3. Segment information
 

The executive Committee (Exco) is the Group’s chief operating decision maker (CODM). Management has determined the operating segments based on the reports reviewed by Exco that are used to make strategic decisions, allocate resources and assess performance of each reportable segment.

The reportable segments have been determined as Openserve, Consumer, BCX, Gyro and “Other”. “Other” includes Yellow Pages and other business units.

The CODM reviews the performance of the operating segments on an EBITDA basis.

The EBITDA is defined as earnings before finance income and finance cost (which includes gains and losses on foreign exchange transactions), tax, depreciation and amortisation, and is also presented inclusive of the following items:

  • Interest revenue; and
  • Interest on overdue accounts

In the current year, for comparability purposes, the CODM also reviewed EBITDA excluding the IFRS 16 impact on IAS 17 operating leases that are capitalised under IFRS 16. The current year EBITDA has been normalised for voluntary severance, retirement and retrenchment package expenses of R1 186 million and expected credit losses of R626 million arising from the expected impact of COVID-19. The comparative year has been normalised for voluntary severance and retirement expenses of R728 million.

The CODM views this as a normalised EBITDA measure. Adjustments are made for significant non-recurring items such as restructurings, adoption of new accounting statements and, for the current year, the expected impact of COVID-19.

March 2020 Openserve
Rm		 Consumer
Rm		 BCX
Rm		 Gyro
Rm		 Other
Rm		 Eliminations
Rm		 Consolidated
Rm		  
Revenue from external customers* 3 990 21 460 16 462 651 480 – 43 043  
Revenue from contracts with customers recognised over time 3 990 19 015 14 111 – 1 – 37 117  
   Voice – 6 970 4 749 – – – 11 719  
   Interconnection 537 420 – – – – 957  
   Data 3 216 11 333 3 490 – 1 – 18 040  
   Information technology services – – 5 823 – – – 5 823  
   Interest revenue – 279 – – – – 279  
   Sundry revenue 237 13 49 – – – 299  
Revenue from contracts with customers recognised at a point in time – 2 445 2 351 – 479 – 5 275  
   Customer premises equipment – 2 445 1 319 – – – 3 764  
   Information technology hardware – – 1 032 – – – 1 032  
   Sundry revenue – – – – 479 – 479  
Operating lease revenue – – – 651 – – 651  
Intersegmental operating revenue 11 145 259 2 280 863 1 403 (15 950) –  
Other income 274 550 88 10 772 (1 018) 676  
Insurance service result – – – – 41 – 41  
Total expenses (11 596) (20 687) (15 814) (327) (1 974) 16 968 (33 430)  
Cost of handsets, equipment, software and directories – (3 189) (2 258) – (178) – (5 625)  
Sales commission, incentives and logistical costs – (1 778) (228) – – – (2 006)  
Payments to other operators (915) (2 689) (619) – – 540 (3 683)  
Employee expenses (3 858) (859) (4 203) (113) (499) 5 (9 527)  
Selling, general and administrative expenses (3 929) (10 493) (7 802) (115) (931) 15 517 (7 753)  
Service fees (1 866) (583) (510) (97) (314) 96 (3 274)  
Lease expenses (1 028) (1 096) (194) (2) (52) 810 (1 562)  
Earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments including intersegmental transactions** 3 813 1 582 3 016 1 197 722 – 10 330  
IFRS 16 impact on lease expenses 731 832 134 – 80 (693) 1 084  
Earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments including intersegmental transactions             11 414  
Reconciliation of operating profit to profit before tax                
Earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments Normalisations             11 414  
Voluntary severance, retirement and retrenchment package expenses             (1 186)  
Expected credit losses             (626)  
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments             9 602  
Depreciation, amortisation, impairments and write-offs             (6 915)  
Operating profit             2 687  
Investment income             79  
Income from associates             11  
Net finance charges, hedging costs and fair value movements             (1 803)  
Profit before taxation             974  
Other segment information                
Capital expenditure of property, plant and equipment and intangible assets 2 992 3 742 552 203 266 – 7 755  
Restated March 2019*** Openserve
Rm		 Consumer
Rm		 BCX
Rm		 Gyro
Rm		 Other
Rm		 Eliminations
Rm		 Consolidated
Rm		  
Revenue from external customers* 4 207 18 866 17 426 609 666 – 41 774  
Revenue from contracts with customers recognised over time 4 207 16 219 15 251 – – – 35 677  
   Voice – 6 845 5 637 – – – 12 482  
   Interconnection 792 270 – – – – 1 062  
   Data 3 415 8 913 3 685 – – – 16 013  
   Information technology services – – 5 889 – – – 5 889  
   Interest revenue – 191 – – – – 191  
   Sundry revenue – – 40 – – – 40  
Revenue from contracts with customers recognised at a point in time – 2 647 2 175 – 666 – 5 488  
   Customer premises equipment – 2 635 1 329 – – – 3 964  
   Information technology hardware – – 846 – – – 846  
   Sundry revenue – 12 – – 666 – 678  
Operating lease revenue – – – 609 – – 609  
Intersegmental operating revenue 12 733 348 2 154 560 1 349 (17 144) –  
Other income 378 615 117 – 809 (1 200) 719  
Total expenses (11 026) (18 799) (16 457) (484) (2 762) 18 344 (31 184)  
Cost of handsets, equipment, software and directories – (2 959) (2 136) – (244) 119 (5 220)  
Sales commission, incentives and logistical costs (6) (1 250) (213) – – 12 (1 457)  
Payments to other operators (954) (1 958) (729) – – 701 (2 940)  
Employee expenses (3 628) (735) (4 538) (104) (1 032) (12) (10 049)  
Selling, general and administrative expenses (4 009) (10 951) (8 110) (88) (1 083) 16 839 (7 402)  
Service fees (1 721) (416) (490) (185) (335) 213 (2 934)  
Lease expenses (708) (530) (241) (107) (68) 472 (1 182)  
Earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments including intersegmental transactions 6 292 1 030 3 240 685 62 – 11 309  
Reconciliation of operating profit to profit before tax                
Earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments including intersegmental transactions             11 309  
Normalisations                
Voluntary severance, retirement and retrenchment package expenses             (728)  
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments             10 581  
Depreciation, amortisation,                
impairments/(reversals) and write-offs             (5 814)  
Operating profit             4 767  
Investment income             185  
Income/(loss) from associates             2  
Net finance charges, hedging costs and fair value movements             (947)  
Profit before taxation             4 007  
Other segment information                
Capital expenditure of property, plant and equipment and intangible assets 4 034 3 070 304 60 206 – 7 674  

Entity wide disclosures

All material non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts related to the segments above are located in South Africa. Assets belonging to the subsidiaries of BCX outside of South Africa are not considered material to the Group as a whole.

No single customer contributes more than 10% of the revenue from external customers and thus no specific information relating to major customers is included in the segment information above.

For the purpose of assessing revenue contribution per customer, management does not treat Government as a single customer.

* Revenue includes balances generated by subsidiaries of BCX in countries outside of South Africa. These are however not considered material to the Group and are thus not disclosed separately.
** EBITDA before IFRS 16 has been included for comparability purposes.
*** Subsequent to the publication of the March 2019 annual financial statements, the Group has aligned its revenue streams in the BCX segment. This has resulted in the reallocation of revenue streams and certain expenses. All revenue line items, as well as cost of handsets, equipment, software and directories and selling, general and administrative expenses were impacted. The comparative numbers have been restated.