NOTES TO THE ANNUAL FINANCIAL STATEMENTS � NOTE 31

31. SEGMENTAL SUMMARY
 

The Group’s segment reporting follows the organisational structure as reflected in its internal management reporting systems, which are the basis for assessing the financial performance of the business segments and for allocating resources to these segments. Management’s assessment of the Group’s organisational structure takes the geographical location of the segments into account.

Operating segments are reported internally to the chief operating decision-maker in a manner consistent with the financial statements. In addition, the chief operating decision-maker uses core net profit as a non-IFRS measure in evaluating the Group’s performance on a segmental level. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors, who are responsible for making strategic decisions on behalf of the Group.

Transactions between reportable segments are conducted on similar terms as other transactions of a similar nature.

At 31 May 2015, the Group is managed on the basis of five main business segments:

• South African Distribution, which includes the distribution of physical and virtual prepaid airtime and electricity of the South African mobile/fixed-line network operators and utility suppliers, and the distribution of starter packs in South Africa.
• International Distribution, which includes international distribution of physical and virtual prepaid airtime in India and Mexico, and payment solutions in India. This segment also incorporates the Africa Prepaid Services group.
• Mobile, which includes the provision of a complete mobile transactional ecosystem and services provisioning platform delivering mobile-centric products and services through any mobile channel, including location-based and WASP services, and music and digital content provision.
• Solutions, which includes marketing of cellular and financial products and services through outbound telemarketing and other channels, provides inbound customer care and technical support, and markets data and analytics services.
• Corporate, which performs the head office administration function.

The segment results for the year ended 31 May are as follows:
    Total   South African Distribution   International Distribution   Mobile   Solutions   Corporate  
    2015
R’000		       2014
R’000		   2015
R’000		       2014
R’000		   2015
R’000		       2014
R’000		   2015
R’000		       2014
R’000		   2015
R’000		       2014
R’000		   2015
R’000		       2014
R’000		  
  Total segment revenue 27 780 173       25 354 475   27 364 493       24 837 763   —       —   251 085       350 783   164 595       165 929   —       —  
  Inter-segment revenue (5 735 951)       (5 952 809)   (5 706 602)       (5 734 111)   —       —   (10 917)       (198 165)   (18 432)       (20 533)   —       —  
  Revenue 22 044 222       19 401 666   21 657 891       19 103 652   —       —   240 168       152 618   146 163       145 396   —       —  
  Segment result                                                                        
  Operating profit/(loss) before depreciation, amortisation and impairment charges 1 080 165       787 993   1 038 252       821 310   35 379       (13 961)   51 359       34 273   40 831       29 257   (85 656)       (82 886)  
  Depreciation and amortisation (89 112)       (62 175)   (72 649)       (48 401)   —       —   (7 068)       (3 407)   (2 877)       (3 331)   (6 518)       (7 036)  
  Impairment of property, plant and equipment —       (128)   —       —   —       —   —       —   —       (128)   —       —  
  Impairment of intangible assets —       (1 073)   —       —   —       —   —       (1 073)   —       —   —       —  
  Impairment of loans (4 907)       (1 761)   (219)       (1 487)   (4 688)       (274)   —       —   —       —   —       —  
  Finance costs (233 165)       (166 876)   (225 994)       (165 647)   (152)       (392)   (733)       (61)   (2)       (1)   (6 284)       (775)  
  Finance income 173 047       156 250   156 703       140 942   7 190       11 274   1 322       1 478   449       485   7 383       2 071  
  Share of (losses)/profits from associates and joint ventures (79 338)       (56 873)   —       —   (81 267)       (56 249)   2 658       —   (729)       (624)   —       —  
  Taxation (265 497)       (206 442)   (222 905)       (186 664)   (14 701)       (3 700)   (15 732)       (7 672)   (9 480)       (9 049)   (2 679)       643  
  Net profit/(loss) for the year 581 193       448 915   673 188       560 053   (58 239)       (63 302)   31 806       23 538   28 192       16 609   (93 754)       (87 983)  
  Reconciliation of net profit for the year to core net profit for the year                                                                        
  Net profit/(loss) for the year 581 193       448 915   673 188       560 053   (58 239)       (63 302)   31 806       23 538   28 192       16 609   (93 754)       (87 983)  
  Amortisation of intangibles raised through business combinations net of tax 19 628       10 625   13 389       6 323   3 593       3 315   2 646       987   —       —   —       —  
  Core net profit/(loss) for the year 600 821       459 540   686 577       566 376   (54 646)       (59 987)   34 452       24 525   28 192       16 609   (93 754)       (87 983)  
  Core net profit/(loss) for the year attributable to:                                                                        
  Equity holders of parent 596 578       460 602   684 756       558 996   (46 958)       (47 862)   28 559       24 904   23 975       12 547   (93 754)       (87 983)  
  Non-controlling interest 4 243       (1 062)   1 821       7 379   (7 688)       (12 125)   5 893       (378)   4 217       4 062   —       —  
  Non-cash items                                                                        
  Net profit/(loss) on sale of subsidiaries 3 691       —   —       —   —       —   —       —   —       —   3 691       —  
  Net profit on disposal of associates 18 771       —   —       —   18 771       —   —       —   —       —   —       —  
  Discounting of receivables 142 326       117 444   142 326       116 783   —       —   —       661   —       —   —       —  
  Discounting of payables (165 201)       (143 882)   (165 201)       (143 882)   —       —   —       —   —       —   —       —  
  The segment assets and liabilities at 31 May are as follows:                                                                        
  Assets excluding investments in associates and joint ventures 6 478 248       5 904 778   5 890 188       5 651 680   (22 250)       (40 235)   407 401       96 420   151 077       134 592   51 832       62 321  
  Investments in associates and joint ventures 548 572       598 109   —       —   500 203       596 611   41 905       —   464       1 498   6 000       —  
  Total assets 7 026 820       6 502 887   5 890 188       5 651 680   477 953       556 376   449 306       96 420   151 541       136 090   57 832       62 321  
  Additions to non-current assets                                                                        
  Property, plant and equipment 54 897       47 038   44 673       42 678   —       —   8 257       3 306   1 657       912   310       142  
  Intangible assets and goodwill 374 095       397 203   344 909       388 280   —       —   27 722       7 239   1 445       1 651   19       33  
  Investment in associates 51 424       —   —       —   51 424       —   —       —   —       —   —       —  
  Investment in joint ventures 30 051       —   —       —   —       —   30 051       —   —       —   —       —  
  Total liabilities (3 108 839)       (2 978 898)   (2 781 588)       (2 838 621)   (26 792)       (24 401)   (147 536)       (76 359)   (18 011)       (15 767)   (134 912)       (23 750)  
  Segmental summary

The Company is domiciled in the Republic of South Africa. The result of its revenue from external customers in South Africa is R22.044 billion (2014: R19.402 billion), and the total revenue from external customers from other countries is nil (2014: nil).

The total non-current assets other than financial instruments and deferred tax assets located in South Africa is R1.483 billion (2014: R1.164 billion), and the total non-current assets located in other countries is R459 million (2014: R555 million).

The South African Distribution segment includes revenues of R3.717 billion and R3.541 billion earned from two external customers.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS � NOTE 31