Telkom SA SOC Limited – Annual report – 31 March 2020
2. Significant accounting policies, judgements, estimates and assumptions (extract)
2.5.12 The assessment of COVID-19 as part of accounting judgements and sources of estimation uncertainty
The World Health Organisation (WHO) announced that COVID-19 was a global pandemic on 11 March 2020 which subsequently resulted in the President of South Africa declaring a national state of disaster on 15 March 2020. Many measures were implemented by the national government, such as immediate travel restrictions and the closure of schools effective from 18 March 2020. These measures resulted in a significant impact on the local and global markets as well as share prices.
As the Group is in the Information Communication Technology (“ICT”) sector in South Africa and since the declaration of the national state of disaster in South Africa, in response to the COVID-19 pandemic, and the subsequent announcement of the national lockdown, all telecommunication services have been recognised as an essential service which has allowed our businesses to continue operating during the lockdown. Management has considered the potential impact on the Group by taking a variety of risk elements into account which included considering macro-economic factors, contractual obligations and supply chain impacts. In addition, management performed a scenario analysis on the business prospects going forward and stress tested forecasts considering its “business unusual” impacts.
Management has considered all the possible financial effects the virus could have on the measurement, presentation and disclosure in the annual financial statements. Key areas are considered in the table below: