Change in accounting policy

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During the current period, the South African Institute of Chartered Accountants issued Circular 2/2017 which replaced Circular 9/2006. Circular 9/2006 – Transactions giving rise to adjustments to revenue/purchases previously included guidance on the recognition of financing elements. Although the Group did not believe that its revenue and purchase transactions constituted financing activities, the Group has previously accounted for its sale and purchase transactions as including a financing element based on the guidance in Circular 9/2006.

Subsequent to the issuing of Circular 9/2006, the International Financial Reporting Standards Interpretations Committee ("Interpretations Committee") has debated financing elements contained within transactions for both revenue and purchases under the current accounting standards (IAS 2 – Inventories and IAS 18 – Revenue). Circular 2/2017 considers these developments and updates the previous guidance contained in Circular 9/2006 relating to financing elements of revenue and purchases. Circular 2/2017 repeals the guidance in Circular 9/2006 that deals with extended payment terms (paragraphs 23 to 30).

As a result of the revised guidance in Circular 2/2017, the Group has reconsidered its accounting policy with respect to financing components included in its sale and purchase transactions in the ordinary course of business. In line with the guidance contained in Circular 2/2017, in particular the indicators provided in paragraph 7 of the Circular, the Group has concluded that there is no financing component included in its sale and purchase transactions that occur in the ordinary course of business. In accordance with IAS 8, the Group has therefore restated its comparative financial information for this change in accounting policy and provided an opening balance sheet as at 1 June 2016. The impact of this change in accounting policy was immaterial to the opening retained earnings at 1 June 2016.

Group statement of financial position

As at 31 May

   Restated 
2017 
R'000 		    Adjustments 
R'000 		    2017 
R'000 		    Restated 
2016 
R'000 		    Adjustments 
R'000 		    2016 
R'000 		   
ASSETS                                     
Non-current assets  2 198 757     –     2 198 757     2 275 161     –     2 275 161    
Current assets  6 498 626     7 113     6 491 513     5 037 786     6 996     5 030 790    
Trade and other receivables  2 766 110     7 113     2 758 997     2 686 019     6 996     2 679 023    
Total assets  8 697 383     7 113     8 690 270     7 312 947     6 996     7 305 951    
EQUITY AND LIABILITIES                                     
Capital and reserves  4 995 284     (9 158)    5 004 442     4 516 120     (3 447)    4 519 567    
Retained earnings  3 640 034     (9 158)    3 649 192     3 101 603     (3 447)    3 105 050    
Non-current liabilities  55 665     (3 561)    59 226     101 613     (1 341)    102 954    
Deferred taxation liabilities  49 391     (3 561)    52 952     60 800     (1 341)    62 141    
Current liabilities  3 646 434     19 832     3 626 602     2 695 214     11 784     2 683 430    
Trade and other payables  3 537 505     19 832     3 517 673     2 613 591     11 784     2 601 807    
Total equity and liabilities  8 697 383     7 113     8 690 270     7 312 947     6 996     7 305 951    

Group income statement

For the year ended 31 May

   Restated
2017 
R'000 		    Adjustments 
R'000 		    2017 
R'000 		   
Revenue  26 469 581     157 706     26 311 875    
Changes in inventories of finished goods  (24 340 581)    (201 288)    (24 139 293)   
Operating profit  1 174 890     (43 582)    1 218 472    
Finance costs  (109 788)    193 239     (303 027)   
Finance income  84 605     (157 589)    242 194    
Net profit before taxation  1 144 966     (7 932)    1 152 898    
Taxation  (329 816)    2 221     (332 037)   
Net profit for the year  815 150     (5 711)    820 861    
Net profit for the year attributable to:                   
Equity holders of the parent  781 254     (5 711)    786 965    
Earnings per share for profit attributable to:                   
Equity holders (cents)                    
– Basic  114.13     (0.84)    114.97    
– Diluted  113.17     (0.83)    114.00    

The change in accounting policy had no impact on the Group statement of cash flows.