Expected dividend yield 3,6% to 3,9%     3,5%  
    Risk-free interest rate 7,3% to 8,6%    7,1% to 8,0%  
    The group recognised total expenses of R19,2 (2006: R19,0) million related to these equity-settled share-based payment transactions during the year.          
    Details of the share options outstanding at the end of the year are set out below.          
          Number of share options
    Foschini Staff Share Incentive Scheme (1990)            
    Options granted, but not exercised at 1 April     19 009   38 018  
    Options exercised during the year     (19 009)   (19 009)  
    Options granted, but not exercised at 31 March     –   19 009  
    Foschini 1997 Share Option Scheme            
    Options exercised, subject to future delivery, at 1 April     17 041 730   23 063 718  
    Options exercised during the year, subject to future delivery     4 431 947   115 254  
    Options delivered during the year     (4 633 503)   (6 137 242)  
    Options exercised, subject to future delivery, at 31 March     16 840 174   17 041 730  
    Options will be delivered during the following financial years:            
    Year   Average price          
                   
    2008   R13,08   4 362 051      
    2009   R34,49   5 086 927      
    2010   R18,26   2 365 039      
    2011   R47,86   3 305 385      
    2012   R39,85   101 670      
    2013   R60,21   1 619 102      
          16 840 174      
    Both schemes are administered by The Foschini Share Incentive Trust which holds shares in Foschini Limited as follows:            
    Shares held at the beginning of the year     11 049 675   11 755 862  
    Options exercised during the year     (19 009)   (19 009)  
    Shares delivered during the year     (4 633 503)   (6 137 242)  
    Shares purchased during the year     5 270 714   5 450 064  
    Shares held at the end of the year     11 667 877   11 049 675  
         
  29.2 Housing loans
    Refer note 5.
     
  29.3 Retirement funds
    Foschini Group Retirement Fund: Defined contribution plan
    The Foschini Group Retirement Fund, which is governed by the provisions of the Pension Funds Act No. 24 of 1956, is a defined contribution plan. It provides comprehensive retirement and associated benefits for members and their dependants. All permanent employees of wholly-owned subsidiaries of Foschini Limited, excluding those that are members of the Namflex or Swaziland Funds, are members of the retirement fund.
    An actuarial valuation of the fund was performed as at 31 December 2003, in which the valuator reported that the fund was in a sound financial position. In addition, the Registrar of Pension Funds has recorded the fund as a nil scheme submission as there was no actuarial surplus to apportion as at the surplus apportionment date being 31 December 2003. The actuarial valuation as at 31 December 2006 is due to be performed during the 2008 financial year.
     
    Investment Solutions Pension Fund: Defined contribution plan
    All employees above an annually determined pensionable salary threshold pay 7,5% of their above-threshold earnings as contributions into this fund, which is an umbrella retirement funding arrangement.
     
    Investment Solutions Provident Fund: Defined contribution plan
    All employees above an annually determined pensionable salary threshold have an option of paying 1,5% of their earnings as contributions into this fund.
     
    Liberty Life Provident Fund: Defined contribution plan
    Employees of RCS Investment Holdings (Pty) Ltd, a non wholly-owned subsidiary, are not members of The Foschini Group Retirement Fund, but receive comparable benefits from the Liberty Life Provident Fund.
     
    Namflex Pension Fund: Defined contribution plan
    All permanent employees in Namibia under normal retirement age are required to be members of the Namflex Pension Fund. This fund is a money purchase arrangement whereby the members pay 7,5% of their pensionable salary as contributions towards retirement benefits.
     
