Basis of preparation and changes in accounting policy
Basis of preparation

The Preliminary Condensed Consolidated Financial Statements for the year ended 30 June 2016 have been prepared in accordance with IAS 34 Interim Financial Reporting, the Companies Act, 2008 (Act 71 of 2008), as amended, the SAICA Financial Reporting Guides, as issued by the Financial Reporting Standards Council and the Listings Requirements of the JSE. The Preliminary Condensed Consolidated Financial Statements do not include all information on disclosures required in the Annual Financial Statements and should be read in conjunction with the Group’s Annual Financial Statements as at 30 June 2016. These financial results have been prepared under the supervision of Chief Financial Officer, Mr B Wood CA(SA).

New standards, interpretations and amendments adopted

The accounting policies adopted and methods of computation are in terms of International Financial Reporting Standards (“IFRS”) and consistent with those of the previous financial year except for the adoption of new and amended IFRS and IFRIC interpretations which became effective during the current financial year. The application of these standards and interpretations did not have a significant impact on the Group’s reported results and cash flows for the year ended 30 June 2016 and the financial position at 30 June 2016.

Commitments and contingencies
There are no material contingent assets or liabilities at 30 June 2016.
    (Rand millions) 30 June
  30 June  
  Capital commitments      
  – Contracted 42    176  
  – Authorised but not contracted for 239    197  
  Total 281     373  
Fair values of financial instruments
  The Group does not fair value its financial assets or liabilities in accordance with quoted prices in active markets or market observables, as there is no difference between their fair value and carrying value due to the short-term nature of these items, and/or existing terms are equivalent to market observables. There were no transfers into or out of Level 3 during the period.
TopT Ceramics Proprietary Limited
  The Group sold a 10% stake in TopT Ceramics Proprietary Limited at the beginning of the period under review to a new business partner identified during the previous financial year. This stake was sold at a cost of R7 million, and reduces the Group’s interest in this entity to 90%.
Cedar Point Trading 326 Proprietary Limited
  The Group acquired a 10% non-controlling stake held by one of the previous business partners of Cedar Point Trading 326 Proprietary Limited at a cost of R12 million effective 30 November 2015, which increases the Group’s interest in this entity to 90%. An additional business partner has since been identified.
Assets held in disposal group
  At 30 June 2016, management elected to sell the operations of Italtile Australia Proprietary Limited, a subsidiary of Italtile Limited. The business of Italtile Australia Proprietary Limited represents the Group’s Australian property portfolio. As a buyer was identified before year end, the assets of the operations were treated as a disposal group at 30 June 2016. The sale is expected to be concluded during the first half of the 2017 financial year.
Staff Share Scheme
  During the 2014 financial year, the Group implemented a share incentive scheme for all employees of the Group and its franchisees that had been in the employ of the Group and/or franchise network for a period of three uninterrupted years at each allotment date in August every year from implementation date. As a result, 15,3 million of the Group’s shares net of forfeitures were held by qualifying staff members at 30 June 2016 (2015: 14,5 million). Until vesting, the shares will continue to be accounted for as treasury shares and have an impact on the diluted weighted average number of shares.

The scheme is classified as an equity-settled scheme in terms of IFRS 2 Share-based Payment, and has resulted in a charge of R13 million (2015: R12 million) to the Group’s profit; R9 million (2015: R7 million) of this charge is a once-off accelerated expense for franchise staff.

year to  
30 June  
year to  
30 June  
Earnings per share  
  Reconciliation of shares in issue (all figures in millions):          
  – Total number of share issued     1 033     1 033  
  – Shares held by Share Incentive Trust     (19)    (21) 
  – BEE treasury shares     (88)    (88) 
  Shares in issue to external parties     926     924  
  Reconciliation of share numbers used for earnings per share calculations (all figures in millions):          
  Weighted average number of shares     925     923  
  – Dilution effect of share awards     15     11  
  Diluted weighted average number of shares     940     934  
  Reconciliation of headline earnings (Rand millions):          
  – Profit attributable to equity shareholders     813     700  
  – Profit on sale of property, plant and equipment – after taxation     (9)    (6) 
  – Fair value gain on SER-Export part disposal     –     (14) 
  – Reclassification of exchange difference to income     –     (19) 
  Headline earnings     804     661  
  No adjustments to earnings are required for diluted earning per share calculations, as the share awards do not have an impact on diluted earnings.