| |
Summary of significant accounting policies
Cost of handsets, equipment, software and directories
The costs of handsets, equipment, software and directories represent the acquisition cost of the items sold, net of any supplier rebates and
discounts. This line item does not include any allocated overhead costs.
Sales commission, incentives and logistical costs
Sales commission and incentives are costs paid to Telkom's independent sales channels. Logistical costs represent costs incurred with third parties
outside the Group for the delivery of handsets to customers and stores. This line item does not include the allocation of any other expense classified
by nature in the financial statements. |
| |
| |
Group |
Company |
| |
31 March
2022
Rm |
31 March
2022
Rm |
| Cost of handsets, equipment, software and directories |
(7 089) |
(5 648) |
(4 280) |
(3 589) |
Cost of handsets, equipment, software and directories increased mainly due to high-end mobile contract sales resulting in higher average handset
costs and higher post-paid revenue, as well as an increase in mobile handset sales. |
| |
| |
Group |
Company |
| |
31 March
2022
Rm |
31 March
2022
Rm |
| Sales commission, incentives and logistical costs |
(2 522) |
(2 516) |
(2 521) |
(2 369) |
Sales commission, incentives and logistical costs increased due to higher commissions from growth in the commissionable base, offset by lower incentives due to lower connections and renewals. |
| |
| |
Group |
Company |
| |
31 March
2022
Rm |
31 March
2022
Rm |
| Employee expenses |
(9 292) |
(8 693) |
(3 397) |
(4 528) |
| Salaries and wages |
(7 665) |
(7 590) |
(2 608) |
(3 719) |
| Post-retirement pension and retirement fund (refer to notes 10.2 and 10.3) |
(582) |
(535) |
(200) |
(335) |
| Post-retirement medical aid (refer to note 10.4) |
176 |
150 |
176 |
150 |
| Post-retirement telephone rebates (refer to note 10.5) |
(36) |
(41) |
(36) |
(41) |
| Share-based compensation expense (refer to note 9.2) |
(176) |
(203) |
(80) |
(164) |
| Other benefits1 |
(1 255) |
(811) |
(764) |
(750) |
| Employee expenses capitalised to capital projects |
246 |
337 |
115 |
331 |
|
|
|
|
|
| 1 |
Other benefits include, among others, skills development, annual leave, performance incentive, service bonuses, voluntary employee severance/voluntary early retirement and retrenchment package costs and termination benefits. Included in other benefits as at 31 March 2023 are restructuring costs amounting to R1 065 million for Group and R420 million for Company. |
|
| |
| |
Group |
Company |
| |
31 March3
2022
Rm |
31 March
2022
Rm |
| Other expenses |
(2 384) |
(2 256) |
(857) |
(992) |
| Included in the other expenses line item are the following expenses: |
|
|
|
|
| Operating expenses |
(2 012) |
(1 875) |
(651) |
(661) |
| Sundry expenses1 |
(460) |
(211) |
(66) |
(62) |
| Licence fees |
(393) |
(377) |
(331) |
(360) |
| Subsistence and travel |
(60) |
(33) |
(19) |
(19) |
| Third-party service costs |
(850) |
(979) |
– |
– |
| Image building and market research costs |
(74) |
(55) |
(71) |
(54) |
| Commission |
(118) |
(121) |
(118) |
(121) |
| Other |
(57) |
(99) |
(46) |
(45) |
| Non-operating expenses |
(372) |
(381) |
(206) |
(331) |
| Donations |
(55) |
(71) |
(34) |
(34) |
| Losses2 |
(314) |
(301) |
(171) |
(297) |
| Other |
(3) |
(9) |
(1) |
– |
|
|
|
|
|
| 1 |
Sundry expenses include, among others, consumables, membership fees, project fees, stock write-offs, printing and stationery costs. |
| 2 |
Losses include losses as a result of theft of copper and fibre lines. |
| 3 |
Wholesale voice and non-voices services are Openserve charges to Telkom Company for data connectivity, broadband access, managed services and line rental cost. In the prior year, these
expenses were interdivisional. These interdivisional expenses would have been eliminated before the carve-out within Telkom Company as it related to business units within the Company.
