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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
continued
For the year ended 31 May 2016
BLUE LABEL INTEGRATED ANNUAL REPORT 2016
151
10. Accounting framework
continued
10.4 Other accounting policies
Starter pack assets
A starter pack is a tool which enables the connection of a mobile device to a mobile network operator, also known as
a subscriber identity module (SIM) card.
The starter pack asset represents starter packs which have been distributed but not yet activated. On activation of the
starter pack, the Group has a right to receive cash. Starter packs are stated at cost less provision for impairment and
are determined by means of the weighted average cost basis.
Provision for impairments are made for starter packs distributed but not expected to be activated.
Foreign currencies
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the functional currency). The Group financial statements
are presented in South African rand (ZAR), which is the functional and presentation currency of the parent company.
(b) Transactions and balances
•
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the statement of comprehensive income.
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
•
Assets and liabilities are translated at the closing rate as at statement of financial position date;
•
Income and expenses are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions); and
•
All resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and
of borrowings and other currency instruments designated as hedges of such investments, are taken to other
comprehensive income. When a foreign operation is partially disposed of or sold, such exchange differences are
recognised in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as the foreign entity’s
assets and liabilities and are translated at the closing rate.
Dividend tax
Dividend tax is provided for at 15% of the amount of any dividend paid, subject to certain exemptions. The dividend
tax is a tax borne by the beneficial owner of the dividend and will be withheld by either the issuer of the dividend or
by regulated intermediaries.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group and Company’s financial
statements in the period in which they are approved by the shareholders.
Distributions of non-cash assets received from subsidiary companies are recognised as a dividend at the fair value of
the non-cash assets received.