The basis of preparing our report

This report covers the financial year 1 April 2019 to 31 March 2020 and includes significant subsequent events up to the date of approval of the integrated report.

Considerations in preparing this report

This report is prepared for our providers of financial capital and other stakeholders. It communicates Telkom’s progress towards achieving the United Nations Global Compact regarding human rights, labour, the environment, and our anti-corruption efforts.

We used the IIRC’s Framework in compiling this report. As a listed company, we adhere to the JSE Listings Requirements and we are a constituent of the FTSE/JSE Responsible Investment Index.

The report complies with all the JSE Listings Requirements, and specifically the corporate governance requirements contained in paragraph 3.84 of the JSE Listings Requirements.

Our report focuses on material themes that substantively impact on our ability to create value for our stakeholders over time. Refer to our materiality determination process, and our material themes. This report shows the connection between our material themes, strategy, governance, performance and prospects. It addresses our divisions and our subsidiaries (business units), unless otherwise stated.

We report according to the six capitals to provide a balanced view of our value creation.

We considered the disclosure guidelines of King IV while preparing our report. We applied and explained the 16 relevant principles and demonstrated how we achieved governance outcomes. A King IV application report, which sets out the principles and summarised application, is available on our website https://www.telkom.co.za/ir/Governance/Governance.html. King IV principle disclosures are indicated with this icon throughout the report.

Combined assurance

We follow a combined assurance approach, which integrates our internal audit function, Telkom Group Internal Audit, other independent assurers and risk management activities across the group. Telkom Audit Services assessed the completeness and accuracy of a sample of strategic, non-financial KPIs presented in the integrated report. We are in the process of enhancing our combined assurance framework to be applied across all combined assurance functions.

PwC and SizweNtsalubaGobodo Grant Thornton Inc. are the joint independent external auditors. They provided assurance over our consolidated annual financial statements and expressed an unmodified opinion (refer to Independent auditors' report of the consolidated annual financial statements) which is available online at www.telkom.co.za/ir.

IBIS ESG Assurance provided assurance over certain non-financial indicators in the report. Assured non-financial indicators are indicated with this icon . For the FY2020 assurance certificate please refer to www.telkom.co.za/ir

Our integrated report was reviewed and approved by the exco, audit committee, social and ethics committee and the board, and the board takes ultimate responsibility.

Reporting suite

Our reporting suite as outlined below can be found at www.telkom.co.za/ir.

Report     Framework     Assurance provider
             
Integrated report, including the notice of AGM    
  • IIRC <IR> Framework
  • King IV
  • Companies Act
  • JSE Listings Requirements
    
  • Management
  • Audit committee
  • Board
  • IBIS ESG Assurance
  • Internal audit
Consolidated annual financial statements    
  • IFRS
  • Companies Act
  • JSE Listings Requirements
    
  • Management
  • Audit committee
  • Board
  • External auditors
Assurance statement    
  • AA1000AS Standard
    
  • IBIS ESG Assurance
King IV application report    
  • King IV
    
  • Management
  • Internal audit
  • Audit committee
  • Board
Annual results presentation    
  • No framework
    
  • Management
  • Audit committee
  • Board
B-BBEE certificate    
  • Amended B-BBEE ICT sector codes
    
  • BEE Online

Feedback

We recognise that integrated reporting and stakeholder information requirements continue to evolve. We welcome feedback to improve our integrated report. Comments and feedback can be sent to our investor relations team at telkomir@telkom.co.za

Forward-looking statements

Many of the statements in this document, and verbal statements that may be made by Telkom or by officers, directors or employees acting on Telkom’s behalf, constitute or are based on forward-looking statements.

All statements, other than statements of historical facts, including, among others, statements regarding our strategy, future financial position and plans, objectives, capital expenditures, projected costs and anticipated cost savings and financing plans, as well as projected levels of growth in the communications market, are forward-looking statements. Forward-looking statements can generally be identified by the use of terminology such as “may”, “will”, “should”, “expect”, “envisage”, “intend”, “plan”, “project”, “estimate”, “anticipate”, “believe”, “hope”, “can”, “is designed to”, "forecast", "guidance" or similar phrases. However, the absence of such words does not necessarily mean that a statement is not forward-looking. Forward-looking statements involve several and unknown risks, uncertainties and other factors that could cause our actual results and outcomes to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Factors that could cause our actual results or outcomes to differ materially from our expectations include, but are not limited to, those risks identified in the strategic risks section of this report.

Telkom cautions readers not to place undue reliance on these forward-looking statements. All written and verbal forward-looking statements attributable to Telkom, or persons acting on our behalf, are qualified in their entirety by these cautionary statements. Moreover, unless we are required by law to update these statements, we will not necessarily update any of these statements after the date of this report, so that they conform either to the actual results or to changes in our expectations.

Any forward-looking financial information disclosed in this integrated report has not been reviewed or audited or otherwise reported on by our external joint auditors. The FY2019 comparatives of the results announcement are restated for the adoption of IFRS 15 and change in the presentation of cash flows.

Pro forma information

Certain financial information presented in the results announcement that was released on 22 June 2020 and in the integrated report constitute pro forma financial information. This is presented for illustrative purposes only. Because of its nature, the pro forma financial information may not fairly present Telkom’s financial position, changes in equity, and results of operations or cash flows. The pro forma financial information is the responsibility of Telkom’s board.

The pro forma financial information contained in the results announcement that was released on 22 June 2020 was reviewed by the group’s joint independent external auditors and their unmodified limited assurance report prepared in terms of ISAE 3420 relating to the results announcement is available for inspection at https://www.telkom.co.za/ir/ financial/financial-results-2020.shtml.

The financial information presented in the results announcement was prepared excluding the impact of the VSP, VERP and the section 189 costs and the pro forma adjustments and constitute pro forma financial information to the extent that it is not extracted from the segment disclosure included in the summary audited consolidated provisional financial statements for the year ended 31 March 2020. This pro forma financial information was presented to eliminate the impact of the pro forma adjustments from the consolidated financial results for the year ended 31 March 2020 to achieve a comparable yearon- year analysis and show the underlying performance of the business. The pro forma adjustments were determined in terms of the group accounting policies disclosed in the consolidated financial statements for the year ended 31 March 2020, except for the changes in accounting policies due to adopting the accounting pronouncements effective from 1 January 2019.

Reported March 2020 refers to the March 2020 financial information as included in the summary audited consolidated financial statements.

The joint independent auditors’ report by PwC and SizweNtsalubaGobodo Grant Thornton Inc. does not report on all of the information contained in the integrated report. Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the joint independent auditors’ engagement, they should obtain a copy of the joint independent auditors’ audit report together with the accompanying financial information from Telkom’s website at: https://www.telkom.co.za/ir/financial/financialresults- 2020.shtml.

The directors of Telkom take full responsibility for the preparation of the integrated report including the pro forma financial information that was correctly extracted from the underlying audited financial statements.