Annual Report - JD Group

Basis of accounting
The annual financial statements are prepared on the historical cost
basis, except for certain financial instruments carried at fair value,
and are in accordance with South African Statements of Generally
Accepted Accounting Practice and International Financial Reporting
Standards, and incorporate the following principal accounting
policies, which are consistent in all material respects with those of the
previous year, except for that relating to the consolidation of share
incentive trusts which is explained in detail later in these policies.
The annual financial statements are presented in South African
rand since this is the currency in which the majority of the Group’s
transactions are denominated.
Consistent with prior financial reporting periods the trading cycle
ends on the 15th of each following month. The financial year ends
on 15 September.
Basis of consolidation
The Group financial statements incorporate the financial
statements of the Company and its subsidiaries. Subsidiaries are
those entities over whose financial and operating policies the
Group has the power to exercise control, so as to obtain benefits
from their activities.
On acquisition, the assets and liabilities of the subsidiaries are
measured at fair value. The results of subsidiaries are included
from the effective dates of acquisition and up to the effective
dates of disposal. All intercompany transactions and balances are
eliminated on consolidation.
The accounting policies and year ends of all consolidated
subsidiaries are consistent throughout the Group. The
consolidation of Abra SA for the year ended 31 August 2004 is
based on audited results and for BoConcept unaudited
management account information was used.
The assets and liabilities of foreign subsidiaries are translated into
rand at rates of exchange ruling at the year end. The results of
their operations are translated at an appropriate weighted average
rate of exchange for the year.
Subsidiaries acquired with the intention of disposal in the
foreseable future are not consolidated.
Goodwill
Goodwill arising on consolidation represents the excess of the cost
of acquisition over the Group’s interest in the fair value of the
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Accounting policies
identifiable assets and liabilities of a subsidiary, associate or jointly
controlled entity at the date of acquisition. Goodwill is capitalised
and amortised on a straight line basis over its estimated useful life,
not exceeding 20 years, and is assessed for impairment. Goodwill
arising on acquisitions by foreign entities is treated as assets and
liabilities of the foreign entity and translated into rand at rates of
exchange ruling at the reporting date.
Intangibles
Intangibles are stated at cost if acquired separately or at fair value
at the date of acquisition in a business combination. The fair value
is limited to the extent of positive goodwill existing after the
allocation of the purchase consideration to the net tangible assets.
Intangibles are amortised on a straight line basis over their
estimated useful lives.
Taxation
The charge for taxation is based on the results for the year as
adjusted for items which are non-assessable or disallowed.
Deferred taxation is accounted for using the balance sheet liability
method in respect of temporary differences. Temporary differences
arise from differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding
taxation basis used in the computation of assessable taxable profit.
In general, deferred taxation liabilities are recognised for all taxable
temporary differences and deferred taxation assets are recognised
to the extent that it is probable that taxable profit will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition of
other assets and liabilities which affects neither the taxable profit
nor the accounting profit at the time of the transaction.
Deferred taxation liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Group
is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred taxation is calculated at the taxation rates that are
expected to apply to the period when the asset is realised or the
liability is settled. Deferred taxation is charged or credited in the
income statement, except when it relates to items credited or
charged directly to equity, in which case the deferred taxation is
also dealt with in equity.