NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS – NOTE 6

    2015
R’000		       2014
R'000		  
6. INVESTMENTS IN GROUP COMPANIES AND RELATED LOANS            
6.1 Investments in and loans to subsidiaries            
  Shares at cost less amounts written off 3 240 227       3 012 304  
  Loans owing by subsidiaries less amounts written off 976       31 565  
    3 241 203       3 043 869  
 

In the current year Viamedia Proprietary Limited was acquired. Refer to note 26 of the Group annual financial statements.

In the current year Blue Label Engage Proprietary Limited was disposed of for R2.4 million. The loss on disposal of R333 676 is included in other expenses in the statement of comprehensive income. Refer to note 25 of the Group annual financial statements.

Details are reflected below:
    Shares at
cost		 Loans
owing by
subsidiaries
R’000		 Provision
for
impairment
R’000		    
  2015          
  Activi Deployment Services Proprietary Limited 5 060 — —    
  Africa Prepaid Services Proprietary Limited 61 520 87 898 (149 418)    
  Africa Prepaid Services Nigeria Limited 14 000 28 740 (42 740)    
  Blue Label Distribution Proprietary Limited** 194 000 — —    
  Blue Label Investments Proprietary Limited 108 416 — —    
  Blue Label One Proprietary Limited 40 000 — —    
  BLT USA Inc. 307 — —    
  Budding Trade Proprietary Limited** 6 000 — —    
  Cellfind SA Proprietary Limited 290 000 — (141 841)    
  Cigicell Proprietary Limited 295 — —    
  Datacel Direct Proprietary Limited 150 000 — (16 073)    
  Gold Label Investments Proprietary Limited 29 400 95 683 (121 148)    
  Kwikpay SA Proprietary Limited** 22 500 — —    
  Matragon Proprietary Limited** * — —    
  Panacea Mobile Proprietary Limited 27 480 — —    
  Simigenix Proprietary Limited * — —    
  The Post Paid Company Proprietary Limited** 1 500 — —    
  The Prepaid Company Proprietary Limited** 2 150 215 — —    
  TicketPros Proprietary Limited** 14 700 — —    
  Transaction Junction Proprietary Limited 4 200 — —    
  Uninex Proprietary Limited * 976 —    
  Velociti Proprietary Limited 7 185 — —    
  Ventury Group Proprietary Limited** 98 406 — —    
  Viamedia Proprietary Limited 229 158 — —    
  Virtual Voucher Proprietary Limited** 44 784 — —    
    3 499 126 213 297 (471 220)    
 
* Less than R1 000.
** These investments have been pledged as security to Investec Bank Limited in terms of the facility. For details on percentage held, country of incorporation and issued shares, refer to note 34 in the Group notes. Refer to notes 15 and 21 for details on impairments.
  All loans are interest free and repayable on demand.
    Shares at
cost		 Loans
owing by
subsidiaries
R’000		 Provision
for
impairment
R’000		    
  2014          
  Activi Technology Services Proprietary Limited * — —    
  Activi Deployment Services Proprietary Limited 5 060 — —    
  Africa Prepaid Services Proprietary Limited1 61 520 75 644 (137 164)    
  Africa Prepaid Services Nigeria Limited1 14 000 17 510 (31 510)    
  Blue Label Distribution Proprietary Limited** 194 000 — —    
  Blue Label Engage Proprietary Limited 2 735 — —    
  Blue Label Investments Proprietary Limited 108 416 — —    
  Blue Label One Proprietary Limited 40 000 — —    
  BLT USA Inc.2 307 — —    
  Budding Trade Proprietary Limited** 6 000 — —    
  Cellfind SA Proprietary Limited 290 000 — (141 841)    
  Cigicell Proprietary Limited 295 — —    
  Datacel Direct Proprietary Limited 150 000 — (16 073)    
  Gold Label Investments Proprietary Limited 29 400 180 201 (175 075)    
  Kwikpay SA Proprietary Limited** 22 500 — —    
  Matragon Proprietary Limited** * — —    
  Panacea Mobile Proprietary Limited 27 479 — —    
  Simigenix Proprietary Limited * — —    
  The Post Paid Company Proprietary Limited** * — —    
  The Prepaid Company Proprietary Limited** 2 150 214 — —    
  TicketPros Proprietary Limited 14 700 — —    
  Transaction Junction Proprietary Limited 4 200 — —    
  Uninex Proprietary Limited * 976 —    
  Velociti Proprietary Limited 7 185 — —    
  Ventury Group Proprietary Limited** 98 406 — —    
  Virtual Voucher Proprietary Limited** 44 784 — —    
    3 271 201 274 331 (501 663)    
 
