(formely M-Cell Limited) - Business Report 2003 - MTN Group

PRINCIPAL ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 MARCH 2003
A glossary of terms and acronyms utilised in this report is provided on page 53.
1. PRESENTATION OF FINANCIAL STATEMENTS
These financial statements are presented in South African Rand since that remains the dominant functional
currency of the Group. The functional currencies of individual operations are the local currencies in those
territories within which they operate, except for MTN Mauritius whose functional currency is the US dollar.
In the current year’s financial statements, the following principal accounting policies were consistently applied in
all material respects with those of the previous year, except for the change in accounting policy in respect of
connection incentives, which is disclosed in note 2.9 below.
2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention in accordance with South African
Statements of Generally Accepted Accounting Practice (SA GAAP) and the requirements of the South African
Companies Act.
2.1 Basis of consolidation
The Group consolidated financial statements incorporate the financial statements of MTN Group Limited
and all its subsidiaries, joint ventures, associates and special purpose entities (including insurance cell
captives) for the year ended 31 March 2003.
Control is achieved where the Group has the power to govern the financial and operating policies of an
investee enterprise so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income
statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
All material intercompany transactions and balances between Group enterprises are eliminated on
consolidation.
The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an
acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the
date of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition
over the fair value of the net assets of the subsidiary acquired is recorded as goodwill.
Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the
policies adopted by the Group.
2.2 Interests in joint ventures
A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic
activity which is subject to joint control.
Joint venture arrangements which involve the establishment of a separate entity in which each venturer
has an interest, are referred to as jointly controlled entities. The Group reports its interests in jointly
controlled entities using the proportionate consolidation method of accounting. The Group’s share of the
assets, liabilities, income and expenses of jointly controlled entities are combined with the equivalent items
in the consolidated financial statements on a line-by-line basis.
Where the Group transacts with its jointly controlled entities, unrealised profits and losses are eliminated to
the extent of the Group’s interest in the joint venture except where unrealised losses provide evidence of
an impairment of the asset transferred.
2.3 Interests in associated companies
An associate is an enterprise over which the Group exercises significant influence with respect to its
financial and operating policies but which it does not control, jointly or otherwise.
Investments in associated undertakings are accounted for using the equity method of accounting.
The carrying amount of such interests is reduced to recognise any decline, other than a temporary decline,
in the value of individual investments.
The Group’s share of post-acquisition accumulated profits and other reserves of associated companies,
which is generally determined from their latest audited financial statements, is included in the carrying
value of the investments.
Where another group entity transacts with an associate of the Group, unrealised profits and losses are
eliminated to the extent of the Group’s interest in the relevant associate, except where unrealised losses
provide evidence of an impairment of the asset transferred.
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MTN BUSINESS REPORT 2003