notes to the annual financial statements for the year ended 24 June 2012

11. Dividends paid to shareholders

  2012
Rm
  2011
Rm
Final cash dividend No 23 (2011: No 21) 288.6   270.1
Interim cash dividend No 24 (2011: No 22) 544.1   514.0
Final Thuthukani preference share dividend No 10 (2011: No 8) 2.5   6.8
Interim Thuthukani preference share dividend No 11 (2011: No 9) 3.6   31.5
Total dividends paid 838.8   822.4

  • No 21 of 134.0 cents declared on 25 August 2010 and paid on 20 September 2010 (R270.1 million).
  • No 22 of 252.0 cents declared on 23 February 2011 and paid on 22 March 2011 (R514.0 million).
  • No 23 of 134.0 cents declared on 24 August 2011 and paid on 19 September 2011 (R288.6 million).
  • No 24 of 252.0 cents declared on 21 February 2012 and paid on 19 March 2012 (R544.1 million).
  • No 25 of 146.0 cents declared on 21 August 2012 and paid on 17 September 2012 (R315.6 million).
  • No 8 of 134.0 cents declared on 25 August 2010 and paid on 20 September 2010 to the Massmart Thuthukani Empowerment Trust (R23.6 million).
  • No 9 of 252.0 cents declared on 23 February 2011 and paid on 22 March 2011 to the Massmart Thuthukani Empowerment Trust (R38.3 million).
  • No 10 of 134.0 cents declared on 24 August 2011 and paid on 19 September 2011 to the Massmart Thuthukani Empowerment Trust (R2.5 million).
  • No 11 of 252.0 cents declared on 21 February 2011 and paid on 19 March 2012 to the Massmart Thuthukani Empowerment Trust (R3.6 million).
  • No 12 of 146.0 cents declared on 21 August 2012 and paid on 17 September 2012 to the Massmart Thuthukani Empowerment Trust (R1.4 million).

Withholding tax of 15% was applied to the dividends declared on 21 August 2012 and paid on 17 September 2012, in line with the new Dividends Taxation legislation.

12. Earnings per share

  2012
Number of shares
  2011
Number of shares
In issue 216,124,461   213,883,460
Weighted average 215,539,458   203,516,310
Diluted weighted average 220,284,100   214,683,140

  2012   2011
  Pre-
taxation
Rm
  Post-
taxation
Rm
  Cents/share   Pre-
taxation

Rm
  Post-
taxation

Rm
  Cents/share
Attributable and headline earnings per share                      
The calculation of attributable and
headline earnings per share is based on the weighted average number of ordinary shares.
                     
The calculation is reconciled as follows:                      
Profit attributable to the equity holders of the parent     1,173.5   544.4       838.7   412.1
Adjustments after minorities:                      
Loss/(profit) on disposal of tangible assets 12.6   8.9   4.1   (2.9)   (1.7)   (0.8)
Loss on disposal of business 12.1   9.9   4.6   34.9   34.9   17.1
Fair value adjustments on assets classified as held for sale 7.9   7.9   3.7      
Impairment of assets 16.5   16.5   7.7   10.0   10.0   4.9
Headline earnings     1,216.7   564.5       881.9   433.3
Walmart costs 185.4   146.9   68.1   408.8   370.8   182.2
Headline earnings before Walmart costs     1,363.6   632.6       1,252.7   615.5

  2012
Rm
  2011
Rm
  2012
Cents/share
  2011
Cents/share
Diluted attributable and diluted headline earnings per share              
The calculation of diluted attributable and diluted headline earnings per share is based on the weighted average number of ordinary shares.              
The calculation is reconciled as follows:              
Profit attributable to the equity holders of the parent 1,173.5   838.7   544.4   412.1
Adjustment for impact of issuing ordinary shares     (11.7)   (21.4)
Diluted attributable earnings 1,173.5   838.7   532.7   390.7
Headline earnings 1,216.7   881.9   564.5   433.3
Adjustment for impact of issuing ordinary shares     (12.2)   (22.5)
Diluted headline earnings 1,216.7   881.9   552.3   410.8
Diluted headline earnings before Walmart costs 1,363.6   1,252.7   619.0   583.5
Weighted average shares outstanding   2012
Number of shares
  2011
Number of shares
Weighted average shares outstanding for basic and headline earnings per share   215,539,458   203,516,310
Potentially dilutive ordinary shares resulting from outstanding options   4,744,642   11,166,830
Weighted average shares outstanding for diluted and diluted headline earnings per share   220,284,100   214,683,140

  • Both the Thuthukani 'A' preference shares and the Black Scarce Skills 'B' preference shares are predominantly dilutive and have a small effect on diluted basic and diluted headline earnings per share.

