2. Accounting framework and significant judgements
2.3 Restatements due to prior period errors
2.3.1 IFRS 15 restatement of revenue, cost of handsets, equipment, software and directories and other expenses

 

Principal versus agent
IFRS 15 (Revenue from Contracts with Customers) requires the entity to evaluate certain control indicators when determining whether the entity is acting as a principal or agent in transactions with customers and the recording of revenue on a gross or net basis.

In the current financial year, it was identified that a number of revenue transactions in BCX, for which the Group would have been considered to be an agent, using information available at that time, were incorrectly recognised and presented on a gross basis (as a principal) in prior years.

The error resulted in the overstatement of revenue, cost of handsets, equipment, software and directories and other expenses in the statement of profit or loss and other comprehensive income in the comparative periods.

This incorrect application of the accounting principles in the prior year has been adjusted as a prior period error through the reversal of revenue, cost of handsets, equipment, software and directories and other expenses and only recognising the margin as revenue (on a net basis). Refer to note 2.7 for each materially affected line items as part of the correction of the error.

There is no impact on EBITDA, profit before and after tax and retained earnings for the prior year. The error also did not impact the statement of cash flows and statement of financial position.

2.3.2 Restatement of headline earnings per share and diluted headline earnings per share
 

On 31 March 2023, the Group correctly calculated and accounted for tax in the Group statement of profit or loss and other comprehensive income. However, the Group incorrectly adjusted for tax on the headline earnings, relating to the profit on disposal of property, plant and equipment and intangible assets, write-offs of property, plant and equipment and intangible assets and impairment of property, plant and equipment and intangible assets.

The tax impact of the profit on disposal of property, plant and equipment and intangible assets was incorrectly adjusted for as an impact to write-offs of property, plant and equipment and intangible assets, and the tax impact on the write-offs of property, plant and equipment and intangible assets was not accounted for when adjusting the headline earnings. The tax impact on impairment of property, plant and equipment and intangible assets was incorrectly calculated by including tax impact on impairment of goodwill.

The accounting consequences of this incorrect tax adjustment was a R47 million overstatement of headline earnings that was used in calculating headline earnings per share and diluted headline earnings per share for the year ended 31 March 2023. Refer to note 3.5 for the impact of this restatement on the aggregated amounts previously disclosed.