1. | SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||
1.1 | Basis of preparation | ||||||||||||||||
The principal accounting policies applied in the preparation of the annual financial statements are in the related notes and are consistent with those adopted in the prior year, unless otherwise specified. The annual financial statements relate to the statutory entity. The consolidated annual financial statements of Blue Label Telecoms Limited (BLT) are available from BLT's registered office and online from BLT's website. The annual financial statements have been prepared on the going concern basis in accordance with IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, and the Companies Act, No 71 of 2008. The term IFRS includes International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC). The standards referred to are set by the International Accounting Standards Board (IASB). The annual financial statements have been prepared on the historic cost convention, adjusted for financial instruments measured at fair value through profit or loss, and incorporate the principal accounting policies set out below and through the notes. They are presented in South African rand (R), which is BLT's functional currency. |
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1.2 | Going concern | ||||||||||||||||
The Directors believe that BLT has adequate financial resources to continue in operation for the foreseeable future and accordingly the annual financial statements have been prepared on a going concern basis. The Directors have satisfied themselves that BLT is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The Directors are not aware of any new material changes that may adversely impact BLT. The Directors are also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect BLT. BLT's forecasts and projections, taking account of reasonably possible changes in trading performance, show that BLT should be able to operate within its current funding levels into the foreseeable future. The Directors reviewed the performance of BLT for the year ended 31 May 2023 including the net loss after tax of R253 million and the accumulated loss of R2 945 billion. The net loss for the year ended 31 May 2023 of R253 million was primarily due to the increase in the expected credit loss provision of R268 million, in line with IFRS 9, for the loan owed by The Prepaid Company to BLT, as well as an ECL adjustment of R40 million relating to the financial guarantee issued to Dark Fibre Africa (SPV5). Refer to note 16. After making enquiries, the Directors have a reasonable expectation that BLT has adequate resources to continue in operational existence for the foreseeable future. BLT therefore continues to adopt the going concern basis in preparing the financial statements. |
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1.3 | Significant judgements and sources of estimation uncertainty | ||||||||||||||||
The preparation of annual financial statements in conformity with IFRS requires management, from time to time, to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. For details of the significant judgements and estimates used, refer to the individual notes addressing key areas:
Impairment of financial assetsThe impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. BLT uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on BLT's past history, existing market conditions as well as forward looking estimates at the end of each reporting period. For details of the key assumptions and inputs used, refer to the individual notes addressing financial assets:
Assessment of investments in subsidiaries, associates and joint ventures for impairmentBLT tests annually whether there are any indicators of impairment present that would require an impairment test to be performed to assess whether investments in subsidiaries, associates and joint ventures may have suffered any impairment, in accordance with the accounting policy. The recoverable amounts of the investments in subsidiaries, associates and joint ventures have been determined based on fair value less costs of disposal or value-in-use calculations. These calculations require the use of estimates. |