13. Property, plant and equipment

  Cost/carrying
value
Rm
  Accumulated
depreciation
Rm
  Net book value
Rm
2012          
Owned assets          
Freehold land and buildings 909.9   52.4   857.5
Fixtures, fittings, plant and equipment 3,358.1   1,476.2   1,881.9
Computer hardware 464.7   283.4   181.3
Leasehold improvements 598.4   206.0   392.4
Motor vehicles 166.7   62.1   104.6
  5,497.8   2,080.1   3,417.7
Capitalised leased assets          
Freehold land and buildings 49.5   15.1   34.4
Fixtures, fittings, plant and equipment 39.7   7.2   32.5
Computer hardware 27.5   11.4   16.1
Motor vehicles 40.4   20.5   19.9
  157.1   54.2   102.9
Total 5,654.9   2,134.3   3,520.6
2011          
Owned assets          
Freehold land and buildings 793.2   42.0   751.2
Fixtures, fittings, plant and equipment 2,680.6   1,273.3   1,407.3
Computer hardware 418.3   286.5   131.8
Leasehold improvements 464.1   160.4   303.7
Motor vehicles 109.5   47.6   61.9
  4,465.7   1,809.8   2,655.9
Capitalised leased assets          
Freehold land and buildings 49.5   13.2   36.3
Fixtures, fittings, plant and equipment 15.2   10.3   4.9
Computer hardware 21.4   13.1   8.3
Motor vehicles 32.3   19.9   12.4
  118.4   56.5   61.9
Total 4,584.1   1,866.3   2,717.8

  • Certain capitalised leased property, plant and equipment is encumbered as per note 24.
  Opening
net book
value
Rm
  Addi-
tions
Rm
  Addi-
tions
through
acqui-
sitions
Rm
  Dispo-
sals
Rm
  Depre-
ciation
Rm
  Foreign
exchange
gain/
(loss)
Rm
  Re-
classi-
fications
Rm
  Classi-
fied as
held for
sale
Rm
  Closing
net book
value
Rm
Reconciliation of property, plant and equipment:                                  
2012                                  
Owned assets                                  
Freehold land and buildings 751.2   122.7     (4.6)   (11.3)   (0.5)       857.5
Fixtures, fittings, plant and equipment 1,407.3   796.1   41.5   (13.6)   (348.8)   2.1   1.3   (4.0)   1,881.9
Computer hardware 131.8   117.7   1.7   (1.0)   (68.5)   0.4     (0.8)   181.3
Leasehold improvements 303.7   126.1     (4.1)   (45.5)   13.8     (1.6)   392.4
Motor vehicles 61.9   47.8   22.0   (1.7)   (24.7)   0.7   0.8   (2.2)   104.6
  2,655.9   1,210.4   65.2   (25.0)   (498.8)   16.5   2.1   (8.6)   3,417.7
Capitalised leased assets                                  
Freehold land and buildings 36.3         (1.9)         34.4
Fixtures, fittings, plant and equipment 4.9     34.5   (0.6)   (5.0)     (1.3)     32.5
Computer hardware 8.3   13.0   2.5     (7.7)         16.1
Motor vehicles 12.4   13.4   4.7   (0.8)   (9.0)     (0.8)     19.9
  61.9   26.4   41.7   (1.4)   (23.6)     (2.1)     102.9
Total 2,717.8   1,236.8   106.9   (26.4)   (522.4)   16.5     (8.6)   3,520.6
2011                                  
Owned assets                                  
Freehold land and buildings 466.4   243.3   52.2     (10.7)         751.2
Fixtures, fittings, plant and equipment 1,098.9   567.6   28.4   (13.9)   (271.9)   (1.8)       1,407.3
Computer hardware 104.9   87.4   0.8   (1.5)   (59.7)   (0.1)       131.8
Leasehold improvements 250.9   92.7   0.6   (1.3)   (36.6)   (2.6)       303.7
Motor vehicles 58.3   38.6   0.2   (15.0)   (18.7)   (1.5)       61.9
  1,979.4   1,029.8   82.2   (31.7)   (397.6)   (6.2)       2,655.9
Capitalised leased assets                                  
Freehold land and buildings 38.3         (2.0)         36.3
Fixtures, fittings, plant and equipment 7.9         (3.0)         4.9
Computer hardware 12.6   2.4       (6.7)         8.3
Motor vehicles 17.0   10.2     (4.3)   (10.5)         12.4
  75.8   12.6     (4.3)   (22.2)         61.9
Total 2,055.2   1,042.4   82.2   (36.0)   (419.8)   (6.2)       2,717.8

