Notes to the Financial Statements · 2018-02-05 · Notes to the Financial Statements 1. ACCOUNTING...
Transcript of Notes to the Financial Statements · 2018-02-05 · Notes to the Financial Statements 1. ACCOUNTING...
Notes to the Financial Statements 1. ACCOUNTING POLICIES
1.1 Basis of PreparationThe financial statements have been prepared in accordance with the South African Statements of Generally Accepted
Accounting Practices (GAAP) including any interpretations of such Statements issued by the Accounting Practices Board,
with the prescribed Standards of Generally Recognised Accounting Practices (GRAP) issued by the Accounting Standards
Board replacing the equivalent GAAP Statement as follows:
Standard of GRAP Replaced Statement of GAAPGRAP 1: Presentation of financial statements AC101: Presentation of financial statements
GRAP 2: Cash flow statements AC118: Cash flow statements
GRAP 3: Accounting policies, changes in AC103: Accounting policies, changes in
accounting estimates and errors accounting estimates and errors
The recognition and measurement principles in the above GRAP and GAAP Statements do not differ or result in material
differences in items presented and disclosed in the financial statements. The implementation of GRAP 1, 2 & 3 has
resulted in the following significant changes in the presentation of the financial statements:
1.1.1 Terminology Differences:
Standard of GRAP Replaced Statement of GAAPStatement of financial performance Income statement
Statement of financial position Balance sheet
Statement of changes in net assets Statement of changes in equity
Net assets Equity
Surplus/deficit for the period Profit/loss for the period
Accumulated surplus/deficit Retained earnings
Contributions from owners Share capital
Distributions to owners Dividends
Reporting date Balance sheet date
80
Notes to the Financial Statements The cash flow statement was
prepared in accordance with
the direct method, therefore
no change was brought about
by the introduction of GRAP.
Specific information such as:
(a) receivables from non-
exchange transact ions,
including taxes and
transfers;
(b) t a x e s a n d t r a n s f e r s
payable;
(c) trade and other payables
f rom non-exchange
transactions; must be
presented separately on the
statement of f inancial
position
The amount and nature of
any restrictions on cash
balances is required to be
disclosed. Paragraph 11 –
15 of GRAP 1 has not been
implemented as the budget
reporting standard is in the
process of being developed
by the international and local
standard setters Although the
inclusion of budget information
would enhance the usefulness
of the financial statements,
non–disclosure will not affect
fair presentation.
Financial statements are based
upon appropriate policies
consistently applied and
supported by reasonable
and prudent judgements and
estimates.
The annual financial state-
ments h a v e b e e n prepared
on the historical cost basis
and incorporate the principal
accounting policies as set
below.
Disclosures Relating to Prior Period
Errors
the nature of the prior period
error;
f o r e a c h p r i o r p e r i o d
presented, to the extent
practicable, the amount
of the correction:
for each financial statement
l ine item affected; and
the amount of the correction
at the beginning of the earliest
prior period presented; and
if retrospective restatement is
impracticable, an explanation
and description of how the error
has been corrected
These accounting policies are
consistent with the previous financial
year.
1.2 Grants, transfer and other income recognitionGrants comprise Government grant
payments received from Government
Communication and Information
System (GCIS). Grants are recognised
when there is reasonable assurance
that the enterprise will comply with
the conditions attaching to them,
that grants will be received and these
grants can be measured reliably.
Interest income is accrued on a time
proportion basis, taking into account
the principal outstanding and the
effective interest rate over the period.
Sales donation represents donations
made for South African story booklet
and video materials. Corporate
advertising income is received for joint
advertising and marketing campaigns.
This income is recognised when it is
probable that future economic benefits
will flow to the enterprise and these
benefits can be measured reliably.
1.1.2
1.1.3
1.1.4
(continued)
82
1.3 Income received in advanceIMC did not receive any income in
advance.
1.4 Office Furniture and Computer EquipmentProperty, plant and equipment are
stated at historic cost less accumulated
depreciation and impairment.
