NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS l NOTE 30

30. SEGMENTAL SUMMARY

The Group’s segment reporting follows the organisational structure as reflected in its internal management reporting systems, which are the basis for assessing the financial performance of the business segments and for allocating resources to these segments. Management’s assessment of the Group’s organisational structure takes the geographical location of the segments into account. All reporting segments located outside South Africa are included in the International distribution segment. Operations included in all other segments are located within South Africa.

Operating segments are reported internally to the chief operating decision-maker in a manner consistent with the financial statements. In addition, the chief operating decision-maker uses core net profit as a non-IFRS measure in evaluating the Group’s performance on a segmental level. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors, who are responsible for making strategic decisions on behalf of the Group.

Transactions between reportable segments are conducted on the same terms as other transactions of a similar nature.

At 31 May 2014, the Group is managed on the basis of five main business segments:

• South African distribution, which includes the distribution of physical and virtual prepaid airtime and electricity of the South African mobile/fixed-line network operators and utility suppliers, and the distribution of starter packs in South Africa.
• International distribution, which includes international distribution of physical and virtual prepaid airtime in India and Mexico, and payment solutions in India and United Kingdom. This segment also incorporates the Africa Prepaid Services group.
• Mobile, which includes the provision of a complete mobile transactional ecosystem and services-provisioning platform delivering mobile-centric products and services through any mobile channel, including location-based and WASP services, and music and digital content provision.
• Solutions, which includes marketing of cellular and financial products and services through outbound telemarketing and other channels, provides inbound customer care and technical support, and markets data and analytics services.
• Corporate, which performs the head office administration function.

The segment results for the year ended 31 May are as follows:

    Total   South African distribution   International distribution   Mobile   Solutions   Corporate  
    2014
R’000		   2013
R’000		   2014
R’000		   2013
R’000		   2014
R’000		   2013
R’000		   2014
R’000		   2013
R’000		   2014
R’000		   2013
R’000		   2014
R’000		   2013
R’000		  
Total segment revenue   25 354 475   24 720 865   24 837 763   24 363 215   —   —   350 783   220 393   165 929   137 257   —   —  
Inter-segment revenue   (5 952 809)   (5 736 655)   (5 734 111)   (5 651 135)   —   —   (198 165)   (68 973)   (20 533)   (16 547)   —   —  
Revenue   19 401 666   18 984 210   19 103 652   18 712 080   —   —   152 618   151 420   145 396   120 710   —   —  
Segment result                                                  
Operating profit/(loss) before depreciation, amortisation and impairment charges   787 993   713 622   821 310   796 439   (13 961)   (31 000)   34 273   37 055   29 257   24 703   (82 886)   (113 575)  
Depreciation and amortisation   (62 175)   (56 143)   (48 401)   (48 450)   —   —   (3 407)   (3 275)   (3 331)   (3 336)   (7 036)   (1 082)  
Impairment of property, plant and equipment   (128)   (3 408)   —   (3 408)   —   —   —   —   (128)   —   —   —  
Impairment of intangible assets   (1 073)   —   —   —   —   —   (1 073)   —   —   —   —   —  
Impairment of loans   (1 761)   (8 400)   (1 487)   (1 150)   (274)   —   —   —   —   (889)   —   (6 361)  
Finance costs   (166 876)   (167 096)   (165 647)   (166 592)   (392)   (30)   (61)   (69)   (1)   (5)   (775)   (400)  
Finance income   156 250   173 260   140 942   162 459   11 274   8 593   1 478   541   485   482   2 071   1 185  
Share of (losses)/profits from associates and joint ventures   (56 873)   (47 326)   —   543   (56 249)   (49 036)   —   —   (624)   1 167   —   —  
Taxation   (206 442)   (196 404)   (186 664)   (175 675)   (3 700)   (5 997)   (7 672)   (9 157)   (9 049)   (5 266)   643   (309)  
Net profit/(loss) for the year   448 915   408 105   560 053   564 166   (63 302)   (77 470)   23 538   25 095   16 609   16 856   (87 983)   (120 542)  
Reconciliation of net profit for the year to core net profit for the year                                                  
Net profit/(loss) for the year   448 915   408 105   560 053   564 166   (63 302)   (77 470)   23 538   25 095   16 609   16 856   (87 983)   (120 542)  
Amortisation of intangibles raised through business combinations net of tax   10 625   13 293   6 323   8 281   3 315   4 176   987   798   —   38   —   —  
Core net profit/(loss) for the year   459 540   421 398   566 376   572 447   (59 987)   (73 294)   24 525   25 893   16 609   16 894   (87 983)   (120 542)  
Core net profit/(loss) for the year attributable to:                                                  
Equity holders of parent   460 602   437 516   558 996   570 766   (47 862)   (50 685)   24 904   24 787   12 547   13 190   (87 983)   (120 542)  
Non-controlling interest   (1 062)   (16 118)   7 379   1 681   (12 125)   (22 609)   (378)   1 106   4 062   3 704   —   —  
Non-cash items                                                  
Net profit/(loss) on sale of subsidiaries   —   120   —   2 147   —   —   —   (2 027)   —   —   —   —  
Net profit on disposal of associates   —   2 273   —   1 400   —   —   —   —   —   873   —   —  
Discounting of receivables   117 444   127 773   116 783   127 773   —   —   661   —   —   —   —   —  
Discounting of payables   (143 882)   (143 329)   (143 882)   (143 329)   —   —   —   —   —   —   —   —  
The segment assets and liabilities at 31 May are as follows:                                                  
Assets excluding investments in associates and joint ventures   5 904 778   5 196 385   5 651 680   4 950 040   (40 235)   (40 633)   96 420   94 581   134 592   144 172   62 321   48 225  
Investments in associates and joint ventures   598 109   524 162   —   —   596 611   522 345   —   —   1 498   1 817   —   —  
Total assets   6 502 887   5 720 547   5 651 680   4 950 040   556 376   481 712   96 420   94 581   136 090   145 989   62 321   48 225  
Additions to non-current assets                                                  
Property, plant and equipment   47 038   20 042   42 678   15 862   —   —   3 306   2 530   912   781   142   869  
Intangible assets and goodwill   397 203   297 501   388 280   294 331   —   —   7 239   2 500   1 651   661   33   9  
Investment in associates   —   138 174   —       —   138 174   —   —   —   —   —   —  
Investment in joint ventures   —   —   —   —   —   —   —   —   —   —   —   —  
Total liabilities   (2 978 898)   (2 477 694)   (2 838 621)   (2 331 195)   (24 401)   (22 238)   (76 359)   (39 036)   (15 767)   (32 086)   (23 750)   (53 139)  

SEGMENTAL SUMMARY

The company is domiciled in the Republic of South Africa. The result of its revenue from external customers in South Africa is R19.402 billion (2013: R18.984 billion), and the total revenue from external customers from other countries is nil (2013: nil).

The total non-current assets other than financial instruments and deferred tax assets located in South Africa is R1.164 billion (2013: R0.841 billion), and the total non-current assets located in other countries is R555 million (2013: R481 million).

The South African distribution segment includes revenue earned from a single external customer totalling R2.789 billion (2013: R3.577 billion).

NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS l NOTE 30