  • The Group has reviewed the residual values and useful lives of the assets. No material adjustment resulted from such review in the current period.
  • The following useful lives are used in the calculation of depreciation:
    – Buildings 50 years
    – Fixtures, fittings, plant and equipment 4 to 15 years
    – Motor vehicles 4 to 10 years
    – Computer hardware 3 to 8 years
    – Leasehold improvements Shorter of lease period or useful life
  • There is no investment property in the Group and all assets are held at historical cost.

14. Goodwill

  2012
Rm
  2011
Rm
Reconciliation of goodwill:      
Balance at the beginning of the year 2,049.4   1,875.0
Additions through acquisitions 486.4   185.0
Impairment (16.5)   (10.0)
Foreign exchange gain/(loss) 2.1   (0.6)
Balance at the end of the year 2,521.4   2,049.4
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of significant goodwill had been allocated as follows:      
Masscash Holdings (Pty) Ltd 1,090.7   1,105.9
Builders Warehouse (a division of Massbuild (Pty) Ltd)   529.1
Builders Trade Depot (a division of Massbuild (Pty) Ltd) 901.1   370.7
Fruitspot 163.9  
Rhino Cash and Carry Group 321.3  

  • The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
  • When testing goodwill for impairment, the recoverable amounts of the CGUs are determined as the lower of value in use and fair value less costs to sell. The key assumptions for the value in use calculations are discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using rates that reflect current market assumptions of the time value of money and the risks specific to the CGUs. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.
  • The Group prepares cash flow forecasts based on the CGUs’ results for the next five years. A terminal value is calculated based on a conservative growth rate of 3% (2011: 3%). This rate does not exceed the average long-term growth rate for the relevant markets. The valuation method applied is consistent with the prior period.
  • The rate used to discount the forecast cash flows is 10.5% (2011: 10.5%).
  • The impairment of goodwill in the current and prior year relates to the impairment of certain acquired goodwill in Masscash.
  • The majority of additions through acquisitions in 2012 relate to the purchase of Rhino Cash and Carry Group and Fruitspot. Further details relating to these acquisitions can be found in note 3.
  • In 2011 the additions through acquisitions relate to the purchase of Mica Cedar Square, Kangela, JD’s Cash and Carry, Savemoor Cash and Carry, Rahme Guys International, Cambridge Nongoma and Liquorland Express. Further details relating to these acquisitions can be found in note 3.
  • During the year the Massbuild division completed a section 45 transaction resulting in all the assets and liabilities being recorded in one entity, namely Builders Trade Depot. This explains the goodwill illustrated above in Builders Warehouse being recorded as zero and the increase in the goodwill recorded in Builders Trade Depot.

15. Other intangibles

  Cost/carrying
value
Rm
  Accumulated
amortisation
Rm
  Net book value
Rm
2012          
Owned assets          
Computer software 572.9   268.6   304.3
Right of use 46.8   5.5   41.3
Trademarks 4.4   2.9   1.5
Total 624.1   277.0   347.1
2011          
Owned assets          
Computer software 521.4   250.2   271.2
Right of use 37.6   1.7   35.9
Trademarks 4.4   2.5   1.9
Total 563.4   254.4   309.0

Reconciliation of other intangible assets: Opening
net book
value
Rm
  Additions
Rm
  Additions
through
acqui-
sitions
Rm
  Disposals
Rm
  Amorti-
sation
Rm
  Foreign
exchange
gain
Rm
  Classified
as held
for sale
Rm
  Closing
net book
value
Rm
2012                              
Owned assets                              
Computer software 271.2   101.7     (0.3)   (68.3)   0.4   (0.4)   304.3
Right of use 35.9   9.0   0.1     (3.7)       41.3
Trademarks 1.9         (0.4)       1.5
Total 309.0   110.7   0.1   (0.3)   (72.4)   0.4   (0.4)   347.1
2011                              
Owned assets                              
Computer software 218.6   108.4     (1.5)   (54.3)       271.2
Right of use   37.8       (1.9)       35.9
Trademarks 2.2         (0.3)       1.9
Total 220.8   146.2     (1.5)   (56.5)       309.0