Depreciation is calculated on a
straight-line basis to write-off the cost
of assets to their expected residual
values in line with IAS 16 (AC123) over
their useful lives estimated as follows:
Item Useful Life
Computer Equipment: 3 years
Office Equipment : 5 years
Office Furniture: 10 years
Motor Vehicle: 5 years
The basis used to determine gross
carrying value of fixed assets is cost
plus VAT. Assets less than R2000.00
are expensed. The gain or loss arising
on disposal or retirement of an asset
is determined as the difference
between the sales proceeds and the
carrying amount of the assets and is
recognised in the income statement.
When the recoverable amount (higher
of net selling price and value in use)
of an asset has declined below its
carrying amount, the carrying amount
is reduced to reflect the decline in
value. The deficit is charged to the
income statement.
1.5 Intangible AssetsAn intangible asset is recognised
when:
- it is probable that the expected
future economic benefits that are
attributable to the asset will flow to
the entity; and
- the cos t o f t he asse t can be
measured reliably.
Intangible assets are initially recognised
at cost.
Intangible assets are carried at cost
less any accumulated amortisation
and any impairment losses.
Computer software is capitalised to
computer equipment where it forms an
integral part of computer equipment.
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.
For intangible assets with a definite
useful life amortisation is provided on
a straight line basis over their useful
life.
The amortisation period and the
amortisation method for intangible
assets are reviewed every year-end.
Reassessing the useful life of an
intangible asset with a definite useful
life after it was classified as indefinite
is an indicator that the asset may be
impaired. As a result the asset is tested
for impairment and the remaining
carrying amount is amortised over its
useful life.
Internally generated brands,
mastheads, publishing titles, customer
lists and items similar in substance are
not recognised as intangible assets.
Amortisation is provided to write down
the intangible assets, on a straight
line basis, to their residual values as
follows:
Item Useful life
Computer software 2 years
Notes to the Financial Statements (continued)
1.6 Financial Instruments:Financial instruments carried on the
balance sheet include cash and bank
balances, receivables and payables.
Financial assets and liabilities are
accounted for at cost.
Subsequently these financial
instruments are measured at amortised
cost using the effective interest rate
method, less any impairment loss
recognised to reflect irrecoverable
amounts.
1.7 Current Expenditure: Expenditure is recognised in the
income statement on an accrual
basis.
1.8 Foreign Operations:Foreign operations are an integral part
of IMC. IMC has foreign operations in
the United Kingdom, United States
of America and India. No income is
generated in those operations but only
expenditure translated in South African
rand at the rate of exchange ruling at
the transaction date.
1.9 Retirement benefit costsPayments to defined contribution
retirement benefit plans are charged
to the income statement in the year
to which they relate. IMC contributes
7.5% of basic salary for each employee
with Liberty pension administrators.
1.10 TaxationIMC is exempted from tax by the South
African Revenue Services (SARS).
1.11 Provisions and contingenciesProvisions are recognised when:
- the company has a present obligation
as a result of a past event;
- it is probable that an outflow of
resources embodying economic
benefits will be required to settle
the obligation; and
- a reliable estimate can be made of
the obligation.
The amount of a provision is the present
value of the expenditure expected to
be required to settle the obligation.
Where some or all of the expenditure
required to settle a provision is
expected to be reimbursed by another
party, the reimbursement shall be
recognised when, and only when, it
is virtually certain that reimbursement
will be received if the entity settles
the obligation. The reimbursement
shall be treated as a separate asset.
The amount recognised for the
reimbursement shall not exceed the
amount of the provision.
Provisions are not recognised for
future operating deficits.
If an entity has a contract that is
onerous, the present obligation under
the contract shall be recognised and
measured as a provision.
A constructive obligation to restructure
arises only when an entity:
has a detailed formal plan for the
restructuring, identifying at least;
the business or part of a business
concerned;
the principal locations affected;
the locat ion , funct ion , and
approximate number of employees
who wi l l be compensated fo r
terminating their services;
the expenditures that will be under-
taken; and
when the plan will be implemented;
and has raised a valid expectation in
those affected that it wil l carry
out the restructuring by starting to
implement that plan or announcing its
main features to those affected by it.
-
--
-
-
1.12 Comparative figuresWhere necessary, comparative figures
have been adjusted to conform to
changes in presentation in the current
year.
1.13 Cash flowFor purpose of the cash flow statement,
cash includes cash on hand and
deposits held on call with banks
1.14 LeasesA lease is classified as a finance lease
if it transfers substantially all the risks
and rewards incidental to ownership.
