| |
|
|
|
|
|
|
| |
| |
| The following has been charged/(credited) in arriving at operating profit: |
|
|
|
| Advertising and promotional expenses |
57 968 |
| 46 284 |
| Audit fees — services as auditors relating to the year-end audit |
27 889 |
| 25 157 |
| Audit fees — other |
2 414 |
| 3 362 |
| Consulting fees |
92 839 |
| 107 418 |
| Foreign exchange loss/(gain) |
1 217 |
| (7 091) |
| Foreign exchange loss on 2DFine and OSI loans |
— |
| 68 262 |
| Impairment of inventory |
4 205 |
| 2 995 |
| Insurance |
11 315 |
| 11 585 |
| IT infrastructure costs and computer-related costs |
55 737 |
| 60 822 |
| Legal fees |
9 283 |
| 7 373 |
| Licence fees |
49 196 |
| 44 127 |
| Motor vehicle expenses |
19 548 |
| 14 681 |
| Profit on disposal of property, plant and equipment |
(1 383) |
| (545) |
| Profit on disposal of joint venture* |
— |
| (26 955) |
| Foreign currency translation reserve release on disposal of joint venture |
— |
| (52 538) |
| Loss on disposal of joint venture |
— |
| 1 990 |
| Travel — local and overseas |
7 638 |
| 5 208 |
| Receipt of contingent consideration |
(45 823) |
| — |
| Professional fees and other costs related to the fraud recoupment |
67 933 |
| — |
| Fraud recoupment |
(315 132) |
| — |
| * |
On 21 September 2020, the Group disposed of its 47.56% shareholding in Blue Label Mexico for R190.6 million to its co-shareholder, Grupo Bimbo S.A.B de C.V. The profit on disposal
of R65.1 million is included in other income in the prior year. In line with Mexican taxation legislation, taxation of R38.1 million was payable on the proceeds of the disposal thereby reducing the profit on disposal to R27 million. |
Fraud recoupment
The Group uncovered a fraudulent scheme, operating since 2015, which was perpetrated by two former senior key executives ("the perpetrators") of a subsidiary company ("the subsidiary"). These fraudulent transactions were performed primarily outside the course and scope of the subsidiary's immediate field of commercial dealings, whereby the perpetrators interposed themselves between intermediary companies and the subsidiary for their own benefit. In addition, certain transactions were identified evidencing theft of funds from the subsidiary and the fraudulent concealment thereof. Settlement agreements were signed with the perpetrators in late October 2021, in terms of which rights to all, but a few, assets of the perpetrators were signed-over to the Group. The Group holds Powers of Attorney over these assets. As of 31 October 2021, the aggregate value of assets either realised by or signed-over to the Group as a result of the fraudulent scheme, amounted to R315 million, which has been recognised as recoupment income within other income, and comprised the following:
|
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|
|
| Rights to: |
|
|
|
|
| Immovable property |
42 2951 |
(11 354) |
(30 941) |
— |
| Loans made to third parties |
62 7722 |
(3 524) |
(8 292) |
50 956 |
| Unlisted shares |
13 1003 |
— |
(13 100) |
— |
| Listed share portfolio |
7504 |
(750) |
— |
— |
| Bank accounts |
191 5275 |
(189 825) |
— |
1 702 |
| Inventory |
448 |
— |
(448) |
— |
| Other |
4 240 |
(140) |
(4 100) |
— |
| Receivables |
— |
— |
60 483 |
60 483 |
|
| 315 132 |
(205 593) |
3 602 |
113 141 |
| 1 |
Rights to immovable property were accounted for as rights to receive non-current assets and were recognised initially at their fair value using comparable market prices. As it was not the intention of the Group to acquire legal title to the properties or to keep the rights for the long term, the Group actively marketed these properties and has sold them all. Accordingly, the rights to receive immovable property were classified as non-current assets held-for-sale. These rights were measured at the lower of the initial amount recognised and fair value less costs to sell. Since the perpetrators are required to bear the costs to sell, these were assumed to be zero for the Group's measurement purposes. All properties were sold by 31 May 2022, resulting in the derecognition of the related right and the recognition of a receivable for the sale proceeds which are expected to be received within the next 12 months where the transfer of title to the property has not yet taken place. |
| 2 |
The right to a loan made to a third party with a carrying amount of R49.5 million has been accounted for as a financial asset at fair value through profit or loss. Early prepayment features resulted in the underlying loan failing the requirements for amortised cost accounting. Refer to note 3.7. The rights to the remaining loans receivable have been measured at amortised cost. |
| 3 |
At about the time of the settlement agreement, an agreement was reached for the sale of certain unlisted shares owned by the perpetrators, the proceeds of which are payable to the Group within the next few months. Accordingly, the Group recognised a receivable for such proceeds, measured initially at fair value, which is subject to the Group's accounting policy for expected credit losses. |
| 4 |
The right to the listed share portfolio has been accounted for as a financial asset at fair value through profit or loss based on quoted share prices. |
| 5 |
Substantially all funds that were found to be held in bank accounts have been transferred to the Group's bank accounts. |
Subsequent to year-end, R20.8 million of the balance remaining to be collected at 31 May 2022 was collected.
Professional fees incurred relating to the fraud recoupment amounted to R67.9 million to the end of May 2022, and have been included in other expenses.
As the fraudulent activities had a direct impact on the Group's operating cash flows, the realisation of the recoupment income is recognised in cash flows from operating activities in the cash flow statement.
Subsequent to the fraud investigation and a detailed review of the control environment and business processes within the subsidiary, management has implemented the necessary improvements to the existing control environment.
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| |
| |
| Impairments and fair value movements comprise the following: |
|
|
|
| Fair value (gain)/loss on surety receivable |
(12 859) |
| 21 116 |
| Fair value gain on financial instruments |
(50 387) |
| (28 911) |
|
| (63 246) |
| (7 795) |
| Bad debts and expected credit loss, arising from the application of IFRS 9, comprise the following: |
|
|
|
| Bad debts and expected credit loss on loans |
(398) |
| 6 181 |
| Expected credit loss on 2DFine and OSI loans* |
471 |
| (67 991) |
| Remeasurement of financial guarantee contracts |
(671) |
| (33 455) |
| Bad debts and expected credit losses on trade receivables, other receivables and advances to customers |
328 359 |
| 83 365 |
|
| 327 761 |
| (11 900) |
| Included in other expenses, impairments and fair value movements, and bad debts and expected credit loss above are the following: |
|
|
|
| Impairments, fair value and foreign exchange movements relating to Oxigen |
|
|
|
| Expected credit loss on 2DFine loan* |
471 |
| (55 540) |
| Expected credit loss on OSI loan* |
— |
| (12 451) |
| Foreign exchange loss on 2DFine loan |
— |
| 55 811 |
| Foreign exchange loss on OSI loan |
— |
| 12 451 |
| Fair value (gain)/loss on surety receivable |
(12 859) |
| 21 116 |
| Foreign exchange gain and expected credit loss on financial guarantee contracts |
(671) |
| (16 605) |
|
| (13 059) |
| 4 782 |
| Impairments and fair value losses relating to Cell C |
|
|
|
| Fair value gain on SPV2 |
— |
| (16 009) |
|
| — |
| (16 009) |
| * |
These loans were fully provided for in 2019. The ECL movements on these loans in the prior year predominantly related to offsetting the forex movement recognised thereon in other expenses. In the current year these loans were written off in full. |
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