Blue Label Telecoms Integrated Annual Report 2017

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BLUE LABEL

INTEGRATED ANNUAL REPORT 2017

Notes

to the Group annual financial statements

continued

For the year ended 31 May 2017

Group composition

continued

Critical accounting judgements and assumptions

(a) Valuation of intangible assets acquired as part of a business combination

The fair values of all identifiable intangible assets acquired as part of a business combination are determined using

recognised valuation techniques. Such techniques often rely on forecasts of future cash flows and the use of

appropriate discount rates that reflect the risk factors associated with the cash flows.

These valuations are based on information at the time of the acquisition and the expectations and assumptions that

have been deemed reasonable by the Group’s management. The risk exists that the underlying assumptions or

events associated with such assets will not occur as projected. For these reasons, among others, the actual cash

flows may vary from forecasts of future cash flows.

(b) Assessment of investment in associates and joint ventures for impairment

The Group tests annually whether investment in associates and joint ventures has suffered any impairment, in

accordance with the accounting policy. The recoverable amounts of the investment in associates and joint ventures

have been determined based on value-in-use calculations. These calculations require the use of estimates. Refer to

note 2.1 for details on these estimates.

The Group exercises judgement in determining the classification of its joint arrangements.

Blue Label Mexico S.A. de C.V.

The Group holds an effective interest of 47.56% in the issued ordinary share capital of Blue Label Mexico S.A. de C.V. The

joint arrangement provides the Group and the other parties to the agreement with rights to the net assets of the entity.

The investment is classified as a joint venture as unanimous approval of the shareholders is required for decisions.

2DFine Holdings Mauritius

The Group holds an effective interest of 50% in the issued ordinary share capital of 2DFine Holdings Mauritius. The

joint arrangement provides the Group and the other parties to the agreement with rights to the net assets of the

entity. Prior to 30 November 2016, the investment was classified as a joint venture as unanimous approval of the

shareholders is required for decisions. Refer to note 2.2 for the classification subsequent to 30 November 2016.

SupaPesa Africa Limited

Viamedia Proprietary Limited (75% owned by the Group) holds 50% of SupaPesa Africa Limited. Therefore the

Group equity accounts for 50% of net assets. The joint arrangement provides the Group and the other parties to

the agreement with rights to the net assets of the entity. The investment is classified as a joint venture as

unanimous approval of the shareholders is required for decisions.

(d) Classification of significant associates

These classifications below refer to pre 30 November 2016. Refer to note 2.2 for the classification subsequent to

30 November 2016.

Oxigen Services India Private Limited (Oxigen Services India)

Blue Label Telecoms Limited (BLT) acting through its wholly owned subsidiary, Gold Label Investments Proprietary

Limited (GLI), 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 and GLI hold 33.85%

and 41.96% respectively 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

58.88% in Oxigen Services India, the Group neither controls nor jointly controls Oxigen Services India.

The Group has the right to appoint two directors out of a total of five. Therefore we have concluded that the Group

has significant influence over the financial and operating policies of Oxigen Services India.

Oxigen Online Services India Private Limited (Oxigen Online)

BLT acting through its wholly owned subsidiary, GLI, 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 and GLI hold 34.42% and 40.96% respectively of Oxigen Online. 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 Online. Therefore, even

though BLT has an effective interest of 58.18% in Oxigen Online, the Group neither controls nor jointly controls

Oxigen Online.

The Group has the right to appoint two directors out of a total of five. Therefore we have concluded that the Group

has significant influence over the financial and operating policies of Oxigen Online.