A lease is classified as an operating
lease if it does not transfer substantially
all the risks and rewards incidental to
ownership.
Finance leases - lessee Finance leases are recognised as
assets and liabilities in the statement
of financial position at amounts
equal to the fair value of the leased
property or, if lower, the present value
on the minimum lease payments. The
corresponding liability to the lessor is
included in the statement of financial
position as a finance lease obligation.
The discount rate used in calculating
the present value of the minimum lease
payments is the interest rate implicit in
the lease.
The lease payments are apportioned
between the finance charge and
reduction of the outstanding liability.
The finance charge is allocated to each
period during the lease term so as to
produce a constant periodic rate on
the remaining balance of the liability.
Operating leases - lesseeOperating lease payments are
recognised as an expense on a
straight-line basis over the lease term.
The difference between the amounts
recognised as an expense and the
contractual payments are recognised
as an operating lease asset or liability.
This liability is not discounted. Any
contingent rents are expensed in the
period they are incurred.
“There is strength in numbers”
84
Notes to the Financial Statements
2 TRANSFERS AND SUBSIDIES RECEIVED
National Departments
Total
3 OTHER INCOME
Corporate Advertising
VAT
MAPPP SETA and Insurance Claims
TISA
Total
4 ADMINISTRATIVE EXPENSES
General administrative expenses
Telephone
Fruitless Expenditure
VAT none refundable
Fees for services - Technical
Legal fees
Entertainment
Stationery and printing
Venues and facilities
Bank charges
Net foreign exchange (gains)/ losses
Total
31 March 2008
R’000
111,096
111,096
11
-
148
1,200
1,359
21
798
-
-
938
16
217
795
266
62
98
3,211
31 March 2007
R’000
83,425
83,425
676
4,901
-
-
5,577
48
660
798
-
885
-
152
303
210
51
-
3,107
(continued)
86
5 STAFF COSTS
Wages and salaries
Basic salaries
Performance awards
Other non-pensionable allowance
Leave payments
Social contributions (Employer’s contributions)
Medical
UIF
Pension
Other salary related costs
Total
6 MARKETING COSTS
Mass Media Advertising
E-Marketing
Collateral
Research
Partnership and Mobilisation
Other Marketing Costs
Total
7 AUDIT FEES
Statutory Audit
Total
31 March 2008
R’000
12,480
10,474
952
1,072
52
1,100
323
46
731
-
13,580
55,260
4,996
2,218
1,388
4,646
20,643
89,151
394
394
31 March 2007
R’000
13,858
12,980
757
85
36
869
242
44
497
86
14,727
38,659
4,199
3,474
2,709
3,791
12,105
64,937
309
309
Notes to the Financial Statements
8 OTHER OPERATING EXPENSES
Equipment items expensed as per entity policy
Staff training and development
Security
Other operating expenses
Internal Audit Fees
Maintenance, repairs and running costs
Other maintenance, repairs and
running costs
Depreciation
Assets carried at cost
Amortisation
Municipal services
Travel and subsistence
Courier and delivery charges
Rentals in respect of operating leases (minimum
lease payments)
Buildings
Plant, machinery and equipment
Total
9 LOSSES ON DISPOSAL OF ASSETS
Loss on stolen laptop
Assets written off
Total
10 FINANCE INCOME
Cash and bank deposits
Total
31 March 2008
R’000
384
307
101
1,394
466
116
116
472
472
104
-
979
59
3,286
2,484
802
7,668
2
3
5
1,578
1,578
31 March 2007
R’000
80
67
74
1,646
-
120
120
308
308
90
10
1,238
194
1,999
1,483
516
5,826
14
-
14
1,128
1,128
(continued)
88
11 PROPERTY, PLANT AND EQUPMENT
Plant and Equipment
Opening net carrying amount
Gross carrying amount
Accumulated depreciation
Additions
Depreciation charge
Closing net carrying amount 31 March
Gross carrying amount
Accumulated depreciation
Vehicles
Opening net carrying amount
Gross carrying amount
Accumulated depreciation
