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Notes to the Annual Financial Statements
for the year ended 31 August 2009

  Group
   2009  2008 
   R’000  R’000 
1 Revenue from continuing operations      
  Turnover* 12 175 312 11 193 577
  Financial income 14 408 18 731
  Other income 564 482 499 209
    Distribution and logistics fees 339 023 291 270
    Rental income 2 231 4 676
    Cost recoveries and other 223 228 203 263
         
      12 754 202 11 711 517
  * Comparative figures have been restated on implementation of IFRIC 13 “Customer Loyalty Programmes”.
See note 36 for further details.		    
         
2 Net financing costs    
  Recognised in profit or loss    
  Interest income on bank deposits 5 848 7 904
  Change in fair value of financial assets designated at fair value through profit or loss 3 861 5 875
  Interest income on loans and receivables measured at amortised cost 4 699 5 049
  Financial income 14 408 18 828
  Interest expense on financial liabilities measured at amortised cost 61 924 66 378
  Cash interest paid 42 683 61 385
  Non-cash interest paid 19 241 4 993
  Change in fair value of financial assets designated at fair value through profit or loss 7 257 3 537
  Financial expense 69 181 69 915
  Net financing cost (54 773) (51 087)
  Less: Discontinued operations (see note 7) – (97)
  Continuing operations (54 773) (57 184)
         
3 Depreciation and amortisation    
  Depreciation on property, plant and equipment 109 676 95 908
  Amortisation of intangible assets 12 241 6 740
  Total depreciation and amortisation 121 917 102 648
  Depreciation included in cost of merchandise sold (8 252) (7 226)
  Depreciation and amortisation included in expenses 113 665 95 422
   Less: Discontinued operations (see note 7) – (44)
  Continuing operations 113 665 95 378
         
4 Occupancy costs    
  Lease charges    
  Operating leases 327 554 297 890
  Turnover rental expense 18 130 12 447
  Movement in operating lease liability (see note 23) 7 747 (5 574)
  Movement in provision for onerous contracts (see note 25) (1 376) (2 184)
  Total occupancy costs 352 055 302 579
  Less: Discontinued operations (see note 7) – 3 909
  Continuing operations 352 055 306 488
       
5 Employment costs    
  Directors’ emoluments 21 086 15 843
    Non-executive 1 983 2 131
      Fees 1 683 1 531
      Consulting services 300 600
    Executive 19 103 13 712
      Salary and bonus 17 669 12 510
      Other benefits 1 434 1 202
  Cash-settled share appreciation rights costs (see note 22) 18 980 (6 160)
  Equity-settled share option costs (see note 19) 717 46
  Long-term incentive scheme (see note 22) 43 306 54 528
  Staff salaries and wages 971 200 847 252
  Contributions to defined contribution plans 60 377 55 716
  Leave pay costs (see note 22) 16 270 10 533
  Bonuses (note 22) 82 268 67 980
  Increase in liability for defined benefit plans (see note 22) 3 794 1 065
  Total employment costs 1 217 998 1 046 803
  Employment costs included in cost of merchandise sold (61 070) (53 324)
  Employment costs included in expenses 1 156 928 993 479
  Less: Discontinued operations (see note 7) – (7 351)
  Continuing operations 1 156 928 986 128
  For further detail of directors’ emoluments refer to the Remuneration Report.
 

Included in total employment costs are the following aggregate amounts (including directors’ emoluments) relating to transactions with key management personnel:

    
    39 760 32 617
    Short-term employee benefits 20 736 17 223
    Post-employment benefits 1 229 1 129
    Other long-term benefits 98 100
    Share-based payment 17 697 14 165
    Fees and consulting services 1 983 2 131
    41 743 34 748
       
6 Other costs    
  Other operating costs include:    
  Auditor’s remuneration 3 153 3 321
    Audit fees 3 150 3 267
    Other services and expenses 3 54
  Fees paid for outside services    
    Technical services 27 795 20 521
  Foreign exchange (gains)/losses – realised (20 127) 1 476
  Foreign exchange losses – unrealised (see note 17) 16 537 3 057
  Foreign exchange options losses – unrealised (see note 17) 429 –
  Share option hedge losses – realised (see note 17) – 10 665
  Share option hedge (gains)/losses – unrealised (see note 17) (28 053) 12 143
  Impairment of trade and other receivables 12 746 9 023
  Water and electricity 47 176 34 336
    Retail 44 800 33 159
    Distribution 2 376 1 177
       
