NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS l NOTE 6

        2013
R’000		   2012
R’000		  
6. Investments in associates and joint ventures            
  Cost and share of reserves at the beginning of the year     224 551   218 027  
  Acquisition of joint venture     138 174   —  
  Share of losses from associates and joint ventures     (47 326)   (19 835)  
  Share of results after tax     (43 150)   (16 387)  
  Amortisation of intangible assets     (5 800)   (4 788)  
  Deferred tax on intangible assets amortisation     1 624   1 340  
  Foreign currency translation reserve     79 722   30 433  
  Equity compensation benefit     77   (596)  
  Dividends received     (750)   (453)  
  Disposal of joint ventures     2 273   (3 025)  
  Cost and share of reserves at the end of the year     396 721   224 551  
  Loans at the beginning of the year     132 920   21 970  
  Loans granted to associates and joint ventures     94 161   104 517  
  Loans repaid by associates and joint ventures     —   (1 228)  
  Disposal of joint ventures     (1 110)   —  
  Loans impaired     (2 039)   —  
  Loan granted to joint venture capitalised     (112 822)   —  
  Unrealised foreign exchange profit on loans to associates and joint ventures     16 331   7 661  
  Loans at the end of the year     127 441   132 920  
  Closing net book value     524 162   357 471  
  Investments in associates and joint ventures include goodwill to the value of R257 million (2012: R205 million).

There was no impairment of investment in associates and joint ventures. The average terminal growth rates applied were between 1% and 4.5% (2012: 1.5% and 4.5%). The weighted average cost of capital used to discount these cash flows ranged between 17.8% and 18.03% (2012: 17.96% and 18.28%). The discount rates used are pre-tax and reflect specific risks relating to the relevant companies.

If one or more of the inputs were changed to a reasonable possible alternative assumption, there would be no further significant impairments that would have to be recognised.

Loans to associates and joint ventures

  Interest
rate		     2013
R’000		   2012
R’000		  
Oxigen Services India (Private) Limited Libor + 1.5%     18 643   18 643  
Blue Label Mexico S.A. de C.V. 4.50%     —   27 829  
2DFine Holdings Mauritius* 9.50%     108 798   83 890  
Bela Phone Company Proprietary Limited —     —   2 260  
E-mail Marketing Solutions Proprietary              
Limited —     —   46  
Betterquote Proprietary Limited —     —   252  
  —     127 441   132 920  
* Refer to note 30 for details on the surety relating to this loan.

The loans are neither past due nor impaired with a low risk of default.

Loans to associates and joint ventures have no fixed terms of repayment.

Shares in associates and joint ventures acquired during the year

      Joint
venture 		  Date acquired   Effective
percentage		  
Blue Label Mexico S.A. de C.V.         1 September 2012   5  

On 1 September 2012 Blue Label Telecoms acquired a further 5% in Blue Label Mexico S.A. de C.V. (BLM) for a purchase consideration of R21.1 million. A further capital contribution of R89.2 million was advanced to BLM during the year. The loan balance at 31 May 2012 amounting to R27.8 million was capitalised during the year.

In June 2011, Blue Label Telecoms acting through its wholly owned subsidiary, Gold Label Investments, acquired a 50% interest in 2DFine Holdings Mauritius. The investment is classified as a joint venture as unanimous approval of the shareholders is required for decisions. 2DFine Holdings Mauritius holds 37.22% of Oxigen Services India. In terms of IFRS, an entity does not aggregate its interests held through associates and joint ventures when assessing for control as BLT through this relationship cannot direct the financial and operating policies of Oxigen Services India. Therefore, even though BLT has an effective interest of 55.83% in Oxigen Services India, the Group neither controls nor jointly controls Oxigen Services India.

Shares in associates and joint ventures disposed during the year

      Joint
venture		   Date acquired   Effective
percentage		  
E-mail Marketing Solutions Proprietary Limited     Joint venture   31 October 2012   41  
Betterquote Proprietary Limited     Joint venture   31 August 2012   21  
Bela Phone Company Proprietary Limited     Joint venture   1 May 2013   51  

Associates

The Group’s interest in its principal associates, which are unlisted, is as follows:

Name Country of
incorporation		     Assets
R’000		 Liabilities
R’000		 Revenues
R’000		 Profit/(loss)
R’000		 Effective
percentage
interest
held		 Net book
value
R’000		  
2013                    
Smart Voucher Limited trading as Ukash United Kingdom     647 550 471 111 357 247 51 408 17.25 65 652  
Oxigen Services India (Private) Limited India     194 734 135 757 3 044 819 1 270 55.83 79 992  
Dual Data Proprietary Limited South Africa     3 — — (4) 50 4  
2012                    
Smart Voucher Limited trading as Ukash United Kingdom     430 979 326 694 241 623 39 659 17.25 49 773  
Oxigen Services India (Private) Limited India     152 191 102 370 2 575 239 4 859 55.83 77 598  
Dual Data Proprietary Limited South Africa     8 — — 12 50 6  
* Less than R1 000

There are no contingent liabilities relating to the Group’s interest in associates.
For details on related party transactions, refer to note 30.

Set out below is the summarised financial information of joint ventures:

Name Country of
incorporation		     Non-
current
assets
R’000		 Current
assets
R’000		 Non-
current
liabilities
R’000		 Current
liabilities
R’000		 Revenues
R’000		 Profit/
(loss)
R’000		 Effective
percentage
interest
held		 Net book
value
R’000		  
2013                        
Blue Label Mexico S.A. de C.V. Mexico     218 686 130 600 — 73 551 1 742 863 (113 155) 45 274 672  
2DFine Holdings Mauritius Mauritius     96 570 1 — 110 093 — (9 274) 50 102 029  
Datacision Proprietary Limited South Africa     122 6 374 — 2 875 20 753 2 603 50 1 813  
2012                        
Blue Label Mexico S.A. de C.V. Mexico     76 097 52 993 — 79 988 859 592 (59 155) 40 146 344  
2DFine Holdings Mauritius Mauritius     82 106 1 84 367 275 — (2 305) 50 82 617  
Bela Phone Company Proprietary Limited South Africa     30 2 342 — 6 181 1 511 (1 000) 51 318  
E-mail Marketing Solutions Proprietary Limited South Africa     — — — 135 148 (135) 41 (25)  
Betterquote Proprietary Limited South Africa     * * — 2 * (2) 21 (421)  
Datacision Proprietary Limited South Africa     124 5 651 — 3 262 10 430 1 659 50 1 261  
* Less than R1 000

Blue Label Telecoms Limited has guaranteed 45% of the amount owed by BLM to Radiomovil Dipsa S.A. de C.V. (trading as Telcel). At year end there is no balance due to them by BLM.

There are no other contingent liabilities relating to the Group’s interest in joint ventures. For details on related party transactions, refer to note 30.

NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS l NOTE 6