  • The Group has reviewed the useful lives of the assets for reasonability. There were no material adjustments in the current period.
  • The following useful lives are used in the calculation of amortisation:
    – Computer software 3 to 8 years
    – Right of use 10 years
    – Trademarks 10 years

16. Investments

    2012
Rm
  2011
Rm
Investment in associate      
Share of post-acquisition profit, net of dividend received   9.3
On 11 October 2010, one of Massmart's subsidiaries acquired the remaining 66.7% shares in Clidet No 484 (Pty) Ltd and so this former associate has been consolidated accordingly.      
Purchase of 66.7% of Clidet No 484 (Pty) Ltd by a Massmart subsidiary   (9.3)
   
Details of the Group's associate at date of purchase were as follows:      
Name of associate Clidet No 484 (Pty) Ltd      
Place of incorporation and operation South Africa      
Proportion of ownership interest 33.3%      
Proportion of voting power held 33.3%      
Principal activity Investment property      
33.3% of the R100 share capital was purchased for R33. The financial reporting date for Clidet No 484 (Pty) Ltd is 26 June. This investment fell into the corporate segment in terms of segmental reporting.      
Summarised financial information in respect of the Group's associate is set out below:      
Total assets   59.3
Total liabilities   31.7
Net assets   27.6
Group's share of associate's net assets   9.3
Revenue   1.8
Profit for the year   19.5
Group's share of associate's profit for the year has been included in 'other operating costs' in the consolidated income statement.   6.5
Unlisted investments      
Fair value through profit or loss (FVTPL)      
Held for trading      
Bare dominium revaluation 82.0   70.6
Other investments   7.9
Investment in offshore trading structure 177.2   250.0
Total financial assets classified as held for trading 259.2   328.5
Designated as at FVTPL      
Participation in insurance cell-captive on extended warranties 18.8   5.8
Participation in insurance cell-captive on premium contributions 35.1   25.7
Total financial assets designated as at FVTPL 53.9   31.5
Total fair value through profit or loss (FVTPL) 313.1   360.0
Loans and receivables      
Trencor export partnership 3.0   3.6
Total loans and receivables 3.0   3.6
Held-to-maturity investments carried at amortised cost      
Other investments 0.1   0.1
Total held-to-maturity investments 0.1   0.1
Total unlisted investments 316.2   363.7
Listed investments      
Available-for-sale investments      
Other investments 5.7   3.9
Total listed investments 5.7   3.9
Total investments 321.9   367.6
Reconciliation of financial assets carried at fair value through
profit or loss (FVTPL):
     
Opening balance 360.0   307.7
Fair value adjustments taken to the income statement 20.8   65.9
Interest on investment taken to finance income 1.4  
Realisation of a portion of the investment in offshore trading structure recognised in cash reserves (109.4)  
Other (7.9)   7.9
Foreign exchange gains/(losses) taken to the income statement 48.2   (21.5)
Closing balance 313.1   360.0
Further details on the investments in this category:      
  • The 'bare dominium revaluation' reflects Massmart's right to acquire a 49.9% share in the bare dominium over seven Makro properties.
  • The 'investment in offshore trading structure' is in M-class preference shares representing an international treasury, shipping and trading business unit.
  • The 'participation in an insurance cell-captive on extended warranties' relates to an insurance arrangement with Mutual & Federal pertaining to extended warranties sold within the Group.
  • The 'participation in an insurance cell-captive on premium contributions' relates to an insurance arrangement with Unison pertaining to general insurance within the Group.
     
Reconciliation of loans and receivables:      
Opening balance 3.6   3.8
Investment realised (0.6)   (0.2)
Closing balance 3.0   3.6
Further details on the investments in this category:      
  • The 'Trencor export partnership' represents our participation in export containers.
     
Reconciliation of held-to-maturity investments:      
Opening balance 0.1   0.7
Amortisation taken to the income statement   (0.6)
Closing balance 0.1   0.1
Reconciliation of available-for-sale investments:      
Opening balance 3.9   0.3
Fair value adjustment 1.8   3.6
Closing balance 5.7   3.9
Further details on the investments in this category:
  • Listed investments include shares held on the JSE and the Zimbabwe Stock Exchange.
  • The directors value the unlisted investments at R316.2 million (2011: R363.7 million).
  • For IAS 39 Financial Instruments: Recognition and Measurement accounting treatment of these investments, see note 39.