* Less than R1 000.
** These investments have been pledged as security to Investec Bank Limited in terms of the facility. For details on percentage held, country of incorporation and issued shares, refer to note 34 in the Group notes. Refer to notes 15 and 21 for details on impairments.
1 These loans bear interest at prime plus 2% and are repayable on demand. All other loans are interest free and are repayable on demand.
2 On 1 April 2014 BLT USA Inc. distributed its loan to 2DFine Holdings Mauritius of R63 million to Blue Label Telecoms Limited as a dividend in anticipation of deregistration. 2DFine Holdings Mauritius is a joint venture of Gold Label Investments Proprietary Limited. This loan receivable is disclosed in note 7. The excess of R10 million represents dividends received from BLT USA Inc. and is included in other income. Refer to note 15.

In the current year Viamedia Proprietary Limited was acquired. Refer to note 26 in the Group notes for details of these acquisitions.

In the current year Blue Label Engage was disposed of for R2.4 million. The loss on disposal of R333 676 is included in other expenses in the statement of comprehensive income. Refer to note 25 of the Group notes for further details.
    2015
R’000		       2014
R'000		  
6.2 Investments in and loans to joint ventures and associates            
  Shares as at the beginning of the year 254 142       164 826  
  Acquisition of joint venture and associate 50 033       89 316  
  Shares as at the end of the year 304 175       254 142  
  Loans at the beginning of the year 1 054       —  
  Loan granted to joint venture capitalised (50 033)       (89 316)  
  Loans granted to joint venture 48 979       86 819  
  Unrealised foreign exchange profit on loans to joint ventures —       3 551  
  Loans at the end of the year —       1 054  
  Closing net book value 304 175       255 196  
 

On 10 September 2013 a loan of R85.8 million was advanced to Blue Label Mexico S.A. de C.V. (BLM). This loan was capitalised on 18 December 2013. The difference of R3.5 million relates to foreign exchange movements.

There was no impairment of investment in joint ventures. The terminal growth rates applied was 3.5% (2014: 3.5%). The weighted average cost of capital used to discount these cash flows was 18.46% (2014: 17.44%). The discount rates used are pre-tax and reflect specific risks relating to the relevant companies.

The discount rate used when calculating the value-in-use calculations would need to be increased by 2.25% before any impairments would need to be recognised. Refer to note 6 of the Group annual financial statements.

Loans to joint venture

    Interest
rate		   2015
R’000		       2014
R'000		  
  Blue Label Mexico S.A. de C.V. 4.50%   —       1 054  
    —   —       1 054  
 

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

Loans to joint ventures have no fixed terms of repayment.

Shares in associate and joint venture acquired during the year:
      Date
acquired		 Country of
incorporation		 Percentage
interest
acquired		  
  Lornanox Proprietary Limited Associate 22 January 2015 South Africa 40  
  Blue Label Mexico S.A. de C.V.* Joint venture 1 September 2014 Mexico 1.07  
 
* In the current year, there was a further capital contribution of R50 million to BLM. This comprised R49 million loaned in September 2014 together with the R1 million loan outstanding at the beginning of the financial year. This resulted in a dilution of shares held by an outside shareholder increasing our shareholding to 46.64%.
    Assets
R’000		 Liabilities
R’000		 Revenues
R’000		 Loss
R’000		    
  2015            
  Blue Label Mexico S.A. de C.V. 334 270 94 773 3 526 421 (186 156)    
  Lornanox Proprietary Limited — — — —    
  2014            
  Blue Label Mexico S.A. de C.V. 393 801 58 777 2 865 340 (131 465)    

NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS – NOTE 6