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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
continued
For the year ended 31 May 2016
97
BLUE LABEL INTEGRATED ANNUAL REPORT 2016
2.
Group composition
continued
Critical accounting estimates 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.
(c) Classification of significant joint arrangements
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. The
investment is classified as a joint venture as unanimous approval of the shareholders is required for decisions.
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
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 34.42% and 40.96%
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 58.18% 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.