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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
4.
Non-financial instruments
continued
4.1 Goodwill continued
Goodwill is allocated to cash-generating units for the purpose of impairment testing.
The recoverable amount has been determined based on value-in-use calculations. These calculations use cash flow
projections based on financial budgets approved by the Board of Directors for the forthcoming year and forecasts for
up to five years which are based on assumptions of the business, industry and economic growth. Cash flows beyond
this period are extrapolated using terminal growth rates, which do not exceed the expected long-term economic
growth rate.
The key assumptions used for the value-in-use calculations are as follows:
2017
2016
Terminal
growth rate
%
Discount
rate
%
Terminal
growth rate
%
Discount
rate
%
Blue Label Distribution Proprietary Limited
4.2
14.76
4.2
17.54
Cellfind Proprietary Limited
4.0
16.20
4.0
19.24
Viamedia Proprietary Limited
4.0
14.97
4.0
17.74
Blue Label Connect Proprietary Limited
4.2
14.76
4.2
17.54
The Prepaid Company Proprietary Limited
4.5
13.88
4.5
16.54
Panacea Mobile Proprietary Limited
4.0
16.29
4.0
19.24
TicketPros Proprietary Limited
4.2
14.76
4.2
17.54
Reware Proprietary Limited
4.2
15.63
—
—
Datacel Group
2.5
18.91
2.5
22.23
The discount rates used are post-tax and reflect specific risks relating to the relevant companies. The growth rate is
used to extrapolate cash flows beyond the budget period. The growth rates were consistent with publicly available
information relating to long-term average growth rates for each of the markets in which the cash-generating units
operate.
For The Prepaid Company Proprietary Limited, Blue Label Distribution Proprietary Limited, Viamedia Proprietary Limited,
Reware Proprietary Limited, TicketPros Proprietary Limited and Panacea Mobile Proprietary Limited if one or more of
the inputs were changed to a reasonable possible alternative assumption, there would be no impairments that would
have to be recognised.
For the remaining balances of goodwill, the discount rate used when calculating the value-in-use calculations would
need to be increased by the following amounts before any impairments would need to be recognised:
Increase in
discount
rate
%
Cellfind Proprietary Limited
1.6
Blue Label Connect Proprietary Limited
1.5
Datacel Group
3.0
The goodwill balances did not result in impairment charges for the year when compared to recoverable amounts
(2016: nil).