NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS – NOTE 39

39. RESTATEMENT OF JUNE 2016 RESULTS
a)

Correction of error in accounting for the conditional financial obligation and interest on conditional financial obligation

The comparative June 2016 Group audited results have been adjusted and restated to comply with IAS 39, where interest accrued on the Sanlam conditional put option obligation of R24.96 million, was accounted for in 2016 as an adjustment to equity, instead of being provided for through the statement of comprehensive income.

The accounting treatment for the conditional financial obligation for the comparative June 2016 Company results has also been restated as a derivative on the subsidiaries shares measured at fair value. As per IAS 39, and based on probability, the liability of R703 million should have not been raised.

This has been corrected by restating the 2016 financial statement line items as follows:

  GROUP  
   2016
As previously
reported
R’000		 Profit
increase/
(decrease)
R’000		 2016
Restated
R’000		   
Statement of profit or loss (extract)            
Finance costs – Conditional obligation  –  (24 960) (24 960)   
Income tax  (77 573) 58  (77 515)   
Profit for the year  218 574  (24 902) 193 672    
Attributable to:             
Equity holders of the parent  165 251  (24 902) 140 349    
Non-controlling interest  53 323  –  53 323    
   218 574  (24 902) 193 672    
Statement of comprehensive income (extract)            
Profit for the year  218 574  (24 902) 193 672    
Other comprehensive income for the year  5 029  (58) 4 971    
Total comprehensive income for the year  223 603  (24 960) 198 643    
Attributable to:             
Equity holders of the parent  170 280  (24 960) 145 320    
Non-controlling interest  53 323  –  53 323    
   223 603  (24 960) 198 643    

Basic and diluted earnings per share for the prior year have also been restated. The amount of the correction for basic earnings was a decrease of 5.41 cents per share and diluted earnings per share was a decrease of 5.17 cents per share.

  COMPANY  
  2016
As previously
reported
R’000		 Increase/
(decrease)
R’000		 2016
Restated
R’000		  
Statement of financial position (extract)            
Conditional put option reserve  (727 960) 727 960  –    
Total equity  123 045  727 960  851 005    
Conditional financial obligation  727 960  (727 960) –    
Total liabilities  920 317  (727 960) 192 357    

The correction further affected some of the amounts disclosed in Notes 5, 24, 26, 27, 35 and 36.
b)

Reclassification in cash flow statement

In the prior financial year, loans to Group/associate companies were reclassified from financing activities to investing activities as this is more appropriate.

This has been corrected by restating the 2016 financial statement line items as follows:

  GROUP  
  2016
As previously
reported
R’000		 Profit
increase/
(decrease)
R’000		 2016
Restated
R’000		  
Statement of cash flows (extract)              
Cash flows from financing activities             
Decrease in loans to Group/associate companies  (31 686) 31 686  –    
Net cash flow from financing activities  487 926  31 686  519 612    
Cash flows from investing activities             
Decrease in loans to Group/associate companies  –  (31 686) (31 686)   
Net cash flow from investing activities  (645 465) (31 686) (677 151)   
c)

Restatement in earnings per share

In the prior financial years, AfroCentric calculated the earnings per share and headline earnings per share using total comprehensive income attributable to the parent instead of profit and loss attributable to the parent and added back impairment of loans for headline earnings per share. From management’s analysis, the change in earnings per share is immaterial, but in compliance with IAS 33.

This has been corrected by restating the 2016 financial statement line items as follows:

  GROUP  
  2016
As previously
reported
R’000		 Profit
increase/
(decrease)
R’000		 2016
Restated
R’000		  
Earnings per share (extract)            
Reconciliation of headline earnings             
Basic earnings (incorporating Note 39(a)) 145 320  (4 971) 140 349    
Impairment of assets  21 469  (11 252) 10 217    
Total non-controlling interest effect of adjustments  (8 409) 4 594  (3 815)   
Headline earnings (incorporating Note 39(a)) 157 196  (11 629) 145 567    
Earnings per share (cents)            
Basic (incorporating Note 39(a)) 26.28  (0.9) 25.38    
Diluted (incorporating Note 39(a)) 25.09  (0.86) 24.23    
Headline earnings per share (cents)            
Basic (incorporating Note 39(a)) 28.43  (2.1) 26.33    
Diluted (incorporating Note 39(a)) 27.14  (2.01) 25.13    
   
   
   

NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS – NOTE 39