Additions
Disposals
Depreciation charge
Closing net carrying amount 31 March
Gross carrying amount
Accumulated depreciation
Computer equipment
Opening net carrying amount
Gross carrying amount
Accumulated depreciation
Additions
Disposals
Depreciation charge
Closing net carrying amount 31 March
Gross carrying amount
Accumulated depreciation
31 March 2008
R’000
326
489
(163)
130
(61)
395
619
(224)
327
355
(28)
-
-
(72)
255
355
(100)
268
782
(514)
409
(22)
(281)
374
1,194
(817)
31 March 2007
R’000
163
274
(111)
215
(52)
326
489
(163)
48
60
(12)
355
(39)
(37)
327
355
(28)
162
508
(346)
274
-
(168)
268
782
(514)
Notes to the Financial Statements
Office furniture and fittings
Opening net carrying amount
Gross carrying amount
Accumulated depreciation
Additions
Depreciation charge
Closing net carrying amount 31 March
Gross carrying amount
Accumulated depreciation
Total Property, plant and equipment
Opening net carrying amount
Gross carrying amount
Accumulated depreciation
Additions
Disposals
Depreciation charge
Closing net carrying amount 31 March
Gross carrying amount
Accumulated depreciation
31 March 2008
R’000
359
506
(147)
194
(58)
495
700
(205)
1,280
2,132
(852)
733
(22)
(472)
1,519
2,865
(1,346)
31 March 2007
R’000
386
482
(96)
24
(51)
359
506
(147)
759
1,324
(565)
868
(39)
(308)
1,280
2,132
(852)
(continued)
90
12 INTANGIBLE ASSETS
Computer software
Opening net carrying amount
Gross carrying amount
Accumulated amortisation
Additions
Amortisation
Closing net carrying amount 31 March
Gross carrying amount
Accumulated amortisation
Total Intangible Assets
Opening net carrying amount
Gross carrying amount
Accumulated amortisation
Additions
Amortisation
Closing net carrying amount 31 March
Gross carrying amount
Accumulated amortisation
31 March 2008
R’000
67
218
(151)
135
(104)
98
353
(255)
67
218
(151)
135
(104)
98
353
(255)
31 March 2007
R’000
99
160
(61)
58
(90)
67
218
(151)
99
160
(61)
58
(90)
67
218
(151)
13 LOANS AND RECEIVABLES
Trade receivables
VAT
Study Loans
Staff Loans
Suspense/ Other Receivables
Prepayments and Advances
Prepayments
Total current
14 CASH AND CASH EQUIVALENTS
Cash and balances with banks
Short-term deposit/ investments
Cash shown as current assets
For the purposes of the cash flow statement:
Cash & cash equivalents
Bank Overdraft
15 TRADE AND OTHER PAYABLES
Trade creditors
Accruals
Interns
Sundry
Total
31 March 2008
R’000
391
298
85
169
311
778
2,032
7,395
3,288
6
10,689
10,689
10,689
-
8,833
1,733
-
634
11,200
31 March 2007
R’000
403
298
200
243
2
242
1,388
564
4,410
6
4,980
4,980
4,980
-
888
3,442
15
208
4,553
Notes to the Financial Statements (continued)
92
16 PROVISIONS
Salary and related expense provision
Opening balance
Unused amounts reversed during the year
Provisions made during the year
Less: current portion of provisions
Closing balance
Analysis for reporting purposes:
Current provisions
17 CASH GENERATED FROM OPERATIONS
Surplus before tax
(Interest received)
Non-cash movements/working capital
changes
Depreciation
Amortisation
Increase/ (Decrease) in payables
Increase in provision relating to employee costs
(Gains)/ Losses on sale of property, plant and
equipment
(Increase)/ Decrease in receivables
Prior period error - straight lining of lease
Loss on foreign exchange
Net cash flows from operating activities
31 March 2008
R’000
388
(388)
339
-
339
339
339
24
(1,578)
6,522
472
104
6,647
(49)
5
(644) - (13) 4,968
31 March 2007
R’000
319
(319)
388
-
388
388
388
1,210
(1,128)
3,207
308
90
(756)
69
14
3,351
131
-
3,289
Notes to the Financial Statements
18 OPERATING LEASE ARRANGEMENTS
Lessee
Up to 1 year
1 to 5 years
More than 5 years
Total
Up to 1 year
1 to 5 years
19 NET CASH INFLOWS/ OUTFLOWS FROM
OPERATING ACTIVITIES
Cash receipts from customers
Cash payments to suppliers and employees
