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


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



Vehicles




Additions

Disposals

Depreciation charge




Computer equipment




Additions

Disposals

Depreciation charge




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)


Office furniture and fittings




Additions

Depreciation charge




Total Property, plant and equipment




Additions

Disposals

Depreciation charge




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



Accumulated amortisation

Additions

Amortisation




Total Intangible Assets




Additions

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


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


22 SENIOR MANAGEMENT EMOLUMENTS

General Manager

Salary

Bonus and Performance Payments

Expense Allowance

Pension Contributions

Other Benefits

Chief Executive Officer

Salary


Expense Allowance


Other Benefits

Chief Financial Officer

Salary


Expense Allowance


Other Benefits

Marketing Director (Resigned 31 July 2007)

Salary


Expense Allowance


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


Expense Allowance


Other Benefits

Chief Operations Officer (Appointed 1 July 2007)

Salary


Expense Allowance


Other Benefits

Total of Senior Management Emoluments

Salary


Expense Allowance


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


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


Restated Balance 2,032 1,388

Accumulated Surplus 2,799 3,428


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)

notes to the financial statements · 2018-02-05 · notes to the financial statements 1. accounting...

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