Let’s Change How We Manage Business

FRS Team

The FRS team that specializes in Fixed Asset Management processing

Dave Garbutt

Director

Claude Jarrard

Chartered Account

Roelof Groesbeek

Fixed Asset Register Specialist

Colin Garbutt

Data Analytics

Les Wilton

Sotware and Data Analytics specialist

FRS Telecommunications Clients

FRS Projects and Assignments

Opco

Start

End

Projects

BTCL (Botswana)

August 2024

May 2025

Managed and updated the FAR monthly foradditions, disposals, impairment, depreciation and EUL changes the year. FAR componentised to operational asset level byunravelling globular capitalisations, consolidatingassets capitalised at invoice level to produceoperational assets,Electronic verification of Telcom assetsinvestigated, established and implemented.Reconciled FAR locations and asset components toelectronic verification results. Resolved namingconventions to standardise naming of locations andassets to a single common standard across thecompany.Developed location register to provide acomprehensive data set that included- Technical asset information by component- Location details including- Ownership /leases /co-location- Co-ordinates- Demographic cross ref to census data- Facilities maintenance data- Technical equip telcom capacities- Reference to applicable ERP systemsStandardization of naming conventions across alldepartmental silos to produce a single unifiedlanguage within the organisation, particularly forlocations and telcom equipment.The objective of the development was to produce asingle source of truth for BTC decision makingImplemented certain PPP’s (policies processes &procedures) for Fixed assets for compliance withIFRS. Provided on the job training to the fixed assetdepartment and staff.Developed fixed asset BI information to constructworking systems to align fixed assets with revenuestreams by, site, technology, demographics,network site etc. to support management decisionmaking based on issues related to the bottom line.

BTCL (Botswana)

Jan 2024

July 2024

Re-engaged by BTC to assist with their fixed assetsregister and disclosure for their 2024-year endaudit. Standardised depreciation and estimateduseful lives of the network assets by technology athigh level. Audit management issues resolved andaudit compliance achieved. Engagement successfully delivered.

Cold Store Enterprise (name confidential)

Sept / Oct 2023

2023

Business rescue required asset verification of itscold store plants and related assets. The FAR …was shall we say “thin” on IFRS compliance, assetcomponentisation and various other issues. FRSwas mandated to resolve these issues to thesatisfaction of BR practitioners and prospective future investors

EVO5x

2021

To current

A group of financial professionals collaborated increating a professional focusing on industries withcomplex fixed assets (e.g. telcom) and buildingmulti-dimensional analytical tools to facilitateenterprise value optimization by delivering a singlesource of auditable information (silo free) fordecision making and strategic planning.In short “if you know what you don’t know – you canmake positive beneficial decisions ….. if not the history of failure will continue to be repeated.

Bofinet (Botswana)

2020

2020 (Covid)

Conducted and reported on scoping exercise forcountry wide fixed asset project (fibre infrastructure and other assets)Covid intervened

Orange (Botswana)

2019

2020 (Covid)

Engaged to provide an end-to-end service fromphysical asset count, verification, valuation, FARreconstruction, PPPs and ERP implementation withvalue added fixed asset reporting.Completed the IFRS fixed asset verification countand register reconstruction, resolved all auditqueries. Results presented at board level and togroup CFO in France.Consulted on telco asset swap transaction withCFO, finance team and auditors. Performed a gapanalysis on the proposed supplier asset swapprocurement and roll-out contract. Recommendedchanges to the contract to embed IFRS parameters / clauses confirming asset swap criteria, assetprojectisation, asset recognition and costing, SLAs,reverse logistics, PAC and FAC criteria etc.Covid intervened

BTCL (Botswana)