Cash generated from operations
Interest received
Net cash inflows/ outflows from operating activities
31 March 2008
R’000
2,156
4,953
-
7, 109
2, 156
4,953
7,109
111,096
(106,128)
4,968
1,578
6,546
31 March 2007
R’000
1,181
2,752
-
3,933
1,181
2,752
3,933
91,530
(88,241)
3,289
1,128
4,417
(continued)
20 FOR NET CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of:
Property, plant and equipment
Acquisition of:
Property, plant and equipment
Intangible assets
Net cash flows from investing activities
21 ACCUMULATED SURPLUS
Balance at the beginning of the year
correction of prior peroid error
As restated
Surplus for the year
Currency translation differences
Balance at the end of the year
31 March 2008
R’000
24
(727)
(134)
(837)
2,774
-
2,774
24
1
2,799
31 March 2007
R’000
25
(868)
(58)
(901)
1,433
131
1,564
1,210
-
2,774
94
Notes to the Financial Statements
22 SENIOR MANAGEMENT EMOLUMENTS
General Manager
Salary
Bonus and Performance Payments
Expense Allowance
Pension Contributions
Other Benefits
Chief Executive Officer
Salary
Bonus and Performance Payments
Expense Allowance
Pension Contributions
Other Benefits
Chief Financial Officer
Salary
Bonus and Performance Payments
Expense Allowance
Pension Contributions
Other Benefits
Marketing Director (Resigned 31 July 2007)
Salary
Bonus and Performance Payments
Expense Allowance
Pension Contributions
Other Benefits
31 March 2008
R’000
793
658
-
86
49
-
1,678
1,334
150
180
-
14
913
680
88
60
55
30
404
304
100
-
-
-
31 March 2007
R’000
746
700
-
-
46
-
1,471
1,304
155
-
-
12
839
700
76
-
39
24
981
874
107
-
-
-
(continued)
Stakeholder Relations Direction
Salary
Bonus and Performance Payments
Expense Allowance
Pension Contributions
Other Benefits
Chief Operations Officer (Appointed 1 July 2007)
Salary
Bonus and Performance Payments
Expense Allowance
Pension Contributions
Other Benefits
Total of Senior Management Emoluments
Salary
Bonus and Performance Payments
Expense Allowance
Pension Contributions
Other Benefits
31 March 2008
R’000
838
525
69
180
39
25
538
501
-
-
37
-
5,164
4,002
407
506
180
69
31 March 2007
R’000
715
665
-
-
36
14
- -
- -
- -
4,752 4,243 338 121
- 50
96
Notes to the Financial Statements
23 RELATED PARTIES
Government Communication and Information System (GCIS) – Funding
Department of Trade and Industry – Strategic Partner on trade related activities
Paul Bannister – A Board member who provides consulting work for the IMC through Ignite Strategies and
South African Tourism – Strategic Partner on tourism related activities.
Government Communications and Information System
Department of Trade and Industry
Ignite Strategies
24 CONTINGENT LIABILITIES
24.1 CCMA Case A case that was lodged with the CCMA against the International Marketing Council (IMC) by a former employee seconded from Government Communication and Information Systems was ruled in favour of the IMC. However, the employee has taken the matter to the Labour Court. The case was heard on 22 May 2008 and dismissed on technicalities.
25 PRIOR YEAR ERROR
The IMC was listed as a Schedule 3A National Public Entity on 28th September 2006. IMC recognised income receivable of R654 158 being a VAT refund for the month of October 2006. No VAT input was claimable from SARS due to listing. No VAT input could be claimed hence the error by recognising the amount for October
2006 in prior year’s other income and loans and receivable, respectively.
Other Income 1,359 6,231
Adjustment VAT - (654)
Restated Amount 1,359 5,577
Loans and Receivable 2,032 2,042
Adjustment VAT - (654)
Restated Balance 2,032 1,388
Accumulated Surplus 2,799 3,428
Adjustment VAT - (654)
Restated Balance 2,799 2,774
111,096
2,200
176
113,472
83,425
41
-
83,466
31 March 2008
R’000
31 March 2007
R’000
Related party balances
(continued)