The financial statements are prepared on the historical cost basis, adjusted by the revaluation of investment properties and incorporate
the following principal accounting policies which are consistent with those applied in the previous year.
B A S I S O F C O N S O L I D AT I O N
Investment in subsidiaries
Subsidiaries are those entities over whose financial and operating policies the group has the power to exercise control, so as to obtain
benefits from their activities.
The group financial statements incorporate the assets, liabilities and results of the operations of the company and its subsidiaries. The
results of subsidiaries acquired and disposed of during a financial year are included from the effective dates of acquisition to the
effective dates of disposal. Where necessary, the accounting policies of subsidiaries are changed to ensure consistency with the policies
adopted by the group.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
P R O P E R T Y, P L A N T A N D E Q U I P M E N T
Property, plant and equipment are stated at cost to the group less depreciation, except in the case of investment properties.
Investment properties are stated at open market valuations which are reviewed at least once every three years. Any surplus on
revaluation, in excess of net book value, is transferred to a revaluation reserve. Surpluses on revaluation are recognised as income to
the extent that they reverse revaluation decreases of the same assets recognised as expenses in previous periods. Deficits on revaluation
are charged directly against the revaluation reserves only to the extent that the decrease does not exceed the amount held in the
revaluation reserve of that same asset. Other deficits are recognised as expenses.
Other assets are stated at historical cost less accumulated depreciation and accumulated impairment losses. The cost of self-constructed
assets includes the cost of materials, direct labour and a proportion of production overheads.
Depreciation is not provided on investment properties or freehold land.
Depreciation on other assets is provided on a straight line basis at the rates set out below, which the directors believe are appropriate
to reduce the carrying value of the assets to their residual values over their expected useful lives:
Leasehold improvements
Plant and machinery
Furniture and equipment
Computer equipment
Motor vehicles |
-
-
-
-
- |
20% per annum
10% to 20% per annum
7,5% to 20% per annum
25% to 33% per annum
20% to 25% per annum |
Property, plant and equipment purchased under suspensive sale agreements is capitalised and depreciated at rates applicable to that
asset class, mentioned above. Finance charges on such suspensive sale agreements are accounted for as interest paid using the effective
interest rate method.
Direct costs incurred on major capital projects are capitalised during the period of construction and commissioning. Finance costs are
capitalised for qualifying assets. Qualifying assets are assets which take a substantial period of time to get ready for their intended use
or sale.
L E A S E S
Operating leases
Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Payments
made under operating leases are charged against income on a straight line basis over the period of the lease.
I M PA I R M E N T
The carrying amounts of the group’s assets are reviewed at each balance sheet date to determine whether there is any indication of
impairment. If there is any indication that an asset may be impaired, its recoverable amount is estimated. The recoverable amount is
the higher of its net selling price and its value in use. The impairment loss is arrived at by comparing the carrying value to the
recoverable amount. Impairment losses are first allocated against the revaluation reserve, where applicable, and then taken against
profit and loss.
G O O D W I L L
Goodwill is any excess of the cost of an acquisition over the group’s interest in the fair value of identifiable assets and liabilities
acquired.
It is capitalised and amortised over its useful life, not exceeding 20 years.
I N V E N T O R I E S
Inventories are valued at the lower of cost, as defined below, and net realisable value.
Cost is determined on the following basis:
Raw materials, work in progress, finished goods, consumables and dies are valued on a first-in-first-out (FIFO) basis which include
labour and overheads related directly to production. Obsolete, redundant and slow-moving stocks are written down where appropriate.
F I N A N C I A L I N S T R U M E N T S
Measurement
Financial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial recognition these
instruments are measured as set out below:
Trade and other receivables
Trade and other receivables originated by the group are stated at cost less provision for doubtful debts.
Cash and cash equivalents
Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at balance sheet date.
Investments in subsidiary companies
Investments in subsidiary companies are stated at cost less provision for impairment in the value of the investments.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisations.
Derivative instruments
Derivative instruments are measured at fair value.
Gains and losses on subsequent measurement
Gains and losses arising from a change in the fair value of financial instruments that are not part of a hedging relationship are included
in net profit or loss in the period in which the change arises.
Derivative financial instruments that are part of a hedging relationship with a recognised financial asset or liability are classified as
fair value hedges. Gains and losses on remeasurement of fair value hedges are taken to profit and loss.