Post the carve-out, these expenses are not eliminated at Company level, resulting in an increase in the overall balance. In the prior year, wholesale voice and non-voice services were included
in the other expenses line item. At a Group level, the prior year has been re-presented to be consistent with the Company disclosure. |
|
| |
| |
Group |
Company |
| |
31 March
2022
Rm |
31 March
2022
Rm |
| Wholesale voice and non-voice services |
(196) |
(59) |
(3 574) |
– |
| Data connectivity |
(71) |
(32) |
(1 922) |
– |
| Broadband access |
(8) |
(22) |
(878) |
– |
| Managed services |
(107) |
(2) |
(100) |
– |
| Line rental cost |
(10) |
(3) |
(674) |
– |
|
|
|
|
|
|
| |
| |
Group |
Company |
| |
31 March
2022
Rm |
31 March
2022
Rm |
| Maintenance |
(4 154) |
(3 879) |
(3 241) |
(4 728) |
Maintenance costs have increased for the Group due to higher subcontractor costs, maintenance costs and support contract costs. |
| |
| |
Group |
Company |
| |
31 March
2022
Rm |
31 March
2022
Rm |
| Marketing |
(812) |
(729) |
(712) |
(649) |
Marketing costs have increased due to higher media and non-media commissions paid as well as sponsorship payments for the Youth Employment
Service programme. |
| |
| |
Group |
Company |
| |
31 March
2022
Rm |
31 March
2022
Rm |
| Service fees |
(4 080) |
(3 388) |
(2 171) |
(2 878) |
| Facilities and property management |
(2 734) |
(2 178) |
(1 357) |
(1 842) |
| Consultancy, security and other services |
(1 346) |
(1 210) |
(814) |
(1 036) |
|
|
|
|
|
|
|
| |
Group |
Company |
| |
31 March
2022
Rm |
31 March
2022
Rm |
| Lease-related expenses |
(332) |
(168) |
(190) |
(95) |
During the current year, the Group undertook an extensive process to renew expired lease agreements relating to strategic leased assets which are
still in use. For expired lease agreements relating to strategic leased assets still in use, the Group policy requires that the lease period be extended
in line with the Group's rolling forecast period. The increase in the lease-related expense is mainly due to additional lease payments made as a
result of variances identified between the original payment terms and the new payments terms under the renewed lease agreements. |
| |
| |
Group |
Company |
| |
31 March
2022
Rm |
31 March
2022
Rm |
| Depreciation, amortisation, impairments and write-offs of non-financial assets |
(20 653) |
(6 975) |
(11 463) |
(6 872) |
| Depreciation of property, plant and equipment |
(5 125) |
(4 713) |
(3 038) |
(4 298) |
| Depreciation of right-of-use assets |
(1 274) |
(1 184) |
(1 439) |
(1 643) |
| Depreciation of investment property |
– |
– |
(55) |
– |
| Amortisation of intangible assets |
(746) |
(831) |
(577) |
(729) |
| Write-offs of property, plant and equipment and intangible assets |
(272) |
(247) |
(225) |
(202) |
| Impairment of property, plant and equipment and intangible assets |
(13 236) |
– |
(6 129) |
– |
|
|
|
|
|
| |
Group |
Company |
| The estimated useful lives assigned to groups of property, plant and equipment are: |
Years
2022 |
Years
2022 |
| Freehold buildings |
5 to 50 |
5 to 50 |
5 to 40 |
5 to 40 4 |
| Network equipment |
|
|
|
|
| Cables |
4 to 30 |
4 to 30 |
4 to 30 |
4 to 30 |
| Switching equipment |
5 to 18 |
5 to 18 |
5 to 18 |
5 to 18 |
| Transmission equipment |
5 to 20 |
5 to 20 |
5 to 20 |
5 to 20 |
| Other |
2 to 20 |
2 to 20 |
2 to 20 |
2 to 20 |
| Support equipment |
5 to 12 |
5 to 12 |
5 to 10 |
5 to 10 |
| Furniture and office equipment |
5 to 15 |
5 to 15 |
11 to 15 |
11 to 15 |
| Data processing equipment and software |
5 to 10 |
3 to 10 |
5 to 10 |
5 to 10 |
| Telkom support services equipment |
2 to 20 |
2 to 20 |
2 to 20 |
2 to 20 |
| |
Company |
| The expected useful lives assigned to investment property are: |
Years
2022 |
| Investment property |
5 to 40 |
N/A |
| |
Group |
Company |
| The expected useful lives assigned to intangible assets are: |
Years
2022 |
Years
2022 |
| Software and licences |
3 to 10 |
3 to 10 |
5 to 10 |
5 to 10 |
| Trademarks, copyrights and other |
5 to 20 |
5 to 13 |
5 to 13 |
5 to 13 |
During the year, the Group reassessed the useful lives on various property, plant and equipment and intangible assets. The reassessment
takes into account the Group's current capex strategy and changes in the technological environment. The reassessment of useful lives
decreased the depreciation expense by R98 million (31 March 2022: decrease of R508 million) and decreased the amortisation expense
by R128 million (31 March 2022: decrease of R28 million) at Company level and decreased the depreciation expense by R81 million
(31 March 2022: decrease of R514 million) and decreased the amortisation expense by R132 million (31 March 2022: decrease of R28 million)
at Group level. With all other factors remaining constant, depreciation for future periods is expected to increase by R98 million for Company and by
R81 million for Group, and amortisation for future periods is expected to increase by R128 million for Company and R132 million for the Group.
Refer to notes 5.1 and 5.2 for the related accounting policies.
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