Notes to the Company annual financial statements | Note 3

3. Investments in subsidiaries
 

Accounting policy

Investments in subsidiaries are carried at cost less any accumulated impairment losses in the Company annual financial statements.

Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes directly attributable costs of investments.

Subsidiaries are all entities over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

%
holding
2022  		 %
holding
2021  		 Carrying
amount
2022
R'000 		 Carrying
amount
2021
R'000 
Blu Nova Proprietary Limited1 100.00  100.00  —  — 
Blue Label Company Proprietary Limited1 100.00  100.00  —  — 
Blue Label Distribution Proprietary Limited  100.00  100.00  194 000  194 000 
Blue Label One Proprietary Limited  100.00  100.00  40 000  40 000 
Blue Label Ventures Proprietary Limited1 100.00  100.00  —  — 
Budding Trade 1170 Proprietary Limited  100.00  100.00  6 000  6 000 
Datacel Direct Proprietary Limited  100.00  100.00  150 000  150 000 
Glocell Retail Solutions Proprietary Limited1 100.00  100.00  —  — 
Gold Label Investments Proprietary Limited1 100.00  100.00  —  — 
One World Telecoms Proprietary Limited1 100.00  —  —  — 
The Prepaid Company Proprietary Limited  100.00  100.00  2 433 048  2 433 048 
TicketPros Proprietary Limited  100.00  100.00  14 700  14 700 
Transaction Junction Proprietary Limited  60.00  60.00  4 200  4 200 
Uninex Proprietary Limited1  100.00  100.00  —  — 
Ventury Group Proprietary Limited  100.00  100.00  98 701  98 701 
WiConnect Proprietary Limited  100.00  100.00  5 000  5 000 
Accumulated impairment of WiConnect Proprietary Limited      (5 000) (5 000)
      2 940 649  2 940 649 

All subsidiaries listed above are incorporated in South Africa.

1 Less than R1 000.

The Prepaid Company Proprietary Limited

An impairment indicator was identified in the current year for The Prepaid Company Proprietary Limited. This indicator was also present in the prior year. A value-in-use calculation has been performed to determine the recoverable amount of the investment. This calculation uses 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 a terminal growth rate which does not exceed the expected long-term economic growth rate.

The key assumptions used for the value-in-use calculations are as follows:

2022 
 2021 
Average EBITDA margin % 3.7 2.8
Terminal growth % 4.5 5.0
Pre-tax discount rate % 15.9 14.9

The discount rates used are pre-tax and reflect specific risks relating to The Prepaid Company Proprietary Limited. 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 the markets in which the companies operate. The Company's target debt-to-equity ratio is applied in the calculation of the weighted average cost of capital.

The Prepaid Company Proprietary Limited continued

Based on the calculation performed, no impairment loss was recognised in the current or prior year. If one or more of the inputs were changed to a reasonable possible alternative, there would be no impairments that would have to be recognised.

WiConnect Proprietary Limited

The Company's investment in WiConnect Proprietary Limited was fully impaired in FY20. The Directors of WiConnect Proprietary Limited are still in the process of realising all assets and settling all liabilities, after which they will consider deregistering WiConnect Proprietary Limited.