The Group’s interests in its other associates, which are unlisted, are as follows:

The Group’s interests in its other joint ventures, which are unlisted, are as follows:

* Less than R1 000.

Loans to associates and joint ventures

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

The loans to associates and joint ventures are repayable on demand.

The Group considers its maximum exposure in respect of these loans, without taking into account any collateral and financial guarantees, to be as follows:

The rating groups for counterparties are categorised as follows:

Group 1 – New customers/related parties (less than six months).

Group 2 – Existing customers/related parties (more than six months) with no defaults in the past.

Group 3 – Existing customers/related parties (more than six months) with some defaults in the past.

Impairment of associates and joint ventures

There was no impairment of investment in associates and joint ventures. This was tested by comparing the recoverable amount against the carrying value of the investment in associates and joint ventures.

The recoverable amount is the higher of fair value less cost of disposal and the value-in-use. These value-in-use 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:

* Refer to note 2.2.

The discount rates used are post-tax and reflect specific risks relating to the relevant associates and joint ventures. 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 companies operate.

The inputs used when calculating the value-in-use would need to be increased/(decreased) by the following amounts before any impairment would need to be recognised:

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

Based on these factors, as well as the impairment testing performed the Group has concluded that no impairment is indicated.

The Group has concluded that no impairment of its investment in Blue Label Mexico S.A. de C.V. (BLM) is required. The decline in losses in BLM is primarily due to BLM becoming a multi-carrier distributor as opposed to historically being confined to one network. This has created a more competitive environment amongst the networks to the benefit of BLM. The introduction of the distribution of starter packs that generate monthly compounded annuity income is expected to gain momentum which will result in further declines in losses going forward.

Shares in associates and joint ventures acquired during the current year

On 1 June 2016 Oxigen Services India was demerged into two entities. The second entity, Oxigen Online, mirrored the shareholding of Oxigen Services India. Refer to note 2.2.

Utilities World was acquired on 1 June 2016 for a payment of R7.5 million and a further contingent payment of R5 million. The potential undiscounted amount of this contingent payment that the Group could be required to make under this arrangement is between Rnil and R4.97 million.

The fair value of the contingent consideration arrangement of R4.5 million was estimated by applying the income approach. The fair value estimates are based on a discount rate of 10.5%. Management has assumed a probability of 100%. In determining these probabilities management has assessed the cash flow projections based on financial budgets approved by the Board of Directors for the forthcoming year which are based on assumptions of the business, industry and economic growth.

Shares in associates and joint ventures acquired during the prior year

The Group’s effective shareholding in OSI prior to March 2016 was 55.83%. Of this shareholding, 37.22% was held by Gold Label Investments (GLI), a wholly owned subsidiary of the Group and 18.61% indirectly through the Group’s 50% shareholding in 2DFine Holdings Mauritius. In March 2016, a rights issue was offered by OSI for USD10.5 million. The Group exercised its rights for the entire amount through GLI congruent with 2DFine Holdings Mauritius waiving its rights. The effect of this is that GLI’s shareholding has increased from 37.22% to 40.97% and its indirect shareholding of 18.61% has been diluted to 17.21%. The latter has in turn resulted in a gain of R30 million on dilution, being the Group’s share of the increased net asset value emanating from the rights issue. The Group’s effective shareholding in OSI therefore increased by 2.35% to 58.18%. The amount paid for this was R159.4 million, the difference of R8.3 million relates to foreign exchange differences.

In September 2015 BLT increased its holding by 0.92% to 47.56% in BLM for an amount of R42.5 million.

Shares in associates disposed of during the prior year

The Group disposed of Forensic Intelligence Data Solutions Proprietary Limited for a nominal value.

BLT’s co-shareholder in BLM, Grupo Bimbo S.A.B DE C.V (“Bimbo”) has guaranteed the performance of BLM’s obligation to Radiomovil Dipsa S.A. de C.V (trading as Telcel) (“Telcel”). BLT has in turn provided Bimbo with a back to back guarantee in terms of which BLT shall reimburse Bimbo a percentage of any loss it incurs as a result of Telcel calling on the aforesaid guarantee, which percentage it shall pro-rata to BLT’s shareholding in BLM (currently 47.56%). At year-end there is no amount due to Telcel by BLM.

There are no other contingent liabilities relating to the Group’s interest in joint ventures.

For details on related-party transactions, refer to note 8.