D E F E R R E D TA X AT I O N
Deferred tax is provided using the balance sheet liability method, based on temporary differences. Temporary differences are differences
between the carrying amounts of assets and liabilities for financial reporting purposes and their tax base. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using the tax
rates enacted or substantively enacted at balance sheet date. Deferred tax is charged to the income statement except to the extent
that it relates to a transaction that is recognised directly in equity, or a business combination that is an acquisition. The effect on
deferred tax of any changes in tax rates is recognised in the income statement, except to the extent that it relates to items previously
charged or credited directly to equity.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the
associated unused tax losses and deductible temporary differences can be utilised. Deferred tax assets are reduced to the extent that
it is no longer probable that the related tax benefit will be realised.
I N T E R E S T B E A R I N G L I A B I L I T I E S A N D B A N K B A L A N C E S
Interest bearing liabilities and bank balances are stated at the actual amounts owing to/by the financial institutions concerned,
including interest thereon. Uncleared cheques are included in accounts payable.
R E V E N U E
Revenue comprises the net sales value to third parties of all invoices, commissions and rentals, excluding value added tax. Sales within
the group are eliminated on consolidation.
Where group companies act as agents and are remunerated on a commission basis, only the commission income, and not the value of
the business handled, is included in revenue.
F O R E I G N C U R R E N C I E S
Foreign currency transactions
Transactions in foreign currency are recorded at the rate of exchange ruling at the transaction date. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Gains and losses arising on
translation are credited to or charged against income.
The group enters into forward exchange contracts to hedge its risk against changes in exchange rates. Open forward exchange contracts
are marked to market at year-end. Resulting gains or losses are taken to income.
Financial statements of foreign entities
The financial statements of foreign entities are translated into SA rands as follows:
• Assets and liabilities are translated at rates of exchange ruling at the financial year-end.
• Income and expenditure and cash flow items are translated at the appropriate weighted average exchange rates for the year.
Exchange differences arising from the translation of foreign entities are taken directly to a foreign currency translation reserve to the
extent that there are reserves. If such reserve is depleted, the losses are taken against income for the year.
P R O V I S I O N S
Provisions are recognised when the group has a present legal or constructive obligation as a result of past events, for which it is
probable that an outflow of economic benefits will occur, and where a reliable estimate can be made of the amount of the obligation.
Where the effect of discounting is material, provisions are discounted. The discount rate used is a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty
data and a weighting of all possible outcomes against their associated probabilities.
Restructuring
A provision for restructuring is recognised when the group has approved a detailed and formal restructuring plan, and the restructuring
has either commenced or has been publicly announced, resulting in a valid expectation of realisation of the plan. Costs relating to
ongoing activities are not provided for.
E M P L O Y E E B E N E F I T S
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.
The provision for employee entitlements to wages, salaries, annual and sick leave represents the amount which the group has a present
obligation to pay as a result of employees’ services provided to balance sheet date. The provisions have been calculated at undiscounted
amounts using (where applicable) current wage and salary rates.
Retirement benefits
The company contributes to a Provident Fund. Contributions are charged against income as incurred.
Equity compensation benefits
The group grants share options to certain employees under an employee share plan. Other than costs incurred in the administration of
the scheme which are expensed as incurred, the scheme does not result in any expense to the group.
R E S E A R C H C O S T S
Research costs are written off as incurred.
E A R N I N G S P E R O R D I N A R Y S H A R E
Earnings per ordinary share are calculated by dividing income attributable to ordinary shares by the weighted average number of
ordinary shares in issue.
Where necessary, the notes to the financial statements set out how the earnings per share have been computed.
D I S C O N T I N U E D O P E R AT I O N S
A discontinued operation results from the sale or abandonment of an operation that represents a separate major line of business and
where the assets, net profit or loss and activities can be distinguished physically, operationally and for financial reporting purposes.
Revenue, costs and results of discontinuing operations are separately disclosed in the income statement.
An operation is disclosed as discontinued once the initial disclosure event has taken place. The initial disclosure event is the earlier of
a binding sale agreement for substantially all the assets of the operation or the approval and announcement of a detailed formal plan
for the discontinuance by the directors.
S E G M E N T R E P O R T I N G
As the group operates predominantly within the tourism and leisure sectors of the economy, the directors are of the opinion that a
segmental report is not required.
E X C E P T I O N A L I T E M S
Exceptional items as disclosed on the face of the income statement and in note 14 are items that the directors believe are material to
the users’ appreciation of the financial statements and are therefore disclosed separately. These items are not necessarily distinct from
normal activities and may occur on an annual basis, and therefore are not classified as exceptional.
C O M PA R AT I V E F I G U R E S
Where necessary, comparative figures have been reclassified. Refer to note 25.
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