17. Other financial assets

  2012
Rm
  2011
Rm
Employee share trust loans to the directors and executive committee members of Massmart Holdings Limited:      
Balance at the beginning of the year 91.8   203.9
Advanced during the year 2.2   5.5
Repayments (11.6)   (117.6)
Balance at the end of the year 82.4   91.8
Other employees' loans:      
Housing and staff loans 0.5   0.7
Finance lease deposit 37.6   45.3
Loan to a related party 13.9  
Other loans 0.2   0.1
  52.2   46.1
  134.6   137.9

  • These loans are classified as 'Loans and receivables'. For IAS 39 Financial Instruments: Recognition and Measurement accounting treatment of these values, see note 39.
  • All housing and staff loans bear interest at various rates below the prime interest rate. The loans to the employee share trust participants, including executive directors, attract interest of zero percent and are secured by the underlying shares. The loans are secured by pledges of 1,382,228 (2011: 1,581,899) ordinary shares in Massmart Holdings Limited, with a market value of R232,698,084 (2011: R209,427,609).
  • The finance lease deposit accrues interest at 13.6%.
  • Details of the housing and employee share trust loans to the directors and Executive Committee members of Massmart Holdings Limited:
      Pattison,
    GM
    Rm
      Hayward,
    GRC
    Rm
      Zwarenstein,
    I
    Rm
      Other Executive
    Committee
    Rm
      Total
    Rm
    2012                  
    Balance at the beginning of the year 25.8   20.7     45.3   91.8
    Advanced during the year 0.6   0.5     1.1   2.2
    Repayments (1.8)   (1.4)     (8.4)   (11.6)
    Balance at the end of the year 24.6   19.8     38.0   82.4
    2011                  
    Balance at the beginning of the year 54.8   43.9     105.2   203.9
    Advanced during the year 1.6   1.2     2.7   5.5
    Repayments (30.6)   (24.4)     (62.6)   (117.6)
    Balance at the end of the year 25.8   20.7     45.3   91.8

    18. Deferred taxation

      2012
    Rm
      2011
    Rm
    The movements during the year are analysed as follows:      
    Net asset at the beginning of the year 242.8   218.9
    Credit/(charge) to the income statement (including foreign exchange movements) 66.3   26.4
    Credit/(charge) to comprehensive income (3.2)   0.6
    Acquisitions/(disposals) of subsidiaries 3.1   (3.1)
    Non-current assets classified as held for sale (7.3)  
    Net asset at the end of the year 301.7   242.8
    Deferred taxation balances are presented in the statement of financial position as follows:      
    Deferred taxation assets 330.2   265.0
    Deferred taxation liabilities (28.5)   (22.2)
      301.7   242.8

      Opening balance
    Rm
      Credit/
    (charge) to
    the income
    statement
    Rm
      Credit/
    (charge) to
    compre-
    hensive
    income
    Rm
      Acquisi-
    tions/
    (disposals)
    of
    subsidiaries
    Rm
      Non-current
    assets
    classified
    as held
    for sale
    Rm
      Foreign
    exchange
    movements
    Rm
      Closing
    balance
    Rm
    2012                          
    Temporary differences                          
    Trademarks 0.8             0.8
    Assessed loss unutilised 88.7   67.7       (1.0)   3.2   158.6
    Export partnerships (3.8)   0.6           (3.2)
    Debtors provisions 14.1   4.0     0.1       18.2
    Prepayments (179.4)   (27.2)           (206.6)
    Creditors provisions 74.4   (14.9)     0.3   (4.3)   (0.4)   55.1
    Property, plant and equipment (93.7)   (18.4)     2.4       (109.7)
    Finance leases 8.4   (8.0)     0.3       0.7
    Long-term provisions 47.1   1.4           48.5
    Income not accrued (0.1)   0.1          
    Deferred income 48.1   17.3       (24.6)   1.3   42.1
    Operating lease adjustment 277.1   26.8         (0.1)   303.8
    Other temporary differences (38.9)   12.2   (3.2)     22.6   0.7   (6.6)
    Total 242.8   61.6   (3.2)   3.1   (7.3)   4.7   301.7
    2011                          
    Temporary differences                          
    Trademarks 0.8             0.8
    Assessed loss unutilised 65.5   30.3         (7.1)   88.7
    Export partnerships (4.0)   0.2           (3.8)
    Debtors provisions 11.2   3.0         (0.1)   14.1
    Prepayments (149.8)   (29.6)           (179.4)
    Creditors provisions 63.3   11.2         (0.1)   74.4
    Property, plant and equipment (73.7)   (17.4)     (3.1)     0.5   (93.7)
    Finance leases 10.8   (2.4)           8.4
    Long-term provisions 16.6   30.5           47.1
    Income not accrued (5.1)   5.0           (0.1)
    Deferred income 54.6   (5.5)         (1.0)   48.1
    Operating lease adjustment 259.1   18.3         (0.3)   277.1
    Other temporary differences (30.4)   (8.9)   0.6       (0.2)   (38.9)
    Total 218.9   34.7   0.6   (3.1)     (8.3)   242.8