7 Discontinued operations    
  Turnover – 50 140
  Cost of merchandise sold – (36 383)
  Gross profit – 13 757
  Other income* – 1 905
  Expenses – (8 385)
    Depreciation and amortisation – (44)
    Occupancy costs – 3 909
    Employment costs – (7 351)
    Other costs – (4 899)
       
  Operating profit – 7 277
    Loss on disposal of property, plant and equipment – (4)
    Profit on disposal of business – 23 649
  Operating profit before financing costs – 30 922
  Finance income – 97
  Profit before tax – 31 019
  Income tax on discontinued operations (see note 8) – 2 519
  Profit for the year from discontinued operations – 33 538
  On 7 September 2007 the sale of the Discom business unit to Edgars Consolidated Stores Limited (“Edcon”) became unconditional.

Set out above are the results of the Discom business unit, which as a result of meeting the definition of a discontinued operation, are required to be separately disclosed from the results of the continuing operations.

* Other income comprises cost recoveries and other.
    Group Company
    2009 2008 2009 2008
    R’000 R’000 R’000 R’000
8 Income tax expense        
  Continuing operations        
  South African normal tax        
    Current tax        
      Current year 178 342 143 646 – –
      Prior-year underprovision 1 112 1 261 – –
    Secondary tax on companies        
      Current year 23 – 23 –
    Capital gains tax        
      Current year 103 3 399 – –
      Prior-year underprovision – 3 286 – –
    Deferred tax        
      Current year* (10 211) (3 926) 1 176 18
      Prior-year (over)/underprovision (767) (2 086) 26 –
      Change in tax rate – (1 961) – –
  Foreign tax        
    Current tax        
      Current year 5 666 3 254 – –
      Prior-year underprovision 91 – – –
    Withholding tax 502 618 – –
    Deferred tax        
      Current year (151) (344) – –
      Prior-year overprovision (91) (250) – –
        174 619 146 897 1 225 18
  Discontinued operations        
  South African normal tax        
    Current tax        
      Current year – 12 345 – –
    Capital gains tax        
      Current year – 14 315 – –
    Deferred tax        
      Current year – (29 349) – –
  Foreign tax        
    Current tax        
      Current year – 170 – –
        – (2 519) – –
  Total income tax expense 174 619 144 378 1 225 18
  Reconciliation of rate of tax (%)        
  Standard rate – South Africa 28.00 28.00 28.00 28.00
  Adjusted for:        
    Capital gains tax (0.29) 2.71 – –
    Change in tax rate – (0.33) – –
    Disallowable expenditure 0.56 1.56 – –
    Exempt income and allowances (1.55) (3.90) – (28.00)
    Foreign tax rate variations 0.12 0.11 – –
    Foreign withholding tax 0.08 0.11 – –
    Prior-year overprovision (0.13) (0.15) – –
    Secondary tax on companies deferred 0.19 – – 0.05
    Sale of business – (3.52) – –
    Other – 0.08 – –
  Effective tax rate 26.98 24.67 28.00 0.05
  Subsidiaries of the group have estimated computed tax losses of R23.9 million (2008: R37.9 million) available for set-off against future taxable income of those subsidiaries. A deferred tax asset of R6.7 million (2008: R10.6 million) has been recognised in respect of the total computed tax losses (see note 13).
 
  * Comparative figures have been restated on implementation of IFRIC 13 “Customer Loyalty Programmes”. See note 36 for further details.
               