2015

2018

Reconstruction & update of FAR to IFRSspecification, and recon to general ledger inpreparation for IPO. Syspro fixed asset modulereview and design changes made where necessaryto facilitate decision making informationproduction.Migration to Syspro ERP systems for fixed assets.Projectisation of annual roll-out.System change through PPP’s (Policies, processesand procedures) for fixed assets from cradle tograve. Commencing with the capex budgeting &procurement processes through asset managementto final disposal. PPPs were specified, workshopped, adopted, implemented, trained, andintegrated to Syspro.Syspro adapted for IFRS requirements – inparticular: Impairments, Government grants, assetcomponentisation, use of estimates, tax values etc.Produced reporting on Syspro to meet compliancerequirements of PPPs and IFRS.Fixed asset management, staff duties andresponsibilities and KPIs were extracted andparties trained.PPP’s, KPIs, staff duties converted to EnterpriseArchitecture for long term management.Proposals made for IFRS 15 & 16. Analysed marketproduct manual for compliance and practicalsolutions.Reviewed General Ledger accounts for IFRScompliance and recommended changes.Reporting designed to meet the requirements of theGMF, HODs and a variety of stakeholders.Engaged periodically by BTCL for assistance on anad hoc basis

MTN South Sudan

2012

2014

Appointed to attend to the FAR split between North and South Sudan.Managed and quality controlled physical count ofthe network assets and recon to general ledger(2012/3). Migration to Sage. Projectisation ofannual roll-out. (+200 sites GSM, & Satellite)

Mascom (MTN Associate in Botswana)

2011

2014

Reconstruction & update of Network FAR to IFRS specification, and recon to general ledger(2011/2/3). Migration to Sage X3. Projectisation ofannual roll-out. (+500 sites GSM, Fibre, Satellite &IBS)

SPTC (eSwatini)

2011

2012

Reconstruction & update of Network FAR andbuildings to IFRS specification, and recon togeneral ledger (2011/2). Conducted network countand recon to GL. (Fixed line, CDMA, WiMAX,Satellite).

MTN Zambia

2011

2013

Controlled and managed physical asset count.Reconstruction & update of Asset and Network FARto IFRS specification, and recon to general ledger(2011/2). Migration to ERP system ( IFS).Projectisation of annual roll-out. (+800 sites GSM,Fibre, Satellite & IBS). Annual updates and recon togeneral ledger.

MTN SA

2010

2010

Zero value fixed asset exercise (1 billion line items)

MTN North Sudan

2006

2013

Appointed by MTN Group to construct a NetworkFAR for MTN Sudan for group to establish if they had over or under paid for the company.Thereafter retained to update of Network FAR toIFRS specification, and recon to general ledger(2006 to 2013), Various FAR tasks as requested.Projectisation of annual roll-out. Completed split offixed assets for segregation of North and South Sudan. Completed migration to electronic FAR(Hardcat). (+2000 sites GSM, Fibre, Satellite IBS &WiMAX)

MTN Uganda

2006

2008

IFRS Accounting policies review, reconstruction &update of Network FAR to IFRS specification, andrecon to general ledger (2006 to 2008) Accounting manual. GSM, CDMA, WiMAX & Fibre)

MTN Nigeria

2004

2006

IFRS Accounting health check, Accounting policies,asset componentisation, development of projectaccounting on IFS

MTN Group

2004

2004

IFRS Accounting health check

MTN Cameroon

2004

2004

IFRS Accounting health check and accounting policies

Vodacom Group

2004

2004

IFRS Accounting health check

Stories from FRS's experience in Africa

Situation

Key Issue

Details / Example / Solution

IFRS compliance

Today the majority of stock exchanges enforce IFRS (International FinancialReporting Standards) compliance. Any listed company or group and theirsubsidiaries or associates must comply with IFRS.

As, 75% or more of a Telecommunications company's balance sheet is represented byits fixed assets, it is imperative that the auditors audit for the telecommunication fixed assets in accordance with IFRS. FRS has 14 years experience in solving this situation with auditor approval.

