Income statement  |  Balance sheet  |  Statement of changes in equity  |  Cash flow statement  |  Notes  |  IFRS Notes
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Adoption of international financial reporting standards               1. Basis of preparation                 The group has adopted International Financial Reporting Standards (IFRS) for the year ended 28 February 2006.          The abridged consolidated financial statements have been prepared on the basis of IFRS and interpretation statements in issue and effective at 28 February 2006. The abridged consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting and in compliance with the listing requirements of the JSE Limited. Accounting policies adopted under IFRS have been applied consistently in preparing the financial statements for the year ended 28 February 2006, the comparative information for the year ended 28 February 2005 and the opening balance sheet on 1 March 2004.         An explanation of how the transition to IFRS has affected the previously reported financial position and performance of the group is provided below.         2. Significant changes to  the group's accounting policies as a result of the adoption of IFRS and other adjustments         Foreign operations         The assets and liabilities of all foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Rands at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Rands at rates approximating the foreign exchange rates ruling at the date of the transactions. Foreign exchange differences arising on translation are recognised directly in a separate component of equity - foreign currency translation reserve. The foreign currency translation reserve applicable to a foreign operation is released to the income statement upon disposal of that foreign operation. The functional currency of all entities in the group has also been reconsidered.         Previously, the non-monetary assets and liabilities of all foreign subsidiaries considered to be integrated foreign operations were translated at historic exchange rates, and the foreign exchange gains and losses arising on translation of monetary assets and liabilities were recognised in operating income.         Goodwill         All business combinations are accounted for by applying the "purchase method". Goodwill represents amounts arising on acquisition of subsidiaries and associates. In respect of business combinations that have occurred since the IFRS transition date, 1 March 2004, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets and contingent liabilities acquired.         From 1 March 2004 goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units and is no longer amortised but tested annually for impairment. Previously goodwill arising on each acquisition was amortised over its useful life on a straight line basis and subjected to annual impairment testing.         The group made an election in terms of IFRS 1 that in respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, which represents the amount recorded under SA GAAP on 1 March 2004. The classification and accounting treatment of business combinations that occurred prior to 1 March 2004 has not been reconsidered in preparing the groups opening IFRS balance sheet at 1 March 2004.                         Premiums and discounts arising on subsequent purchases from, or sales to, minorities.           Any increase or decrease in ownership interests in subsidiaries without a change in control are recognised as equity transactions in the consolidated financial statements. Accordingly any premium or discount on subsequent purchases or sales of equity instruments from or to minority interests are recognised directly in the equity of the parent shareholder.         Previously premiums on subsequent sales of equity instruments to minorities were taken to profit as a capital item in the income statement and premiums on subsequent purchases of equity instruments were classified as goodwill.         Intangible assets         Intangible assets other than goodwill that are acquired by the group are stated at cost less accumulated amortisation and impairment losses.         Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life are tested annually for impairment.         Other intangible assets are amortised from the date they are available for use. The estimated useful lives are currently as follows: Patents and trademarks 5 years       Distribution rights indefinite life               Previously distribution rights were included with goodwill and not seperately identified  on the balance sheet and amortised to the income statement as part of goodwill amortisation on a straight line basis over the useful life of the intangible asset.         Share-based payment transactions         The fair value of share options and deferred delivery shares granted to employees is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and expensed over the period during which the employees are required to provide services in order to become unconditionally entitled to the equity instruments. The fair value of the instruments granted is measured using generally accepted valuation techniques, taking into account the terms and conditions upon which the instruments are granted. This accounting policy has been applied to all equity instruments granted after 7 November 2002 that had not yet vested at 1 January 2005.  The fair value of share based payments was not recognised under the group's  previous accounting policies.         Black Economic Empowerment (BEE) transactions         Where goods or services are considered to have been received from BEE partners as consideration for equity instruments of the group, these transactions are accounted for as share based payment transactions, even when the entity cannot specifically identify the goods or services received. This accounting policy is applicable to equity instruments that had not vested by 1 January 2005 (as above) and consequently had no impact on the group. Straight-lining of operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Past practice, whereby operating lease payments were expensed on a payments basis, was based on an interpretation that was generally accepted in the South African financial reporting community. This interpretation considered the contractual payments basis as being most representative of the time pattern of the entity's benefit obtained from the leased property. The global spotlight has led to the view that the entity is obliged to adopt the straight-line basis of accounting for all lease payments. The adjustment has been made as required by IAS 8  - Accounting Policies, changes in accounting estimates and errors, with the necessary restatement of comparative figures.         Designation and fair valuing of available-for-sale investments       Available-for-sale investments are non-derivative financial assets other than:               (a) those that the group upon initial recognition designates as at fair value through profit or loss;    (b) held to maturity assets; and         (c) those that meet the definition of loans and receivables.         Gains or losses from fair valuing these available-for-sale investments are recognised directly in equity.           The investments in Fintech Receivables 1 and Technologies Acceptances Receivables meet this criteria and as such have been designated as available-for-sale assets and are measured at fair value. The comparative figures have been restated.                 3. Reconciliation of equity           28-Feb   1-Mar In R millions   2005   2004         Equity previously reported under SA GAAP               3,566             3,571 Impact of adopting IFRS and other adjustments                    77                  (8) Equity reported under IFRS               3,643             3,563         Equity adjustments         Retained earnings:         Net reversal of goodwill amortised and impaired                    96                  -   Expensing of share based payments                    (2)                  -   Foreign operations                     3                  -   Property, plant and equipment                     1                  -   Intangible assets                    (2)                  -   Operating leases                   (13)                  (9) Minorities' share of adjustments                   (40)                   4 Share based payment reserve                     1                  -   Foreign currency translation reserve                    (3)                  -   Fair value reserve                    26                 42 Treasury shares reclassified                    16                 16 Premium/discount on minority equity transactions                   (16)                (16) Minorities shareholder loans reclassified                   (31)                (41) Minorities share of adjustments                    41                  (4)                    77                  (8) Assets and liabilities adjustments         Property, plant and equipment                     1                  -   Intangible assets and goodwill                    94                  -   Associates and other investments                    30                 49 Deferred tax                    (1)                  (5) Non-current loans                   (31)                (41) Accounts payable                   (16)                (11)                    77                  (8)         4. Reconciliation of profit for the year ended 28 February 2005              As reported   Effect   IFRS     previously   of IFRS   restated     (Audited)                      Operating profit before capital items                  968             (5)              963 Investment income                  100            -                100 Finance costs                   (62)            -                (62) Share of profits from associates                    24            -                 24 Goodwill adjusted and impaired                 (300)            96             (204) Capital items                  114            -                114 Profit before taxation                  844            91              935 Taxation                 (340)              1             (339) Profit for the year                  504            92              596 Attributable to :         Minority shareholders                  104            44              148 Altron equity holders                  400            48              448                 EPS                  145            17              162 HEPS                  161              1              162                 5. Reclassification of finance lease receivables and payables       Previously certain finance lease receivables and payables were offset, these have been grossed up and reported seperately as the criteria for offset are no longer considered applicable. The effect of the reclassification at 28 February 2005 is as follows:               Assets         Decrease in rental finance advances             (31)       Increase in accounts receivable         (short term portion of rental finance advances)              84                    53       Liabilities          Increase in non-current loans              24       Increase in current loans              29                    53               Back to top