            Group
            2009 2008
            R’000 R’000
9 Earnings per share*    
  Reconciliation of headline earnings    
  Profit attributable to equity holders of the parent 472 387 441 201
  Adjustments:    
    Profit from discontinued operations (see note 7) – (33 538)
    Profit before tax from discontinued operations – (31 019)
    Tax relating to discontinued operations – (2 519)
       
  Basic earnings from continuing operations attributable to equity holders of the parent 472 387 407 663
  Profit attributable to equity holders of the parent 472 387 441 201
  Adjustments:    
    Loss/(profit) on disposal of property, plant and equipment 6 100 (12 412)
    Loss/(profit) before tax 7 177 (13 921)
    Tax (1 077) 1 509
    Profit on disposal of businesses – (29 162)
    Profit before tax – (24 893)
    Tax – (4 269)
  Headline earnings 478 487 399 627
       
            2009 2008
            cents cents
  Earnings per share – continuing operations 165.6 136.7
  Earnings per share – discontinued operations – 11.3
  Earnings per share 165.6 148.0
  Headline earnings per share 167.7 134.0
  Diluted earnings per share – continuing operations 163.8 134.2
  Diluted earnings per share – discontinued operations – 11.0
  Diluted earnings per share 163.8 145.2
  Diluted headline earnings per share 165.9 131.5
       
            2009 2008
            '000 '000
  Reconciliation of shares in issue to weighted average number of shares in issue    
  Total number of shares in issue at the beginning of the year 324 139 335 957
  Treasury shares held for the full year and/or cancelled (33 814) (19 842)
  Treasury shares purchased during the year weighted for period held (7 629) (21 213)
  Treasury shares utilised for share options weighted for period in issue 2 553 3 264
  Weighted average number of shares in issue for the year 285 249 298 166
  Reconciliation of weighted average number of shares in issue to weighted average diluted number of  shares in issue    
  Weighted average number of shares in issue for the year 285 249 298 166
  Dilutive effect of share options and forward purchase of shares 3 100 5 681
  Weighted average diluted number of shares in issue for the year 288 349 303 847
  * Comparative figures have been restated on implementation of IFRIC 13 “Customer Loyalty Programmes”. See note 36 for further details.
       
       
        Group    
      2009     2008  
      Accumulated     Accumulated  
      depreciation     depreciation  
      and     and  
      impairment Net book   impairment Net book
    Cost losses value Cost losses value
    R’000 R’000 R’000 R’000 R’000 R’000
10 Property, plant and equipment            
  Land 25 809 – 25 809 25 809 – 25 809
  Buildings 312 671 26 983 285 688 272 193 22 972 249 221
  Computer equipment 146 128 87 368 58 760 136 104 79 720 56 384
  Equipment 135 321 58 344 76 977 134 911 47 059 87 852
  Furniture and fittings 584 563 221 370 363 193 478 444 182 436 296 008
  Motor vehicles 33 472 14 386 19 086 31 405 12 194 19 211
    1 237 964 408 451 829 513 1 078 866 344 381 734 485
  A register of land and buildings containing the required statutory information is available for inspection on request at the registered office of the company.

All group property is owner-occupied.

Motor vehicles with a net book value of R1 million are encumbered in terms of a finance lease with a carrying amount of R0.5 million as detailed under note 21.

Computer equipment with a net book value of R12.2 million is encumbered under finance leases with a carrying amount of R3.2 million as detailed under note 21.

The carrying amount of the group’s property, plant and equipment is reconciled as follows:
        Computer   Furniture Motor  
    Land Buildings equipment Equipment and fittings vehicles Total
    R’000 R’000 R’000 R’000 R’000 R’000 R’000
  Net book value at 1 September 2007 25 809 249 771 67 355 83 510 256 649 15 870 698 964
  Additions – 1 184 24 335 27 432 91 795 12 012 156 758
  Disposals – – (3 642) (7 663) (10 591) (3 433) (25 329)
  Depreciation – (1 734) (31 664) (15 427) (41 845) (5 238) (95 908)
  Net book value at 31 August 2008 25 809 249 221 56 384 87 852 296 008 19 211 734 485
  Additions – 40 124 30 027 7 561 128 497 6 061 212 270
  Disposals – (163) (843) (1 974) (5 217) (580) (8 777)
  Depreciation – (3 529) (27 365) (16 462) (56 670) (5 650) (109 676)
  Acquisition of business – 35 557 – 575 44 1 211
  Net book value at 31 August 2009 25 809 285 688 58 760 76 977 363 193 19 086 829 513