Telcom asset valuations

Attributing a fair value to telecom asset components in the fixed asset registerrequires an in depth understanding of asset costs required to get it into thelocation and condition for their use as intended by management

The various telecom suppliers have their own methodologies in computing telecomasset roll-outs including professional fees, transport, customs duties etc. togetherwith asset swaps, free assets, discounts and other purchase inducements. The onlycommonality is that they generally charge in either US$ or Euro's. Asset projects haveto be interpreted into component costs by location and priced to give effect to theapplicable foreign exchange rates, custom duties etc..

Software & License

Software Upgrades

Major Upgrades vs Minor Updates. Minor Updates do not usually give rise to capitalexpenditure. Major updates are more likely to give rise to capital expenditure andprevious versions of the software should be retired to the extent that the specificfeatures or modules of the old software have been replaced. Thus componentisationof software can be advantageous when capitalization is done.

Obsolete Software

Software may become obsolete due to technological advances (new hardware meansnew software), change in platform, or change in software solution (replacement), etc.Old software to be impaired and depreciation accelerated to reflect the phase-in ofnew software solution

Software License VS. Subscriber/Capacity License

An Experience Register should give management insight into the network, and givethem the ability to determine how long assets are lasting. This should be correlatedwith other data, i.e. environmental conditions could impact the useful life of an asset.Examples heat, sand erosion, wind and dust may all have a major impact ontelecommunication equipment and may impact on equipment operating efficiency oruseful lives.

Software (Annual) License

Annual license costs do not give rise to a fixed asset, as derived benefits do not exceed more than 1 year.

Experience Register

Depreciation/Amortization in the fixed asset register often does not reflect thetrue useful lives or replacement cycles of assets in the network.

An Experience Register should give management insight into the network, and give them the ability to determine how long assets are lasting. This should be correlated with other data, i.e. environmental conditions could impact the useful life of an asset. Examples heat, sand erosion, wind and dust may all have a major impact on telecommunication equipment and may impact on equipment operating efficiency or useful lives.

Zero value assets

Auditors often raise the issue of assets that will depreciate to zero in thefinancial year. The standard response is to extend the assets useful life for afurther 3 years. This requires extensive work with no value.

Long live assets are best managed by using residual values as recommended by IFRS.FRS implements residual values to practically manage such assets and avoidunnecessary costly exercises.

Common language

Accountants have little to no appreciation of telecoms equipment, software,licences etc. Equally engineers do not understand finance - debits and creditsare meaningless concepts and financial systems are seen as unnecessarilywasting engineers time.

By having a common language / concept of the equipment the accountants can beginto understand engineers challenges. Similarly when engineers understand thebenefits of using fixed asset information for decision making then the parties canwork together for the benefit of the company.

Payment milestones onroll-out projects

In many cases turnkey suppliers negotiate payment milestones that areintended to pay the supplier "fairly" as the project progresses. Typically theseare loaded in favour of the supplier and weighted toward the front-end of thecontract.

Experience showed that when too little is paid in the final PAC & FAC instalmentssuppliers have no incentive to complete the work. This is resolved to increasing thefinal payments to a significant value

Lack of knowledge of IFRS

An extreme case but lack of IFRS knowledge resulted in the equivalent of amonths opex having been written off to the income statement that actually represented fixed assets not capitalised

This situation was rectified when FRS reviewed payments and applied IFRS correctlyin the capitalisation of fixed assets.

Work in Progress notcounted

Excluding WIP, particularly when the opco is managing the roll-out, can result insignificant understatement of assets and an incorrect reconciliation to the general ledger

WIP is a timing issue and many telecoms roll-out projects happen over financial yearends. Excluding WIP from the GL reconciliation can void the exercise

Fully depreciated assets not in use

When fixed assets are not managed in accordance with IFRS anomalies occurand assets are not retired but remain in the fixed asset register long after theyhave ceased to have value for the company

This situation was rectified by identifying and photgraphically recording obsolete andnon-functional assets during the physical asset count. These arE correlated to the old fixed asset register and removed from the records.