    19. Inventories

      2012
    Rm
      2011
    Rm
    Food      
    Inventory at cost 2,619.9   1,992.6
    Provisions (185.9)   (130.3)
      2,434.0   1,862.3
    Liquor      
    Inventory at cost 539.6   398.2
    Provisions (20.0)   (20.6)
      519.6   377.6
    General Merchandise      
    Inventory at cost 3,490.6   2,934.3
    Provisions (268.9)   (240.2)
      3,221.7   2,694.1
    Home Improvement      
    Inventory at cost 1,614.8   1,421.5
    Provisions (174.5)   (155.8)
      1,440.3   1,265.7
    Total inventory net of provisions 7,615.6   6,199.7
    Carrying amount of inventories carried at net realisable value 167.8   148.5

    • Inventories are carried at the lower of cost and net realisable value.
    • Provisions include: shrinkage and obsolescence provisions, write-downs to net realisable value and unearned rebates and settlement discounts per SAICA Circular 9/2006: Transactions Giving Rise to Adjustments to Revenue/Purchases.
    • Inventory is fully funded by trade payables. Details of trade payables can be found in note 26.
    • No inventory is pledged as security.

    20. Trade, other receivables and prepayments

      2012
    Rm
      2011
    Rm
    Trade receivables 1,628.0   1,333.2
    Allowance for doubtful debts (82.8)   (59.8)
      1,545.2   1,273.4
    Prepayments 33.9   47.5
    Other accounts receivable 1,353.9   1,241.8
    FEC asset 20.9  
    Total receivables net of provisions 2,953.9   2,562.7
    Movement in allowance for doubtful debts      
    Balance at the beginning of the year 59.8   56.1
    Amounts written off during the year (17.8)   (20.3)
    Amounts recovered during the year (2.4)  
    Decrease in provision relating to assets classified as held for sale (1.5)  
    Increase in provision recognised in the income statement 44.7   24.0
    Balance at the end of the year 82.8   59.8
    Ageing of debtors provided for:      
    60 to 90 days 12.8   10.7
    90 to 120 days 4.4   2.8
    120+ days 65.6   46.3
    Total 82.8   59.8

    • No interest is charged on the trade receivables for the first 30 days from the date of the invoice. Thereafter, differing structures exist between the Divisions with interest being charged between 0% and 24% (2011: 12% and 24%) per annum on the outstanding balance. Trade receivables between 30 days and 180 days are provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience. It is the Group's policy to provide fully for all receivables that are past due because historical experience is such that these receivables are generally not recoverable, except for those specifically identified below.
    • Before accepting any new customer, the Group uses an external credit scoring system to assess the potential customer's credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed quarterly to once a year. There is no customer who represents more than 5% of the total balance of trade receivables.
    • Included in the Group's trade receivables balance are debtors with a carrying amount of R73.1 million (2011: R8.8 million) which are past due at the reporting date for which the Group has not provided. The Group considers the amounts recoverable and currently holds security over these debtors or the debtors are insured. The average age of these receivables is 78 days (2011: 82 days).
      2012
    Rm
      2011
    Rm
    Ageing of past due debtors but not impaired      
    60 to 90 days 52.2   6.3
    90 to 120 days 13.9  
    120+ days 7.0   2.5
    Total 73.1   8.8

    • In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
    • There were no specific trade receivables under liquidation in the current or prior year.
    • Trade receivables are classified as 'Loans and receivables'. For IAS 39 Financial Instruments: Recognition and Measurement accounting treatment of these values, see note 39.