    Swaziland Provident Fund: Defined contribution plan
    All permanent employees in Swaziland under normal retirement age are required to be members of the Swaziland Provident Fund, whereby members pay 7,5% of their pensionable salary as contributions to this fund.
    The employers and the members make like contributions in respect of retirement benefits. In addition, the employers cover death and disability benefits, reinsurance and administration and management costs.
      Number of members Contributions
      2007   2006   2007   2006  
    Summary per fund:         Rm   Rm  
    The Foschini Group Retirement Fund 9 326   8 196   69,7   61,7  
    Namflex Pension Fund 207   188   1,2   1,0  
    Swaziland Pension Fund 9   8   –   –  
    Liberty Life Provident Fund 216   173   4,5   2,9  
    Investment Solutions Pension Fund 119   114   3,1   2,7  
    Investment Solutions Provident Fund 123   119   1,2   1,1  
      10 000   8 798   79,7   69,4  
  29.4 Medical aid
    The Foschini Group Medical Aid Scheme: Defined benefit plan
    The company and its wholly-owned subsidiaries operate a defined benefit medical aid scheme for the benefit of their permanent employees (excluding those employed in Namibia). Membership of the scheme is voluntary, except for senior employees. Total membership currently stands at 2 246 principal members.
    These costs are charged against income as incurred and amounted to R18,2 (2006: R18,2) million, with employees contributing a further R18,2 million to the fund.
    In respect of the year ended 31 December 2006, the scheme earned contributions of R37,7 million and reflected a net surplus of R1,6 million after the deduction of all expenses.
    The fund had net assets totalling R37,9 million. The projected surplus in respect of the year ending 31 December 2007 is R0,6 million.
     
    Bankmed Medical Aid Scheme: Defined benefit plan
    Permanent employees in Namibia are voluntary members of the Bankmed Medical Aid Scheme. These costs are charged against income as incurred and amounted to R0,5 (2006: R0,5) million, with employees contributing a further R0,5 million to the fund. There are currently 80 members of this fund.
     
    Ingwe Health Plan: Defined benefit plan
    An external medical aid scheme, Ingwe Health Plan, is also available to group employees and is subsidised by the group in the same way as the schemes mentioned above. The plans offered cater for lower income earners, and 201 employees are currently members. Costs charged to income total R1,3 million.
     
    Discovery Health: Defined benefit plan
    All permanent staff of RCS Investment Holdings (Pty) Ltd, a non-wholly-owned subsidiary are required to become members of their choice of the medical plans offered by Discovery Health.
    These costs are charged against income as incurred and amounted to R1,8 million. Total membership currently stands at 190 principal members.
 
  29.5 Post-retirement medical aid
    Qualifying retired employees are entitled to medical aid benefits, which have been fully provided for (refer note 18). The cost of providing post-retirement medical aid has been determined in accordance with IAS 19 and the charge against income for the year was R4,0 (2006: R4,0) million.
    The principal assumptions at the last valuation date, being 31 March 2006 were as follows:
   
Net discount rate  2%
Withdrawal rates   0% – 24%
Normal retirement age   60 – 65 years
  29.6 Other
    Group employees and pensioners are entitled to a discount on purchases made at stores within the group.
                                   
                            2007   2006  
                        Per-          
        Remuner-   Pension   Travel   Other   formance          
    Fees   ation   fund   allowance   benefits*   bonus**   Total   Total  
    R’000   R’000   R’000   R’000   R’000   R’000   R’000   R’000  

30.

DIRECTORS’ REMUNERATION

                    
  Non-executive                                
  E Osrin 712,5   –   –   –   –   –   712,5      
  D M Nurek 236,3   –   –   –   –   –   236,3      
  F Abrahams 178,7   –   –   –   –   –   178,7      
  S E Abrahams 201,2   –   –   –   –   –   201,2      
  L F Bergman 135,0   –   –   –   –   –   135,0      
  W V Cuba 135,0   –   –   –   –   –   135,0      
  N H Goodwin 158,8   –   –   –   –   –   158,8      
  M Lewis 130,0   –   –   –   –   –   130,0      
  Total 1 887,5   –   –   –   –   –   1 887,5      
  Executive                                
  D M Polak –   3 110,8   286,0   269,9   184,3   –   3 851,0      
  R Stein –   1 519,6   158,1   206,9   97,8   –   1 982,4      
  Total –   4 630,4   444,1   476,8   282,1   –   5 833,4      
  Total remuneration 2007 1 887,5   4 630,4   444,1   476,8   282,1   –   7 720,9      
  Non-executive                                
  E Osrin 525,0   –   –   –   –   –       525,0  
  D M Nurek 163,8   –   –   –   –   –       163,8  
  F Abrahams 127,5   –   –   –   –   –       127,5  
  S E Abrahams 141,2   –   –   –   –   –       141,2  
  L F Bergman 107,5   –   –   –   –   –       107,5  
  W V Cuba 107,5   –   –   –   –   –       107,5  
  N H Goodwin 120,0   –   –   –   –   –       120,0  
  M Lewis 100,0   –   –   –   –   –       100,0  
  Total 1 392,5   –   –   –   –   –       1 392,5  
  Executive                                
  D M Polak –   2 849,9   269,8   233,6   133,8   4 099,4       7 586,5  
  R Stein –   1 383,3   149,8   193,4   64,9   1 951,7       3 743,1  
  Total –   4 233,2   419,6   427,0   198,7   6 051,1       11 329,6  
  Total remuneration 2006 1 392,5   4 233,2   419,6   427,0   198,7   6 051,1       12 722,1  
 
