12. Group composition
12.2. Non-current asset held for sale and discontinued operation
 

During the 2023 financial year, the Telkom Board approved the disposal of Swiftnet SOC Ltd (Swiftnet), a 100% owned subsidiary. The disposal is part of the Group's Value Unlock Strategy, which aims at realising the intrinsic value of the underlying business.

Significant judgement in assessing if Swiftnet meets the conditions to be classified as held for sale in accordance with IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations)

The asset held for sale classification was met during the first half of the 2024 financial year and reported in the September 2023 interim financial statements, after the current preferred bidder presented an offer that was within Telkom's acceptable range. The receipt of an offer within the acceptable range made the transaction structure more certain and the likelihood of finalising the transaction within 12 months highly probable considering the bidder's profile. Subsequent to 30 September 2023, the disposal has progressed as planned with a sale agreement being finalised in March 2024. The disposal is subject to approvals that are expected to be obtained within 12 months based on previous market precedents.

Non-current assets held for sale classification

Swiftnet's assets and liabilities were presented as held for sale in the interim reporting, 30 September 2023, as the sale was considered highly probable. The sale transaction has since progressed as planned. A sale agreement was finalised in March 2024, followed by the issue of the JSE circular in April 2024. The circular reassures the market of management's commitment to sell Swiftnet.

The transaction is expected to be completed within 12 months from year-end. The assets and liabilities of Swiftnet, as well as the investment in Swiftnet, therefore remain classified as held for sale. In line with IFRS 5 requirements, the statement of financial position and the statement of cash flows have not been re-presented for prior periods to reflect the classification as held for sale.

Discontinued operation assessment

In addition to being classified as held for sale, it was confirmed that Swiftnet is a separate component of Telkom and represents a separate major line of business and therefore meets the discontinued operation classification. Consequently, Swiftnet's operating results (revenue and expenses) have been separately disclosed as a single line item in the consolidated statement of profit or loss and other comprehensive income. The comparative statement of profit or loss and other comprehensive income has been re-presented for the discontinued operation.

Statement of profit or loss and other comprehensive income   31 March 
2024 
Rm 
31 March 
2023 
Rm 
Operating revenue  767  696 
Other expenses  –  (1)
Maintenance  (2) (2)
Impairment of receivables  (18)
Service fees  (152) (210)
Lease-related expenses  (4) (7)
EBITDA   613  458 
Depreciation of property, plant and equipment  (20) (33)
Depreciation of right-of-use assets  (12) (19)
Amortisation of intangible assets  (3) – 
Write-offs and impairments of property, plant and equipment and intangible assets  (1) (12)
Operating profit   577  394 
Investment income  24  15 
Net finance charges and fair value movements  (16)
Profit from discontinued operation before taxation   585  410 
Taxation  (158) (113)
Profit from discontinued operation1   427  297 
1 Presented net of intercompany transactions between Swiftnet and other Telkom Group entities.

 

Statement of financial position 31 March
2024
Rm
 
The carrying amount of assets and liabilities in this disposal group are summarised as follows:    
Assets    
Non-current assets 1 551  
Property, plant and equipment 1 360  
Right-of-use assets 179  
Intangible assets 12  
Current assets 418  
Trade and other receivables 224  
Cash and cash equivalents 192  
Income tax receivable 2  
Assets included in disposal group classified as held for sale 1 969  
Liabilities    
Non-current liabilities 189  
Lease liabilities 141  
Deferred taxation 48  
Current liabilities 292  
Trade and other payables 219  
Lease liabilities 39  
Deferred revenue 34  
Liabilities included in disposal group classified as held for sale 481  

 

Statement of cash flows   31 March 
2024 
Rm 
31 March 
2023 
Rm 
Cash flows generated by Swiftnet for the reporting period under review are as follows:       
Cash flows from operating activities  14  376 
Cash flows utilised for investing activities  (210) (296)
Cash flows from financing activities  (20) (15)
Net (decrease)/increase in cash and cash equivalents from discontinued operation   (216) 65 
Net cash and cash equivalents at 1 April  408  343 
Net cash and cash equivalents at the end of the year of the discontinued operation   192  408 

 

  31 March
2024
Rm
 
Investment in Swiftnet SOC Ltd disclosed as an asset held for sale 1 239