Blue Label Telecoms Integrated Annual Report 2019

Blue Label annual financial statements 2019 9 Independent auditor’s report to the shareholders of Blue Label Telecoms Limited continued u u the disclosure of summary financial information of Cell C Limited, presented in note 2.1 to the consolidated financial statements may be materially misstated. We conducted our audit in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Independence We are independent of the Group in accordance with the sections 290 and 291 of the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (Revised January 2018) , parts 1 and 3 of the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (Revised November 2018) (together the IRBA Codes) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities, as applicable, in accordance with the IRBA Codes and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Codes are consistent with the corresponding sections of the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) respectively. MATERIAL UNCERTAINTY RELATING TO GOING CONCERN We draw attention to note 9.2 to the financial statements, which indicates that the Group has evaluated the going concern assumption as at 31 May 2019. One of the Group’s significant facilities has been extended to 29 November 2019. A renegotiation for a further extension beyond that date is currently in process. These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. OUR AUDIT APPROACH Overview Overall Group materiality u u Overall Group materiality: R77 600 000, which represents 0.3% of consolidated revenue. Our audit approach Overview Overall gr up materiality R 80,369,000 which represents 0.3% of total revenue. Group audit scope We identified fifteen components, which in our view, required an audit of their complete financial information due to their financial significance and risk characteristics. Key audit matters 1. Impairment assessment of goodwill arising from business combinations and impairment assessment of investment in Blue Label Mexico S.A. de C.V. (“Blue Label Mexico”). 2. Fair value assessment of investment in Oxigen Services India Private Limited (“OSI”). 3. Accounting for equity accounted investment in Cell C Limited. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Materiality Group scoping Key audit matters Group audit sco u u We have identified 17 components which, in our view, require an audit of their financial information due to their financial significance to the Blue Label Telecoms Group and due to their risk characteristics. Key audit matters u u Assessment of impairment of investment in Cell C. u u Impairment assessment of goodwill arising from business combinations and impair t assessment of associate investments in Blue Label Mexico S.A. de C.V. (Blue Label Mexico) a d Oxigen Services India Private Limited (OSI). As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of ma agement override of internal controls, includi g among other matters, consideration of whether there was evidence of bias that r presented a risk of mat ial miss ateme due to fraud. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reason bly expect d to influ nce the economic decisions of users taken on he basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table on the following page. Th se, together with qualitative considerations, helped us to determine the scope of our audit and the na ure, timing and extent of ur audit procedu es and to evaluate the effect of misstatements, both individually and in aggregate on the fina cial statements as a whole.