* Other benefits include medical aid and group life cover.
** The performance bonus relates to the results for the 2006 financial year.
  In accordance with the requirements of IFRS 2, the fair value of share options granted to employees is expensed in the income statement over the term of the option. An amount of R2,5 (2006: R2,8) million and R1,1 (2006: R1,2) million was recognised in respect of options granted to Messrs D M Polak and R Stein respectively.
      2007   2006  
    Rm   Rm  

31.

RELATED-PARTY TRANSACTIONS

        
  Shareholders        
  An analysis of the principal shareholders of the company is provided in the Shareholdings section of the annual report. For details of directors’ interests refer to note 12.4.        
  Subsidiaries        
 

During the year, in the ordinary course of business, certain companies within the group entered into arm’s length transactions.

        
   These intragroup transactions have been eliminated on consolidation.        
 

Other related parties

        
  The Foschini Group Retirement Fund        
  The Foschini Group Retirement Fund is administered by Foschini Retail Group (Pty) Ltd, a subsidiary of Foschini Limited.        
   Administration fee earned from The Foschini Group Retirement Fund 1,3   1,3  
  An executive director of Foschini Limited (Mr R Stein) is also a trustee of the Foschini Group Retirement Fund.        
  RCS Home Loans (Pty) Ltd        
  RCS Investment Holdings (Pty) Ltd, a subsidiary of Foschini Limited, is the holding company of RCS Home Loans (Pty) Ltd.        
  RCS Home Loans (Pty) Ltd is party to a joint venture agreement with South African Home Loans (Pty) Ltd.        
  The results of this joint venture have not been consolidated in the current financial year as the group does not control this entity.        
 

Directors

        
 

Remuneration

        
  Details relating to executive and non-executive directors’ remuneration are disclosed in note 30.        
 

Interest of directors in contracts

       
 

No directors have any interests in contracts.

       
 

Executive directors are bound by service contracts.

        
 

Loans to directors

       
 

No loans have been made to directors.

        
 

Employees

       
 

Details relating to the share incentive scheme are disclosed in note 29.1.

        
  Key management personnel        
 

Key management personnel are those having authority and responsibility for planning, directing and controlling activities, directly or indirectly, including any director of that entity. Directors and associates of all subsidiary companies, excluding those who are also executive directors of the company, have been classified as key management personnel. No key management personnel had a material interest in any contract of significance with any group company during the year under review.

       
  Remuneration paid to key management personnel is as follows:        
  Remuneration 49,55   49,4  
  Pension fund

 5,3   5,3  
  Travel allowance 7,4   6,9  
  Other benefits 1,8   1,5  
  Performance bonus 4,5   27,6  
  Fair value of share options granted* 16,9   16,7  
  Gain from sale of RCS Investment Holdings (Pty) Ltd shares –   92,3  
  Total remuneration 85,4   199,7  
  * The fair value of options granted is the annual expense determined in accordance with IFRS 2 Share-based payments.        

32.

CASH FLOW

        
  32.1 Operating profit before working capital changes        
    Profit before tax 1 782,3   1 488,2  
    Adjusted for:        
    – interest received (873,8)   (644,1)  
    – interest paid 104,7   79,1  
    – dividends received (22,8)   (13,4)  
    – depreciation and amortisation 174,1   148,9  
    – share-based payments 19,2   19,0  
    – operating lease liability 7,7   (6,8)  
    – loss on sale of property, plant and equipment 0,1   1,6  
    Operating profit before working capital changes 1 191,5   1 072,5  
  32.2 Working capital changes        
    – increase in inventory (176,2)   (190,1)  
    – increase in trade and other receivables (207,6)   (360,9)  
    – increase in trade and other payables 161,9   22,7  
    – increase in employee benefit accruals 3,8   4,0  
    Increase in working capital (218,1)   (524,3)  
  32.3 Reconciliation of taxation paid        
    – amount unpaid at the beginning of the year (327,9)   (304,5)  
    – current year provision (625,0)   (487,6)  
    – amount unpaid at the end of the year 234,7   327,9  
      (718,2)   (464,2)  
  32.4 Reconciliation of dividends paid        
    – dividends declared during the year (500,6)   (388,8)  
    – dividends paid by subsidiary to outside shareholders (51,6)   (23,9)  
      (552,2)   (412,7)  
  32.5 Proceeds on dilution of interest in subsidiary        
    As part of the agreement entered into with the Standard Bank of South Africa Limited (SBSA) (refer note 15), RCS Investment Holdings (Pty) Limited issued further shares, all of which were acquired by SBSA. This resulted in a further dilution of 10%.        
    The cash flow effects of the acquisition by SBSA of this further 10% are reflected below.        
    SBSA’s holding in this subsidiary at 31 March 2007 was 35%.        
    Purchase consideration 183,3   263,8  
    Fair value of net assets 71,2   74,7  
    Profit on dilution 112,1   189,1  
    Proceeds on dilution of interest in subsidiary 183,3   263,8  

   

33.

RECLASSIFICATION
  In addition to the operating lease adjustment (refer note 28), certain comparative figures have been restated in order to improve disclosure. These adjustments have no effect on comparative earnings.
  The effect on the comparative balance sheet is as follows:  
    2006
    Rm
  Net decrease in assets  
  Increase in property, plant and equipment (a) 53,6
  Increase in goodwill and intangible assets (b) 1,0
  Decrease in deferred tax asset (refer note 28) (59,8)
  Increase in inventory (c) 25,9
  Decrease in other receivables and prepayments (84,3)
    (63,6)
  Net decrease in equity and liabilities  
  Increase in equity (refer note 28) 145,0
  Decrease in operating lease liability (refer note 28) (204,8)
  Decrease in trade and other payables (d) (3,8)
    (63,6)
 
(a) The increase in property, plant and equipment is as a result of a reclassification of assets under construction which were previously classified in other receivables and prepayments.
(b) The increase in goodwill and intangible assets is as a result of a client list erroneously included as part of other receivables and prepayments.
(c) The increase in inventory is as a result of reclassifying shopfitting stock and consumables which were previously included in other receivables and prepayments.
(d) The decrease in trade and other payables is as a result of the reclassification of a receivable erroneously included in liabilities in 2006.
   

34.

ACCOUNTING STANDARDS AND INTERPRETATIONS TO BE ADOPTED IN FUTURE YEARS

  		 There are Standards and Interpretations in issue that are not yet effective. These include the following Standards and Interpretations that are applicable to the group and may have an impact on future financial statements:
   
  IFRS 7 Financial instruments: Disclosures and the amendments to IAS 1 Presentation of financial statements: Capital disclosures
  The disclosures provided in respect of financial instruments and share capital in the financial statements for the year ending 31 March 2008, as well as comparative information, will be compliant with IFRS 7 and amended IAS 1.
  These statements require additional disclosure about the significance of financial instruments for an entity's financial position and performance, and qualitative and quantitative disclosures of the nature and extent of risks, as well as the entity's objectives, policies and processes for managing capital.
   
  IFRS 8 Segmental reporting
  This statement which will be applicable to the group for the year ending 31 March 2010, requires significant additional disclosures as it extends the scope of segmental reporting.
   
  IFRIC 8 Scope of IFRS 2 Share-based payments

  This interpretation addresses the accounting for share-based payment transactions in which some or all goods or services rendered cannot be specifically identified. IFRIC 8 will be retrospectively applied to the financial statements for the year ending 31 March 2008, but is not expected to have a material impact.
   
  IFRIC 10 Interim financial reporting and impairment
  IFRIC 10 prohibits the reversal of an impairment loss recognised in a previous interim period in respect of goodwill, an investment in an equity instrument classified as available-for-sale or a financial asset carried at cost. IFRIC 10 will be prospectively applied to the financial statements for the year ending 31 March 2008.

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