INTEGRATED ANNUAL REPORT FOR MULTICHOICE SOUTH AFRICA HOLDINGS (PTY) LTD AND PHUTHUMA NATHI INVESTMENTS (RF) LTD

GOVERNANCE AND ACCOUNTABILITY Significant reporting matter Conclusions reached/actions taken Empowerment transaction As part of the unbundling from Naspers Limited, the MultiChoice South Africa group issued 22.5m shares to the two Phuthuma Nathi companies for no consideration. This empowerment transaction resulted in the Phuthuma Nathi companies acquiring an additional 5% stake in MultiChoice South Africa group. In terms of IFRS 2 Share-based Payment (IFRS 2), this transaction qualifies as an equity-settled share-based payment. The value of the 5% Phuthuma Nathi share issue according to the terms of the empowerment transaction has been calculated at R2.6bn. The audit committee reviewed the accounting principles applied to the empowerment transaction to ensure it was in line with IFRS. The disclosure thereof in the consolidated annual financial statements was also reviewed. Technical accounting advice was received, which was audited by the external auditor. Consequently, the audit committee was satisfied with the accounting and disclosure of the empowerment transaction included in the consolidated annual financial statements by management. New IFRS standards and interpretations The adoption of IFRS 9 Financial Instruments , IFRS 15 Revenue from Contracts with Customers and IFRIC 22 Foreign Currency Transactions and Advance Consideration resulted in an increase of R107m in opening retained earnings of the group. The audit committee reviewed the adjustments prepared by management and ensured it was in line with the IFRS changes adopted. The audit committee has reviewed the external auditor’s reporting as well as disclosure in the annual financial statements, the audit committee concluded that it was satisfied with the IFRS changes adopted and disclosures made. Contingent liability During the current year, M-Net released a contingent liability of R342m due to settlement of the matter. The audit committee reviewed management’s update on this matter and the auditor’s report and are satisfied with the approach adopted by management. Debtor receivable The group has a net receivable of R121m from a debtor as at 31 March 2019. Management has agreed to a payment plan with the debtor for the outstanding balance. No provision has been raised as the balance is current and the debtor has met its payment arrangement obligations thus far and has indicated intent to settle the full amount. The audit committee reviewed management’s update on this matter and the auditor’s report and are satisfied with the conclusion reached and the disclosure in the financial statements. REPORT OF THE AUDIT COMMITTEE continued for the year ended 31 March 2019 92  MultiChoice South Africa Holdings Proprietary Limited integrated annual report 2019